S3 INFRAREALITY PRIVATE LIMITED,DELHI vs. INCOME TAX OFFICER,TDS WARD 77(1), DELHI

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ITA 2487/DEL/2025Status: DisposedITAT Delhi08 October 2025AY 2015-16Bench: SHRI YOGESH KUMAR US, JUDICIAL MEMBER, SHRI NAVEEN CHANDRA (Accountant Member)4 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that proceedings under Section 201(1) must be initiated within a reasonable time limit, as established by the Delhi High Court. The order passed against the assessee was beyond the four-year limitation period, rendering it invalid.

What were the facts?

The assessee's appeal was against the order of the JCIT upholding the disallowance under Section 201(1) for non-deduction of TDS on External Development Charges. The assessee did not appear, and the appeal was decided based on the DR's arguments and case records.

What were the issues?

Whether the order passed under Section 201(1) for non-deduction of TDS was time-barred as per the Delhi High Court's ruling on limitation periods for initiating such proceedings.

Which sections of the Income-tax Act were involved?

Section 201(1),Section 201

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI ‘B’ BENCH,

Before: SHRI YOGESH KUMAR US, & SHRI NAVEEN CHANDRA

For Respondent: Shri Rajesh Kumar Dhanesta, Sr. DR
Hearing: 22.09.2025Pronounced: 08.10.2025

PER NAVEEN CHANDRA, ACCOUNTANT MEMBER:-

1.

This appeal by the assessee is preferred against the order of the JCIT, Ahmedabad dated 21.02.2025 for A.Y 2015-16.

2.

The solitary grievance of the assessee in this appeal is that the ld. CIT(A) has upheld the disallowance u/s 201(1) of the Income-tax Act, Development Charges paid to DTCP.

3.

None appeared on behalf of the assessee. We decided to proceed ahead with the assistance of the ld. DR. The ld. DR was heard at length and the case records were carefully perused. At the very outset, the ld. counsel for the assessee stated that

4.

The brief facts of the case are that the order u/s 201(1) was made on 25.02.2022 which was for A.Y 2015-16. We find that the Hon'ble Jurisdictional High Court in the case of NHK Japan Broadcasting Corporation reported in [2008] 172 taxmann.com 230 [Del] found that the power to initiate Section 201 proceedings is drastic and therefore requires a reasonable time limit. The court established a four-year reasonable period for initiating such proceedings, a finding that was based on Supreme Court precedents like the State of Punjab v.

Bhatinda District Co-op Milk Producers Union Ltd case. This decision meant that any proceedings under Section 201 that were initiated more than four years after the default occurred were considered time-barred and could be set aside. The hon’ble Delhi High Court held that date of knowledge is not relevant for the purpose of exercising jurisdiction so far as provisions of the Act are concerned.

Page 2 of 4 passed on 21.02.2025. In accordance with the above referred decision of the Hon'ble Delhi High Court, any action u/s 201(1) of the Act should have been made within 4 years of the infringement of the provisions of section 201 of the Act. In that view of the matter, the order u/s 201(1) of the Act is considered as passed beyond the limitation period as defined by the Hon'ble Delhi High Court rendering the same as invalid and not permissible in law. Accordingly, the order u/s 201(1) of the Act is considered as invalid and set aside. Grounds of appeal raised by the assessee are allowed. allowed.

The order is pronounced in the open court on 08.10.2025.

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