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Income Tax Appellate Tribunal, JAIPUR BENCHES “A”, JAIPUR
Before: SHRI RAMESH C SHARMA, AM & SHRI VIJAY PAL RAO, JM vk;dj vihy la-@ITA Nos. 17, 18 & 19/JP/2019
आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES “A”, JAIPUR Jh jes'k lh 'kekZ] ys[kk lnL; ,oa Jh fot; iky jko] U;kf;d lnL; ds le{k BEFORE: SHRI RAMESH C SHARMA, AM & SHRI VIJAY PAL RAO, JM vk;dj vihy la-@ITA Nos. 17, 18 & 19/JP/2019 fu/kZkj.k o"kZ@Assessment Years: 2010-11, 2011-12 & 2012-13 Income Tax Officer, cuke M/s Eid Mohammad Nizamuddin, Vs. TDS-3, Nizam House, Subhash Bazar, Jaipur. Tonk. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAAFI 4581 A vihykFkhZ@Appellant izR;FkhZ@Respondent jktLo dh vksj ls@ Revenue by: Shri K.C. Meena (Addl.CIT) fu/kZkfjrh dh vksj ls@ Assessee by: Shri Hemang Gargieya & Shri Mahendra Gargieya (Advs) lquokbZ dh rkjh[k@ Date of Hearing: 08/05/2019 mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 23/07/2019 vkns'k@ ORDER PER: R.C. SHARMA, A.M. These are the appeals filed by the revenue are directed against the separate orders dated 29/10/2018 of ld. CIT(A)-3, Jaipur for the A.Ys. 2010-11 to 2012-13 in the matter of order passed U/s 206C(6)/206C(7) of the Income Tax Act, 1961 (in short, the Act).
All these appeals were heard together and for the sake of convenience, a consolidated order is being passed.
2 ITA No. 17 to 19/JP/2019 ITO TDS-3 Vs M/s Eid Mohammad Nizamuddin 3. Common grounds have been taken by the revenue in all the years under consideration, therefore the grounds taken in the appeal for A.Y. 2010-11 reads as under:
“1. Whether in the facts and circumstances of the case and the law, the Id. CIT(A)is justified in quashing the order passed by the AO (TDS) u/s 206C(6)/206C(7) within time line with the limitation period of seven years as defined under section 201(3) under chapter —XVII of the Income Tax Act, 1961 by choosing four years as time limitation for passing order. 2. Whether in the facts and circumstances of the case and the law, the Id. CIT(A) has erred in deleting the demand raised by the AO(TDS) u/s 206C(6)/206C(7) within time Period of seven years from transacting years in line with section201(3) for TDS action under chapter —XVII of the Income Tax Act, 1961 without appreciating the facts and the failure the assessee in fulfillment of the terms and conditions as specified under the proviso to section 206(6) of the Income Tax Act, 1961. 3. Whether under the law the Id. CIT(A)is justified in deciding four years as reasonable time limit for initiating proceeding and passing order in TCS default of the assessee in line with time limit of action under section 153/147/148 under Chapter- XIV as against the time limit of action for TDS default as defined in 201(3) amended by the Finance Act,2014 under chapter XVII of the income tax Act.1961. 4. Whether under the law and the & circumstances of the case, the assessee is not liable to penalty u/s 271CA levied by the competent income tax authority for the for the TCS default u/s 206C(6) and 206C(7) of the Income Tax Act which the issue has not been adjudicated by the Id. CIT(A). 5 The appellant craves its rights to add, amend or alter any of grounds on before the hearing.”
