VODAFONE DIGILINK LTD., Jaipur V. ITO, Jaipur

ITA 75/JPR/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99523 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 10 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 24-01-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KALIKA SINGHCIT DHK
• Assessee Lawyers: MANASVINI BAJPAI S
• Keywords: Recovery proceedings; Depreciation; Search and seizure; Principle of natural justice; Earning of tax free income; Period of limitation; Retrospective amendment; Question of law; Reasonable cause; Competent authority; Time period of passing order
• Section: 133A; 14A; 201(1); 147; 148; 139

Judgement Text

1 ;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VH-VKJ-EHUK] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF; D LNL; DS LE{K BEFORE: SHRI T.R.MEENA, AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA-@ ITA NO. 75 TO 80/JP/2013 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2004-05, 05-06, 06-07, 07-08, 08-09 & 09-10. VODAFONE DIGILINK LTD., CIRCLE OFFICE, 5 TH FLOOR, GAURAV TOWERS, MALVIYA NAGAR, JAIPUR. CUKE VS. THE INCOME TAX OFFICER, TDS-2, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AAACA 3202 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT /KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI DEEPAK CHOPRA AND MS MANASVINI BAJPAI (ADVOCATES) JKTLO DH VKSJ LS@ REVENUE BY : SHRI KALIKA SINGH(CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 30.09.2015. ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 27/11/2015. VKNS'K@ ORDER PER SHRI LALIET KUMAR, J.M. THESE ARE SIX APPEALS FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT (APPEALS)-III, JAIPUR DATED 15 TH NOVEMBER, 2012 FOR THE A.YS. 2004-05 TO 09-10. TH E COMMON GROUNDS RAISED IN THE APPEALS ARE AS UNDER : - 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED CIT (A) HAS ERRED IN HOLDING THAT THE ORDER PASSED UNDE R SECTION 201((1)/201(1A) OF THE ACT FOR THE SUBJECT ASSESSME NT YEAR IS NOT BARRED BY LIMITATION AND HENCE, IS NOT BAD IN LAW. 2 ITA NO. 75-80/JP/2013 A.Y. 2004-05 TO 09-10. VODAFONE DIGILINK LTD. VS. ITO TDS-2,JAIPUR. 2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED CIT (A) HAS ERRED IN HOLDING THAT ROAMING CHARGES PAID BY THE APPELLANT QUALIFY AS FEE FOR TECHNICAL SERVICES AND THUS, SUB JECT TO TAX DEDUCTION AT SOURCE UNDER SECTION 194J OF THE ACT. 3) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED CIT (A) HAS ERRED IN NOT DIRECTING THE LEARNED TDS OFFI CER TO VERIFY PAYMENT OF TAX IN RESPECT OF THE RECIPIENT TELECOM OPERATORS F OR WHOM THE APPELLANT COULD NOT FURNISH CONFIRMATIONS DESPITE THE FACT TH AT OTHER REQUISITE DETAILS FOR SUCH VERIFICATION WERE AVAILABLE WITH THE LEARN ED CIT (A)/TDS OFFICER. 4) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED CIT (A) HAS ERRED IN DIRECTING THE LEARNED TDS OFFICER TO LEVY INTEREST UNDER SECTION 201(1A ON THE TAX DEMAND RAISED UNDER SECTI ON 201(1) OF THE ACT. 2. A SURVEY WAS CONDUCTED UNDER SECTION 133A OF THE IT ACT ON THE PREMISES OF THE ASSESSEE ON 29.12.2008. BASED ON THE SURVEY, A SHOW CAUSE NOTICE UNDER SECTION 201(1) AND 201(1A) OF THE IT ACT WAS ISSUED ON 4 TH FEBRUARY, 2009 FOR NON DEDUCTION OF TDS ON ROAMING CHARGES PAID IN THE FINANCIAL YEAR 2 002-03 TO 08-09. A COPY OF THE NOTICE IS PLACED AT PAGES 6 & 7 OF THE PAPER BOOK F ILED BY THE ASSESSEE. IN RESPONSE TO THE NOTICE DATED 9 TH FEBRUARY, 2009, THE ASSESSEE MADE SUBMISSION ON 14 .02.2009, 16.02.2009 AND ON 23.2.2009. IN THE LETTER DATED 23 RD FEBRUARY, 2009, THE ASSESSEE MENTIONED THAT SOME OF THE REMAINING INFORMATION IS IN PROCESS AND WILL BE SUBMITTED TO YOUR GOOD OFFICE SOON. THUS THE INFORMATION AS SOUGHT FOR BY THE AO WERE NOT FURNISHED BY THE ASSESSEE . 2.1 IN THE MEAN TIME ANOTHER SURVEY WAS CONDUCTED U NDER SECTION 133A OF THE ACT IN THE PREMISES OF THE ASSESSEE ON 12 TH JULY, 2010 AND THEREAFTER A LETTER DATED 3 ITA NO. 75-80/JP/2013 A.Y. 2004-05 TO 09-10. VODAFONE DIGILINK LTD. VS. ITO TDS-2,JAIPUR. 05.10.2009 WAS WRITTEN TO THE ASSESSEE CALLING UPON TO SUPPLY MORE INFORMATION. IN THE SAID LETTER DATED 05.10.2009 IT WAS MENTIONED AS UN DER :- ' 1. YOU HAVE PAID COMMISSION TO VARIOUS DISTRIBU TORS OF PREPAID STARTER PACKS AND RECHARGE COUPONS OF YOUR COMPANY WHICH IS EVIDENT FROM CONTRACTS MADE WITH THEM. THIS SHOWS PRINCIPAL TO AGENT RELATIONSHIP BETWEEN YOU AND YOUR DEALERS AND THEREFORE TDS WA S TO BE MADE U/S 194H BUT YOU DID NOT MAKE ANY TDS IN F.Y. 2005-06 , 2006-07, 07-08, 08- 09 AND CURRENT F.Y. YOU ARE ASKED TO SHOW CAUSE AS TO WHY THE AMOUNT OF NON DEDUCTION /SHORT DEDUCTION TDS U/S 194H ON COMMISSION SHOULD NOT BE RECOVERED FROM YOU U/S 201 ALONG WITH INTE REST OF UNDER THE PROVISIONS OF SECTION 201(IA). 2. PLEASE PROVIDE DETAILS OF MRP AND DEALERS'' PR ICE OF ALL THE PRODUCTS SOLD THROUGH DIFFERENT DISTRIBUTORS/DEALERS IN TH E FOLLOWING FORMAT FOR THE PERIOD OF F.Y. 2005-06, 2006-07, JAN. 2009 TO MAR CH, 2009 AND APRIL, 2009 TO TILL DATE. F.Y MONTH MRP DEALER PRICE DIFFERENCE TDS DEDUCTED 3. PLEASE PRODUCE RELEVANT RECORD OF F.Y. 2008-09 FOR VERIFICATION OF TDS ON COMMISSION PAID TO DISTRIBUTORS. 4. MONTH WISE BIFURCATION OF ROAMING CHARGES PAID FOR DEC. 2008 TO MARCH, 2009 AND APRIL, 2009 TO TILL DATE.' THE ASSESSEE HAS FILED ITS REPLY ON 26 TH OCTOBER, 2009. THEREAFTER ON 25.10.2010 A FRESH AND COMPREHENSIVE SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE. IN THE SAID NOTICE FOLLOWING 3 (THREE ) ISSUES WERE SPECIFICALLY RAISED ON WHICH THE REPLY WAS SOUGHT : 1. NON DEDUCTION OF TDS U/S 194H ON COMMISSION PAID TO VARIOUS DISTRIBUTORS OF PRE-PAID STARTER PACKS AND RECHARGE COUPONS. 4 ITA NO. 75-80/JP/2013 A.Y. 2004-05 TO 09-10. VODAFONE DIGILINK LTD. VS. ITO TDS-2,JAIPUR. 2. NON DEDUCTION OF TDS FOR ROAMING CHARGES PAID IN FI NANCIAL YEAR 2008- 09. 3. NON DEDUCTION OF TDS UNDER SECTION 194-I ON PROVISI ONS MADE FOR CELL SIDE SHARING EXPENSES PAID TO VARIOUS POWER OWNERS/ OPERATORS DURING FINANCIAL YEAR 2007-08 TO 09-10. THE ASSESSEE HAD FILED THE REPLY TO THE SAID NOTICE DATED 25.10.2010 ON 06.01.2011 AND HAS SUBMITTED THAT THE SHOW CAUSE NOTICE GIVEN BY T HE REVENUE IS NOT MAINTAINABLE AS THE ASSESSEE IS NOT LIABLE TO PAY ANY CHARGES AGAIN ST ALL THE THREE HEADS. 