DCIT, LAXMINAGAR vs. TURNER GENERAL ENTERTAINMENT NETWORKS INDIA PRIVATE LIMITED, MAHIPALPUR DELHI

The assessing officer has completed the assessment u/s 201(1)/ (1A) of the Act, holding that the assessee company in default to deduct tax for amount of Rs 5,00,40,103/- which was required to be deducted under various TDS sections but was not deducted.

Aggrieved the order of the AO the assessee company has filed the appeal before the Ld CIT(A) who vide his order dated 07-12-2023 allowed the appeal. Aggrieved the order of the Ld CIT(A) the revenue is in appeal before us.

In the ground no. one the revenue has challenged the order passed under section 201(1) and 201(1A) of the Act to be within time. This issue raised by the revenue is purely legal and jurisdictional issue going to the root of the matter, we proceed to deal with it at the very outset.

We have heard the parties and perused the material available on record.

The Ld.DR vehemently supported the order of the Assessing-officer and submitted that the AO passed the order u/s 201(1)/201(1A) of the Act within prescribed time limit.

The Ld AR has submitted that the order passed by the AO was time barred by limitation. He has submitted that section 201(3) of the Act provides the time limit within which an order u/s 201(1) of the Act can be made. He has also submitted that the assessee has filed the TDS statement within time so the time limit for assessment is two years. The Ld. CIT (A) has rightly allowed the appeal by holding that the impugned order was time barred. He has relied upon the following judicial decisions ; 1. S.S. Gadgil Vs. Lal &Co. [1964 53 ITR 231(SC) 2. K.M. Sharma Vs. Income-tax-Officer [2002] 122 Taxman 426 (SC) 3. National Agricultural Co-operative Marketing Federation of India Ltd. v. Union of India [ 2003] 128 Taxman 361 (SC) 4. Tata Teleservices v. Union of India [2016] 385 ITR 497 (Gujarat)

Troikaa Pharmaceuticals Ltd. v. Union of India ( 68 taxmann.com 229) [2016] (Gujarat) 6. Sodexo SVC India Pvt. Ltd. v. DCIT [ 2018] 92 taxmnan.com 260 (Mumbai-Trib.)

As could be seen from a reading of the aforesaid provision, the only change which was effected from the earlier provision was the limitation period of four years in case of a deductor not filing TDS statement was extended to six years from four years. Whereas, in case of a person /deductor filing TDS statement, the limitation period of two years remained unchanged. The aforesaid sub section (3) of section 201 was again amended by Finance Act, 2014 w.e.f 1st October 2014 by substituting the earlier provision and earlier provision with a uniform limitation period of seven years from the end of relevant financial year wherein payments made or credit given was made applicable. If the legislature intended to apply the amendment provision of sub-section (3) retrospective it would definitely have provided such retrospective effect expressing in clear terms while making such amendment. In the case of Sodexo AVC India (P) Ltd. Vs Deputy Commissioner of Income Tax (TDS) 2(2) Mumbai [2018] 92 taxmann.com 260(Mumbai) the coordinate Bench held as under :- 6. We have heard the rival submissions and perused materials available on record in the light of the decisions cited. So far as fled statements of the issue is concerned, there is no dispute that in terms of Section 200(3), the assessee has field statements of TDS before the Department within the prescribed time. In fact, in the assessee has TDS before the Department within the prescribed time. In fact in the submissions made by the assessee as reproduced in Para 5.2 of the impugned order of the learned Commissioner (Appeals) the fact of filing of TDS statements by the assessee has been clearly brought out. Therefore, we have to proceed on the basis that in assessee’s case, the statements of TDS have been filed. Keeping the aforesaid factual position in view it is necessary to examine the relevant statutory provisions. Section 201 which lays down the consequences of failure to deduct tax at source or having deducted not remitted to the Government account, in its original form, did not provide any time limit for passing the order under sub- section (1) of section 201. Looking at the dispute arising out of proceedings being taken up and completed after lapse of substantial time in the absence of a time limit, the legislature through Finance Act, 2009, introduced sub- section (3) to section 201 providing limitation period of two years for passing the order under section 201(1) from the end of the financial year in which statement of TDS is filed by the deductor and in a case where no statement is filed the limitation was extended therefore expiry of four years from the end of financial year in which the payment was made or credit given. The aforesaid amendment was made effective from 1st April 2010. Subsequently, by Finance Act, 2012, sub-section (3) of section 201 was again amended with retrospective effect from 1st April 2010. The aforesaid amended provision reads as under:-

As could be seen from a reading period aforesaid provision, the only change which was effected from the 8. As could be seen the limitation period of four years in case of a deductor not filing TDS statement was extended to six years from four years. Whereas in of a person/deductor filing TDS statement, the limitation period of two years remained unchanged. The aforesaid sub-section (3) of section 201 was again amended by Finance Act, 2014 w.e.f. 1st October 2014 by substituting the earlier provision with the following :-