3 ITA No. 17 to 19/JP/2019 ITO TDS-3 Vs M/s Eid Mohammad Nizamuddin 4. Rival contentions have been heard and record perused. Facts in brief are that a survey U/s 133A(2A) of the Act, a newly inserted Section by the Finance Act, 2014 w.e.f. 01/10/2014 was conducted at the assessee’s business premises on 23/03/2015 for the purpose of TDS/TCS verification. During the course of survey proceedings, certain anomalies were noticed and proceedings U/s 206C)6A)/206C(7) of the Act were initiated. In the order passed U/s 206C(6)/206C(7) of the Act, the A.O. observed that the assessee is purchasing Tendu patta from forest department and selling it after drying in sun heat in open grounds without changing the form. The A.O. further observed that the firm has sold Tendu Leaves for trading purpose to various parties which falls under the category of forest produce and the assessee as such was required to collect tax at source as per the provisions of Section 206C(1) of the Act. As per the A.O., the assessee firm failed to collect tax at source from buyers and also failed to submit the Form No. 27C in the prescribed time. The A.O. finally concluded as under:
“In view of the above, it is found that the assessee has received receipts for sale of trading of Tendus Leave which falls under the category of "forest produce" and which falls under the ambit of section 206C of the Income tax Act, 1961. Thus, tax collected at source on these receipts should have been collected at the time of receipts/debit of the amount payable by the buyer to the account of the buyer or of receipt of such amount from the said buyer in cash or by the issue of cheque or draft or by any other mode, whichever is
4 ITA No. 17 to 19/JP/2019 ITO TDS-3 Vs M/s Eid Mohammad Nizamuddin earlier but the assessee has failed to do so and has not collected tax at source as required under section 206C of the Income tax Act, 1961. The assessee has committed a clear default of non collection of TCS on the sale/amount of Rs. 17,97,38,005/- in terms of the provisions of section 206C(1) of the Income tax Act,1961. Thus, the assessee is held to be an assessee in default within the meaning of section 206C(6)/206C(7) read with section 206C(1) of the Income Tax Act, 1961.”
Against the order of the A.O. treating the assessee in default U/s 206C(6) r.w.s. 206C(7) of the Act for non-collection of tax including interest, the assessee approached to the ld. CIT(A). Before the ld. CIT(A), the assessee has agitated the merit as well as limitation of the order passed by the A.O. U/s 206C(6)/206C(7) of the Act.
By the impugned order, the ld. CIT(A) has quashed the order passed by the A.O. holding that the order passed by the A.O. was beyond limitation period. While holding so, the ld. CIT(A) has relied on the order of the Tribunal in assessee’s own case dated 28/09/2018. The precise observation of the ld. CIT(A) was as under:
“4.3 I have carefully considered the material before me. I find that the same issue already decided by the Hon'ble ITAT, Jaipur Bench in ITA No. 394/JP/2016 dated 28.09.2018 in appellant own case as under:-
"We have considered the rival submissions as well as the relevant material on record. At the outset, we note that an identical issue was considered by
5 ITA No. 17 to 19/JP/2019 ITO TDS-3 Vs M/s Eid Mohammad Nizamuddin 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 in para 6 as under:
"6. We have considered the rival submissions as well as the relevant material on record. There is no dispute that Section 206C or any other provisions of the Income Tax Act do not provide any limitation for passing the order by the Assessing Officer U/s 206C(6)/206C(7) of the Act holding the assessee in default due to failure to collect tax at source. However, non-providing the limitation in the statute would not confer the jurisdiction/powers to the Assessing Officer to pass order U/s 206C at any point of time disregarding the amount of time lapse from such default of collection of tax at source, if the contention of the revenue is accepted that the Assessing Officer is free to initiate the action and pass the order U/s 206C at any time depending upon the circumstances of the case, it would amount to give an unfettered powers to the Assessing Officer to take action at any point till .an indefinite period. Therefore, such interpretation or inference would defy or defeat the very purpose and scheme of the statute and further the concept of finality of matters. Hence, in such a situation, a reasonable time period is allowed to the taxing authority for a particular action or an order to be passed otherwise it would lead to unregulated powers and authorities to the taxing authority. The law is to be followed by the authorities concerned as well as the persons governed by the said law and therefore, in absence of the limitation on the powers of the taxing authority, it would allow the misuse of such powers and provisions of the Act. It is pertinent to note that when a limitation is not provided in statute for a specific purpose then the limitation provided for the purpose of completing the assessment would be a proper guidance for taking the reasonable time period within which an order has to be passed by the taxing authority. An identical situation was prevailing in respect
6 ITA No. 17 to 19/JP/2019 ITO TDS-3 Vs M/s Eid Mohammad Nizamuddin of the order passed U/s 201(1)(201(1A) of the Act prior to the amendment vide Finance Act, 2009 w.e.f. 01/4/2010 whereby subsection (3) was inserted to Section 201 of the Act and limitation has been provided for 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(XA) 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 provisions of reassessment are under sections 147 and 148 of the Act and they are on a completely different footing and, therefore, do not merit consideration for the purposes of this case.