2.2. FOR THE CLARITY OF FACTS, IT IS CLARIFIED, THA T THERE IS A SUBSTANTIAL DIFFERENCE BETWEEN THE NOTICE GIVEN ON 4 TH FEBRUARY, 2009 AND THE NOTICE GIVEN ON 25.10.2010. IN THE NOTICE DATED 4.2.2009 THE BASIS WAS THE SURVEY CONDUCTED ON 29.12.2008 WHEREAS IN THE NOTICE DATED 25.10.2010 THE NOTICE WAS BASED ON THE SURVEY CONDUCTED ON 29.12.2008 AND 12 TH JULY, 2010. MOREOVER, IN THE EARLIER NOTICE DATED 4.2.2009 THE SCOPE WAS LIMITED TO ONE ASPECT I.E NON-DEDUCTION O F TDS ON ROAMING CHARGES IN FINANCIAL YEARS 2002-03 TO 08-09, WHEREAS IN THE NO TICE DATED 25.10.2010 THE SCOPE WAS MUCH LARGER AS THREE ISSUES WERE REQUIRED TO BE ADDRESSED BY THE ASSESSEE. 2.3. BEFORE WE PROCEED TO DECIDE AND DISCUSS THE VA RIOUS DEVELOPMENTS IN THE MATTER, IT WILL BE DESIRABLE TO REPRODUCE ONE IMPOR TANT CHANGE IN LAW WHICH HAS COME INTO EFFECT BY VIRTUE OF INSERTION OF SECTION 201 S UB-CLAUSE (3) AND (4) OF THE IT ACT BY THE FINANCE (NO.2) ACT 2009 WITH EFFECT FROM 1.4.20 10. 5 ITA NO. 75-80/JP/2013 A.Y. 2004-05 TO 09-10. VODAFONE DIGILINK LTD. VS. ITO TDS-2,JAIPUR. CONSEQUENCES OF FAILURE TO DEDUCT OR PAY. 95 95A 201. 96 [(1) WHERE ANY PERSON, INCLUDING THE PRINCIPAL OFFI CER OF A COMPANY, ( A ) WHO IS REQUIRED TO DEDUCT ANY SUM IN ACCORDANCE WITH THE PROVISIONS OF THIS ACT; OR ( B ) REFERRED TO IN SUB-SECTION (1A) OF SECTION 192 , BEING AN EMPLOYER, DOES NOT DEDUCT, OR DOES NOT PAY, OR AFTER SO DEDUC TING FAILS TO PAY, THE WHOLE OR ANY PART OF THE TAX, AS REQUIRED BY OR UNDER THIS A CT, THEN, SUCH PERSON, SHALL, WITHOUT PREJUDICE TO ANY OTHER CONSEQUENCES WHICH H E MAY INCUR, BE DEEMED TO BE AN ASSESSEE IN DEFAULT IN RESPECT OF SUCH TAX: 97 [ PROVIDED THAT ANY PERSON, INCLUDING THE PRINCIPAL OFFICER O F A COMPANY, WHO FAILS TO DEDUCT THE WHOLE OR ANY PART OF THE TAX IN ACCOR DANCE WITH THE PROVISIONS OF THIS CHAPTER ON THE SUM PAID TO A RESIDENT OR ON THE SUM CREDITED TO THE ACCOUNT OF A RESIDENT SHALL NOT BE DEEMED TO BE AN ASSESSEE IN D EFAULT IN RESPECT OF SUCH TAX IF SUCH RESIDENT ( I ) HAS FURNISHED HIS RETURN OF INCOME UNDER SECTION 139 ; ( II ) HAS TAKEN INTO ACCOUNT SUCH SUM FOR COMPUTING INCOME IN SUCH RETUR N OF INCOME; AND ( III ) HAS PAID THE TAX DUE ON THE INCOME DECLARED BY HIM IN SUCH RETURN OF INCOME, AND THE PERSON FURNISHES A CERTIFICATE TO THIS EFFE CT FROM AN ACCOUNTANT IN SUCH FORM AS MAY BE PRESCRIBED 98 :] 6 ITA NO. 75-80/JP/2013 A.Y. 2004-05 TO 09-10. VODAFONE DIGILINK LTD. VS. ITO TDS-2,JAIPUR. PROVIDED 99 [ FURTHER ] THAT NO PENALTY SHALL BE CHARGED UNDER SECTION 221 FROM SUCH PERSON, UNLESS THE ASSESSING OFFICER IS SATISFIED T HAT SUCH PERSON, WITHOUT 99A GOOD AND SUFFICIENT REASONS, HAS FAILED TO DEDUCT AND PA Y SUCH TAX.] 1 [(1A) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SE CTION (1), IF ANY SUCH PERSON, PRINCIPAL OFFICER OR COMPANY AS IS REFERRED TO IN T HAT SUB-SECTION DOES NOT DEDUCT THE WHOLE OR ANY PART OF THE TAX OR AFTER DEDUCTING FAI LS TO PAY THE TAX AS REQUIRED BY OR UNDER THIS ACT, HE OR IT 99A SHALL BE LIABLE TO PAY SIMPLE INTEREST, ( I ) AT ONE PER CENT FOR EVERY MONTH OR PART OF A MONTH ON THE AMOUNT OF SUCH TAX FROM THE DATE ON WHICH SUCH TAX WAS DEDUCT IBLE TO THE DATE ON WHICH SUCH TAX IS DEDUCTED; AND ( II ) AT ONE AND ONE-HALF PER CENT FOR EVERY MONTH OR PAR T OF A MONTH ON THE AMOUNT OF SUCH TAX FROM THE DATE ON WHICH SUCH TAX WAS DEDUCTED TO THE DATE ON WHICH SUCH TAX IS ACTUALLY PAID, AND SUCH INTEREST SHALL BE PAID BEFORE FURNISHING T HE STATEMENT IN ACCORDANCE WITH THE PROVISIONS OF SUB-SECTION (3) OF SECTION 200 :] 99 [ PROVIDED THAT IN CASE ANY PERSON, INCLUDING THE PRINCIPAL O FFICER OF A COMPANY FAILS TO DEDUCT THE WHOLE OR ANY PART OF THE TAX IN ACCORDANCE WITH THE PROVISIONS OF THIS CHAPTER ON THE SUM PAID TO A RESIDENT OR ON TH E SUM CREDITED TO THE ACCOUNT OF A RESIDENT BUT IS NOT DEEMED TO BE AN ASSESSEE IN D EFAULT UNDER THE FIRST PROVISO TO SUB-SECTION (1), THE INTEREST UNDER CLAUSE ( I ) SHALL BE PAYABLE FROM THE DATE ON WHICH SUCH TAX WAS DEDUCTIBLE TO THE DATE OF FURNIS HING OF RETURN OF INCOME BY SUCH RESIDENT.] (2) WHERE THE TAX HAS NOT BEEN PAID AS AFORESAID AF TER IT IS DEDUCTED, 2 [THE AMOUNT OF THE TAX TOGETHER WITH THE AMOUNT OF SIMPLE INTER EST THEREON REFERRED TO IN SUB- 7 ITA NO. 75-80/JP/2013 A.Y. 2004-05 TO 09-10. VODAFONE DIGILINK LTD. VS. ITO TDS-2,JAIPUR. SECTION (1A)] SHALL BE A CHARGE UPON ALL THE ASSETS OF THE PERSON, OR THE COMPANY, AS THE CASE MAY BE, REFERRED TO IN SUB-SECTION (1). '(3) NO ORDER SHALL BE MADE UNDER SUB-SECTION (1) D EEMING 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 EXP IRY OF ( I ) TWO YEARS FROM THE END OF THE FINANCIAL YEAR IN WHI CH THE STATEMENT IS FILED IN A CASE WHERE THE STATEMENT REFERRED TO IN SECTION 200 HAS BEEN FILED; ( II ) SIX YEARS FROM THE END OF THE FINANCIAL YEAR IN WHI CH PAYMEN T IS MADE OR CREDIT IS GIVEN, IN ANY OTHER CASE : PROVIDED THAT SUCH ORDER FOR A FINANCIAL YEAR COMMENCING ON OR BEFORE THE 1ST DAY OF APRIL, 2007 MAY BE PASSED AT ANY TIME ON OR BEFO RE THE 31ST DAY OF MARCH, 2011.' 5 [ EXPLANATION. FOR THE PURPOSES OF THIS SECTION, THE EXPRESSION ' ACCOUNTANT' SHALL HAVE THE MEANING ASSIGNED TO IT IN THE EXPLANATION TO SUB-SECTION (2) OF SECTION 288 .] '(3) NO ORDER SHALL BE MADE UNDER SUB-SECTION (1) D EEMING 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 F ILED; ( II ) SIX YEARS FROM THE END OF THE FINANCIAL YEAR IN WHI CH PAYMENT IS MADE OR CREDIT IS GIVEN, IN ANY OTHER CASE : PROVIDED THAT SUCH ORDER FOR A FINANCIAL YEAR COMMENCING ON OR BEFORE THE 1ST DAY OF APRIL, 2007 MAY BE PASSED AT ANY TIME ON OR BEFORE THE 31ST DAY OF MARCH, 2011.' 2.4. IT IS CLEAR FROM THE PROVISO TO SUB-SECTION (3 ) INSERTED BY FINANCE (NO.2) ACT, 2009 THAT SUCH ORDER FOR THE FINANCIAL YEAR COMMENC ING ON OR BEFORE 1 ST APRIL, 2007 MAY BE PASSED AT ANY TIME ON OR BEFORE 31 ST DAY OF MARCH, 2011. BY VIRTUE OF INSERTION OF 8 ITA NO. 75-80/JP/2013 A.Y. 2004-05 TO 09-10. VODAFONE DIGILINK LTD. VS. ITO TDS-2,JAIPUR. THE PROVISIONS IT IS CLEAR THAT AN ASSESSEE WILL BE ASSESSEE IN DEFAULT IF HE FAILS TO DEDUCT ALL OR ANY PART OF TAX FROM A PERSON RESIDENT IN INDIA. 2.5. COMING BACK TO NARRATION, THE AO PASSED THE OR DER ON 17.1.2011 UNDER SECTION 201(1) AND 201(1A) READ WITH SECTION 194-H AGAINST THE ASSESSEE AND HAS DECLARED THE ASSESSEE AS ASSESSEE IN DEFAULT AND THE TOTAL DEMAN D (SHORT DEDUCTION) ALONG WITH INTEREST WAS QUANTIFIED AT RS. 8,83,66,948/-. 