THE DISTRICT MAGISTRATE,BADAUN vs. ITO(TDS), MORADABAD

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ITA 3483/DEL/2019Status: DisposedITAT Delhi24 May 2023AY 2009-104 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 while no specific limitation period is prescribed in the Act for orders under Section 206C, a reasonable period of limitation should be applied. Following previous decisions, a period of four years from the end of the assessment year was considered reasonable.

What were the facts?

The assessee, the District Magistrate, appealed against an order passed by the Income-tax Officer (TDS) under Section 206C(1C)/206C(6A) for AY 2009-10. The primary contention was that the assessment order was barred by limitation.

What were the issues?

Whether an order passed under Section 206C(1C)/206C(6A) is invalid if passed beyond a reasonable period of limitation, even if no specific period is prescribed in the Act.

Which sections of the Income-tax Act were involved?

Section 206C(1C),Section 206C(6A)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH “B ”: NEW DELHI

Before: SHRI ANIL CHATURVEDI & SHRI ANUBHAV SHARMA

Hearing: 18.05.2023Pronounced: 24.05.2023

O R D E R PER ANUBHAV SHARMA, JM: The assessee has come in appeal against the order dated 20.01.2019 passed by the Commissioner of Income Tax (Appeals), Moradabad (hereinafter referred as “learned First Appellate Authority” or in short “FAA”) for the assessment year 2009-10, arising out order dated 29.03.2016 u/s 206C(1C)/206C(6A) of the Income-tax Act, 1961 (hereinafter referred as the “Act”), passed by the Income-tax Officer (TDS), Moradabad (hereinafter referred in short as “Ld. AO”).

2.

Heard and perused the record.

3. At the time of final hearing learned AR submitted that on behalf of the assessee he is making a statement by way of endorsement on the appeal memo that except for ground no. 2 the other grounds are not pressed. Accordingly, ground no. 2 is reproduced below:

“2. Because, on the facts and in the circumstances of the case, the impugned order passe4d by the Ld. CIT(A), confirming the order of ITO (TDS) u/s 206C(6A) of the Income Tax Act is unsustainable and bad in law since the assessment order is itself barred by limitation.

3.

In this context learned DR submitted that when no limitation is prescribed under the Statute, then the AO was justified to pass the impugned order. However, what transpires is that the order passed by the AO u/s 206C(1C)/206C(6A) of the Act is with regard to A.Y. 2009-10 and order was passed on 29.3.2016. In the Act there is no specific period, however, as every assessee is entitled to be sure of the assessment and its consequential effect, the principles of natural justice require assuming a reasonable period of limitation for passing order and the Coordinate Bench in the case of District Magistrate, Bijnor Vs. ITO in vide order dated 24.03.2023 has also acknowledged the aforesaid observation of the Bench and has held in similar facts and circumstances as follows:

6.

Heard rival submissions, perused the orders of the authorities below. The question as to whether in the absence of any specific time period specified in the Act can an order be passed u/s 206 of the Act at any time or there should be a reasonable limitation of time has been considered by various High Courts and the Jaipur Bench of the Tribunal in I.T.A.No.7985/Del/2019 5 the case of Eid Mohammad Nizamuddin vs. ITO(TDS-III) in dated 29.08.2018 considered identical issue and after examining various decisions of the High Court on the issue held as under: “Thus, a consistent view has been taken by the various Hon'ble High Courts on this issue that when no limitation is provided in the statute then a period of four years is considered as reasonable for passing the order U/s 201(1)/201(1A) of the Act. The provisions of Section 206C of the Act are analogous and a measure for compliance of collection of tax at source as a similar measure for compliance of deduction of tax at source is provided U/s 201 of the Act. The department has accepted those decisions and consequently brought amendment to the provisions of Section 201 and thereby provided the limitation for passing the orders U/s 201(1)/201(1A) of the Act which was inline with the view taken by the Hon'ble High Courts on this issue. Though, subsequently an amendment vide Finance Act, 2014 was again brought in the said provisions of Section 201 enlarging the period of limitation, however, the said amendment is not retrospective. Accordingly, the liability of tax collected at source is also a vicarious liability of the assessee to assist the department in the measure to avoid any possibility of tax avoidance by the persons with whom the specific transactions have been entered into by the assessee. Therefore, in our considered opinion, the analogy and reasoning given in the decisions of various Hon'ble High Courts cited supra in respect of the limitation for passing the order U/s 201 of the Act, is also applicable for considering the reasonable time period for passing the order U/s 206C of the Act. The provisions of Section 201 and 206C of the Act are having same scheme and object being the measures against the avoidance of tax by the parties with whom the assessee had the transactions. Hence, applying the reasonable period of limitation as four years within which the Assessing Officer could pass the order U/s 206C(6)/206C(7) of the Act, we hold that the impugned order passed by the Assessing Officer on 30/3/2016 is beyond the said reasonable period of limitation and consequently is invalid being barred by limitation. Accordingly, we quash the impugned order passed U/s 206C(6)/206C(7) of the Act.” I.T.A.No.7985/Del/2019 .

7.

Similar view has been taken by the Lucknow Bench of ITAT in the case of The District Magistrate District Mining Officer vs. ITO(TDS) in ITA Nos. 243 to 246/Lkw/2019 dated 16.12.2020 following the decision of the Jaipur Bench of the Tribunal. In the case on hand admittedly the order u/s 206C(1C)/206C(6A) assessment year 2009-10 was passed on 29.03.2016 which is admittedly beyond

2009-10. Applying the ratio of the above decision of the Jaipur Bench and Lucknow Bench, we hold that the order passed by the ITO(TDS), Moradabad u/s 206C(1C)/206C(6A) dated 29.03.2016 is barred by limitation and the same is quashed. 8. Ground no. 2 of grounds of appeal is allowed.”

4. In the light of aforesaid, the Bench is inclined to allow Ground No. 2 as raised and the appeal of the assessee is allowed.

Order pronounced in open court on 24.05.2023.

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