Thus, as could be seen from the aforesaid amended provision a uniform limitation period of seven years from the end of relevant financial year wherein payments made or credit given was made applicable. The issue before us is, whether the un-amended sub-section (3) which existed before introduction of amended sub- section (3) by Finance Act, 2014, will apply to assessee's case or not. It is the case of the assessee that, since, clause (1) of sub-section (3) of section 201 is applicable to the assessee and the limitation period of two years has expired by the time the provision was amended by Finance Act, 2014, the extended period of limitation of seven years as per the amended provision will not apply. Whereas, it is the case of the Department that the amended sub-section (3) brought into the statute by Finance Act, 2014, will apply retrospectively, hence, the impugned order passed by the Assessing Officer within the period of seven years is valid. It is a fact on record that by the time the amended provisions of sub-section (3) was introduced by Finance Act, 2014, the limitation period of two years as per clause (1) of sub-section (3) of section 201 (the un-amended provision) has already expired. The learned Commissioner (Appeals) has applied the amended provision of sub- section (3) of section 201 by referring to the objects for making such amendment and on the reasoning that the said provision being a machinery provision will apply retrospectively. However, on a careful perusal of the objects for introduction of the amended provision of sub- section (3), we do not find any material to hold that the legislature intended to bring such amendment with retrospective effect. If the legislature intended to apply the amended provision of sub-section (3) retrospectively it would definitely have provided such retrospective effect expressing in clear terms while making such amendment. This view gets support from the fact that while amending sub-section (3) of section 201 by Finance Act, 2012, by extending the period of limitation under sub-clause (ii) to six years, the legislature has given it retrospective effect from 1st April 2010. Since, no such retrospective effect was given by the legislature while amending sub-section (3) by Finance Act, 2014, it has to be construed that the legislature intended the amendment made to sub-section (3) to take effect from 1st October 2014, only and not prior to that. The Hon'ble Supreme Court in Vatika Township Pvt. Ltd. (supra) while examining the principle concerning retrospectivity of an amendment brought to the statutory provisions has observed that unless a contrary intention appears, a legislation is presumed not to be intended to have retrospective operation. The idea behind the rule is that a current law should govern current activities. Law passed today cannot apply to the events of the past. The Hon'ble Court observed, legislations which modified accrued rights or which impose obligations or imposes new duties or attach a new disability have to be treated as prospective unless the legislative intent is clearly to give the enactment a retrospective effect. It was observed, if a provision is not for the benefit of a community, but, imposes some burden or liability the presumption would be it will apply prospectively. The rule against retrospective operation is a fundamental rule of law that no statute shall be construed to have retrospective operation unless such a construction appears very clearly in the terms of the Act, or arises by necessary and distinct implication. Similar view has been expressed in the case of Reliance Jute and Industries Ltd. (supra) as well as Shah Sadiq & Sons (surpa). In case of Toto Teleservices (supra), which is directly on the issue of retrospective application of the amended sub-section (3) of section 201, the Hon'ble Gujarat High Court, after extensively dealing on the issue of retrospective applicability of the provisions and applying the principles laid down by the Hon’ble Supreme Court in a number of cases, held as under :- “15.00 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)(1) 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 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 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(1) 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."

Following the aforesaid decision of the Hon'ble Gujarat High Court in Troykaa Pharmaceuticals Ltd. (supro) again expressed the same view.

No contrary decision has been brought to our notice by the learned Departmental Representative. Therefore, considering the principle laid down by the Hon'ble Supreme Court in the decisions as well as the ratio laid down by the Hon'ble Gujarat High Court in the decisions referred to above which are directly on the- issue, we hold that the order passed under section 201(1) and 201(1A) having been passed after expiry of two years from the financial year wherein the TDS statements were filed by the assessee under section 200 of the Act, is barred by limitation, hence, has to be declared as null and void.

Before parting, we must put it on record that since we have decided the appeal on the issue of limitatior we have consciously restrained ourselves from touching upon the merits of the issue regarding applicability c section 194C of the Act which is left open to be decided if it arises in case of the assessee in any other assessment year.

In the result, assessee's appeal is partly

In the instant case the time limit for passing order u/s 201(1) of the Act pertaining to financial year 2010-11 where a statement u/s 200 of the Act has been filed was two years from the end of the financial year in which such statement was filed. It is evident from the order of the AO that the tax statement in the relevant form i.e. Form 26Q for F.Y. 2010-11 was filed by the assessee on 13-05-2011. The time limit for passing an order u/s 201(1) of the Act was up to 31-03-2014.The assessment order was completed on 28-03-2018 by the AO beyond the prescribed time limit. The sub-section (3) of the Section 201 of the Act does not applicable in this case.

For the foregoing reasons we find that the assessment was made by the AO was time barred has no leg to stand and the Ld. CIT(A) has rightly allowed the appeal. The appeal of the revenue is liable to be dismissed.

In the result, the appeal of the revenue is dismissed. Order pronounced in the open court on 14.11.2024.