Even though the period of three years would be a reasonable period as prescribed by section 153 of the Act for completion of proceedings, we have been told that the Income-tax Appellate Tribunal has, in a series of decisions, some of which have been mentioned in the order which is under challenge before us, taken
7 ITA No. 17 to 19/JP/2019 ITO TDS-3 Vs M/s Eid Mohammad Nizamuddin the view that four years would be a reasonable period of time for initiating action, in a case where no limitation is prescribed.
The rationale for this seems to be quite clear - if there is a time- limit for completing the assessment then the time-limit for initiating the proceedings must be the same if not less. Nevertheless, the Tribunal has given a greater period for commencement or initiation of proceedings.
We are not inclined to disturb the time-limit of four years prescribed by the Tribunal and are of the view that in terms of the decision of the Supreme Court in Bhatinda District Co-op. Mil (P.) Union Ltd.'s case (supra) action 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.
Learned counsel for the revenue submitted that the Department came to know that the assessee was an assessee in default only in November, 1998 when a survey was conducted and it came to be known only then that when the assessee had not deducted tax at source on the global salary. We are of the opinion that the date of knowledge is not relevant for the purposes of exercising jurisdiction insofar as the provisions of the Income-tax Act are concerned. If it were so, the limitation period, as for example prescribed under section 147/148 of the Act would become meaningless if the concept of knowledge is imported into the scheme of the Act.
The second part of the argument of learned counsel for the revenue in this regard was that the question of limitation did not at all arise because the assessee had itself admitted its liability and it voluntarily paid the tax and interest on that amount. Again, we are
8 ITA No. 17 to 19/JP/2019 ITO TDS-3 Vs M/s Eid Mohammad Nizamuddin not in agreement with learned counsel for the revenue in this regard.
It appears that the assessee paid the tax voluntarily as well as 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.
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 liability of the deductor is a vicarious liability and, therefore, he cannot be put in a situation which would prejudice him to such an extent that the liability would remain hanging on his head for all times to come in the event the Income-tax Department decides not to take any action to recover the tax either by passing an order under section 201 of the Act or through making an assessment of the income of the deductee."
9 ITA No. 17 to 19/JP/2019 ITO TDS-3 Vs M/s Eid Mohammad Nizamuddin The Hon'ble High Court was of the view that the time limit for completing the assessment as per Section 153(1)(a) is two years from the end of the assessment year in which the income was first assessable which was considered as reasonable period for passing the order U/s 201(1)/20I(1A) of the Act The Hon'ble High Court has turned down the contention of limitation provided U/s 147/148 of the Act and hence, it was observed that three years would be a reasonable period as prescribed by Section 153 for completion of proceedings. However, since the Tribunal in a series of decisions had taken a view that the period within which the order U/s 201(1)/201(1A) shall be passed would be four years and therefore, the Hon'ble High Court has refrained from disturbing the view taken by this Tribunal. Following the said decision, the Hon'ble Delhi High Court in a subsequent decision in the case of Vodafone Essar Mobile Services Ltd. Vs Union of India & ors. (supra) has reiterated the view taken in the case of Of Vs NHK Japan Broadcasting (supra). The Hon'ble Gujarat High Court in the case of Tata Teleservices Vs. Union of India & Am. (supra) has held in paras 15 and 16 as under:
Considering the law laid down by the Hon'ble Supreme Court in the aforesaid decisions, to the facts of the case on hand and more particularly considering the fact that while amending section 201 by Finance Act, 2014, it has been specifically mentioned that the same shall be applicable w.e.f. 1/10/2014 and even considering the fact that proceedings for F.Y. 2007-08 and 2008-09 had become time barred and/or for the aforesaid financial years, limitation under section 201(3)(i) of the Act had already expired on 31/3/2011 and 31/3/2012, respectively, much prior to the amendment in section 201 as amended by Finance Act, 2014 and therefore, as such a right has been accrued in favour of the assessee and considering the fact that wherever legislature wanted to give retrospective effect so specifically provided while amending section 201(3) (ii) of the Act as was amended by Finance Act, 2012 with retrospective
10 ITA No. 17 to 19/JP/2019 ITO TDS-3 Vs M/s Eid Mohammad Nizamuddin 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.
