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Income Tax Appellate Tribunal, NAGPUR BENCH, NAGPUR
Before: HON’BLE SHRI S. S. GODARA & SHRI G. D. PADMAHSHALI
बिधम / V/s Asstt./Dy. Commissioner of Income Tax TDS Circle-51(1), Nagpur. . . . . . . . प्रत्यर्थी / Respondent द्वधरध / Appearances Assessee by : Mr Pratik Sadrani [‘Ld. AR’] Revenue by : Mr Abhay Marathe [‘Ld. DR’] Date of conclusive Hearing : 22/03/2024 Date of Pronouncement : 22/04/2024 आदेश / ORDER PER G. D. PADMAHSHALI, AM; The present appeal is instituted u/s 253(1)(a) of the Income-tax Act, 1961 [‘the Act’ hereinafter] against the DIN & Order No. ITBA/NFAC/S/250/2022-23/104772696(1) dt. 30/11/20222 passed u/s 250 of the Act by National Faceless Appellate Centre, Delhi [‘NFAC’ hereinafter] confirming the order dt. 31/03/2020 passed u/s 201(1) & 201(1A) of the Act by the Asstt./Dy. Commissioner of Income Tax Circle-51(1), Nagpur [‘AO’ hereinafter] anent to assessment year 2013-14 [‘AY’ hereinafter]
Tersely stated facts of the case are; ITAT-Nagpur Page 1 of 6
Bank of India AY:2013-14 2.1 The assessee is a Zonal office of Bank of India a Public Sector Banking Company viz; owned by Central Government of India. To ascertain the compliance provisions of Chapter XVII i.e. deduction of taxes at source [‘TDS’ hereinafter] a spot verification on the assessee was conducted in March, 2016. During the course of such spot verification certain discrepancies in compliance were noted. Considering the nature of non-compliance and submission of the assessee thereagainst, an order u/s 201(1) & 201(1A) of the Act was passed holding the assessee as ‘assessee in default’ for failure to deduct TDS from the payment of interest to its customers/clients etc. This action exposed the assessee to a demand of ₹2,17,686/- comprising of ₹79,908/- the amount of TDS remained to be deducted by the assessee from the interest payment and balance ₹1,37,778/- representing interest levied u/s 201(1A) of the Act on such account.
2.2 Aggrieved assessee unsuccessfully contested the recovery of non-deducted TDS and imposition of interest in appeal before Ld. NFAC u/s 246A(1)(ha) of the Act.
2.3 Aggrieved by the order of Ld. NFAC, the assessee came in present appeals with as many as nine argumentative grounds which prima-facie appeared to be not in consonance with rule 8 of Income Tax Appellate Tribunal Rules, 1963 [‘ITAT-Rules’ hereinafter]. For the reason we deem re-production thereof unnecessary for the purpose of adjudicating the matter on the sole ground of limitation.
During the course of virtual hearing, adverting to timelines Ld. AR submitted that, both the time limit of two year u/c (i) & four years u/c (ii) of s/s (3) of section 201 of the Act for passing the order for the financial year 2012-13 were expired on ITAT-Nagpur Page 2 of 6
Bank of India AY:2013-14 31/03/2015 & 31/03/2017 respectively. The impugned order u/s 201(1)/(1A) in the present case however was passed on 31/03/2020 which is much later hence making it time barred. To drive home this contention the Ld. AR pressed into service the order of Co-ordinate bench in dt. 23/08/2023 and ITA No. 153/NAG/2022 dt. 09/06/2022 wherein the issue of limitation was adjudicated in relation to AY 2009-10 & 2010-11 holding the order passed u/s 201(1) r.w.s. 201(1A) of the Act is barred by limitation. It is therefore prayed that, applying the decision of Co-ordinate bench, the appeal may to be allowed.
Per contra, the Ld. Mr Marathe solidifying the facts vehemently argued that, the Finance (No.2) Act, 2014 [‘FA-2014’ hereinafter] has substituted s/s (3) of section 201 w.e.f. 01/10/2014 thereby dispensed with the classification of filing & non-filing of statement and thus provided for single time limit of seven years for passing an order u/s 201 of the Act. Since the present case relates to FY 2012-13 wherefore the order was passed on 31/03/2020 which is well within the time limit of seven years as stipulated under the substituted provision of s/s (3) of section 201 of the Act. Since the facts of the present case are dissimilar to the issue adjudicated by the co-ordinate bench (supra) hence decision/adjudication laid therein cannot be applied to the year under consideration. The assessee therefore deserves no relief on the ground of limitation.
