Dr. Reddy's Laboratories Ltd. V. The Deputy Commissioner of Income Tax -1, International Taxation and The Union of India, through the Secretary, Ministry of Finance

WP/1513/2019

AI Insights

Dr. Reddy's Laboratories Ltd. challenged an order by the Deputy Commissioner of Income Tax, which deemed them an assessee in default for failing to deduct TDS on payments made to two foreign companies. The payments were made under a trademark assignment agreement, and the petitioner argued that these payments were not taxable in India, thus not requiring TDS deduction. The court examined whether the order was barred by limitation and whether the petitioner had availed of adequate alternative remedies before approaching the court under Article 226 of the Constitution. The court concluded that the order was not barred by limitation as no specific time limit applied to non-residents under Section 201(1) of the Income Tax Act, and the proceedings were completed within a reasonable time.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 798111 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 21-06-2023
• Assessment Year: misc
• Other Referred Cases: Mahindra & Mahindra Limited vs. Deputy Commissioner of Income Tax, Director of Income Tax (International Taxation) vs. Mahindra & Mahindra Limited, Bharti Airtel Limited vs. Union of India, CIT vs. U.B. Electronic Instruments Ltd, CIT vs. H.M.T. Limited, CIT vs. Bhura Exports Ltd
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: K MAMATA CHOUDARY; GADI PRAVEEN KUMAR
• Assessee Lawyers: DEEPAK CHOPRA; PRATISHTHA SINGH
• Keywords: Assessment; Income Tax; Legal validity; Limitation; Non-Resident; TDS; Writ petition
• Section: 195; 201(1); 201(1A); 226; 227

Judgement Text

"[ 3311 ] IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD (Special Original Jurisdiction) WEDNESDAY, THE TWENTY FIRST DAY OF JUNE TWO THOUSAND AND TWENTY THREE PRESENT THE HONOURABLE THE CHIEF JUSTICE UJJAL BHUYAN AND THE HONOURABLE SRI JUSTICE N.TUKARAMJI WRIT PETITIO N NO: 1513 OF 2019 Between: AND 1 Dr. Reddv's Laboratories Ltd., 8-2-337, Road No. 3.. Banjara Hills, Hyderabad - 500 03'4, Telangana, lndia, Through its Authorized Signatory' Mr' M V' Narasimham ...PETITIONER The Deputy Commissioner of lncome Tax -1, lnternational Taxation Aayakar Bhavan, Bisheerbagh Hyderabad - 500 004 The Union of lndia, through the Secretary, Ministry of Finance, Government of lndia, North Block, NewDelhi 1'10101. ...RESPONDENTS 2 Petition under Article 226 of the constitution of lndia praying that in the circumstances stated in the affidavit filed therewith, the High court may be pleased to issue a writ of certiorari or any other writ order or direction under Article 2261227 of the constitution of lndia calling for the records of the case leading to the passing of the lmpugned order dated December 14,2018 (Exhibit H) anJ, after going through and examining the question of the validity, propriety ano legality ine16 ot, be pleased to declare the same to be illegal and unenforceable, and quash the same. lA NO: 2 OF 2019 Petition under Section 151 C in the affidavit filed in support of the be pleased pending the hearing Respondents be restrained from taking any steps pursuan PC praying that in the circumstances stated petition, the High Court may be pleased may and final disposal of this Petition' the Order dated December 14,2018 t to the imPugned lA NO: 3 OF 20 19 Between: AND 1 2 t he Detr;rrty r-; ) ,missioner of Income Tax -1, lnternatio r:rl T;rxation #505. Aayakar Bha,r r,'. Elasheerbagh Hyderabad _ 500 004 ,l lra Uf.r rrt,r,t L ta .tlrror-rglt lhe Secretary. t 4inistry of r n rnc -,, Governrnent of tr rora N{,rth H I k. New D-lltr .l 10 101 ..,PETITIONERS Y.ii^Pl^ _In,li 1..*. Laborarorres Ltd , 8-2_337, foad N: ) , Banlara Hrils, HyoeraO,lO :t t. UJ4. lelalgana. Through its Ar llr:rrzed Signatory, Mr. M. V. Naras,imharn ...RESPONDENTS Petition :ncrer r:,ection 151 cpc praying that i. the crr.curnstances stated in the affidavit frled rr support of the peiition, t.