INCOME TAX ACT,1961

Section-201(1)/(1A)

Tax deduction at source - Assessee-in-default - AO passed order under section 201(1)/(1A) - Bar of limitation

AO passed an order under section 201(1)/201(1A) raising demand and interest from assessee denying the exemption under section 10(5) for non-deduction of TDS on reimbursement towards Leave Travel Concession. Before CIT(A), assessee contended that as per provisions of section 201(3), the order should have been passed within the period of two years from the end of relevant financial year in which TDS statement was filed , but in his case order was issued after two years, hence, was time-barred. He further argued that while amending section 201 by Finance Act, 2014, it was specifically mentioned that the same shall be applicable prospectively with effect from 1-10-2014.Therefore,proceedings for relevant assessment years had become time-barred and/or for the relevant financial years, limitation under section 201(3)(i) had already expired much prior to the amendment made in section 201 and, therefore, no order could have been passed under section 201(1). Held: The issue was squarely covered in favour of the assessee by the order of the Tribunal in assessee's own case passed in (ITA No.2615/Del/2019 And ITA No.2616/Del/2019, dt. 30-8-2022) as in similar circumstances and for the similar period, the assessment order passed was held to be invalid as it was passed beyond the limitation period of two years. Following this,the assessment order passed in the present case relating to the assessment year 2011-12, on the same reasoning is beyond limitation period and void ab initio. While amending section 201 by Finance Act, 2014, it has been specifically mentioned by legislature that the same shall be applicable with effect from 1-10-2014. Section 201(3) as amended by Finance Act, 2014 shall not be applicable retrospectively and therefore, no order under section 201(3)(i) of the Act can be passed for which limitation had already expired prior to amended section 201(3) as amended by Finance Act, 2014. Hence, assessment order passed by AO was beyond limitation period of two years and therefore void ab initio.

Dy. CIT v. Oracle India Pvt. Ltd. (2016) 72 taxmann.com 138 (SC) : 2016 TaxPub(DT) 3681 (SC), Tata Teleservices v. Union of India (2016) 66 taxmann.com 157 (Guj) : 2016 TaxPub(DT) 1126 (Guj-HC) and Vodafone Cellular Ltd. v. DCIT (2018) 91 taxmann.com 466 (Pune)

REFERRED :

FAVOUR : In favour of the assessee

A.Y. : 2011-12

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