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Income Tax Appellate Tribunal, ‘B’ BENCH LUCKNOW
Before: HON’BLE SHRI G. D. PADMAHSHALI & SHRI SUBHASH MALGURIA
IN THE INCOME TAX APPELLATE TRIBUNAL, ‘B’ BENCH LUCKNOW BEFORE HON’BLE SHRI G. D. PADMAHSHALI, ACCOUNTANT MEMBER AND SHRI SUBHASH MALGURIA, JUDICIAL MEMBER आयकर अपील सं. / ITA No.186/LKW/2022 निर्धारण वर्ा / Assessment Year : 2011-12 State Bank of India Zonal Office, The Mall Road, Kanpur, UP-208001 TAN: KNPS02318B . . . . . . . अपीलार्थी / Appellant बिधम / V/s. Dy. Commissioner of Income Tax, TDS, Kanpur . . . . . . . प्रत्यर्थी / Respondent & आयकर अपील सं. / ITA No.187/LKW/2022 निर्धारण वर्ा / Assessment Year : 2011-12 State Bank of India Overseas Branch, 15/54B, Civil Lines, Kanpur, UP-208001 TAN: KNPS01627D . . . . . . . अपीलार्थी / Appellant बिधम / V/s. Dy. Commissioner of Income Tax, TDS, Kanpur . . . . . . . प्रत्यर्थी / Respondent द्वधरध / Appearances Assessee by : None for the Assessee Revenue by : Mr SK Sharma [‘Ld. DR’] सुनवाई की तारीख / Date of conclusive Hearing : 09/07/2024 घोषणा की तारीख / Date of Pronouncement : 09/07/2024 आदेश / ORDER Per G. D. Padmahshali, AM; These twin appeals of the assessee are assailed against the separate DIN & Order No. ITBA/NFAC/S/250/2022-23/1045081675(1) & 1045081558(1) both dt. 31/08/2022 orders passed u/s 250 of the Income Tax Act [‘the Act’ in short] by the National Faceless Appeal Centre, Delhi [‘NFAC’ in short] confirming the order dt. 21/03/2018 passed u/s 201(1) & 201(1A) of the Act by the Dy. Commissioner of Income Tax Circle-51(1), Nagpur [‘AO’ hereinafter] anent to assessment year 2011- 12 [‘AY’ hereinafter]
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State Bank of India Vs DCIT(TDS) ITA No.186 & 187/LKW/2022 AY:2011-12 2. These appeals were called twice, none appeared at the bequest of appellant. In the absence of request for adjournment, on the basis of primary briefing from the Ld. DR we deem it to proceeded to adjudicate the matter ex-parte u/s 24 of the Income Tax Appellate Rules, 1963. [‘ITAT-Rules’] with the able assistance from the Revenue. Proceeded accordingly. Since facts and threadbare issue involved in this bunch of appeals are common & identical, on the request from Revenue, for the sake of brevity these are heard together for a common and consolidated order.
Tersely stated the common facts emanating from case records are that; 3.1 The assessee is a Zonal office & Overseas branch of State Bank of India a Public Sector Banking Company viz; owned by Central Government of India. On the basis of information available on record, in order to ascertain the compliance provisions of Chapter XVII i.e. deduction of taxes at source [‘TDS’ hereinafter] in relation to foreign Leave Travel Concession [‘LTC’ hereinafter] / Leave Fair Concession [‘LFC’ hereinafter] the Ld. AO called upon the assessee to showcase as to why assessee be not treated as ‘assessee in default’ for failure to deduct TDS in relation to aforestated LTC/LFC granted/reimbursed to its employee.
3.2 Considering the nature of non-compliance and submission of the assessee thereagainst, separate orders u/s 201(1) & 201(1A) of the Act was passed holding both these assessee as ‘assessee in default’ for failure to deduct TDS from the payment/reimbursement of LTC/LFC to its employees etc. This action exposed both these assessee to a demand of ₹15,38,728/- & ₹2,53,969/- respectively representing cumulatively sum levied for short deduction charges u/s 201(1) and interest u/s 201(1A) of the Act levied on such account.
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State Bank of India Vs DCIT(TDS) ITA No.186 & 187/LKW/2022 AY:2011-12 3.3 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.
3.4 Aggrieved by the order of Ld. NFAC, these assessees 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.
At the outset of hearing, the Ld. DR Mr SK Sharma on the point of limitation solidifying the facts of the case 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 2011-12 wherefore the order was passed on 21/03/2018 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. The assessee therefore deserves no relief on the ground of limitation.
We have heard the 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.
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 2010-11?’ And if answer to it is in affirmative colour, then we have to
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State Bank of India Vs DCIT(TDS) ITA No.186 & 187/LKW/2022 AY:2011-12 travel on merits and other grounds of appeal. If it is 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 2010-11 i.e. in relation to AY 2011-12.
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:
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 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.
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State Bank of India Vs DCIT(TDS) ITA No.186 & 187/LKW/2022 AY:2011-12 10. 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 LTC/LFC was paid/reimbursed by the assessee bank/branch. 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 21/03/2018 is barred by limitation. However, if FA-2014 substitution provisions of limitation are applied, then the impugned order passed on 21/03/2018 falls well within the recasted period of seven years from the end of the financial year 2010-11 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 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 financial year anterior thereto. ITAT-Lucknow Page 5 of 6
State Bank of India Vs DCIT(TDS) ITA No.186 & 187/LKW/2022 AY:2011-12
11.1 A similar view can also be traced in the decision of Co-ordinate benches in ‘Life Style International Pvt Ltd. Vs ACIT’ [2022, 141 Taxmann.com 559] & ‘Aero Club Vs DCIT’ [2023, 149 Taxmann.com 339] and Co-ordinate bench in ITA No. 337/NAG/2022 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 that the order passed u/s 201(1) r.w.s. 201(1A) of the Act is barred by limitation.
In view of aforestated discussion, we hold that the impugned orders dt. 21/03/2018 passed by the Ld. AO in relation to financial 2010-11 is beyond the time limit stipulated u/c (i) of s/s (3) of section 201 of the Act and are time barred, hence quashed. In the absence of existence of any valid orders u/s 201(1)/201(1A) of the Act, the proceedings flowing therefrom also get annulled. We, therefore, overturn the impugned orders by which the assessees were held to be ‘assessee in default’ in terms of section 201 of the Act. The acceptance of legal ground raised in this bunch of appeal render all other grounds academic in nature, hence not dealt with.
These twin appeals of the assessee in result stands ALLOWED. In terms of rule 34 of ITAT Rules, the order pronounced in the open court on this Tuesday, 09th day of July, 2024
-S/d- -S/d- SUBHASH MALGURIA G. D. PADMAHSHALI JUDICIAL MEMBER ACCOUNTANT MEMBER Lucknow ; दिनाांक / Dated : 09th day of July, 2024 आदेश की प्रनिनलनप अग्रेनर्ि / Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant. 2. प्रत्यर्थी / The Respondent. 3. The CIT(A)-NFAC, Delhi (India) 4. The Concerned CIT 5. DR, ITAT, Bench ‘B’, Lucknow 6. गार्डफ़ाइल / Guard File. आिेशानुसार / By Order, A आयकर अपीलीय न्यायादिकरण, पुणे / ITAT, Lucknow
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