-f,e Ulgr, Cou rt me y be pleased to vacate the inte'rm o .'ior dated 15.02 2o1g in wp No 1513 c' 20i 9 as extended from time to tinre zrnr ismiss the present W.p. No. 1513 of 2(. 1g with costs_ counsel for the Peti ir:ner: SRI DEEPAK cHopRA & sRl plt/r.Tls;HTHA sINGH REPRESENTING FOR SRI ROHIT POGULA Counsel for tho Res )ondent No..l: M/s. K. MAMATA C:HOU|)AR ., SR. SC FOR INCOME TAX DEFARTT IE:NT Counsel for ther Res rondent No.2: SRI GADI PRAVEEN KU Mi R, DY. SOLICITOR GENERAI- OF INDIA The Court made the rollowing: ORDER ) THE HON'BLE THE HIEF IUSTIC UIIAL BHT]YAN T EHON'BLE SR ICE N.TU AMII AND I ruST KAR w.P.No. 13 of t9 ORDER, 1ne, rl,e t 1on'hh rl'e Lhil lttri'e ttjlal tshryan) Ffuard Mr. Deepak Chopra and Mr' Pratishtha Singh' Ieamed counsel for the petitioner and I 4s' K'Mamata Choudary leamed Senior Standing Counsel, Income Tax Department for respondent No.1. 'We have also heard Mr' Gadi Praveen Kumaq leamed DepurySolicitor General of India for respondent No'2' 2. By filing this petidon under Article 226 of the Constitution of India, Petitioner has assailed legaliry and validiry of the order dated 14.12.2018 passed by respondent No'1 under Sections 201(1) and 201(1A) read with Section 195 of the Income Tax Act, 1961 (briefly'the Act' hereinafter)' 3. Petitioner before us is a pharmaceutical comPany incorporated in the year 1984 and is engaged in the business of manufacture and sale of pharmaceutical producs' It is also engaged in research and development of dntg products' ., Activitie:; ,,1 the petirioner al-e undertaken rhrorrgh three core busini,sses ,,i, phamaceutical services and a(:1. ve ingredients, glob.rl ecr,' r. s .rrrd pr,,prietan.producrs. 4' [t is rrite i] tiiat pciirioner haci entereci rr t< a 'I rademark Assignrnenr fgreeurenr (IAA) with two foreign ( onrpanles zt, USB I'archi rr SAn Switz.crland (for shon ,[ISB Su,rzrrland) and USB Iliophrr;na SpRI_, Belgium (for shor_ .t_.r,SB Belgium) for purchase ci c'163in tradcmark for identicar tcrrrt rie; rncluding India. Ir. ; starecl rhar peririoner had parcl an i,,mounr of Rs.115,l4,3C,irIC.OC ro USB Switzerland antj a;r :rnount of Rs.244.16,1C:()0.00 ro USB Belgium during ,he financial year 2a1'5-2i Ir> rercva.it to t'e assessmenr year 2)1G2a17 for purchasc of t r- said rraclerr-rar-i.I uidc Iener d:rtener had also raised an objection rs ro linntation 2.a., iniri;rtion,rJ proceedings uas bared byli mrarir r arLd that the reasonable p ,riocl for passing an order unde r Se:c.j,,n .lO1 of the Act had Iapsr ,1. 6. r lter- (rrring the nratter, responder,t Nk,.. passccl the impugrr<'d tr {,:r clated 14.12.201g dcclaring lhat sir:ce pcririoner d.id nor declu, r TDS as r-equired under Section 195 r,f t:re Act on the tanble p; yllcnts mrrdc to rhe two foreign c()rnl )an.cs during the fin,rrrci;ri t,nr 2C15-2a16, it is decrned t.r lrr. a r ar;scssce in default unie Section 201(1) o[ the A,:t. .rrdvr:ning ro ( 6 Section 201(1AXD of the Act, respondent No.1 held that as no tax was deducted at source by the petitioner, interest would have to be levied @ lo/o for the period for which the tax deduction was not made. Accordingly, the total tax payable by the petitioner after adding the interest was quantified at Rs.55,55,18,964.00. 7 It is stated that consequent upon passing of the impugned order, Additional C-ommissioner of Income Tax (International Taxation), Hlderabad initiated penalty proceedings under Secdon 27lCof the Act uide show catse notice dated2l.l2.20l8- 8. It is in the above circumstances that the writ petition came to be filed seeking the relief as indicated above. 8.1. This Court uitle order dared 15.02.2019 noted that two important issues arise for consideration in the writ proceedings; fintly, u4rether the period of limitation stipulated in Section 201(3) of the Act would apply to the petitioner especially when the same uses the expression 'a person resident in India'; ) and secondly, the impact of double hxation avoidance 7 agreeme,t. I. the mea.wlrile, respondent l.Io.1 .,v:rs directed not to take an'y' < r>r:rcive action against the petitic,ner. 9. It u.ru Irereafter that respondent Nc.1 has lileC coLurter_ :rf[i,1.',..';r r,. ,.,!! .