2.6. IT MAY BE USEFUL TO MENTION HERE THAT SUBSEQUE NT TO THE PASSING OF THE ORDER ON 17.01.2011, ANOTHER ORDER WAS PASSED ON 24.3.2011 U NDER SECTION 201(1) AND 201(1A) READ WITH SECTION 194J OF THE IT ACT. THE AO HAS QU ANTIFIED THE AMOUNT TO THE TUNE OF RS. 8,33,32,848/-. AT THE BOTTOM OF THE ORDER IT I S MENTIONED THAT THE AMOUNT OF ROAMING CHARGES PAID TO INTERNATIONAL ROAMING OPERA TORS OUTSIDE INDIA HAS BEEN EXCLUDED BECAUSE THE SAME IS COVERED UNDER SECTION 195 AND NOT 194J. FURTHER THE PAYMENTS MADE BY VEDL RAJASTHAN TO OTHER TELECOM CI RCLES OF VDEL ITSELF HAVING SAME PAN HAS ALSO BEEN EXCLUDED FOR THE PURPOSE OF WORK- IN-DEFAULT UNDER SECTION 201(1)/201(1A) OF THE ACT, 1961. 2.7. AGAINST THE ORDER PASSED BY THE AO, THE ASSESS EE FILLED APPEAL BEFORE LD. CIT (A).THE ASSESSEE HAS FILED THE SUBMISSIONS ON 31 ST MAY, 2012 IN SUPPORT OF ITS APPEAL BEFORE THE LD. CIT (A) ON 26 TH APRIL, 2011 AGAINST THE ORDER DATED 24.3.2011. THE ASSESSEE VIDE SAME SUBMISSION HAD ALSO RAISED AN AD DITIONAL GROUND OF APPEAL AT PAGE 57 OF THE PAPER BOOK IN THE FOLLOWING MANNER :- 9 ITA NO. 75-80/JP/2013 A.Y. 2004-05 TO 09-10. VODAFONE DIGILINK LTD. VS. ITO TDS-2,JAIPUR. 1. ADDITIONAL GROUND (FY 2003-04 TO 2008-09): ORD ER PASSED UNDER SECTION 201(1) OF THE ACT ON MARCH 24, 2011 IS BAD IN LAW AND THE PROCEEDINGS ARE BARRED BY LIMITATION. 1.1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LEARNED TDS OFFICER HAS ERRED IN ASSUMING JURISDICTION AND PASSING AN ORDER UNDER SECTION 201(1) OF THE ACT WHICH IS BARRED BY THE LIMITATION AND LIABLE TO BE STRUCK DOWN DUE TO DELAY IN INITIA TION/COMPLETION OF PROCEEDINGS. 1.2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE IMPUGNED TDS ORDER PASSED BY THE LEARNED TDS OFFICE R IS VOID-AB- INITIO AND BAD IN LAW SINCE THE TDS PROCEEDINGS FOR THE SUBJECT FINANCIAL YEAR, IN RESPECT OF THE ISSUE UNDER CONSI DERATION, ALREADY STAND CONCLUDED BY VIRTUE OF THE EARLIER ORDER UNDE R SECTION 201(1)/201(1A) PASSED ON JANUARY 17, 2011. THE LD. CIT (A) HAS PASSED A DETAILED JUDGMENT ON 1 5.11.2012 AND HAS DECIDED THE APPEAL FOR THE A.Y. 2004-05 TO 10-11. 3. NOW THE ASSESSEE IS BEFORE US AGAINST THE ORDER PASSED BY THE LD. CIT (A). 4. AT THE OUTSET THE LD. COUNSEL FOR THE ASSESSEE H AS SUBMITTED THAT THE PRESENT APPEALS CAN BE DECIDED IF THE ISSUE OF LIMITATION I S DECIDED BY THIS TRIBUNAL AND HAS SUBMITTED THAT THE ORDER PASSED ON 24.3.2011 WAS NO T PASSED WITHIN ONE YEAR FROM THE END OF THE FINANCIAL YEAR IN WHICH THE PROCEEDINGS WERE INITIATED. HE SUBMITTED THAT THE PROCEEDINGS WERE INITIATED ON 4 TH FEBRUARY, 2009 AND THE ORDER WAS REQUIRED TO BE PASSED BY 31.03.2010, THEREFORE, IN VIEW OF THE LAW LAID DOWN BY THE SPECIAL BENCH IN 10 ITA NO. 75-80/JP/2013 A.Y. 2004-05 TO 09-10. VODAFONE DIGILINK LTD. VS. ITO TDS-2,JAIPUR. THE CASE OF MAHINDRA & MAHINDRA JUDGMENT, THE ORDER PASSED BY THE AO WAS BEYOND LIMITATION AND, THEREFORE APPEALS WERE REQUIRED TO BE DECIDED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 5. BOTH THE PARTIES I.E. REVENUE AS WELL AS ASSESSE E HAVE AGREED THAT TRIBUNAL SHOULD DECIDE THE ISSUE OF LIMITATION FIRST. 6. NOW WE PROCEED TO RECORD THE SUBMISSIONS ON BEHA LF OF THE ASSESSEE TO SUPPORT THAT THE ORDER PASSED BY THE AO IS BEYOND THE PERIO D OF LIMITATION. 7. THE ASSESSEE CONTENDED THAT SECTION 201 OF THE A CT AS EXISTING PRIOR TO ITS INSERTION WITH EFFECT FROM 1.4.2010 PROVIDED AS UND ER :- 201.(1) IF ANY SUCH PERSON (REFERRED TO IN SECTION 200) AND IN THE CASES REFERRED TO IN SECTION 194, THE PRINCIPAL OFFICER A ND THE COMPANY OF WHICH HE IS THE PRINCIPAL OFFICER DOES NOT DEDUCT (THE WH OLE OR ANY PART OF THE TAX) OR AFTER DEDUCTING FAILS TO PAY THE TAX AS REQ UIRED BY OR UNDER THIS ACT, HE OR IT SHALL, WITHOUT PREJUDICE TO ANY OTHER CONSEQUENCES WHICH HE OR IT MAY INCUR, BE DEEMED TO BE AN ASSESSEE IN DEF AULT IN RESPECT OF THE TAX : PROVIDED THAT NO PENALTY SHALL BE CHARGED UNDER SEC TION 221 FROM SUCH PERSON, PRINCIPAL OFFICER OR COMPANY UNLESS THE (AS SESSING) OFFICER IS SATISFIED THAT SUCH PERSON OR PRINCIPAL OFFICER OR COMPANY, AS THE CASE MAY BE, HAS (WITHOUT GOOD AND SUFFICIENT REASONS) FAILE D TO DEDUCT AND PAY THE TAX. [(1A) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SE CTION (1), IF ANY SUCH PERSON, PRINCIPAL OFFICER OR COMPANY AS IS REFERRED TO IN THAT SUB-SECTION DOES NOT DEDUCT (THE WHOLE OR ANY PART OF THE TAX) OR AFTER DEDUCTING FAILS TO PAY THE TAX AS REQUIRED BY OR UNDER THIS ACT, HE OR IT SHALL BE LIABLE TO PAY SIMPLE INTEREST AT [TWELVE] PER CENT PER ANNUM ON THE AMOUNT OF SUCH TAX FROM THE DATE ON WHICH SUCH TAX WAS DEDUCTIBLE TO THE DATE ON WHICH SUCH TAX IS ACTUALLY PAID.] 11 ITA NO. 75-80/JP/2013 A.Y. 2004-05 TO 09-10. VODAFONE DIGILINK LTD. VS. ITO TDS-2,JAIPUR. (2) WHERE THE TAX HAS NOT BEEN PAID AS AFORESAID AF TER IT IS DEDUCTED, [THE AMOUNT OF THE TAX TOGETHER WITH THE AMOUNT OF SIMPL E INTEREST THEREON REFERRED TO IN SUB-SECTION (1A)] SHALL BE A CHARGE UPON ALL THE ASSETS OF THE PERSON, OR THE COMPANY, AS THE CASE MAY BE, REF ERRED TO IN SUB- SECTION (1). IT WAS CONTENDED THAT FROM THE BARE PERUSAL OF SECT ION 201 OF THE ACT AS EXISTING FOR THE RELEVANT PERIOD, CLEARLY SHOWS THAT NO LIMITATION W AS PRESCRIBED FOR THE INITIATION OF PROCEEDINGS UNDER SECTION 201 OF THE ACT. IT WAS F URTHER CONTENDED THAT HONBLE DELHI HIGH COURT IN THE MATTER OF CIT VS. NHK CORPORATION JAIPUR HAS HELD THAT ACTION MUST BE INITIATED BY THE COMPETENT AUTHORITY UNDER THE IT A CT, WHERE NO LIMITATION PRESCRIBED, AS IN SECTION 201 WITHIN THE PERIOD OF 4 YEARS. 7.1. IT WAS FURTHER SUBMITTED THAT THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE MATTER OF NHK CORPORATION JAPAN WAS FOLLOWED IN THE CASE OF CIT VS. HUCTHISON ESSAR TELECOM LTD. ( 323 ITR 230) (DEL.) AND ALSO IN CIT VS. SATLUJ JAL VIDYUT NIGAM LTD. (345 ITR 552)(HP) AND OTHERS. 7.2. THE LD. COUNSEL FOR THE ASSESSEE HAS DRAWN OUR ATTENTION TO THE SPECIAL BENCH DECISION PASSED IN THE CASE OF MAHINDRA & MAHINDRA (122 TTJ 577)(MUM.)(SB) AND HAS CONTENDED THAT TIME LIMIT FOR COMPLETING THE PROCEE DINGS AS PER THE SAID JUDGMENT HAS TO BE WITHIN ONE YEAR FROM THE END OF THE FINANCIAL YEAR IN WHICH THE PROCEEDINGS UNDER SECTION 201 WERE INITIATED. THEREAFTER, IT WAS CONT ENDED BY THE LD. COUNSEL FOR THE ASSESSEE THAT IN THE PRESENT CASE THE PROCEEDINGS W ERE INITIATED PURSUANT TO NOTICE DATED 4 TH FEBRUARY, 2009 AND THEREAFTER COMPLETED BY THE IMP UGNED ORDER DATED 12 ITA NO. 75-80/JP/2013 A.Y. 2004-05 TO 09-10. VODAFONE DIGILINK LTD. VS. ITO TDS-2,JAIPUR. 