TMI Blog2023 (5) TMI 694X X X X Extracts X X X X X X X X Extracts X X X X ..... sed 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 [ 2016 (8) TMI 509 - DELHI HIGH COURT] 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. 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. Decided in favour of assessee. - ITA No.1102/Del/2016, ITA No.1103/Del/2016, ITA No.1104/Del/2016 - - - Dated:- 10-5-2023 - Shri Saktijit Dey, Judicial Member And Shri M. Balaganesh, Accountant Member For the Assessee : Shri K.R. Manjani, Advocate And Shri Tarun Aswani, Advocate For the Revenue : Shri J.S. Minhas, CIT-DR ORDER PER M. BALAGANESH, AM: These appeals in ITAs No.1102, 1103 1104/Del/2016 for AYs 2002-03, 2002-03 and 2003-04 respectively arise ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnished by the assessee, the ld. TDS Officer came to the conclusion that the assessee firm had committed defaults on certain contractual payments u/s 194C of the Act and on certain cases payments u/s 194H of the Act, pursuant to which an order u/s 201(1)/201(1A) of the Act was framed in the hands of the assessee, Green Line (Punjab) on 29.03.2011 treating the assessee as an assessee in default for not deducting tax at source on certain payments and also levying interest u/s 201(1A) of the Act for the delayed remittance. 7. Before the ld.CIT(A), the assessee stated that the order passed u/s 201(1)/201(1A) of the Act is time barred in view of the fact that the said order is passed beyond four years from the end of the financial year in which proceedings were initiated. It was the case of the assessee that the proceedings got initiated pursuant to the TDS survey conducted on 17.03.2003 and that the order was passed on 29.03.2011 which is much beyond the reasonable period of four years and, hence, the order passed thereon would be barred by limitation. The ld.CIT(A) called for a remand report in this regard from the ld. AO. In the said remand report, the ld. AO submitted that a no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or before 01.04.2007, the order u/s 201(1)/201(1A) could be passed at any time on or before 31.03.2011. In the instant case before us, the year under consideration is AY 2002-03. The ld. TDS Officer has passed the order u/s 201(1)/201(1A) of the Act on 29.03.2011. The said provisions of section 201(3) of the Act read with proviso thereon only states that order could be passed for A.Y. 2008-09 onwards (i.e financial year commencing on or after 1.4.2007) till 31.3.2011. The said proviso cannot be interpreted in a way to enable the ld. TDS officer to pass orders for Assessment Years prior to A.Y. 2008-09. This understanding of ours is further fortified by the decision of the Hon ble Delhi High Court in the case of Vodafone Essar Mobile Services Ltd. vs. Union of India, reported in 385 ITR 436, wherein it was held as under:- 8. The Court in NHK Japan Broadcasting Corp. case (supra) noted that there was no provision in the Act, which stipulated a time limit regarding initiation of the proceedings under Section 201 of the Act. It referred to Section 153(1)(a) of the Act, which required an assessment to be completed within two years from the end of the AY in which income was first as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RC 637. 7. The judgment in NHK Japan to a certain extent was limited by the amendment to Section 201 by substitution of Section 201(3) w.e.f. 1.4.2010 by Finance Act No. 2/2009. This substitution was in turn amended w.e.f. 1.10.2014 by Finance Act No. 2/2014. As a result, the provision which exists as on date is as follows: 201. (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 seven years from the end of the financial year in which payment is made or credit is given. 8. Secondly, Section 201 itself was amended by introduction of sub-section 1(A) - with retrospective effect, from 1.4.1966. The provision underwent legislative changes on different occasions. The decision in NHK Japan was rendered on 23.04.2008. The Revenue's appeal was rejected on 3.7.2014. Although, the Supreme Court had granted special leave and has apparently stated in its final order rejecting the Revenue's appeal that the question is left open, the mere circumstance that the Parliament did not spell out any time limit bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a) at the time of or along with the initiation of proceedings against the searched person under Section 158BC of the Act; (b) along with the assessment proceedings under Section 158BC of the Act; and (c) immediately after the assessment proceedings are completed under Section 158BC of the Act of the searched person. 10. An added reason why the submission of the Revenue is unacceptable is that had the Parliament indeed intended to overrule or set aside the reasoning in NHK Japan (supra), it would have, like other instances and more specifically in the case of Section 201(1A), brought in a retrospective amendment, nullifying the precedent itself. That it chose to bring Section 201(3) in the first instance in 2010 and later in 2014 fortifies the reasoning of the Court. Accordingly, the issue is answered against the Revenue.' 17. It appears to the Court that the above decision settles the question whether to declare an Assessee to be an Assessee in default under Section 201 of the Court could be initiated for a period earlier than four years prior to 31st March, 2011. 24. The Court is unable to agree with the above submission of Mr. Shivpuri. As the Court sees it, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edings for AY 2002-2003, as far as the orders under challenge in these writ petitions are concerned, they pertain to AYs 2003-2004, 2004-2005 and 2005-2006 in respect of which no orders have been passed by the Supreme Court. These notices, therefore, sought to initiate proceedings for declaring VEMSL to be an Assessee in default earlier than four years prior to 31st March, 2011. 31. The Court agrees that the notices issued to VEMSL for the aforementioned AYs are not covered by the order of the Supreme Court for AY 2002-2003. Accordingly, insofar as the notices for AYs 2003-2004, 2004-2005 and 2005-2006 are concerned, they are held to be unsustainable in law on the interpretation of Section 201(3) of the Act by the Court. 32. In view of the above conclusion, the Court does not consider it necessary to address the question of constitutional validity of Section 201(3) of the Act or the proviso thereto. In any event, the Petitioners also did not press for that relief in view of the acceptance of their submission on the interpretation of the said provision by the Court. 33. Consequently, the notices impugned in the present petitions issued by the Department seeking to ini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 201(1)/201(1A) of the Act by the ld. TDS Officer in the case of different assessees are barred by limitation. 15. We find that the facts prevailing in the case of Green Line (Delhi) are identical with the facts in Green Line (Punjab) adjudicated, supra, save that in the case of Green Line (Delhi) the default committed by the assessee in the TDS provisions were in respect of payments made on account of commission, interest, contract payments and salary. 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.1,08,813/- for TDS default and levying an interest u/s 201(1A) of the Act on the assessee in the sum of Rs.1,05,821/-. The order passed by the ld.CIT(A) in the case of Green Line (Delhi) is identical to the order passed by him in the case of Green Line (Punjab), supra. 16. Since the ld.CIT(A) had adjudicated only the issue of order being passed by the ld. TDS Officer as not barred by limitation and the very same issue is also raised before us by the assessee, vide ground No.1, we find that the decision rendered by us in the case of Green Line (Punjab), supr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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