\" ^,. ;,.,--!-......-- ---r:- .' | - r ^ N, r!,, dr arr l'r((rr(i LiiUi) appiiC;tLt()1 . Iy,.111,, i.t .r tl.j of 2019 [or\" ar:aringthe interirnorderdatcd $.AZ2i)19. 10. In hjs vrcate peridon -clrm- counrcr-ailir-Li,it. respondenr No.1 has ;rt :lre ourset quesrioned the main_ainabiltv,tf the writ petitior. lt ; submitted that asainst the in-rtuqrLid or,ler, appeal lies befort t rc (bmnissioner o[ Income Tax (p.p rcrls) (briefly 'Ol'(A ' lLe r :irafter) under Section 2a6A(1)(ha) oi tl-e Act. If the petrtion< r- .ontinues to remain aggr.ieve,J [v rr:y clecision of CIT(A), it r ray prefer further appeal bcfc,re rle In:onrc Tax Appellate I ribunal (briefly 'the Tribunal ht:r,:irraher) under Section 251 of the Act and cven Lhercafrer ;f hc petitioner continLles tr, remain aggrieved, an apperl rv,rt kl lie on a substantial q rcsrion of law before the jurisrlicr.ir> ral I figh Coun unde r Sec:ic n 26AA o[ the Act. 'Iherelor\"i:, o r L]t point of l 8 alternative remedy, respondent No.1 seek dismissal of the writ Petltlon. 10.1. fu regards the issue of limitation raised bythe petitioner, it is stated that initially no time limit was prescribed by the statute for concluding the proceedings under Section 201 of the Act. Sub-section (3) to Section 201 of the Act was inserted by Finance (No.2) Act, 2009 w.e.,f.,01.04.2010 providing the time limit in case of payrnent to persons resident in India, which was four pars. It is stated that the notes on clauses attached to the Financ. (Itfo.2) Bill, 2009 also clearly reflects the legislative intent that no time Iimit is sought to be prescribed where the recipient is a non- resident as it may not be administratively possible to recover the tax from a non-resident. 10.2. Vide the Finance Act, 2012, the period of four years ln respect of resident Indians was replaced by six yean. 10.3. Vidr the Finance (No.2) Act,2014, Section 201(3) of the J ) Act was funher amended w.e.l., 01.10.2014 and as per the 9 amended [)r( vjsion, tinre lirnit of seven years has l>r :n prescribed for passing :n order undcr Section 201(1) ir. thc ,:r;r, r>f residcnt Indi:rns. 10 4 I Inv;e' c-, no linre limir r.ns !-i.red f rr 1-,3s, i119 nn ,-. r-[ rire 'l r-ibLrnal at /)' ( Munrbai in il4ahindra & Mahindra Limiterl Dcpury ...t1.. --tL.. Commissioner of lncome Taxl. Refening to the said dccision, leamed counsel submits that Special Bench has held that going by the same logic as is evident from Section 153(2) of the Acq completion of proceedings under Section 201(1) of the Act that is passing of the order under the said provision has to be within one year from the end of the financial year in which those proceedings under Section 201(1) were initiated. This view of the Special Bench of the Tribunal in Mahindra & Mahindra Lirnited (1 supra) has been accepted by the Bombay F[gh C-oun when the appeal filed bythe revenue against the said decision in Director of lncome Tax (International Taxation) v Matrindra & Mahindra Limited2 came to be dismissed by the Bombay Flgh C-ourt. FIe has also referred to a decision of the Delhi Flgh Cpurt in Bharti Airtel Limited v. Union of India3 and submits that in the aforesaid decision, Delhi Flgh Coun had set aside the notices issued under Section 201(1) of the Act regarding non-deduction of TDS in respect of pay,ments made to ' [2009] 30 soT 374 (MumbaixsB) ' l21l4) 48 taxmann.com 150 (Bombay) 31ZOte1 zO taxmann.com 256 (Delhi) I ::13:: non-resiclent . llhose shol1, cause notices verc s31 as de on the grourd that tosc. were issued beyrcnd a reasc,nabk l,cricd; lraving regard to the l'.rrch consequences, such a procee.dlrSl cntails. !2.-1. 't- c:1rn( ,l ccunse I tl.re l-efore, subm.its thal tlre irq;ugned order h,rvin! l'cen passed on 14.12.2018, the shcu cause norice bcing issut:d ,rn 20.01.2C16, is well beyond tire nrsrrnable preriod and thercl.,rr, , .hc san'rc should be set aside. 13. P,r' ,,,,'1,i1, N.