We have heard rival parties’ submissions on the issue of limitation and subject to the provisions of rule 18 of ITAT-Rules perused the material placed on record and considered the facts of the case in the light of settled law.
ITAT-Nagpur Page 3 of 6
Bank of India AY:2013-14
On the issue of limitation, the sole question arises for our consideration ‘as to whether amended provision of s/s (3) of section 201 of the Act is applicable to financial year 2012-13?’ And if answer to it is in affirmative colour, then we have to travel on merits and other grounds of appeal. If it otherwise, then delving deeper into merits of the case would be unwarranted. Therefore, we shall first consider the applicability of substituted provisions of s/s (3) of section 201 of the Act for the financial year 2012-13 i.e. in relation to AY 2013-14.
7. S/s (3) sets the time clock for passing of the order u/s 201, the relevant part thereof as it was in force prior to its substitution by FA-2012 & FA-2014 stood as; ‘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— (i) two years from the end of the financial year in which the statement is filed in a case where the statement referred to in section 200 has been filed; (ii) four years from the end of the financial year in which payment is made or credit is given, in any other case: 8. From the aforestated provision it transpires that, the order u/s 201(1), deeming a person to an ‘assessee in default’, has two limbs. The cases where statement u/s 200 is filed the time limit for passing order two years is governed by clause (i) and in other cases where statement is not filed the time limit of four year is regulated by clause (ii).
This s/s (3) of section 201 the Act was first amended on 28/05/2012 by the Finance Act, 2012 [‘FA-2012’] w.r.e.f. 01/04/2010 whereby the limitation was substituted from four years to six years for passing of the order where the TDS statement had not been filed u/c (ii). However, the limitation of two years prescribed ITAT-Nagpur Page 4 of 6
Bank of India AY:2013-14 u/c (i) continued in cases where the statement is filed. Subsequently doing away with classification this time limit u/s (3) stands substituted by FA-2014 w.e.f. 01/10/2014 thus stands extended to a period of seven years from the end of relevant financial year in which payment is made or credit is given.
We have the first limb applicable before us, where the quarterly statements were filed by the assessee but tax was not deducted from the payees to whom interest was paid. Going with the prescription of clause (i) i.e. FA-2014 pre- substitution provision, no order u/s 201(1)/(1A) could be made after the expiry of two years from the end of the relevant financial year in which the statement was filed. To put it simply, once it is on record that the statement is filed by the assessee the time limit available for passing an order u/s 201(1)/(1A) shall be as stipulated u/c (i) of s/s (3) of section 201 of the Act. That is to say, by application of pre- substitution provisions the order passed on 31/03/2020 is barred by limitation. However, if FA-2014 substitution provisions of limitation are applied, then the impugned order passed on 31/03/2020 falls well within the recasted period of seven years from the end of the financial year 2012-13 wherein the default of non- deduction of TDS were occurred & identified by the respondent Revenue.
The amendment brought in by FA-2014 came into force on 01/10/2014 without prescribing for retrospective operation unlike FA-2012. This shows that the financial year which is already ended before the amended provision came into effect the time limit for passing the order u/s 201(1)/201(1A) shall be the one which was pre-existed as at the financial year i.e. two years and six years as governed by respective pre-amened clause (i) and (ii) of s/s (3) of section 201 of the Act. A ITAT-Nagpur Page 5 of 6
Bank of India AY:2013-14 subsequent amendment to the provision cannot give a new lease of life to the time limit to the financial year which has already passed away or ended. That is to say the recasted period of seven years for passing an order u/s 201(1)/201(1A) shall only be made available in relation to financial year 2014-15 and subsequent financial year and not to any year anterior thereto. A similar view can also be traced in the decision of Co-ordinate benches in ‘LifeStyle International Pvt Ltd. Vs ACIT’ [2022, 141 Taxmann.com 559] & ‘Aero Club Vs DCIT’ [2023, 149 Taxmann.com 339].
In view of aforestated discussion, we hold that the order dt. 31/03/2020 passed by the Ld. AO in relation to financial 2012-13 is beyond the time limit stipulated u/c (i) of s/s (3) of section 201 of the Act and is time barred, hence quashed. In the absence of the existence of any valid orders u/s 201(1)/201(1A), the proceedings flowing therefrom also get annulled. We, therefore, overturn the impugned order holding the assessee to be ‘assessee in default’ in terms of section 201 of the Act.
In result, the appeal of the assessee stands ALLOWED. In terms of rule 34 of ITAT Rules, the order pronounced in the open court on this Monday, 22nd day of April, 2024.