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 High Court has specifically dealt with the issue of applicability of amendment brought to the provisions of Section 201 of the Act and held that the proceedings in the assessment year 2007-08 and 2008-09 had become time barred as the limitation U/s 201(3) has already expired and otherwise amendment cannot be applicable retrospectively. The Hon'ble Gujarat High Court in the case of CIT (TVS) Vs. Anagram Wellington Assets Management Co. Ltd. (supra) has again considered this issue and held in para 7 as under:-
"7. It is true that it is the duty of the assessee to deduct TDS and the question is whether it is likely to cause any loss to the revenue if it is not deducted in time. If TDS Is not deducted, it is required to be paid in the first instalment of advance tax, which is required to be paid within four months from the date of filing of return. Therefore, even if the
11 ITA No. 17 to 19/JP/2019 ITO TDS-3 Vs M/s Eid Mohammad Nizamuddin contention of Mr. Bhatt is accepted, loss that may be caused to the revenue is only to the tune of interest of four months on delayed payment of tax. Not only that when the declaration about this is made in the return, it comes within the knowledge of the Assessing Officer even if the TDS is not deducted. Therefore, we are of the view that the period of four years is reasonable period and we concur with the view taken by the Delhi High Court. It is true that the Court cannot legislate the Act, however, the Assessing Officer also cannot be given unfettered powers, which he can exercise even beyond the reasonable period of four years. Therefore, in our view, period' of four years is just and proper and the Tribunal has not committed any error while passing the impugned order. Therefore, all these appeals are dismissed. The questions posed for our consideration are answered in favour of the assessee and against the revenue."
Thus, four years time period was considered as reasonable period for passing the order U/s 201(1)/201(1A) of the Act. We find that the similar view has been taken by the Hon'ble Andhra Pradesh High Court in the case of CIT Vs. U.B. Electronics Instruments Ltd. (2015) 371ITR 3.14 (AP) as well as by the Hon'ble Kerala High Court in the case of CIT(TDS) & Anr. Vs Bharat Hotels Limited (2016) 384 ITR 77 (Kam.). The Hon'ble Karnataka High Court has dealt this issue in para 23 to 27 as under:
In the memorandum explaining the provisions in the Finance (II) Bill, 2009, it was 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
12 ITA No. 17 to 19/JP/2019 ITO TDS-3 Vs M/s Eid Mohammad Nizamuddin 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.
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 Acton28.1.2008forthe assessment year 2002-03, would be barred by limitation as the period of limitation would be four years from the end of the financial year in question. As such,we answer the first question raised in this appeal, in favour of the respondent assessee and against the Revenue.
Question No.2;
Now, coming to the second question of law, it is true that in view of the first question having been decided in favour of the assessee, this question remains only academic in nature. However, since the question would be relevant for the other assessment years (more particularly, assessment year 2004-05 and 2005-06), the appeals regarding which assessment years are also connected with this appeal, learned counsel for both the parties submitted that this question may also be considered and decided in this appeal, which would then govern the other appeals of the Revenue filed against the same assessee.
Sri K V Aravind, learned counsel for the Revenue has submitted that subsection (I A) of Section 201 of the Act provides for payment of interest. The sub-section, as it stood at the relevant time, prior to 1.7.2010, reads as under; "(1A) Without prejudice to the provisions of sub-section (1), if any such person, principal officer or company as is referred to in that sub-section does not deduct the whole or any part
13 ITA No. 17 to 19/JP/2019 ITO TDS-3 Vs M/s Eid Mohammad Nizamuddin of the tax or after deducting fails to pay the tax as required by or under this Act, he or it shall be liable to pay simple interest at 'one per cent for every month or part of a month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is actually paid and such interest shall be paid before furnishing the statement in accordance with the provisions of subsection (3) of Section 200." The said sub-section clearly provides that interest would be payable from the date on which such tax was deductible, i.e., the date when payment was made by the assessee to the Recipient till the date on which such tax was actually paid, i.e., tax was deposited by the Recipient.
The provision for tax deduction at source is only a mechanism for collection of tax by the payer, even though the liability to pay tax is that of the Recipient. The provision for payment of interest under sub- section (1A) of Section 201 of the Act is only of compensatory nature. It cannot be a means to penalise the payer. The provision for payment of interest would arise from the date when it ought to have been deducted i.e., from the date of payment by 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."