&. K.Mamata Choud;.ry, le,,mr.d Senior Standing (lo rr sel of the Income Ta.r Dep:rnrnel rcrresr.nring responclent 'r,;.1 reiterated the preliminary <>bje,.tion rhar an order prssec r nder Section 201(1) is an appealat,lt, order turder Section 246,'. of the Act before the C_omrnissi,cn,.r of Income Tax (Appea st. Thus, petitioner has gor rn ,,de<1uatc and effrcacir>r-r-s ;.r(.rxarive remedy. (rthout av;rilinr; s,rch adcquate and eilica:r< Lr,; altemarive remedy, petitiorrer h,r.s straightauay approa.he',,J h s Court under Article 226 of the rlrns_ituLion of Lrdirr arrd lu; sought lrtr qr-rashing of thc irnpugrre,C r,rdcr borh on the Poi.t , limitari.r-r as well as on meri,.. 'I'hLs. she s.Lr,ilts. I :iL4:.l is impermissible and on this ground itself, the writ petition is liable rc be dismissed. 13.1. On the poinr of limitation, leamed Senior Standing C-ounsel has drawn the attention of the C-oun to Section 201(1) of the Act including the various amendments made therein. She submits that initially no limitation was provided for passing an order under sub-section (1) of Section 201 of the Act both in respect of residents and non-residents. Bythe first amendment, a limitation of two )rears was introduced for resident indian which was subsequently enhanced to four yrars. Thereafter, the limitation was extended to six 1rears and finallyto seven years. All this u,{rile, Parliament consciously did not provide for any limitation insofar non-resident Indians are concerned. This clearly reflects the legislative intent that there can be no limitation insofar passing of an order under Section 201(1) of the Lct qua non- residens is concemed 13.2. Adverting to the present case, leamed Senior Standing Counsel submis that the impugned order has been passed within ::I5:: io r-rr yers tr, nr initiation of proceedings unl rhe Cricurta Ftrgh (burr ir Bhura Exports Ltd. v. [ncorne Tax Officer (TDS)'. 13.3' I ear.ru J standing c-ounsel has also porntecllr rr rhat though the B.r.b;r' ligh C;urt had dismissed the zppe;rJ r:i the re'enue agai^st th., l,.cisio, oi the Special Bench oi th., Tiibu.al in n 371 flR l1.l ',t rclrra pradesh) [2012] 40 r;,/ g,Punlab & Harydna) ' [zot+] es I : 5..8 rcal;ulta) :: l6:: Mahindra & Mahindra (1 supra), that was on the ground that no substantial question of law arose in that appeal. But Bombay F[gh Coun lrcpt open the question as to what can be a reasonable period for passing of an order under Section 201(1) of the Act. She has also distinguished the decision of the Delhi F[gh Coun in Bharti Airtel Limited (3 supra). 14. Submissions made by learned counsel for the panies have received the due corsideration of the Coun. 15. At the outset, we ruy advert to some of the relevant provisions of the Act having a bearing on the /zi. 16. Section 4 of the Act deals with charge of income tax. fu per sub-section (1) thereof, where any Crntral Act enacts that income tax shall be charged for any assessment Far at any rate or rates, income tax at that rate or those rates shall be charyed for that year in accordance with and subject to the provisions (including provisions for the lery of additional income tax) of the Act in respect of the total income of the previous year of every ::17 t: pe6on. SL 5.section (2) clarilies that in resp,r( r c,f income charge ablc tr ,cier sub-section (1), income tax shatl b,: d:c{ucted at source or p: rcl in aclvancc, u4rere it is so dedur palable under anv pr ,r is;on oi thc Act. 17. Sub-se tron (1) ol Scction 195 sals rllirt arry person rcsponsibl,: f r peying to a non-resident, not being a company, or to a l'oreign ()mpan% any inrerest (not bein,4 interersr reler.red to in Section 1t4LI) etc..) or any orher sum chargeal,le under the provisic,ns o .he Acr (not being income chargeal.,le under the hcad's;rlarier ). shall ar rhe rinrc of credit of such income to rhe accorurt ot rl -, payee ()r-ar the tin.re of pa)rnent tlx,r.,of i, cash or bytl.re i;sue ,,1 a cheqLre ordraft orbyanyorher nrc,de whichever is earlie'. dcc r,..t income tax there on at the rares in 1, ,rcr:. 