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Income Tax Appellate Tribunal, “D” BENCH : KOLKATA
Before: Hon’ble Shri M.Balaganesh, AM & Hon’ble Shri S.S.Viswanethra Ravi, JM]
ORDER Per M.Balaganesh, AM
These appeals by the Assessee arise out of the separate orders of the Learned Commissioner of Income Tax(Appeals)-24, Kolkata [in short the ld CIT(A)] in Appeal Nos.1549/CIT(A)-24/(2003-04)/2014-15 and 1550/CIT(A)-24/(2004-05)/2014-15 dated 10.03.2015 against the order passed by ITO(TDS), Ward-57(1), Kolkata[ in short the ld AO] under section 201(1)/201(1A) of the Income Tax Act, 1961 (in short “the Act”) dated 29.01.2016 for the Assessment Years 2003-04 and 2004-05 respectively. Since the identical issue involved in these appeals, they are taken up together and disposed off by this common order for the sake of convenience.
2 & 937/Kol/2015 Aarambh Advertising & Marketing Ltd. A.Yrs. 2003-04 & 2004-05 2. The only common issue involved in these appeals is as to whether the ld CITA was justified in not treating the order passed by the ld AO u/s 201(1A) of the Act as time barred in the facts and circumstances of the case.
The brief facts of this issue are that the assessee is a company regularly assessed to income tax and has been duly complying with the provisions of Chapter XVII B of the Act with regard to deduction and remittance of tax thereon to the account of the Central Government. Due to certain financial hardships faced by the assessee during the financial years ended 31.3.2003 and 31.3.2004, the assessee having deducted the tax at source had remitted the same to the account of the Central Government with some delay. The ld AO sought to levy interest u/s 201(1A) of the Act for the said delay. In this regard, the ld AO issued notice u/s 201/201(1A) of the Act on 24.8.2010 for the Asst Years 2003-04 and 2004-05. The assessee gave the explanation and objection to levy of interest u/s 201(1A) of the Act vide its letter dated 1.2.2011 for both the asst years under appeal. The ld AO ultimately passed order u/s 201(1A) of the Act on 21.3.2011 raising a demand of Rs 27,276/- and Rs 39,624/- towards interest u/s 201(1A) of the Act for the Asst Years 2003-04 and 2004-05 respectively.
The assessee before the ld CITA pleaded that the proceedings u/s 201(1A) of the Act were triggered by issuance of notice thereon only on 24.8.2010, which was beyond the reasonable period from the end of the relevant financial year. It was stated that there was no time limit stipulated in the statute in section 201 of the Act for raising a demand thereon prior to 1.4.2010. It was only with effect from 1.4.2010, the provisions of section 201(3) was introduced to include the time limit within which such order could be passed. Upto 31.3.2010, there was no time limit stipulated in the statute. Hence it was pleaded that in this scenario, for the years falling within the period prior to 2
3 & 937/Kol/2015 Aarambh Advertising & Marketing Ltd. A.Yrs. 2003-04 & 2004-05 31.3.2010, the courts have held that the order should be passed within a reasonable period of time. On the contrary, the revenue contended that there is no time limit stipulated in the statute upto 31.3.2010 for framing of order u/s 201(1A) of the Act and hence the order passed on 21.3.2011 for the Asst Years 2003-04 and 2004-05 is valid in law and cannot be treated as barred by limitation. The revenue placed reliance on the decision of Hon’ble Jurisdictional High Court in the case of M/s Bhura Exports Ltd vs ITO reported in 13 taxmann.com 162 (Cal) dated 30.8.2011 wherein it was held that where no period of limitation is prescribed under a statute for taking action, there cannot be any prohibition of the period of limitation for taking action under the statute. Relying on this decision, the ld CITA upheld the action of the ld AO. Aggreived, the assessee is in appeal before us.