14 ITA No. 17 to 19/JP/2019 ITO TDS-3 Vs M/s Eid Mohammad Nizamuddin 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 tax at source is provided U/s 201 of the Act. The department has accepted those decisions and consequently brought amendment to the provisions of Section 201 and thereby provided the limitation for passing the orders U/s 201(1)/201(1A) of the Act which was in line with the view taken by the Hon'ble High Courts on this issue. Though, subsequently an amendment vide Finance Act, 2014 was again brought in the said provisions of Section 201 enlarging the period of limitation, however, the said amendment is not retrospective. Accordingly, the liability of tax collected at source is also a vicarious liability of the assessee to assist the department in the measure to avoid any possibility of tax avoidance by the persons with whom the specific transactions have been entered into by the assessee. Therefore, in our considered opinion, the analogy and reasoning given in the decisions of various Hon'ble High Courts cited supra in respect of the limitation for passing the order U/s 201 of the Act, is also applicable for considering the reasonable time period for passing the order U/s 206C of the Act. The provisions of Section 201 and 206C of the Act are having same scheme and object being the measures against the avoidance of tax by the opposite parties with whom the assessee had the transactions. Hence, applying the reasonable period of limitation as four years within which the Assessing Officer could pass the order U/s 206C(6)/206C(7) of the Act, we hold that the impugned order passed by the Assessing Officer on 30/3/2016 is beyond the said reasonable period of limitation and consequently is invalid being barred by limitation. Accordingly, we quash the impugned order passed U/s 206(6)/206C(7) of the Act."
15 ITA No. 17 to 19/JP/2019 ITO TDS-3 Vs M/s Eid Mohammad Nizamuddin Hence the contention raised by the id, A/R. has also been considered by this Tribunal m assessee's own case regarding limitation provided under section 201(1) by Finance Act, 2014. Accordingly, following the earlier order of this Tribunal, we hold that the impugned order dated 31st March, 2015 passed under section 206C(6)/201C(7) of the Act is invalid being barred by limitation. Accordingly, the same is quashed. Since we have quashed the order passed under section 206C(6)/206C(7) of the Act.
Therefore the following the above decision of the Hon'ble I.T.A.T as discuss above in the assessee own case for A.Y.2009-10. The order passed in present case is also barred by limitation. Accordingly I quash the impugned order passed u/s 206C(6) and 206C(7) of the Income Tax Act, 1961. This ground is allowed.
I already quash the order passed u/s 206C(6) and 206C(7) of the Income Tax Act, 1961 while decided the ground No.2. Therefore there is no need to adjudicate other grounds.”
Against the above order of the ld. CIT(A), the revenue is in further appeal before the ITAT in all the years under consideration.
It was argued by the ld AR of the assessee that the impugned orders were passed on 22.12.2016 in all the above years. Also, there is no dispute that the provisions contained u/s 206C of the Act does not prescribe any time-limit for the initiation of the proceedings or for passing any order there under. A question therefore, arises, does that mean that unlimited time is available to the ITO to take action or to pass order at any time as per his sweet will.
16 ITA No. 17 to 19/JP/2019 ITO TDS-3 Vs M/s Eid Mohammad Nizamuddin 9. Further contention of the ld AR was as under:
“1.2.1 It is submitted that for the most of the actions to be taken under the Income Tax Act, a particular time-limit has been given for the commencement and completion of such actions. To take a few examples:
* Sec. 153A of the Act deals with time-limit for completion of assessment within two years from the end of the financial year in which the last of the authorizations for search under sec.132 or for requisition under sec.132A was executed.
* Sec. 149 of the Act provides the period within which the concluded assessment can be re-opened being a period of four years or six years from the end of the relevant assessment year.
* Sec. 154 of the Act provides the period within which the subjected order can be rectified within a limited period of 4 years by the authorities.
* Similarly, penalty imposable under Chapter XXI is to be initiated and completed within two years.
* Action of the CIT u/s 263 of the Act is to be taken within two years from the end of the financial year in which the order sought to be revised was passed.