17.1. s pr-. :.ub-secrion (2) of Section 19:i, u,her.e the person responsiblt, I rr payng lny such sum chargeable u.r<:er rhe Acr to a no^-n..si<.l.. rt considcrs that the whole of ;uch ;rrnr would not bc inc,rmi, :;rgcable ro tax in the case of the re,:ipierrt, he may makc rrr ap; lit;ation in such fonn and mar]ne r t,r thc assessing ] :: l[l: : officer, to determine in such rranner as nny be prescribed the appropriate proponion of such sum so chargeable and upon such determination, tax shall be deducted under sub-section (1) only on that proportion of the sum u'hich is so chargeable. 18. Consequences of such non-deduction under Section 195(2) of the Act or such other provision is dealt with in Section 201 of the Act. 18.1. Vhile dealing with Section 201 of the Act, it is necessary that we refer to the Section as it originally stood and also the changes brought in by various amendments from time to time. Original Secdon 201 of the Act as it stood read as under: Consequences of failure to deduct or pay 201.(1) If any such penon and in the cases referred to in Section 194, the principal officer and the companyof which he is the principal officer does not deduct or after deducting fails to pay the tax as required by or under this Act, he or it shall, wjthout prejudice to any other consequences which he or it /^ y ncrx, be deemed to be an assessee in default in respect of the tax: :: l9:: Prori ir. :;ub-secti<>n (1). 18.2. 'fhu;. ilrb-section (1) of Section 2a1 ct tlrr: ct provided that il the re ,,,rrs fai[Lre to deduct tax at sour]e or al ter deducting not pa)-rng tl ,- tax, the person concemed as well .s the company includine i,s ,rincipal officer would be deenred tc l.e an assessee in dcfarrlt in n: spect of the tax. As per the pr rJrerel.o, no penaltv uc,til l bc charged l-r-,om such person, princr ral officer or comPar.v trn rt- s the Incopte Tax Officer wirs satrslied that such pe6or1 or pr rrrcipal oliicer or company as the cas(, may be had qllifLrlir fa le ro deduct or palr1[6 12L. 18.3. S,-rb-se rjon (2) thercof provided tlrat whr:re tle tax had ( 1 not been p,rL,: rtfter it u,as deducted, it would be :L :l.arge upon all :20:.'- the assets of the person or the comPany as the case may be, referred to in sub-section (1). 18.4. Thus, we find that no limitadon was prescribed for passing an order under sub-section (1) of Section 201 of the Act and also an order under the proviso to sub-section (1) of Section 201 of the Act. 18.5. By the Finance (No.2) Act, 2009, t4rich came intc force w.eJ, 0I.04.2010, sub-sections (3) and (+) were insened in Section 2Ol of the Act after sub-section (Z). Sub-sections (3) and (a) as were insened read as follows: (3) No or,Jer 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 tirne after dre expiry of (f wo pan from the end of the financial year in which the statement is filed in a case vrhere the statement referred to in Section 200 has been filed; (if four years from the end of the financial year in which pay,rnent is made or credit is given, in any other case: ::2li: ])ro,.irlt.d rlrlr such order for ir financial )cil[ (]crlr)rcn jing on :Pl:.narion 1 to Sectior.r 153 ol Llre Act shall so far as mayapplytr:, rlre tirne lirnit prcscribcrl irr s rt:-secrion (3) thertof. tt22rl 18.8. In the memorandum preceding enactment of Finance (I.{o.2) Act 2009,it v/as mentioned that while time limit has been introduced for passing an order under Section 201(1) of the Act, no time limit has been prescribed for passing an order under sub- section (1) of Section 201, of the Act where amongst others, the deductee is a non-resident as it may not be administratively possible to recover the tax from a non-resident. This has also been clarified by Grcular No.5 of 2010 issued by th. Crntral Board of Direct Taxes (CBDT). 