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Income Tax Appellate Tribunal, DELHI BENCH ‘G’, NEW DELHI
Before: SRI G.D. AGARWAL, HON’BLESRI C.M.GARG
PER C.M.Garg, J.M. This appeal by the Revenue has been filed against the order of the Commissioner of Income Tax (Appeals) – XXX New Delhi dated 26.08.2011 in first appeal no. 1316/11-12 for AY 2002-03.
The sole grounds raised
by the revenue reads as under :
1. On the facts and in the circumstances of the case as well as in law, the ld. CIT(A) has erred in (a) Deleting the demand raised u/s 201(1) on account of non- deduction of tax at source u/s 194H on non-cash payment to dealers treating the same as incentives and discounts. (b) in holding that the initiation of proceedings u/s 201 of the IT Act against the assessee in respect of FY 2001-02 was barred by Samsung India Electronics (P) Ltd. limitation having been initiated beyond a reasonable period of time of four years.”
We have heard argument of both the sides and carefully perused the relevant material placed on record before us, inter alia, impugned assessment order, first appellate order paper book of the assessee separate over 124 pages and copies of the decisions/ orders relied by the ld AR. The ld. Departmental Representative (DR) supporting action of the AO submitted that the assessee has not invoked the provision of section 194H of the Income Tax Act, 1961 (for short the Act) on the expenditure of Rs. 2,11,01,212/- on account of the cost of 75 vehicles provided to the dealers as incentive rewards then the assessee was rightly held as a assessee in default in respect of such tax payable to the department. The Ld DR strongly contended that the total amount of TDS liability and interest thereon u/s 201(1) and 201(1A) of the Act was rightly determined by the AO in this regard. The ld. DR challenging the relief granted to the assessee by the first appellate authority vehemently contended that the CIT(A) granted relief for the assessee without any reasonable basis merely on the surmises and conjectures. Therefore, impugned order may be set aside by restoring that of the AO.
Replying to the above the Ld. AR placing reliance on the decision of Hon’ble High Court of Delhi in the case of CIT vs. NHK Japan Broadcasting Corporation Ltd. 305 ITR 137(Delhi) and decision in the case of CIT vs. Hutchinson Essar Telecom Ltd. (2010) 323 ITR 230 (Delhi) submitted that when proceedings u/s 201(1)/201(1A) of the Act was initiated after 4 years from the end of relevant FY then the same are barred by limitation. The Ld. AR strongly supporting the conclusion of the CIT(A) submitted that the Revenue authorities have no power to pass an order beyond prescribed limit and in the present case order has been passed beyond 4 years and if the AO (TDS) is not taking any action within a reasonable time of 4 years from the end of relevant financial year then he should not open such old cases, where the assessee -
Samsung India Electronics (P) Ltd. company cannot get records/ information from the deductee/companies due to non-availibility of such old record.
The ld. DR also placed rejoinder to the above noted contentions of the Ld. AR on behalf of the revenue and she submitted that notice was issued to the assessee on 9.2.2011 for AY 2002-03 and no limitation has been fixed by the Act for initiation of proceedings u/s 201(1)/201(1A) of the Act. The Ld. DR pointed out that it is by the courts who have laid down 4 years and 6 years limitation without any basis, therefore, the CIT(A) was not justified in granting relief for the assessee. The ld DR also pointed out at the time of initiation of proceedings and issuance of notice to the assessee on 9.2.2011, there was specific information with the AO for this valid action therefore order of the CIT(A) also not sustainable on this count.
6. On careful consideration on rival submissions at the very outset, from the operative part of the impugned order of the first appellate authority. We observe that the CIT(A) granted relief to the assessee on merits with following conclusion and finding :-
“The issue no. 1 is reopening of case u/s 201(1)/ 201(1A) is decided by ITAT (SB), Pune Bench in the case of Mahindra & Mahindra vs. DCIT(2009) 313 ITR(AT) 263. As earlier, there was no time limit u/s 153/201(1)/201(1A), the various Courts had expressed the maximum limit should be 4 years for reopening a case, comparing the case with that of reopening a case u/s 148 of the I.T.Act. Again in this case there is no proceedings pending as on 01-4/2007 in this case. The National Distributors, Redistributors, Dealers in various places had filed their I.T. returns and paid taxes for A.Y.2002-03, hence creating a demand on appellant company in 2010-11 F.Y. under TDS provisions the department cannot collect tax again which might have been paid by dealers earlier. As the sales from appellant Company to NDs, RDs Dealer are from Principal to Principal according to recent decision of DHC in the case of Jaya Drinks(P) Ltd., the section 144-H on TDS on brokerage/Commission paid to agent for services on selling/buying
Samsung India Electronics (P) Ltd. goods for Principal company is not applicable here. TDS is like other advance tax provisions, for collection of tax from assesses in advance. If the AO(TDS) is not taking action within a reasonable time limit of four years, from the end of FY then the he should not reopen such old cases, where assessee company cannot get records/information from deductee companies, due to non- availability of such old records. The department should increase computerization process of TDS provisions so that AO (TDS) can verify from PAN of deductee companies, whether such payments and corresponding TDS are shown in their return or not. Hence the assessment order of AO is annulled.”