24.3.2011. THEREFORE, THE ORDER PASSED BY THE LOWER AUTHORITIES WAS BEYOND THE PERIOD OF LIMITATION IN VIEW OF THE JUDGMENT PASSED IN THE CASE OF MAHINDRA & MAHINDRA VS. DCIT. THE LD. COUNSEL FOR THE ASSESSEE ALSO RELIE D UPON THE JUDGMENT IN THE CASE OF S.S GADGIL VS. LAL AND CO. (53 ITR 231) (SC) TO CON TEND THAT THE LIMITATION PRESCRIBED IN THE ACT WAS NOT MERE A PERIOD OF LIMITATION BUT IT WAS EMPHASIZED A FATTER UPON THE POWER OF THE AO TO TAKE ACTION UNDER THE SAID PROVI SION. IN THAT CONTEXT IT WAS SUBMITTED THAT SINCE BY VIRTUE OF THE JUDGMENT OF M AHINDRA & MAHINDRA, THE ORDER WAS REQUIRED TO BE PASSED WITHIN ONE YEAR FROM THE END OF THE FINANCIAL YEAR IN WHICH IT WAS INITIATED. THEREFORE, NON PASSING OF THE ORDER HAS GIVEN RISE TO A CRYSTALLIZED RIGHT IN FAVOUR OF THE ASSESSEE. MOREOVER, IT ALSO FATTER T HE POWER OF THE AO TO PASS THE ORDER IN THE PENDING PROCEEDINGS AFTER 31.3.2010 AS THE P ROCEEDINGS WERE INITIATED ONLY ON 4 TH FEBRUARY, 2009. THE LD. COUNSEL HAS ALSO DRAWN OUR ATTENTION TO THE JUDGMENT PASSED BY HONBLE MUMBAI HIGH COURT IN THE CASE OF DIRECTOR OF INCOME TAX VS. MAHINDRA & MAHINDRA ARISING OUT OF THE ORDER PASSED BY SPECIAL BENCH WHEREBY THE HONBLE MUMBAI HIGH COURT HAS UPHELD THE JUDGMENT P ASSED BY THE SPECIAL BENCH. 7.3. THE LD. COUNSEL FOR THE ASSESSEE THEREAFTER HA S SUBMITTED THAT SECTION 201 WAS MODIFIED BY WAY OF INSERTION OF NEW PROVISIONS WITH EFFECT FROM 1.4.2010. IT WAS SUBMITTED BY LD. COUNSEL FOR THE ASSESSEE THAT THE INTRODUCTION OF THE LIMITATION BY THE FINANCE (NO.2) ACT, 2009 WITH EFFECT FROM 1.4.2010 WAS NOT HAVING THE RETROSPECTIVE APPLICATION AS ON THE DATE OF PASSING OF THE ACT NO PROCEEDINGS WERE DEEMED TO HAVE BEEN PENDING BEFORE THE AO, AS BY THE EFFLUX OF TIM E THE PROCEEDINGS DEEMED TO HAVE 13 ITA NO. 75-80/JP/2013 A.Y. 2004-05 TO 09-10. VODAFONE DIGILINK LTD. VS. ITO TDS-2,JAIPUR. BEEN COMPLETED ON 31.3.2010 , BEING NOT COMPLETED B Y THE AO IN TERMS OF THE MANDATE OF SPECIAL BENCH IN MAHINDRA & MAHINDRA JUDGMENT. H E ALSO CONTENDED THAT THE ASSESSEE HAS RAISED THE PLEA OF LIMITATION AS MENTI ONED HEREIN ABOVE DURING THE COURSE OF HEARING AS AN ADDITIONAL GROUND BEFORE THE LD. C IT (A) AND THE LD. CIT (A) HAS ALSO DEALT WITH THE ISSUE OF LIMITATION IN PARA 6.2 AT P AGE 15 AS UNDER :- '6.2. I HAVE DULY CONSIDERED THE SUBMISSION OF TH E LD.AR AND THE MATERIAL AVAILABLE ON RECORDS. THE TIME LIMIT FOR PASSING THE ORDER U/S 201(1) HAS BEEN PROVIDED BY THE FINANCE ACT, 2009 W.E.F. 01. 04.2010.THE MEMORANDUM EXPLAINING THE PROVISIONS OF THE FINAN CE BILL 2009 CLEARLY PROVIDES THAT THE AMENDMENT WILL APPLY TO SUCH OR DERS PASSED ON OR AFTER 01.03.2010. HENCE, THE PROVISIONS OF SEC. 201(3) ARE APPLICABLE TO THE IMPUGNED ORDER. AS PER SUB-CLAUSE (I) OF SUB-SEC. (3), ORDER CAN BE PASSED WITHIN TWO YEARS FROM THE END OF THE F.Y. IN WHICH THE STATEMENTS U/S 200 WERE FILED. AS PER THE DETAILS FILED BY L D.AR, THE STATEMENTS U/S 200 FOR F.Y. 2008-09 AND 2009-10 WERE FILED WITHI N TWO YEARS FROM THE DATE OF THE ORDER PASSED U/S 201(1) OF THE ACT. H ENCE, THE ORDER PASSED FOR F.Y. 2008-09 AND 2009-10 ARE WITHIN THE LIMIT ATION PERIOD AND ARE VALID. 7.4. THE LD. AR FURTHER RELIED UPON THE JUDGMENT PA SSED IN THE MATTER OF ACIT VS. CATHOLIC RELIEF SERVICES, 55 SOT 405 (DEL.) AND ALS O RELIED UPON THE JUDGMENT IN THE MATTER OF ORACLE INDIA PVT. LTD. VS. DCIT (WP NO. 3 075/2015) DATED 9.7.2015 TO CONTEND THAT IF THE PROCEEDINGS ARE NOT CONCLUDED W ITHIN THE REASONABLE TIME, AS INTERPRETED BY THE SPECIAL BENCH, THE ORDER OF THE AO IS NOT MAINTAINABLE BEING BARRED BY LIMITATION. 8. THE LD. D/R FOR THE REVENUE HAS SUBMITTED THAT T HE JUDGEMENT GIVEN BY THE HONBLE MUMBAI HIGH COURT IN THE CASE OF MAHINDRA & MAHINDRA ON 3.7.2014 IS SUBJECT 14 ITA NO. 75-80/JP/2013 A.Y. 2004-05 TO 09-10. VODAFONE DIGILINK LTD. VS. ITO TDS-2,JAIPUR. MATTER OF CIVIL APPEAL PENDING BEFORE THE HONBLE S UPREME COURT IN SLP NO. 143/2015. IN THE SAID APPEAL THE LEAVE WAS GRANTED BY THE HON BLE SUPREME COURT, IT WAS CONTENDED THAT SINCE THE LEAVE WAS GRANTED BY THE H ONBLE SUPREME COURT, THEREFORE, THE ORDER PASSED BY THE HONBLE MUMBAI HIGH COURT H AS NOT ATTAINED FINALITY. HE FURTHER RELIED UPON CERTAIN PORTIONS OF THE ORDER OF SPECIAL BENCH TO CONTEND THAT THE SPECIAL BENCH ITSELF WAS OF THE OPINION THAT THE JU DGMENT PASSED BY THE HONBLE HIGH COURT OTHER THAN JURISDICTIONAL HIGH COURTS ARE NOT BINDING ON IT. IT WAS FURTHER SUBMITTED THAT THE COURTS ARE NOT COMPETENT TO LEGI SLATE AND THE LEGISLATURE HAS THE SOLE PREROGATIVE OF THE LEGISLATURE AND THE TRIBUNAL AND THE HONBLE HIGH COURT HAS NO POWER EITHER FOR INITIATION OF PROCEEDINGS OR FOR COMPLET ION OF THE PROCEEDINGS. 8.1. THE LD. D/R HAS ALSO SUBMITTED THAT THE DIVISI ON BENCH OF HONBLE DELHI HIGH COURT IN THE MATTER OF NHK CORPORATION JAPAN, WA S NOT CONCERNED WITH THE ISSUE OF COMPLETION OF PROCEEDINGS RATHER IT WAS ONLY CONCER NED WITH THE INITIATION OF THE PROCEEDINGS AND FOR THE PURPOSE OF INITIATION OF TH E PROCEEDINGS IT HAS LAID DOWN THE TIME LIMIT OF 4 YEARS. IT WAS POINTED OUT BY THE J UDGMENT OF NHK CORPORATION JAPAN DIVISION BENCH, RATHER HAD MADE A DISTINCTION BETWE EN THE INITIATION OF PROCEEDINGS AND COMPLETION OF PROCEEDINGS. IT WAS MENTIONED AS UND ER :- ' 11. IN BHARAT STEEL TUBES LTD. (SUPRA) THE QUESTI ON THAT AROSE BEFORE THE COURT (AND WHICH HAS BEEN STATED ON P. 130 OF THE REPORT) IS WHETHER AN ORDER OF ASSESSMENT UNDER SECTION 11(3) OF THE PUNJAB GENERAL SALES-TAX ACT, 1948 OR SECT ION 28(3) OF THE HARYANA GENERAL SALES-TAX ACT, 1973 C OULD NOW BE 15 ITA NO. 75-80/JP/2013 A.Y. 2004-05 TO 09-10. VODAFONE DIGILINK LTD. VS. ITO TDS-2,JAIPUR. COMPLETED OR IT WOULD BE BARRED BY LIMITATION. IN THAT CASE, THE ASSESSMENT PROCEEDINGS HAD BEEN UNDULY DELAYED AND THE SUPREME COURT CAME TO THE CONCLUSION THAT FOR COMPLETING TH E ASSESSMENT PROCEEDINGS THERE IS NO PERIOD OF LIMITATION PRESCR IBED AND THAT WOULD DEPEND UPON THE FACTS OF EACH CASE. CONSIDERING THE FACTS OF THE CASE, THE SUPREME COURT GAVE A DIRECTION TO THE ASS ESSING AUTHORITY TO COMPLETE ALL THE PENDING ASSESSMENTS WITHIN A PE RIOD OF FOUR MONTHS FROM THE DATE OF DELIVERY OF THE JUDGMENT. 12. INSOFAR AS BHATINDA DISTRICT COOP. MIL P. UNION LTD. (SUPRA) IS CONCERNED, THE QUESTION THAT AROSE BEFORE THE SUPRE ME COURT WAS REGARDING INITIATION OF PROCEEDINGS BY EXERCISE OF JURISDICTION BY THE STATUTORY AUTHORITY. THE SUPREME COURT HELD THAT EX ERCISE OF JURISDICTION MUST BE WITHIN A REASONABLE PERIOD OF TIME AND CONSIDERING THE PROVISIONS OF THE PUNJAB GENERAL SA LES-TAX ACT, 1948, IT WAS HELD THAT A REASONABLE PERIOD OF TIME FOR IN ITIATING PROCEEDINGS WOULD BE FIVE YEARS. 