18.9. fu already noticed above, the limitation was thereafrcr extended in respect of resident Indians to six years and finallyto seven )€a$. Sub-sections (3) and (4) of Section 201 of the Act as those provisions srand todayread as follows: (3) No order shall be made under sub-section (1) deeming a person to be an assessee in default for failure to deduct the vzhole or any part of the tax from a penon resident in India, at any time after the expiry of seven years from the end of the financial year in which palanent is made or credit is given. ..r?,.. (a) Ihe 1 r'visions of sub-clause (ii) oi s ub-se :tion (3) of sccr-i,rn I5' :rnd ol' E xplanarion I to reeUon 1J-l s r:.ll so Iar as rlar,.rpplv o rhe rirne limir prescribed h sub sectic n (J), 18.1C. 'lhrrs a; per sub-section (3) of Secrion 20i of tlre Acr, no ^--l^.- .l - l- ._ 1 l urricL sjr.iii ir( r r.lde rurdcr, s ub-scction (i) cle<.mrng . lre :Soll ro be an asscsse(, i r ,lefauit for failure to deduct the u,h.le or anypart of the t:rx i:r<:-a percorl resident inlndia at :rn r:irrL. al'terexpiry ol seven 1e,r s from the end of the financi,rl lrar in which the payrent is rr 't,-le or credit is given. 18.11. Sinr: ,ul>section (4) of Section 2Ol ol tlr, Acr refers to Section 151 i the Act, it would be apposite tc, bri..fl), deal with the said p^r' ision. Secrion 151 of rhe Act rleals w th time rimit for conrpl<:Li ,n o[ assessnrent, reassessment and ft:ornputation. Sub-seciion l') thereof deals with a situatiol 1,hir, a remand is ,-iad.' i.llo*,,f; a. order by the Income Ta;t Apire latt: T'ibunal r-rnder Sccr.i<; t 254 cti the Act or by the (brnnu:;sioner under Sectiorrs 2(:1 t 264 of the Act. In sucl.r a c;Lse. l're:;h assessrnenr uoulc{ lr,rr': ,,r bc made by thc assessing olf cer- be1 cre expiry ol nine nr,rnths jrrom thc end of the financial )rir- n ,r,hic[r the ) ) .,) d.,. above orders were passed. Before proceeding funher, we may mention that Section 153 of the Act as noticed above deals with the tirne limit for completion of assessment, reassessment and re- computation. Therefore, the intent behind sub-section (4) of Section 201 of the Act is that in the event of interference with an order passed under sub-section (1) of Section 201 of the Act by the appellate authorities, the time limit prescribed for completion of assessment etc., under Section 153 of the Act would be applicable to an order to be passed under Section 201(1) r/w sub- section 3 of Section 201 of the Act. lg. Before proceeding further, a brief reference to sub-section (1A) of Section 2Ol of the Act would be in order' The said provision fastens liability on the assessee in default to payinterest for failure to deduct or Paythe TDS' 20. Fhving said so, we may now deal with the decisions cited at the bar. Insofar the decision of this C-ourt in CIT v' U.B.Electronic lnstruments Ltd (4 supra) is concemed' this ] C-ourt referred to various provisions of the Act including ' ::25;: Secrions 14i . r49 ard 263 and thereafter c,bsenc.l tlrat by and lartc j.,',ul v rrrs is trcated as thc period withirr v,l- ich anr,. pcnal action jar [-. initiated agair-rst an assessee ]s a (r.,nsequence of 'o.-dc.{ucri',rr of TDS. 'rhis Coun funher obse:rr..,d rhat failure to i.itiate stt ,:; 'ri,'irhi, such pedod would di;aL,kr rlre depanment to prcrr'eerl .gainst the assessee. With ea,:h l.,as:;ing year, the assessc(. is r-r ,lrrired to adjust his or her own aflar,rs n such a ivay that tlrt' art.,,r _y rLndenalen by it goes on smo,)t y. In case liabilitv for- r Lir preceding one or r'wo years is f.rst,:ned, there can be sc,rpe l,,r nraking adjtstments in tht, suLs, qu,:nt years. I {oue'r.r, ii' r ;airly lorg gap inrervenes, it [,econre ,, dilficrrlt for n'raking suc: adjmtmenrs panicularly when rhr, :rctivity is comrne rciai n nature. In that case, the asse.sment )ears u.ert 1989..)( '. 1gg0_91 and 1gg1_g2. Ir was nea.l,. s(ven )ears ther-r,:rlt,rr rl: Lr the in-rpugned notices wer,-, jssrLc.,l. In such crrcurnsr,ancr: ;, this C_oLrrt concur:red with thc l,ir:.i. takcn L_.,y the l'ribLrnal an( ,rns$ere(l arnongst others, thl: <1uts.ion that tl_re inconre -lrrr ,,1,ppellarc Tnbunal was justif ed irL rpp,lying the theorv o1- r'i.;onable period for passing the ,rrder under ii26ii Section 201(1A) of the Act in the absence of time limit specilicd in the Act. 20.1. (e may mention that in the said case, when the impugned notices were issued or the order under Section 201(1) of the Act was passed bythe assessing officer on3l.O3.l999' the statute did not provide for any limitation either in respect of a resident Indian or a non-resident Indian. 