1.2.2 From the above provisions, it is clear that normally there is a time-limit provided for completion of the proceedings, if any commenced under the Act. In such a scenario, a question arises that if no time-limit is provided, can the authorities be permitted to take action at any time as they wish. It is beyond comprehension that how, in the absence of any time limitation provided in the provision, the action as provided therein can be
17 ITA No. 17 to 19/JP/2019 ITO TDS-3 Vs M/s Eid Mohammad Nizamuddin taken even after the lapse of an indefinite period. It is wholly impermissible to argue that unlimited time-limit be granted to the Revenue for taking action under this section. This is for the simple reason that certainty is the hallmark of any proceedings. The sword of taxing authorities cannot be allowed to hang forever, over the head of a taxpayer. If this proposition of the ITOs is accepted that will give license to the officers to take action even after lapse of 30, 40 or 50 years. The canons of limitation are ordinarily provided expressly in the Act but in their absence, they are to be impliedly inferred by the Courts by taking into consideration the scheme of the relevant provisions. It is naturally so for the reason that time is the core of every action under law. A right, which has already accrued in favour of a person cannot be unsettled at any time after an indefinite period even in absence of any prescribed time limit because if permitted, would amount to unsettling-the settled position between the parties. If the legislature is silent in prescribing a particular time-limit then the action must be taken within a reasonable time only.
In the context of the provisions of Income Tax Act, the courts and the tribunals have normally taken a view that the period of 4 years, is a reasonable period within which any action can be initiated and completed but not beyond that unless otherwise provided. In the context of TDS particularly, there are various decisions which has taken the view that it is only within 3 years from the end of the relevant assessment year or only within a period of 4 years from the relevant financial year, appropriate proceedings must have been initiated. The case laws available on this aspect are being discussed hereinafter.
18 ITA No. 17 to 19/JP/2019 ITO TDS-3 Vs M/s Eid Mohammad Nizamuddin 3. TDS and TCS provisions are the same: It is not denied that the law of TDS and TCS is similar, therefore, the law developed in the context of Sec.201 and more particular with regard to the limitation provisions, is fully applicable in the cases of TCS as well. Originally, there was no limitation provision incorporated in Sec.201. It is only by the Finance (No.2) Act, 2009 that new Subsections 3 and 4 were inserted w.e.f 01.04.2010 which provided the time limits of two years or 4 years from the end of the F.Y. depending upon the facts. However, the proviso to Sec 201(3) has fixed a cutoff date of 31.03.2011, in the cases where the relevant FY was 2007-08 or the earlier one. This aspect has been elaborately dealt with in the case of Vodafone Essar Mobile Services Ltd. v/s UOI & Ors. (2016) 385 1TR 436 (Del).
In these circumstances when it is admitted that provisions of TDS and TCS are the same, the following decisions which are available relating to limitation in context of TDS provisions, are equally applicable with full force on the aspect of limitation in the context of TCS provisions as well.
Directly Covered Issue: An exactly identical controversy which is involved in these years, was also there, in assesse's own case, in F.Y. 2008-09 [A.Y. 2009-10] in ITA No. 316/JP/2018 decided vide order dated 29.08.2018 (PB 11-27) wherein, this Hon'ble Bench was pleased to hold (in para 6 Pg-7 onwards) that four years' time period was considered as reasonable for passing any order u/s 201 or u/s 206C of the Act holding as under:
"6. We have considered the rival submissions as well as the relevant material on record.
19 ITA No. 17 to 19/JP/2019 ITO TDS-3 Vs M/s Eid Mohammad Nizamuddin x x x x x
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 tax at source is provided U/s 201 of the Act. The department has accepted those decisions and consequently brought amendment to the provisions of Section 201 and thereby provided the limitation for passing the orders U/s 201(1)/201(1A) of the Act which was inline with the view taken by the Hon'ble High Courts on this issue. Though, subsequently an amendment vide Finance Act, 2014 was again brought in the said provisions of Section 201 enlarging the period of limitation, however, the said amendment is not retrospective. Accordingly, the liability of tax collected at source is also a vicarious liability of the assessee to assist the department in the measure to avoid any possibility of tax avoidance by the persons with whom the specific transactions have been entered into by the assessee. Therefore, in our considered