13. THERE IS A QUALITATIVE DIFFERENCE BETWEEN BHARA T STEEL TUBES LTD. (SUPRA) AND BHATINDA DISTRICT COOP. MIL P. UNION LT D. (SUPRA). IN THE FORMER CASE, THE QUESTION PERTAINED TO COMPLETION O F PROCEEDINGS, WHILE IN THE LATTER CASE IT PERTAINED TO INITIATION OF PROCEEDINGS. WE ARE CONCERNED WITH INITIATION OF PROCEEDINGS.'' 8.2. THE LD. D/R FOR THE REVENUE HAS DRAWN OUR ATTE NTION TO THE ORDER PASSED BY HONBLE SUPREME COURT IN SLP FILED BY THE REVENUE I N NHK CORPORATION JAPAN AS UNDER :- 16 ITA NO. 75-80/JP/2013 A.Y. 2004-05 TO 09-10. VODAFONE DIGILINK LTD. VS. ITO TDS-2,JAIPUR. ' THE FOLLOWING SUBSTANTIAL QUESTION OF LAW ARISE S FOR CONSIDERATION IN THIS BATCH OF CIVIL APPEALS : 'WHETHER THE INCOME TAX APPELLATE WAS CORRECT IN LA W IN HOLDING THAT THE ORDERS PASSED UNDER SECTIONS 201(1) AND 20 1(1A) OF THE INCOME TAX ACT, 1961 ARE INVALID AND BARRED BY TIME HAVING BEEN PASSED BEYOND A REASONABLE PERIOD. HAVING HEARD LEARNED COUNSEL ON BOTH SIDES, WE ARE OF THE VIEW THAT, ON THE FACTS AND CIRCUMSTANCES OF THESE CASES, THE QUE STION ON THE POINT OF LIMITATION FORMULATED BY THE INCOME TAX APPELLATE T RIBUNAL IN THE PRESENT CASES NEED NOT BE GONE INTO FOR THE SIMPLE REASON T HAT, AT THE RELEVANT TIME, THERE WAS A DEBATE ON THE QUESTION AS TO WHET HER TDS WAS DEDUCTIBLE UNDER THE INCOME TAX ACT, 1961, ON FOREI GN SALARY PAYMENT AS A COMPONENT OF THE TOTAL SALARY PAID TO AN EXPATRIA TE WORKING IN INDIA ? THIS CONTROVERSY CAME TO AN END VIDE JUDGEMENT OF T HIS COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. ELI LILLY & CO. (I NDIA) PVT. LTD., REPORTED IN (2009) 312 ITR 225. THE QUESTION ON LIM ITATION HAS BECOME ACADEMIC IN THESE CASES BECAUSE, EVEN ASSUMING THAT THE DEPARTMENT IS RIGHT ON THE ISSUE OF LIMITATION STILL THE QUESTION WOULD ARISE WHETHER ON SUCH DEBATABLE POINTS, THE ASSESSEE(S) COULD BE DEC LARED AS ASSESSEE (S) IN DEFAULT UNDER SECTION 192 READ WITH SECTION 201 OF THE INCOME TAX ACT, 1961. FURTHER, WE ARE INFORMED THAT THE ASSESSEE(S) HAVE PAID THE DIFFERENTIAL TAX. THEY HAVE PAID THE INTEREST AND T HEY FURTHER UNDERTAKE NOT TO CLAIM REFUND FOR THE AMOUNTS PAID. BEFORE CO NCLUDING, WE MAY ALSO STATE THAT, IN ELI LILLY & CO. (INDIA) PVT. LTD. (SU PRA) VIDE PARAGRAPH 21, THIS COURT HAS CLARIFIED THAT THE LAW LAID DOWN IN THE SAID CASE WAS ONLY APPLICABLE TO THE PROVISIONS OF SECTION 192 OF THE INCOME TAX ACT, 1961.' 17 ITA NO. 75-80/JP/2013 A.Y. 2004-05 TO 09-10. VODAFONE DIGILINK LTD. VS. ITO TDS-2,JAIPUR. 8.3. IN VIEW OF THE ABOVE IT WAS CONTENDED THAT EVE N THE ISSUE OF LIMITATION FOR INITIATION OF PROCEEDINGS HAS NOT BEEN DECIDED BY T HE HONBLE SUPREME COURT WITH RESPECT TO THE SECTION 201 AS EXISTING PRIOR TO 1.4 .2010. LASTLY IT WAS CONTENDED BY THE LD. D/R THAT THE LEGISLATURE HAS MADE A DISTINCTION BETWEEN THE RESIDENT AND NON- RESIDENT IN AMENDMENT DATED 1.4.2010. NEW PROVISIO N INSERTED WITH EFFECT FROM 1.4.2010 WAS ONLY APPLICABLE TO THE RESIDENT. IT WA S FURTHER SUBMITTED THAT THE JUDGMENTS CITED BY THE ASSESSEE ARE APPLICABLE TO N ON RESIDENTS AND ARE NOT APPLICABLE TO RESIDENTS. 8.4. LASTLY IT WAS CONTENDED BY THE LD. D/R THAT SE CTION 201, AS IT WAS PRIOR TO 1.4.2010 HAS NOT PROVIDED ANY LIMITATION EITHER FOR INITIATION OF PROCEEDINGS OR FOR COMPLETING THE PROCEEDINGS, FOR THE FIRST TIME BY V IRTUE OF THE ACT, A NEW PROVISION WAS INTRODUCED WITH A VIEW TO PROTECT THE ASSESSEES FRO M HARASSMENT AND THE LIMITATION WAS PROVIDED FOR INITIATION OF PROCEEDINGS AS WELL AS F OR COMPLETION OF PROCEEDINGS. THEREAFTER IT WAS SUBMITTED THAT THE INTRODUCTION O F NEW SUB-PROVISION IN SECTION 201, WAS MERELY DECLARATORY IN NATURE AND SUB-PROVISION INTRODUCED BY THE ACT HAS ALSO PROVIDED ITS APPLICABILITY AND THE PERIOD UNDER WHI CH THE PROCEEDINGS ARE REQUIRED TO BE COMPLETED IN RESPECT TO THE EARLIER ASSESSMENT YEAR S. 8.5. THE SHOW CAUSE NOTICE DATED 4 TH FEBRUARY, 2009 WAS ONLY RESTRICTED TO NON DEDUCTION OF TDS ON ROAMING CHARGES PAID IN FINANCI AL YEARS 2002-03 TO 08-09. THIS WAS BASED ON THE SURVEY CONDUCTED IN THE BUSINESS P REMISES OF THE ASSESSEE ON 29.12.2008 WHEREAS THE NOTICE DATED 25.10.2010 WAS PERTAINING TO :- 18 ITA NO. 75-80/JP/2013 A.Y. 2004-05 TO 09-10. VODAFONE DIGILINK LTD. VS. ITO TDS-2,JAIPUR. 1) NON DEDUCTION OF TDS UNDER SEC. 194H ON COMMISSION PAID TO VARIOUS DISTRIBUTORS OF PRE-PAID STARTER PACKS AND RECHARGE COUPONS. 2) NON DEDUCTION OF TDS ON ROAMING CHARGES PAID IN FIN ANCIAL YEARS 2002-03 TO 08-09. 3) NON DEDUCTION OF TDS U/S 194-I ON PROVISIONS MADE F OR CELLULAR SIDE SHARING EXPENSES PAID ON VARIOUS TOWER OWNERS/OPERA TORS DURING FINANCIAL YEAR 2007-08 TO 09-10. THE NOTICE DATED 2 5.10.2010 WAS BASED ON THE SURVEY CONDUCTED BY THE REVENUE IN THE BUSINESS PREMISES OF THE ASSESSEE ON 29.12.2008 AND 12 TH JULY, 2010. THE STATED SUBJECT OF TWO SHOW CAUSE NOTICE IS WITH A VIEW TO FIND OUT WHETHER BOTH THE SHOW CAUSE NOTICES PERTAIN TO THE SAME SUBJECT MATT ER OR TWO DIFFERENT SUBJECT MATTER OR WAS ARISING FROM THE SAME SURVEY OR FROM DIFFERE NT SURVEY. IN OUR VIEW, THE NOTICE DATED 4.2.2009 ISSUED BY THE REVENUE WAS A LIMITED NOTICE AND WAS ONLY PERTAINING TO ROAMING CHARGES PAID IN FINANCIAL YEARS 2002-03 TO 08-09. 9. WE SHALL BE DECIDING THE ISSUE OF LIMITATION WIT H RESPECT TO THE NOTICE DATED 4.2.2009, PERTAINING TO NON DEDUCTION OF TDS ON ACC OUNT OF ROAMING CHARGES PAID IN FINANCIAL YEAR 2002-03 TO 08-09 VIDE ISSUING THE NO TICE ON 25/10/2010 AND THE PROCEEDINGS WERE COMPLETED WITHIN THE SAME FINANCIA L YEAR I.E. BY PASSING THE ORDER BY THE AO ON 24.3.2011. 9.1. IT IS NOTICED THAT THE WHOLE CONTENTION OF THE ASSESSEE IS THAT THE NOTICE WAS ISSUED ON 4 TH FEBRUARY, 2009 AND THE PROCEEDINGS WERE COMPLETED ON 24.3.2011, THEREFORE, THE ORDER PASSED UNDER SECTION WAS BARRE D BY LIMITATION. IN FACT, ASSESSEE 19 ITA NO. 75-80/JP/2013 A.Y. 2004-05 TO 09-10. VODAFONE DIGILINK LTD. VS. ITO TDS-2,JAIPUR. HAS NOT STATED THE TRUE AND CORRECT FACTS WHILE MAK ING THE SUBMISSION BEFORE THE TRIBUNAL ORALLY AS WELL AS IN WRITING AND HAS NOT C LEARLY MENTIONED THAT THE NOTICE DATED 25.10.2010 WAS A COMPREHENSIVE NOTICE ISSUED ON 3 D IFFERENT ASPECTS BASED ON THE SURVEY CARRIED OUT ON 12.07.2010. EVEN AS PER THE BE ST CASE OF THE ASSESSEE, THE PROCEEDINGS WERE INITIATED ON 25.10.2010 IN RESPECT OF THE ABOVE TWO GROUNDS AND WERE COMPLETED ON 24.03.2011. THEREFORE, EVEN GOING BY THE JUDGMENT OF THE SPECIAL BENCH, THE PROCEEDINGS WERE COMPLETED WITHIN THE TI ME FRAME GRANTED. THEREFORE, WE HOLD THAT THE ORDER PASSED U/S 201 IN RESPECT OF GR OUNDS I.E. (1) NON DEDUCTION OF TDS UNDER SECTION 194-H ON COMMISSION PAID TO VARIOUS D ISTRIBUTORS OF PRE-PAID STARTER PACKS AND RECHARGE COUPONS ; (2) NON DEDUCTION OF T DS U/S 194-I ON PROVISIONS MADE FOR CELLULAR SIDE SHARING EXPENSES PAID TO VARIOUS TOWER OWNERS/OPERATORS DURING THE FINANCIAL YEARS 2007-08 AND 2009-10 WAS WITHIN THE PERIOD LIMITATION. THEREFORE, THIS ISSUE IS DECIDED AGAINST THE ASSESSEE AND IN FAVOUR OF THE REVENUE. 