By K. B. Bhujle, Advocate
New Page 1
31 TDS : Consequences of failure :
Limitation : Ss. 153, 201(1), (1A) of Income-tax Act, 1961 : A.Y. 1990-91 :
Period of limitation not prescribed : Reasonable period is 4 years : Proceedings
initiated in 1999 for A.Y. 1990-91 : Barred by limitation.
[CIT v. NHK Japan Broadcasting Corporation, 305 ITR
137 (Del.)]
The assessee is a Government-company of a foreign country and
is carrying on the business in India. In respect of its employees in India it
pays salary in Indian Rupees and also pays something called ‘global salary’ to
the employees in the home country. In respect of the salary paid to the
employees in India, the assessee deducted tax at source, but with respect to the
global salary, the assessee did not deduct tax at source. On November 19, 1998,
a survey was conducted by the Revenue in the premises of the assessee and these
facts came to light for the first time. The assessee did not dispute its
liability to deduct tax at source in respect of global salary and the tax due
thereon was paid by the assessee and interest was also paid. In December 1999,
the Assessing Officer issued show-cause notice, and thereafter passed an order
treating the assessee as being in default for the purposes of S. 201 of the
Income-tax Act, 1961. The Tribunal cancelled the order holding that the
proceedings have not been initiated within a reasonable period of time.
The Delhi High Court dismissed the appeal filed by the
Revenue and held as under :
“(i) There is no dispute that S. 201 of the Act does not
prescribe any limitation period for the assessee being declared as an assessee
in default.
(ii) S. 153(1)(a) prescribes the period of two years from
the end of the assessment year for completing the assessment. Therefore, the
time limit would be three years from the end of the financial year. Even
though the period of three years would be a reasonable period as prescribed by
S. 153 of the Act for completion of proceedings, we have been told that the
Income-tax Appellate Tribunal has, in a series of decisions taken the view
that four years would be the reasonable period of time for initiating action
in a case where no limitation is prescribed. The rationale for it seems to be
quite clear — if there is a time limit for completing the assessment, then the
time limit for initiating the proceedings must be the same, if not less.
Nevertheless the Tribunal has given a greater period for commencing or
initiation of proceedings. We are not inclined to disturb the time limit of
four years prescribed by the Tribunal and are of the view that in terms of the
decision of the Supreme Court in Bhatinda District Co-op. Milk Producers Union
Ltd. (2007) 9 RC 637; 11 SCC 363, action must be initiated by the competent
authority under the Income-tax Act, where no limitation is prescribed as in S.
201, within a period of four years.
(iii) It appears that the assessee paid the tax voluntarily
as well as interest thereon, but the acceptance of the liability by the
assessee would not by itself extend the period of limitation, nor would it
extend the reasonable time that is postulated by the scheme of the Income-tax
Act. The assessee cannot be put, in a sense, in a worse position merely
because it has admitted its liability. The fact that the assessee agreed to
pay the tax voluntarily cannot put the assessee in a situation worse than if
it had contested its liability.”