21. In CIT V. H.M.T. Limited (5 supra), which was an appeal bythe revenue under Section 26OLof the Act, one of the substantial questions of law before the Punjab and Fhryrana Flgh C-oun was whether on the facts and in the circumstances of the case, Tribunal had erred in law in allowing the appeal of the assessee by holding that four )ears was a reasonable period to issue show cause notice under Section 2OL of the Act by the assessing officer to the assessee though no such limitation was provided under Section 2Ol of the Act. This appeal pertained to the financial years 1994-95 to 1997-98 and the order under ) ) ,.)1.. Scction 2Cl 1 /(,lA) ol the Act was passed on.2r). 2.lt0O5 u,hen thc star.rre rj I not pror,ide lor an1.lirni1x1i611. :)bove context, Punjab and I{ary:lr:. High Coun Times l-ir.i r,,l r.. [Jnion of India/ wherein Supr,:r,c (]un held thlt qhi,n tl r Legislature has not considered ir rl)prcprirrre ro pre scnL,.., lirr trLtion, it cannot be read in srrch a 1. ror.ision and based t rcre,- rr, answercd the above questi()n in [;r'our of the rc re ,Lre [r' h ri,1i,g that it couid not be conc luclec r r;rt tire or<]er passcd irr. rlrt :rssessing officcr under Section 20I(1) an1201(1A) of the ; ct w rs liable to be annulled on the ,lround ol. del,rv and laches. 22' Ins.l;rr the decisi.n of rhe Carcutta High (orut in Brrura Exports Lirr rirccl (6 supra) is concemed, r.hat 1rc;1xlrs ro the asscssnr(,nl_ vr:. 2a02-2a0j. In that case, ass(,ssee r:,;r,ir.ed notice datcd 0(.04.1 lC6 issued bythe Income Tax Jf[ic,:r allt:qing irtt,t trli,t ll,,t.rsscs (,1 had peid interest on loan brrt haci :xrt dedLrcted 21.1. [rr rht: fo llou,\", l ' AIR 199s 5c rjBt i,28:.i TDS from the paynents made to the three companies for the financial yar200l-02 relevant to the assessment year 2002-03. It v/as thereafter that assessing officer passed an order dated 07.03.2008 treating the assessee to be in default and demanded a sum of Rs.21,64,471.00 as the tax payable. In appeal, both the appellate authorities affirmed the order of the assessing officer though the Tribunal reduced the amount of default. 22.1. Question before the Glcutta Flgh Clurt was whether the assessing officer was competent to initiate proceedings under Section 201,(l)/(l$) of the Act in the year 2007 for the assessment year 2002-03. 22.2. Calcutta Flgh C-,oun held that the time limit prescribed in Section 1,49 of the Act for taking action under Section 147 thereof by giving notice under Section 148 cannot have any application for taking action under Section 201 of the Act as it is ) ) not a case of income escaping assessment but a case of inaction ..r().. of a derrrol r; deduct r.ax on interest while rnaliin,; p,ryment of intcrest in vir lrrtion of Section 194A of the A:t. 22.3. t-..rlc.rr. r i{igh (-irurt ftrnher posed th:: quesr on rhat if in .rnr' .'i',.,', ,r1 'r re rlra.,. ,c .^ ,.,o^^L,t l;,-;..+:^^ ..-,^^.iL.t r^-- ''''l 5\" r ir i iL., ir-iivu (ji iiiiiiiaiiu-i I i-(.s_-ilD(,Li ioi- raking rrcri'rr. r ,der rh,rt statute, whether such actir), should be takerr u,irhin rrasonable pe riod ? 22.4. ( hlcu t:L ftrgh (bun opined that if nc, perir>cl of limitation is prescribt:.1 u.tder a st,ttute for taking actio;t lLnde-. it and at the samc ti,ne rl e lintitation Ao, 1963 does t.ror rt1.ly to such a statLrte, tlte rr: c;rnnot b. any prt,scription of ; peri.cl of limitation for takirrg ''t on rLndcr the said sratute un[es:; thcre is any contran' iutt, tjon expt'ssed thurein. 23. 'I'his b irLss Lrs ro the decision of the lipecll Bench ol-the 'I'ribtLr,al i' I I:rhincrra & Mahindra Linritr:d (r srrpra). Special 1 Bench r!as ,)l rhe view rhar even thoui;h n,r liniltation is prescdbecl r. r,.ler- Scction 201(1) of the Act, n:r,eftrelcss rhe ::30:: order thereunder would have to be passed within a reasonable period. 