9.2. NOW WE ARE LEFT FOR DETERMINATION OF THE ORDER PASSED BY THE AO ON THE ISSUE OF NON DEDUCTION OF TDS ON ROAMING CHARGES PAID IN FIN ANCIAL YEAR 2002-03 TO 08-09. AS MENTIONED IN THE BRIEF FACTS HEREIN ABOVE, THE NOTI CE DATED 4.2.2009 WAS ISSUED PURSUANT TO THE SURVEY CARRIED OUT ON 29.12.2008. T HE REPLY TO THE SHOW CAUSE NOTICE DATED 4.2.2009 WAS SUBMITTED IN PIECE-MEAL BY SENDI NG THE LETTER DATED 12.2.2009, 16.2.2009 AND 23.2.2009. IN THE LAST LETTER DATED 2 3.2.2009 THE ASSESSEE HAS SOUGHT TIME TO FILE THE COMPREHENSIVE REPLY BY STATING SOME OF THE REMAINING INFORMATION IS IN PROCESS AND WILL BE SUBMITTED TO YOUR GOOD OF FICE SOON. THEREAFTER 20 ITA NO. 75-80/JP/2013 A.Y. 2004-05 TO 09-10. VODAFONE DIGILINK LTD. VS. ITO TDS-2,JAIPUR. ANOTHER SURVEY WAS CARRIED OUT ON 12 TH JULY, 2010 AND BASED ON BOTH THE SURVEY AND INFORMATION COLLECTED FROM THE ASSESSEE, THEREAFTER A COMPREHENSIVE SHOW CAUSE NOTICE WAS ISSUED BY THE DEPARTMENT. IT MAY BE NOTED THAT AS PER THE FIRST NOTICE DATED 4.2.2009 THERE IS A QUALITATIVE CHANGE IN AMOUNT OF NON DEDUCTION/SHORT DEDUCTION OF TDS FOR THE PERIOD 2002-03 TO 08-09. FOR THE PURPO SE OF CONVENIENCE, WE ARE REPRODUCING HEREUNDER THE AMOUNT OF NON DEDUCTION/S HORT DEDUCTION OF TDS MENTIONED IN THE NOTICE DATED 4.2.2009 AND THE AMOUNT OF DEMA ND/SHORT DEDUCTION ALLOWED + INTEREST AS PER THE NOTICE DATED 25.10.2010 :- F.Y. AMOUNT OF NON DEDUCTION/SHORT DEDUCTION OF TDS AS PER NOTICE DATED 4.2.2009. AMOUNT OF TOTAL DEMAND/SHORT DEDUCTION + INTEREST AS PER NOTICE DATED 25.10.2010. 2002 - 03 217540 415501 2003 - 04 364311 652117 2004 - 05 2110254 3524125 2005 - 06 2851563 4419922 2006 - 07 4276656 6115618 2007 - 08 1272979 APRIL 2007 TO MAY 2007 1667603 2007 - 08 16537982 JUNE 2007 TO MARCH 2008 21333996 2008 - 09 20286558 APRIL, 2008 TO NOVEMBER,2008 38987640 APRIL 08 TO MARCH 09 9.3. THEREFORE, WE FIND THAT THE SHOW CAUSE NOTICE ISSUED ON 25.10.2010 WAS A COMPREHENSIVE BASED ON INFORMATION AND DATA COLLECT ED BY THE REVENUE DURING THE COURSE OF VARIOUS SURVEY PROCEEDINGS ON 29.12.2008 AND 12 TH JULY, 2010. FURTHER THE ASSESSEE WHILE FILING THE REPLY TO THE NOTICE DATED 25.10.2010 HAS NOT RAISED ANY 21 ITA NO. 75-80/JP/2013 A.Y. 2004-05 TO 09-10. VODAFONE DIGILINK LTD. VS. ITO TDS-2,JAIPUR. OBJECTION WITH RESPECT TO THE NOTICE BEING TIME BAR RED RATHER THE ASSESSEE HAS FILED THE DETAIL TECHNICAL REPLY ON MERITS STATING THAT THE S HOW CAUSE NOTICE IS NOT TENABLE AS THERE IS NO TECHNICAL SERVICES INVOLVED IN ROAMING CHARGES AND THE ASSESSEE IS NOT LIABLE TO DEDUCT THE TDS ON THE AMOUNT PAID FOR THAT PURPO SE. WE ARE AFRAID THAT THE CONTENTION OF THE LD. A/R FOR THE ASSESSEE IS NOT M AINTAINABLE ON FACTS THOUGH THE NOTICE WAS ISSUED ON 4 TH FEBRUARY, 2009 BUT A COMPREHENSIVE AND DETAILED NO TICE GIVING THE DIFFERENT CHARGES WERE ISSUED ON 25 TH OCTOBER, 2010, THEREFORE, THE INITIATION OF PROCEEDINGS WAS, IN THE OPINION OF THE BENCH HAS EF FECTED ONLY ON 25.10.2010 AND THE PROCEEDINGS WERE CULMINATED AND COMPLETED WHILE PAS SING THE ORDER ON 24.3.2011. THEREFORE, WE DO NOT FIND ANY MERIT IN THE CONTENTI ON OF THE LD. A/R FOR THE ASSESSEE. THEREFORE, WE REJECT THE CONTENTION OF THE ASSESSEE AND HOLD THAT THE ORDER PASSED UNDER SECTION 201 IN RESPECT OF NON DEDUCTION OF TD S ON ROAMING CHARGES PAID IN THE FINANCIAL YEAR 2002-03 TO 08-09 WAS WITHIN THE PERI OD OF LIMITATION, THEREFORE, THE ISSUE IS DECIDED AGAINST THE ASSESSEE. 9.4. EVEN ASSUMING THAT THE PROCEEDINGS WERE INITIAT ED ON 4 TH FEBRUARY, 2009 AS CONTENDED BY THE LD. COUNSEL FOR THE ASSESSEE, BASE D ON THE SURVEY DATED 29.12.2008, WE ARE NOT INCLINED TO ACCEPT THE INTERPRETATION GI VEN BY THE LD. A/R THAT THE PROCEEDINGS WERE REQUIRED TO BE COMPLETED BEFORE 31 .03.2010 AS HELD BY THE SPECIAL BENCH. 22 ITA NO. 75-80/JP/2013 A.Y. 2004-05 TO 09-10. VODAFONE DIGILINK LTD. VS. ITO TDS-2,JAIPUR. 9.5. THE SPECIAL BENCH WHILE PASSING THE JUDGMENT H AS RECORDED THE FACTUAL MATRIX IN ITS JUDGMENT IN PARA 2. THE PARA 2 OF THE JUDGMENT IS REPRODUCED HEREIN BELOW FOR THE PURPOSE OF CONVENIENCE :- ' 2. THE FACTUAL MATRIX OF THE CASE IS AS UNDER : IT WAS GATHERED BY THE REVENUE AUTHORITIES THAT THE ASSESSEE CAME OUT WITH TWO EURO ISSUES OF THE SIZE OF US $ 74.75 M ILLION AND US $ 100 MILLION IN NOVEMBER, 1993 AND JULY, 1996 RESPEC TIVELY. THE ASSESSEE WAS CALLED UPON TO FURNISH THE DETAILS IN CONNECTION WITH THE PAYMENTS MADE TO VARIOUS NON-RESIDENT PERSONS WHO WERE CONNECTED WITH BRINGING OUT THESE EURO ISSUES. FROM SUCH DETAILS THE DY. CIT, TDS CIRCLE, MUMBAI-1 (HER EINAFTER CALLED AO) OBSERVED THAT M/S BANQUE PARIBAS WAS PAID A SUM OF RS. 8,21,00,838 AS MARKETING AND UNDERWRITING COMMISSIO N AND SELLING COMMISSION. A FURTHER SUM OF RS. 88,74,971 WAS PAID AS OUT-OF- POCKET EXPENSES LIKE TRAVELLING EXPENSES, FEE AND D ISBURSEMENT OF LEGAL ADVISORS, MANAGERS, TELEX, TELEPHONE ETC. THE DETAILS OF THESE TWO EURO ISSUES HAVE BEEN MORE ELABORATELY RECORDED IN THE ORDER PASSED BY THE AO UNDER S. 195. AS REGARDS THE FIRST EURO ISSUE, THE COMPANY CAME OUT WITH AN OFFERING CIRCULAR DT. 30TH NOV., L993 OFFERING 87,36,559 GLOBAL DEPOSITORY RECEIPTS (GDRS ) REPRESENTING 87,36,559 ORDINARY SHARES AT AN ISSUE PRICE OF US $ 7.44 PER GDR. IT WAS FURTHER STIPULATED IN THE TERMS OF THE OFFERING CIRCULAR THAT EACH GDR WOULD BE ISSUED IN RESPECT OF ONE ORDINARY SHAR E WITH A PAR VALUE OF RS. 10 PER SHARE. THE CLOSING DATE IN TERM S OF THE OFFERING CIRCULAR WAS FIXED AS 14TH MARCH, 1993, BY WHICH TI ME THE DELIVERY OF GDR WAS STIPULATED TO BE MADE. M/S BANQUE PARIBA S WERE APPOINTED AS LEAD MANAGERS. CLAUSE 5 OF THE SUBSCRI PTION AGREEMENT WITH THE LEAD MANAGES DEALS WITH THE COMMISSION PAY ABLE TO THE LEAD MANAGERS. IT PROVIDES THAT MANAGEMENT AND UNDE RWRITING COMMISSION WAS TO BE PAID AT 1.5 PER CENT OF THE IS SUE PRICE AND SELLING COMMISSION AT 2 PER CENT OF THE ISSUE PRICE . SUCH COMMISSION WAS TO BE RETAINED BY THE LEAD MANAGERS FROM THE IS SUE PRICE OF GDRS. BESIDES THAT THE ASSESSEE ALSO AGREED TO BEAR AND PAY ALL EXPENSES INCIDENTAL TO THE PERFORMANCE OF ITS OBLIG ATIONS INCLUDING THE FEES AND EXPENSES OF ITS LEGAL ADVISORS AND ACC OUNTANTS ETC. EXPENSES IN CONNECTION WITH THE ISSUE OF THE DEPOSI TED SHARES ETC. THE COST OF LISTING THE GDRS AND THE DEPOSITED SHAR ES ETC. AND THE 23 ITA NO. 75-80/JP/2013 A.Y. 2004-05 TO 09-10. VODAFONE DIGILINK LTD. VS. ITO TDS-2,JAIPUR. COST OF ANY ADVERTISING AGREED TO BY THE ASSESSEE I N CONNECTION WITH THE OFFER OF GDRS. THE ASSESSEE FURTHER AGREED TO R EIMBURSE TO THE LEAD MANAGER FOR ITS OUT OF POCKET EXPENSES AND DIS BURSEMENT INCURRED BY IT, SUBJECT TO THE LIMIT OF US $ 1,75,0 00. 