The ld AR argued that the decision of Hon’ble Jurisdictional High Court supra had been duly considered and distinguished by the Hon’ble Bombay High Court in the case of DIT (International Taxation) vs Mahindra & Mahindra Ltd reported in 48 taxmann.com 150 (Bom) dated 3.7.2014 wherein they had affirmed the special bench decision of Mumbai Tribunal in the case of Mahindra & Mahindra Ltd reported in 122 ITD 216 (Mum.) (SB) and the decision of Hon’ble Delhi High Court in the case of CIT vs NHK Japan Broadcasting Corporation reported in 305 ITR 137 (Del). Accordingly he argued that the issue is to be decided in favour of the assessee. In response to this, the ld DR vehemently supported the order of the ld CITA and the decision of the Hon’ble Jurisdictional High Court supra.
We have heard the rival submissions and perused the materials available on record. There is no dispute that the assessee had duly deducted the required tax at source and remitted the same to the account of the Central Government. The only mistake 3
4 & 937/Kol/2015 Aarambh Advertising & Marketing Ltd. A.Yrs. 2003-04 & 2004-05 committed by the assessee was that the said tax deducted was remitted beyond the respective due dates prescribed under Chapter XVII B of the Act read with relevant rules thereon. There is no dispute with regard to the quantification of interest u/s 201(1A) of the Act. We find that the Hon’ble Bombay High Court in the case of Mahindra & Mahindra Ltd supra had held that eventhough the statute does not provide for any time limit for taking action under section 201 of the Act, the same should be taken within a reasonable period of time. What is reasonable period of time is to be imported from the other provisions of the Act such as section 147 or section 153 etc. Based on this, the ld AR argued that accordingly reasonable period could be assumed at 4 years from the end of the relevant financial year and hence the proceedings initiated on 24.8.2010 was much beyond the reasonable period of 4 years and accordingly the order passed u/s 201(1A) of the Act is to be treated as barred by limitation. In this regard, we find that the provisions of section 201(3) of the Act has been introduced only with effect from 1.4.2010. We are not inclined to agree with the alternative argument advanced by the ld AR that the amendment brought with effect from 1.4.2010 need to be construed as retrospective in operation in as much as there is a specific provision in the statute for substantive levy of tax and interest by way of an independent order thereon which cannot be construed as retrospective in operation. It is well settled that any substantive law could only have to be construed as prospective in nature. Reliance in this regard is placed on the decision of the Hon’ble Supreme Court in the case of CIT vs Vatika Township P Ltd reported in 367 ITR 466 (SC). Now the short point of dispute that arises for our consideration is when there is no time limit prescribed in the statute for taking action under the law, can the said action be taken at any point of time by the revenue. The ld DR argued that the charging of interest u/s 201(1A) of the Act is automatic when there is a default in non-remittance or delayed remittance of tax deducted at source. This is done based on the principle of unjust enrichment i.e the assessee should not be unjustly enriched by the legitimate monies belonging to the exchequer and at the same time, the exchequer should be duly compensated for not 4
5 & 937/Kol/2015 Aarambh Advertising & Marketing Ltd. A.Yrs. 2003-04 & 2004-05 getting its legitimate dues in time from the assessee due to default committed by the assessee. We find that the Hon’ble Supreme Court in the case of Hindustan Coca Cola Beverages Ltd reported in 293 ITR 226 (SC) had held that if the payee had disclosed the subject mentioned transaction as his receipts and in his return, then the assessee payer should not be treated as assessee in default u/s 201 of the Act. Even in that scenario, the assessee would be eligible to be levied with interest u/s 201(1A) of the Act till the date of payment of taxes by the payee thereon. Hence when the assessee payer himself delays the remittance of TDS which has been deducted by it, there is no reason why the interest u/s 201(1A) of the Act should not be charged on it. Looking into the facts of the case from this angle and by placing reliance on the decision of the Hon’ble Jurisdictional High Court in the case of Bhura Exports Ltd supra , which is binding on us, we hold that when there is no time limit stipulated in the statute for passing an order u/s 201(1A) of the Act upto 31.3.2010. for all the assessment years falling prior to 31.3.2010, the order could be passed at any time by the ld AO . Accordingly, we do not deem it fit to interfere in the order of the ld CITA in this regard. Accordingly, the grounds raised by the assessee are dismissed.
In the result, the appeals of the assessee are dismissed.
Order pronounced in the Court on 06.07.2018