23.1. Ye rnay mention that in that case, the assessment year under consideration was 1998-99 and the order under Section 201(1) of the Act was passed on 30.03.1999. 23.2. It was submitted before the Tribunal that a period of four yean from the end of the relevant financial 1rear would be reasonable for initiation of proceedings as well as passing of the order under Section 201(1) of the Act. Tribunal referred to different provisions of the Act, such as, Sections 147, 148, 1'49 and l53Q) and thereafter concluded that completion of proceedings under Section 201(1) of the Act 2.r., passing of the order under the said provision has to be within one year from the end of the financial War in which proceedings under Section 201(1) of the Act were initiated. Same time limit for initiation and passing of order would also be valid for passing of order under Section 201(1A) of the Act. i ::31:: 23.3. , s rrr- rir:crl above, rhc above mane r P,:r.rrirs to the assessrncnr v a r 1998-9,) rvhen the tinre limir evc,r. n t 1e case of resident Inrir, r:; r/as nol introduced. 24. .1r\"', ,i,. \"\"' o,,,,o ,.L\"ll^'.^^,l .L:- r:...1:-.. - r .1.^ c--^^:-t ,,,i iiaii(iiSUU iiiis iiiiUi.iii ,,i Ijt(. jpecial Bench of thr -l'ribunal be[ore the Bombay Flgh (irLrn in DCIT v. Mal'rindlr & Mahindra (2 supra), Bombay IJgh C_oun dismissccl r-h, ,.ppsxl on rhe ground thar no subs..a,rial question of larv aros. rom the al'oresaid order of the Speci r[ Be.rch of the Tr-ibLLnal. ,1 ib doing so, Bornbay Higb ():,r.r:. d.:clined to follow thr: dc :i:;ior-r of rlre (hlcLrtta F[gh C-oun in I]l.trr:r Exports Limitc1. ir no r.r- resident. The difficrrlt -r.hat u,orLld accrue to realisation o[ r, x ,,y,,, a non- resident wor (l be much more than that of a pen;on. rvhc., is a resident. In r.rr view, limitation penod o1's(ven )c.n prescribed for a rrsiden , ndian u,ould be a useful guide to ,ft.rennine what would [-,e 2 r 11;6n2[lg penod in the case oI a non-:e,;idr:nt Indian. 30. [n thr instanr casc, it is seen that follcu,inB a survey operation ur,lt:r Secrion 133A of the Acr cn .10.1.,.2(115. it was detecterl tha l.,etitioner had rnade two px)rnerrts t() trvo loreign companies b rr did nor deducr fl)S uncler Section 1,).5 ,>f the Act. It uas tlre ,::ifter thrt the shou. cau.se noli,:i ?s issued on20.a1.2C1tr It woukl be intet-,sting to no.e rha. , rn rhe ground that thc' two [,:rrerign companics had filed applicatic,ns before rhe AAR es tc, r rr.lbility ol s,ch rransacrio.s, p-,tiri.rre r- hrd l'iled an applicar iorr ,cfore rcsponde nt No.1 to k:ep t rt proceedings trndcrSecr.irr r 2C1 of the Act in abeyancc. litrch :Lr, ac,ion of the petitione r * r LLld mn cou,ter to its veq, conL.r Liotr that the f { ::36:: proceedings corcl..,dcd by rcsporrdcnt No.1 was beyond limitation. 31. Be that as it may, such a contention was rejected by respondent No.1 and insofar limitation is concemed, respondent No.1 held that though the Act did not provide for any time limit for passing an order under Section 201(1) of the Act, nonetheless I I principles of natural justice would require that proceedings should be completed witlrin a reasonable time. Respondent No.1. further noted that the surveywas conducted on30.12.2015, show cause notice was issued on 20.01.2016 and the proceedings came co be concluded on 14.12.2018 which was within a reasonable trme 32. fle see no infinnity in the view taken by respondent No.1. 'We are therefore not inclined to entertain the writ petition. However, we refrain from cxpressing any opinion on merit 2.e., the second $sue fmrned by this Coun uide the order darcd 15.02.2019 u,hich rvould be gone into by the appropriate forum in an appropriate procecding. f + ::37:: ll 'llirat lr, ir Lg the position, it rvould be oPcr. lr lrc pcririoner to sccli tlrc rr: rL.:dy as provided turder thc Act 14. Subjr:ct t.r rhe above, thc u,rit petirio r is