3. THE SECOND ISSUE OF US $ 100,000,000 WAS OF 5 PE R CENT CONVERTIBLE NOTES DUE ON 9TH JULY, 2001 CONVERTIBLE INTO GDRS. FOR THIS ISSUE, THE SUBSCRIPTION AGREEMENT WAS ENTERED INTO BY THE ASSESSEE WITH GOLDMAN SACHS (ASIA) L.L.C. NOTES WERE TO BE IN THE DENOMINATION OF US $ 1,000 EACH CONVERTIB LE, AT THE OPTION OF THE HOLDER THEREOF, INTO GDRS EACH REPRESENTING ONE ORDINARY SHARE OF THE COMPANY ON OR AFTER 18TH AUG., 1996 UN TIL AND INCLUDING 9TH JUNE, 2001. THE CLOSING DATE FOR THIS ISSUE WAS FIXED ON 9TH JULY, 1996. CLAUSE 4 OF THIS AGREEMENT DEALS WITH THE COMMISSION AND CONCESSION. IT PROVIDES THAT IN CONS IDERATION OF THE AGREEMENT BY THE MANAGERS TO MANAGE THE ISSUE OF, A ND TO SUBSCRIBE FOR, THE NOTES, THE COMPANY SHALL PAY TO GOLDMAN SACHS (ASIA) L.L.C. A COMBINED MANAGEMENT AND UNDERWRITIN G COMMISSION OF 1 PER CENT OF THE AGGREGATE PRINCIPAL AMOUNT OF NOTES AND FURTHER 1.50 PER CENT AS SELLING CONCESSION. ' FROM THE READING OF THE FACTUAL MATRIX, IT IS CLEAR THAT THE SPECIAL BENCH WAS DECIDING THE ISSUE OF TDS ON PAYMENTS TO NON RESIDENTS AND W AS NOT DECIDING THE ISSUE OF TDS PAYMENT TO RESIDENTS. WITH RESPECT, PRECEDENT IS AN AUTHORITY ONLY FOR WHAT IT ACTUALLY DECIDES AND NOT FOR WHAT MAY REMOTELY FOLLOW THERE FROM. THE FACTS IN THE PRESENT CASE ARE DIFFERENT THAN THE FACTS BEFORE THE SPECIAL BEN CH. IN THE PRESENT CASE THE NON DEDUCTION OF TDS WAS FOR THE PAYMENT OF ROAMING CHA RGES PAID TO OTHER CELLULAR OPERATORS IN INDIA AND WAS NOT IN RESPECT OF THE PA YMENT MADE TO ANY FOREIGN ENTITY OR NON-RESIDENT ENTITY. THEREFORE, AT THE FIRST INSTAN CE THE JUDGMENT CITED BY THE LD. A/R FOR THE ASSESSEE IS NOT APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. 9.6. THE JUDGMENT OF MAHINDRA & MAHINDRA BY THE SPE CIAL BENCH MENTIONED IN PARA 15.2, 15.3, 15.4 AND 15.5 ARE AS UNDER :- 24 ITA NO. 75-80/JP/2013 A.Y. 2004-05 TO 09-10. VODAFONE DIGILINK LTD. VS. ITO TDS-2,JAIPUR. '15.2 WHEN A PERSON PAYS A SUM TO ANYONE ON WHICH T AX. IS REQUIRED TO BE DEDUCTED, THEN THE PERSON RESPONSIBLE FOR PAYING SUCH SUM IS UNDER OBLIGATION TO DEDUCT TAX AT SOURCE AT THE TIME OF C REDIT OF SUCH SUM TO THE ACCOUNT OF PAYEE OR AT THE TIME OF PAYMENT THER EOF IN CASH OR BY ISSUING OF A CHEQUE OR BY ANY OTHER MODE WHICHEVER IS EARLIER. WHEN THE PERSON RESPONSIBLE HAS DEDUCTED THE TAX AND PAID IT TO THE CREDIT OF THE CENTRAL GOVERNMENT OR AS THE BOARD DIRECTS HIS DUTY IS OVER INSOFAR AS THE QUESTION OF DEDUCTION OF TAX AT SOURCE IS CONCE RNED, OF COURSE, SUBJECT TO THE ISSUANCE OF CERTIFICATE OF SUCH DEDU CTION TO THE PAYEE AND THE FURNISHING OF THE TDS RETURN IN TIME. IF HOWEVE R SUCH PERSON WHO IS RESPONSIBLE FOR DEDUCTING TAX AT SOURCE FAILS TO DE DUCT THE WHOLE OR ANY PART OF THE TAX DEDUCTIBLE OR AFTER DEDUCTING FAILS TO PAY THE SAME TO THE EXCHEQUER, PRIMA FACIE, HE BECOMES THE ASSESSEE IN DEFAULT. THE VERY ACT OF NOT DEDUCTING TAX AT SOURCE OR FAILURE TO DE POSIT THE SAME MAKES SUCH PERSON AN ASSESSEE IN DEFAULT. 15.3 WHEN THERE IS SUCH A FAILURE AS IS REFERRED TO IN THE PRECEDING PARA, THE PROCEEDINGS ARE LAUNCHED AGAINST THE PERSON RES PONSIBLE AND INQUIRY IS CONDUCTED. IF AT THE CONCLUSION OF SUCH PROCEEDI NGS, IT IS FOUND THAT THE PERSON RESPONSIBLE FOR PAYING HAS FAILED TO DED UCT TAX OR FAILED TO DEPOSIT THE SAME AFTER DEDUCTION, HE OR IT IS DEEME D TO BE AN ASSESSEE IN DEFAULT IN RESPECT OF SUCH TAX BY WAY OF ORDER U NDER S. 201(1) SUBJECT TO THE PRESCRIPTION OF EXPLANATION TO S. 191. THUS T HIS ORDER CRYSTALLIZES THE LIABILITY ON THE PERSON RESPONSIBLE FOR PAYING TAX WHICH WAS DEDUCTIBLE. ALBEIT THE PERSON RESPONSIBLE FOR DEDUC TING TAX AT SOURCE BECAME DEFAULTER THE MOMENT HE MADE THE PAYMENT OR CREDITED THE ACCOUNT OF THE PAYEE, WHICHEVER IS EARLIER, WITHOUT DEDUCTION OF TAX AT SOURCE, BUT ON THE PASSING OF THE ORDER UNDER S. 20 1(1), THE AMOUNT OF TAX IS DETERMINED IN RESPECT OF WHICH SUCH PERSON R ESPONSIBLE IS DEEMED TO BE AN ASSESSEE IN DEFAULT. 15.4 ON THE PASSING OF THE ORDER UNDER S. 201(1), A NOTICE OF DEMAND IS ISSUED UNDER S. 156 IN THE NAME OF THE SUCH PERSON WHO IS DEEMED TO BE ASSESSEE IN DEFAULT SPECIFYING THE SUM SO PAYABL E. IF THE NOTICE OF DEMAND IS COMPLIED WITH AND THE SUM DETERMINED BY W AY OF ORDER UNDER S. 201(1), IS PAID, THE MATTER ENDS. 15.5 IF HOWEVER THERE IS A FAILURE TO COMPLY WITH T HE TERMS OF NOTICE OF DEMAND ISSUED UNDER S. 156, THE TAX RECOVERY PROCEE DINGS ARE INITIATED. SEC. 231 PRIOR TO ITS OMISSION BY THE DIRECT TAX LA WS (AMENDMENT) ACT, 1987 W.E.F. 1ST APRIL, 1989, PROVIDED THAT NO PROCE EDINGS FOR THE RECOVERY OF ANY SUM PAYABLE UNDER THIS ACT SHALL BE COMMENCED AFTER THE EXPIRATION OF THREE YEARS FROM THE LAST DAY OF THE FINANCIAL YEAR IN 25 ITA NO. 75-80/JP/2013 A.Y. 2004-05 TO 09-10. VODAFONE DIGILINK LTD. VS. ITO TDS-2,JAIPUR. WHICH THE DEMAND IS MADE OR IN THE CASE OF A PERSON WHO IS DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER ANY PROVISION OF TH IS ACT. THIS SECTION THUS PROVIDED THAT NO PROCEEDINGS FOR RECOVERY OF A NY SUM PAYABLE UNDER THIS ACT SHALL BE COMMENCED AFTER THE EXPIRY OF THREE YEARS FROM THE LAST DAY OF THE FINANCIAL YEAR IN WHICH THE DEM AND WAS MADE. THIS MEANS THAT THE RECOVERY CERTIFICATE COULD BE ISSUED BY THE AO ONLY WITHIN THE AFORESAID PERIOD OF THREE YEARS. SIMULTA NEOUS WITH THE OMISSION OF S. 231, AN AMENDMENT HAS BEEN CARRIED O UT TO S. 222 BY WHICH THE REQUIREMENT OF THE ISSUE OF SUCH CERTIFIC ATE BY AN AO HAS BEEN DISPENSED WITH AND THE TRO CAN NOW DRAW THE STATEME NT OF ARREARS AND ASSUME JURISDICTION AS SOON AS THE ASSESSEE IS IN D EFAULT. '' WE DO NOT AGREE WITH THE VIEW OF THE HONBLE SPECIA L BENCH. IN OUR VIEW, BY VIRTUE OF PROVISIONS OF SECTION 201 OF THE ACT ANY PERSON IS DEEMED TO BE AN ASSESSEE IN DEFAULT IN VIEW OF THE STATUTORY