TMI Blog2018 (9) TMI 1962X X X X Extracts X X X X X X X X Extracts X X X X ..... r of assessee - ITA No. 394/JP/2016 - - - Dated:- 28-9-2018 - SHRI VIJAY PAL RAO, JM AND SHRI VIKRAM SINGH YADAV, AM For the Assessee : Shri Mahendra Gargieya (Advocate) For the Revenue : Shri K.C. Meena (Addl. CIT) ORDER PER VIJAY PAL RAO, JM: This appeal by the assessee is directed against the order dated 29th February, November, 2016 of ld. CIT (A)-3, Jaipur arising from the order passed under section 206C(6) / 206C(7) of the IT Act for the assessment year 2008-09. 2. The assessee is a partnership firm and engaged in the business of manufacturing and trading of Bidi leafs. There was a survey under section 133A(2A) of the Act at the business premises of the assessee on 23rd March, 2015. During the course of survey proceedings, it was detected that the assessee firm was liable to collect tax at source (TCS) @ 5% on sale of Tendu leafs as per the provisions of section 206C(1) of the Act but it has defaulted for not collecting the TCS. Accordingly, the AO proceeded to held the assessee as assessee in default within the meaning of section 206C(6) read with section 206C(7) of the Act and passed the order dated 31st March, 2015. The assessee challenge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es not press ground no. 1 and the same may be dismissed as not pressed. The ld. D/R has raised no objection if the ground no. 1 of the assessee s appeal is dismissed as not pressed. Accordingly, ground no. 1 of the assessee s appeal is dismissed being not pressed. Ground No. 2 is regarding validity of the order passed by the AO under section 206C(6)/206C(7) of the IT Act being barred by limitation. 4. The ld. A/R of the assessee has submitted that an identical issue was considered by this Tribunal in assessee s own case for the assessment year 2009-10 vide order dated 29.08.2018 in ITA No. 316/JP/2018, therefore, this issue of validity of order being barred by limitation is covered by the order of this Tribunal in assessee s own case. 5. On the other hand, the ld. D/R has submitted that the provisions of section 201(1)/201(1A) of the Act provided limitation of 7 years as per sub-section (3) of the said section. Therefore, the said period of limitation shall be applied for the purposes of passing the order under section 206C(6) of the Act. The ld. D/R has thus submitted that the order passed on 31st March, 2015 is within the period of limitation of 7 years. 6. We have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passing the order U/s 201(1) and 201(1A) of the Act. When this issue of limitation for passing the order U/s 201(1)/201(1A) of the Act came before the Courts, it was held that the Assessing Officer cannot be given unfettered powers which can be exercises even beyond a reasonable time because of non-providing the limitation in the statute. Hence, the courts have taken a consistent view that reasonable time period for passing the order U/s 201(1)/201(1A) of the Act would be four years. The Hon ble Delhi High Court in the case of CIT Vs. NHK Japan Broadcasting (supra) has considered and decided this issue in para 18 to 25 as under: 18. Insofar as the Income-tax Act is concerned, our attention has been drawn to section 153(1)(a) thereof which prescribes the time-limit for completing the assessment, which is two years from the end of the assessment year in which the income was first assessable. It is well-known that the assessment year follows the previous year and, therefore, the time-limit would be three years from the end of the financial year. This seems to be a reasonable period as accepted under section 153 of the Act, though for completion of assessment proceedings. The prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest thereon but the acceptance of the liability by the assessee would not by itself extend the period of limitation nor would it extend the reasonable time that is postulated by the scheme of the Income-tax Act. The assessee cannot be put, in a sense, in a worse position merely because it has admitted its liability. If the assessee had denied its liability the question that would have arisen would be whether the revenue could have initiated proceedings after a lapse of four years. The answer to that would of course have to be in the negative in view of the reason that we have already indicated above. The fact that the assessee agreed to pay the tax voluntarily cannot put the assessee in a situation worse than if it had contested its liability. 25. We may also note that under section 191 of the Act, the primary liability to pay tax is on the person whose income it is that is the deductee. Of course, a duty is cast upon the deductor, that is the person who is making the payment to the deductee, to deduct tax at source but if he fails to do so, it does not wash away the liability of the deductee. It is still the liability of the deductee to pay the tax. In that sense, the lia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... retrospective effect so specifically provided while amending section 201(3) (ii) of the Act as was amended by Finance Act, 2012 with retrospective effect from 1/4/2010, it is to be held that section 201(3), as amended by Finance Act No.2 of 2014 shall not be applicable retrospectively and therefore, no order under section 201(i) of the Act can be passed for which limitation had already expired prior to amended section 201(3) as amended by Finance Act No.2 of 2014. Under the circumstances, the impugned notices / summonses cannot be sustained and the same deserve to be quashed and set aside and writ of prohibition, as prayed for, deserves to be granted. 16. In view of the above and for the reasons stated above, all these petitions succeed. The impugned notices / summonses are held to be invalid and the same are hereby quashed and set aside and the respondents herein are hereby restrained by writ of prohibition from proceedings with the impugned notices / summonses which are, as such, hereby quashed and set aside. Rule is made absolute accordingly in each of the petitions. In the facts and circumstances of the case, there shall be no order as to costs. Thus, the Hon'ble Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as clearly stated that 'to provide sufficient time for pending cases, it is proposed to provide that such proceedings for a financial year beginning from 1st April, 2007 and earlier years can be completed by the 31st March, 2011. As such, the memorandum itself clarified that the proviso is for pending cases, and not decided cases. The Circular dated 3.6.2010, issued by the CBDT, also clearly specifies that the said proviso would be for pending cases and not decided cases. With regard to the applicability of the amendment made by the Finance Act, 2009 with effect from 1.4.2010, it was also clarified to be from the assessment year 2011-12 and subsequent years. As such, it is clear that proviso to sub-section (3) did not legalize the cases where action had already been taken, but was meant for only such cases which were pending at the time of insertion of sub-section (3) to Section 201 of the Act. 24. Thus, for the reasons given above, we find that the Tribunal was correct in holding that the order passed under Sec.201 (1) and (1A) of the Act on 28.1.2008 for the assessment year 2002-03, would be barred by limitation as the period of limitation would be four years from the end ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the payer to the Recipient. The liability to pay interest would end on the date when such tax has been deposited by the Recipient, either by way of advance tax or along with the return of income. Interest, herein, being compensatory in nature, cannot be thus charged for the period beyond the date when such tax has already been deposited by the Recipient. If the Revenue is permitted to charge interest even after the Recipient has deposited the tax, the same would amount to undue enrichment of the Revenue, as even after receiving the tax, it would continue to get interest on the amount which has already been paid or deposited with it. As such, the liability of the assessee herein would not be for payment of interest after the period of deposit of tax by the Recipient. Thus, a consistent view has been taken by the various Hon'ble High Courts on this issue that when no limitation is provided in the statute then a period of four years is considered as reasonable for passing the order U/s 201(1)/201(1A) of the Act. The provisions of Section 206C of the Act are analogous and a measure for compliance of collection of tax at source as a similar measure for compliance of deduction of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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