opinion. the analogy and reasoning given in the decisions of various Hon'ble High Courts cited supra in respect of the limitation for passing the order U/s 201 of the Act, is also applicable for considering the reasonable time period for passing the order U/s 206C of the Act. The provisions of Section 201 and 206C of the Act are having same scheme and object being the measures against the avoidance of tax by the opposite parties with whom the assessee had the transactions. Hence, applying the reasonable period of limitation as four years within which the Assessing Officer could pass the order U/s 206C(6)/206C(7) of the Act, we hold that the impugned order passed by the Assessing Officer on 30/3/2016 is beyond the said reasonable period of limitation and consequently is invalid being barred by limitation. Accordingly, we quash the impugned order passed U/s 206C(6)/206C(7) of the Act.' Similarly in F.Y. 2007-08 [A.Y. 2008-09] in ITA NO. 394IJP/2016 dated 28.09.2018 (PB 1-10) the Hon'ble bench held as under:
"6. We have considered the rival submissions as well as the relevant material on record. At the outset, we note that an identical issue was considered by this Tribunal in assessee's own case for the
20 ITA No. 17 to 19/JP/2019 ITO TDS-3 Vs M/s Eid Mohammad Nizamuddin assessment year 2009-10 vide order dated 29.08.2018 in ITA No. 316/JP/2018 in para 6 as under: x x x x x x Hence the contention raised by the Id. A/R has also been considered by this tribunal in assessee's own case regarding limitation provided under section 201(1) by Finance Act. 2014. Accordingly, following the earlier order of this Tribunal, we hold that the impugned order dated 31.03.2015 passed under section 206C(6)/201C(7) of the Act is invalid being barred by limitation. Accordingly, the same is quashed. Since we have quashed the order passed under section 206C(6)/206C(7) of the Act., therefore, the other issues raised in ground nos. 3 & 4 become infructuous."
Application on facts: Applying the above settled judicial guideline on the facts. the position are as per chart mentioned below: F.Y. A.Y. Impugned Late Date (4 years Time barred order dated from the end of F.Y.) 2009-10 2010-11 22/12/2016 31/03/2014 YES 2010-11 2011-12 22/12/2016 31/03/2015 YES 2011-12 2012-13 22/12/2016 31/03/2016 YES
From a perusal of above chart it evidently clear that the order passed in all the years are beyond the period of four year from the end of the relevant financial years and hence all the impugned orders, are barred by limitation. Accordingly, all the impugned order kindly be declared as barred by limitation and consequently be quashed.
On the other hand, the contention of the ld DR was that a survey was conducted at the assessee’s business premises on 23/3/2015 and
21 ITA No. 17 to 19/JP/2019 ITO TDS-3 Vs M/s Eid Mohammad Nizamuddin the A.O. has correctly passed order within the statutory time limit on 22/12/2016 in terms of the newly inserted section by the Finance Act, 2014 w.e.f. 01/10/2014. Accordingly, the ld. CIT(A) was not justified in annulling the assessment on the ground that the order so passed was beyond the limitation period.
We have considered the rival contentions and carefully gone through the orders of the authorities below. From the record we found that an exactly identical controversy which is involved in these years, was also there, in assesse's own case, in F.Y. 2008-09 [A.Y. 2009-10] in ITA No. 316/JP/2018 decided vide order dated 29.08.2018 wherein, this Hon'ble Bench was pleased to hold (in para 6 Pg-7 onwards) that four years' time period was considered as reasonable for passing any order u/s 201 or u/s 206C of the Act.
The ld. CIT(A) after applying the proposition of law laid down by the Tribunal in assessee’s own case concluded that the order passed in all the years under consideration are beyond the period of four years from the end of the relevant financial year, accordingly held that the impugned orders are barred by limitation. The facts and circumstances during the years under consideration are same, therefore, respectfully following the order of the Tribunal in assessee’s own case, we do not find any infirmity in the order of the ld. CIT(A).
22 ITA No. 17 to 19/JP/2019 ITO TDS-3 Vs M/s Eid Mohammad Nizamuddin 13. In the result, all the appeals of the revenue are dismissed.
Order pronounced in the open court on 23rd July, 2019.
Sd/- Sd/- ¼fot; iky jko½ ¼jes'k lh 'kekZ½ (VIJAY PAL RAO) (RAMESH C SHARMA) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 23rd July, 2019 *Ranjan आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू vihykFkhZ@The Appellant- The ITO, TDS-3, Jaipur. 1. izR;FkhZ@ The Respondent- M/s Eid Mohammad Nizamuddin, Tonk. 2. vk;dj vk;qDr@ CIT 3. vk;dj vk;qDr¼vihy½@The CIT(A) 4. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत 5. xkMZ QkbZy@ Guard File (ITA Nos. 17 to 19/JP/2019) 6. vkns'kkuqlkj@ By order,
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