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TMI Blog2023 (5) TMI 694X X X X Extracts X X X X X X X X Extracts X X X X ..... on order for the sake of convenience. 3. At the outset, there is a delay in filing the appeal of 8 ½ months by the assessee before this Tribunal. This Tribunal, in the first round of appeal had dismissed the appeal by not condoning the delay. The assessee preferred an appeal before the Hon'ble jurisdictional High Court which was disposed of in ITA 744/2018 in the case of Green Line (Punjab); in ITA No.1207/2018 in the case of Green Line (Delhi); and in ITA No.1217/2018 in the case of Green Line Earth Ltd., vide order dated 16.11.2022 wherein the Hon'ble Delhi High Court condoned the delay in filing the appeal before the Tribunal and restored the appeal to the file of this Tribunal to hear the matter on merits qua the grounds raised by the assessee. Hence, the appeals of the assessee are admitted for adjudication. 4. The only identical issue to be decided in these appeals is as to whether the ld.CIT(A) was justified in imposing interest and recovering TDS from the hands of the assessee in the facts and circumstances of the case. The interconnected issue involved is whether the order passed u/s 201(1)/201(1A) of the Act by the ld. TDS Officer in the case of different assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a survey operation carried out on 17.03.2002. Pursuant to the survey operation, the ld. TDS Officer observed certain discrepancies in certain payments effected by the assessee without deduction of tax at source thereby violating various provisions of Chapter XVII-B of the Act. Subsequently, no proceedings were taken up by the taken up by the ld. TDS Officer till 06.02.2011. It is only on 07.02.2011, the notice was issued by the ld. TDS Officer for initiating proceedings u/s 201(1)/201(1A) of the Act on the assessee firm. The ld. AR had argued that this initiation of proceedings on 07.02.2011 and subsequent order passed on 29.03.2011 are barred by limitation as it is in violation of the provisions of section 201(3) of the Act. For the sake of convenience, the provisions of section 201(3) as amended by the Finance Act, 2012 w.r.e.f. 01.04.2010 is reproduced hereunder: "(3) No order shall be made under sub-section (1) deeming a person to be an assessee in default for failure to deduct the whole or any part of the tax from a person resident in India, at any time after the expiry of- (i) two years from the end of the financial year in which the statement is filed in a case where the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on must be initiated by the competent authority under the Income Tax Act, where no limitation is prescribed as in Section 201 of the Act within that period of four years." 16. This question, after the amendment to Section 201 of the Act brought about by the Finance (No. 2) Act, 2009 with effect from 1st April, 2010 came up for consideration by this Court in ITA No. 57/2015 CIT (TDS)-I v. C.J. International Hotels (P.) Ltd. [2015] 372 ITR 684/231 Taxman 818/56 taxmann.com 458 (Delhi). One of the questions addressed by the Court in the said case in its judgment dated 9th February, 2015 concerned the initiation of proceedings against the Assessee for declaring an Assessee to be an Assessee in default. The discussion in the said judgement on this issue is contained in paras 6 to 10, which read as under: '6. It is evident from the above discussion that the assessee was sought to be proceeded against Section 201 as one in default, after the period of four years. This Court is conscious that the text of the provision nowhere limits the exercise of powers. Equally, there are several provisions of enactment, i.e., Sections 143(2), 147, 148 and 263, and even through introduction of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibed, statutory authority must exercise its jurisdiction within a reasonable period. What, however, shall be the reasonable period would depend upon the nature of the statute, rights and liabilities thereunder and other relevant factors. 18. Revisional jurisdiction, in our opinion, should ordinarily be exercised within a period of three years having regard to the purport in terms of the said Act. In any event, the same should not exceed the period of five years. The view of the High Court, thus, cannot be said to be unreasonable. Reasonable period, keeping in view the discussions made hereinbefore, must be found out from the statutory scheme. As indicated hereinbefore, maximum period of limitation provided for in Sub-section (6) of Section 11 of the Act is five years." 9. More recently in Commissioner of Income Tax-III v. Calcutta Knitwears, Ludhiana [2014] 362 ITR 673 (SC), the Supreme Court had the occasion to deal with the correct position in law as to the initiation of income tax proceedings. Although, the context of the dispute was in respect of recording of a satisfaction note as to the initiation of proceedings against third parties under erstwhile Section 158BD of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch 2011, Mr. Shivpuri sought to suggest that the Circular has to be harmoniously construed with Section 201(3) of the Act to glean an intention to permit the Department to initiate cases four years earlier than 31st March, 2011. The only requirement was that orders had to be passed by 31st March, 2011. 25. The Court is unable to agree with this approach of the Department either. There is no question of 'harmonious construction' of a CBDT Circular issued by the CBDT. At best, it is an external aid of construction of Section 201(3) and the proviso thereto. The Circular also gives an instance of contrary understanding of the legal position by the Department itself. It is well settled that if a Circular issued by the Department favours an Assessee then it should be so done even where such interpretation goes contrary to the legislative intent. 28. Circular 5 of 2010 of CBDT clarifying that the proviso to Section 201(3) of the Act was meant to expand the time limit for completing the proceedings and passing orders in relation to 'pending cases'. The said proviso cannot be interpreted, as is sought to be done by the Department, to enable it to initiate proceedings for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... April, 2010 only and would apply to such orders passed on or after 1st April, 2010. We find that the ld. DR took shelter based on this CBDT Circular before us stating that since the order in the instant case was passed on 29.03.2011 which is after 01.04.2010, the said order is passed within the time limit prescribed in section 201(3) of the Act r.w. proviso thereto. We find that the very same issue was subject matter of consideration before the Hon'ble jurisdictional High Court in the case of Vodafone Essar Mobile Services Ltd. vs. Union of India, reported in 385 ITR 436 referred to supra. The Circular has to be interpreted in such a manner that the time limit stipulated in section 201(3) of the Act would apply only for those orders passed on or after 1.4.2007 and not earlier. 11. In view of the aforesaid observations and respectfully following the decision of Hon'ble Jurisdictional High Court referred supra, we hold that the order passed by the ld. TDS officer u/s 201 / 201 (1A) of the Act is barred by limitation. Hence the demand raised thereon is directed to be quashed. In view of this, the other grounds raised by the assessee on merits, need not be adjudicated upon as they wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the result, the appeal of the assessee in the case of Green Line (Delhi) in ITA No.1103/Del/2016 is allowed. 19. Now let us take up the appeal of the assessee Green Line Earth Ltd. in ITA No.1104/Del/2016 for AY 2002-03. 19.1 The only identical issue to be decided in this appeal is as to whether the ld.CIT(A) was justified in imposing interest and recovering TDS from the hands of the assessee in the facts and circumstances of the case. The interconnected issue involved is whether the order passed u/s 201(1)/201(1A) of the Act by the ld. TDS Officer in the case of different assessees are barred by limitation. We find that the facts prevailing in the case of Green Line Earth Ltd., are identical with the facts in Green Line (Punjab) adjudicated, supra, save that in the case of Green Line Earth Ltd., the default committed by the assessee in the TDS provisions were in respect of payments made on account of commission and deemed dividend u/s 194 of the Act. An order has been passed by the ld. Income-tax Officer, Ward-55, New Delhi u/s 201(1)/201(1A) on 29.03.2011 treating the assessee as an assessee in default in respect of Rs.86,835/- for TDS default and levying an interest u/s 201( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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