In the present case, undisputedly and admittedly the assessing officer initiated proceedings by way of issuing a letter / notice dated 09.02.2011 and thereby asking the assessee to show cause as to why it should not be treated as an assessee in default within the meaning of section 201(1) of the Act for AY 2002-03.
As per preposition laid down by Hon’ble Jurisdictional High Court of Delhi in the case of CIT vs. NHK Japan Broadcasting Corporation (Supra) the date of knowledge is not relevant for the purpose of exercising jurisdiction u/s 201(1)(1A) of the Act. Their lordship further held that the time limit of 4 years prescribed by the tribunal called for no interference and the action was to be initiated by the competent authority under the Act, where no limitation was prescribed, within the period of 4 years. Their lordship explicitly hold that the acceptance of liability by the assessee would not by itself extent the period of limitation nor it would extent the reasonable time that was postulated by the scheme of the Act and merely because the assessee had admitted its liability and agreed to pay tax voluntarily, the assessee could not be put in a situation worse then if it had contested its liability. This preposition was again reiterated by Hon’ble High Court of Delhi in the case of CIT vs. Hutchinson Essar Telecom Ltd. (Supra) wherein referring to its Samsung India Electronics (P) Ltd. earlier decision in the case of NHK Japan(Supra) their lordship held as follows :-
“4. We have examined the impugned decision as well as the decision of this Court in the case of NHK Japan Broadcasting Corporation (supra), wherein it has been clearly indicated that although no specific period of limitation has been prescribed or indicated under Section 201 and 201(A), a reasonable time limit has to be adopted. In that context, it examined the provisions of Section 153(1)(a) and came to the conclusion :-
"
In so far 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 assesement, which is two year 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 years. 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 purpose 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 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 much 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. Milk Producers Union Ltd. [2007] 9RC 637; 11SCC 363 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." (underlining added) 5. From the above, it is clear that the proceedings under Section 201/ 201(A) of the Income Tax Act, 1961 can be initiated only within three years from the end of 5 Samsung India Electronics (P) Ltd. the Assessment Year or within four years from the end of the relevant Financial Year.
In the present case, we are concerned with the Financial Year 2001-02 or the Assessment Year 2002-03. The proceedings under Sections 201/ 201(A) were admittedly initiated beyond the period of three years from the end of the relevant Assessment Year as also beyond the period of four years from the end of the Financial Year. Consequently, the Tribunal has correctly concluded that the proceedings were beyond time. No substantial question of law arises for our consideration. The appeals are dismissed.”
In view of above , we are inclined to hold that the present case of the assessee is also concerned with the FY 2001-02 pertaining to assessment year 2002-03 wherein notice for initiation of proceedings u/s 201(1) of the act was issued on 9.2.2011 which were admittedly initiated beyond eight years and 10 months from the end of FY 2001-02 and obviously much beyond the period of 3 years from the end of relevant assessment year and also beyond the period of 4 years from the end of relevant Financial Year 2001-02. In this situation, we are inclined to hold that the conclusion of the CIT(A) also gets strong support from the dicta laid down by the Hon’ble Jurisdictional High Court in the case of CIT vs. Hutchinson Essar Telecom Ltd. (Supra) and it was rightly concluded by the first appellate authority that impugned proceedings were beyond prescribed time limitation and thus the same deserve to be annulled. Therefore, we are unable to see any ambiguity, perversity or any other valid reason to interfere with the impugned order. Consequently, ground no. 1 (b) of the revenue being devoid of merits is dismissed.
Since by the earlier part of this order, we have dismissed ground of the revenue challenging the conclusion of the CIT(A), therefore, ground no. 1(a) of the revenue on merits becomes
Samsung India Electronics (P) Ltd. academic and we dismiss the same without any further deliberations having become infructuous. 11. In the result, the appeal of the revenue is dismissed. Order Pronounced in the Court on 19/02/2016.