PROVISIONS CONTAINED THERE IN AND IN SUCH A CASE THERE IS NO SCOPE OF FURTHER GIVING NOTICE OF DEMAND UNDER SECT ION 156 OF THE ACT. FROM THE BARE READING OF SECTION 156 IT IS CLEAR THAT IF ANY TAX, INTEREST, PENALTY, FINE OR ANY OTHER SUM IS PAYABLE IN CONSEQUENCE OF ANY ORDER PASSED UNDER THIS ACT, THE AO SHALL SERVE UPON THE ASSESSEE A NOTICE OF DEMAND IN THE PRESCRIBED F ORM. THUS IT IS CLEAR THAT THE TAX BECAME PAYABLE ONLY UPON SERVICE OF NOTICE OF DEMAN D UNDER SECTION 156 OF THE ACT. WHEREAS UNDER SECTION 201 THE DECLARATION OF DEEMIN G PROVISION COMES INTO PLAY ON THE FAILURE OF THE ASSESSEE TO DEDUCT THE TAX UNDER SEC TION 201. THE PAYMENT OF TAX UNDER SECTION 156 IS DEPENDENT UPON THE ADJUDICATION OF T HE LIABILITY/SERVICE OF NOTICE OR DEMAND. IN THE ABSENCE OF SUCH ASSESSMENT/ADJUDICA TION IT IS ONLY A PROPOSED DEMAND/AMBULATORY. OUR VIEW GETS STRENGTHENED FROM THE ORDER PASSED BY THE HONBLE CALCUTTA HIGH COURT WHERE IN PARA 9 TO 12 HAS HELD AS UNDER :- 9. ON A PLAIN READING OF THE AFORESAID PROVISIONS, WE FIND THAT BY VIRTUE OF THE PROVISION UNDER SECTION ASSESSEE IN DEFAULT' IN VIEW OF THE STATUTORY PROVI SION CONTAINED THEREIN AND IN SUCH A CASE, THERE IS NO SCOPE OF GIVING FUR THER NOTICE OF DEMAND UNDER SECTION TAX, INTEREST, PENALTY, FINE OR ANY OTHER SUM IS PA YABLE IN CONSEQUENCE OF ANY ORDER PASSED UNDER THIS ACT'. 10. IT IS WELL SETTLED THAT A TAX BECOMES PAYABLE O NLY UPON SERVICE OF NOTICE OF DEMAND UNDER S NO LIABILITY ARISES IN SUCH A CASE UNTIL SERVICE OF A NOTICE OF DEMAND, BECAUSE THE LIABILITY TO PAY TAX, UNTIL DETERMINED BY MEANS OF A PROPER ASSESSMENT, REMAINS MERELY AMBULATORY AND BECOMES F IXED ONLY UPON COMPLETION OF THE ASSESSMENT AND DEMAND ( M. M. PARIKH, ITO V. NAVANAGAR TRANSPORT & INDUSTRIES LTD . (1967) MANU/SC/0146/1966 11. HOWEVER, THE PROVISIONS CONTAINED IN SECTIONS 195 WHICH, AT NO POINT OF TIME, DEPENDS ON PASSING ANY ORDER UNDER THIS ACT, BUT IS ATTRACTED IMMEDIATELY UPON THE HAP PENING OF THE DEFA ULT MENTIONED THEREIN, I.E. THE FAILURE TO DEDUCT U NDER SECTION 195 SECTION 200 AUTOMATICALLY AND THERE IS NO FURTHER REQUIREMENT O F COMPUTATION OR ASSESSMENT OR EVEN THE SERVICE OF A NOTICE OF DEMAN D UNDER SECTION 156 IMPOSITION OF PENALTY IN TERMS OF THE PROVISO TO SE CTION WITH SECTION 1 12. EVEN IN THE PROVISIONS FOR ISSUE OF CERTIFICATE UNDER SECTION 220 MAY BE DRAWN UP UNDER TWO CIRCUMSTANCES I.E. 1) WHE N AN ASSESSEE IS IN DEFAULT, MEANING THEREBY, THAT IT IS PRECEDED BY SERVICE OF A NOTICE UNDER SECTION DEEMED TO BE IN DEFAULT IN MAKING A PAYMENT OF TAX UNDER THE ACT, A CIRCUMSTANCE COVERED UNDER SECTION 9.7. THE SPECIAL BENCH, IN PARA 26 ITA NO. 75- 80/JP/2013 A.Y. 2004 VODAFONE DIGILINK LTD. VS. ITO TDS 9. ON A PLAIN READING OF THE AFORESAID PROVISIONS, WE FIND THAT BY VIRTUE OF THE PROVISION UNDER SECTION 201 OF THE ACT, A PERSON IS 'DEEMED TO BE AN ASSESSEE IN DEFAULT' IN VIEW OF THE STATUTORY PROVI SION CONTAINED THEREIN AND IN SUCH A CASE, THERE IS NO SCOPE OF GIVING FUR THER NOTICE OF DEMAND UNDER SECTION 156 OF THE ACT WHICH IS APPLICABLE ONLY IN CASES 'WHEN ANY TAX, INTEREST, PENALTY, FINE OR ANY OTHER SUM IS PA YABLE IN CONSEQUENCE OF ANY ORDER PASSED UNDER THIS ACT'. 10. IT IS WELL SETTLED THAT A TAX BECOMES PAYABLE O NLY UPON SERVICE OF NOTICE OF DEMAND UNDER S ECTION 156 OF THE ACT. THE REASON IS THAT NO LIABILITY ARISES IN SUCH A CASE UNTIL SERVICE OF A NOTICE OF DEMAND, BECAUSE THE LIABILITY TO PAY TAX, UNTIL DETERMINED BY MEANS OF A ASSESSMENT, REMAINS MERELY AMBULATORY AND BECOMES F IXED ONLY UPON COMPLETION OF THE ASSESSMENT AND DEMAND ( M. M. PARIKH, ITO V. NAVANAGAR TRANSPORT & INDUSTRIES LTD . MANU/SC/0146/1966 : 63 ITR 663). 11. HOWEVER, THE PROVISIONS CONTAINED IN 195 , 200 AND 201 , IF CONJOINTLY READ, DEAL WITH A LIABILITY WHICH, AT NO POINT OF TIME, DEPENDS ON PASSING ANY ORDER UNDER THIS ACT, BUT IS ATTRACTED IMMEDIATELY UPON THE HAP PENING OF THE ULT MENTIONED THEREIN, I.E. THE FAILURE TO DEDUCT U NDER 195 OR FAILURE TO CREDIT THE SUM DEDUCTED AS REQUIRED B Y 200 . AS SOON AS SUCH FAILURE OCCURS, THE LIABILITY ARI SES AUTOMATICALLY AND THERE IS NO FURTHER REQUIREMENT O F COMPUTATION OR ASSESSMENT OR EVEN THE SERVICE OF A NOTICE OF DEMAN D UNDER 156 UNLESS THE REVENUE DECIDES TO INITIATE PROCEEDINGS FOR IMPOSITION OF PENALTY IN TERMS OF THE PROVISO TO SE CTION WITH SECTION 221 . 12. EVEN IN THE PROVISIONS FOR ISSUE OF CERTIFICATE UNDER 220 OF THE ACT, THERE IS CLEAR INDICATION THAT SUCH CER TIF MAY BE DRAWN UP UNDER TWO CIRCUMSTANCES I.E. 1) WHE N AN ASSESSEE IS IN DEFAULT, MEANING THEREBY, THAT IT IS PRECEDED BY SERVICE OF A NOTICE UNDER SECTION 156 OF THE ACT OR 2) WHE DEEMED TO BE IN DEFAULT IN MAKING A PAYMENT OF TAX UNDER THE ACT, A CIRCUMSTANCE COVERED UNDER SECTION 201 OF THE ACT. THE SPECIAL BENCH, IN PARA 17.5 OF THE JUDGMENT HAS MENTIONED AS UNDER : 80/JP/2013 A.Y. 2004 -05 TO 09-10. VODAFONE DIGILINK LTD. VS. ITO TDS -2,JAIPUR. 9. ON A PLAIN READING OF THE AFORESAID PROVISIONS, WE FIND THAT BY VIRTUE OF 'DEEMED TO BE AN ASSESSEE IN DEFAULT' IN VIEW OF THE STATUTORY PROVI SION CONTAINED THEREIN AND IN SUCH A CASE, THERE IS NO SCOPE OF GIVING FUR THER NOTICE OF DEMAND THE ACT WHICH IS APPLICABLE ONLY IN CASES 'WHEN ANY TAX, INTEREST, PENALTY, FINE OR ANY OTHER SUM IS PA YABLE IN CONSEQUENCE OF 10. IT IS WELL SETTLED THAT A TAX BECOMES PAYABLE O NLY UPON SERVICE OF THE ACT. THE REASON IS THAT NO LIABILITY ARISES IN SUCH A CASE UNTIL SERVICE OF A NOTICE OF DEMAND, BECAUSE THE LIABILITY TO PAY TAX, UNTIL DETERMINED BY MEANS OF A ASSESSMENT, REMAINS MERELY AMBULATORY AND BECOMES F IXED ONLY UPON COMPLETION OF THE ASSESSMENT AND DEMAND ( M. M. PARIKH, ITO V. NAVANAGAR TRANSPORT & INDUSTRIES LTD . 11. HOWEVER, THE PROVISIONS CONTAINED IN , IF CONJOINTLY READ, DEAL WITH A LIABILITY WHICH, AT NO POINT OF TIME, DEPENDS ON PASSING ANY ORDER UNDER THIS ACT, BUT IS ATTRACTED IMMEDIATELY UPON THE HAP PENING OF THE ULT MENTIONED THEREIN, I.E. THE FAILURE TO DEDUCT U NDER OR FAILURE TO CREDIT THE SUM DEDUCTED AS REQUIRED B Y . AS SOON AS SUCH FAILURE OCCURS, THE LIABILITY ARI SES AUTOMATICALLY AND THERE IS NO FURTHER REQUIREMENT O F COMPUTATION OR ASSESSMENT OR EVEN THE SERVICE OF A NOTICE OF DEMAN D UNDER UNLESS THE REVENUE DECIDES TO INITIATE PROCEEDINGS FOR IMPOSITION OF PENALTY IN TERMS OF THE PROVISO TO SE CTION 201(1) READ 12. EVEN IN THE PROVISIONS FOR ISSUE OF CERTIFICATE UNDER OF THE ACT, THERE IS CLEAR INDICATION THAT SUCH CER TIF ICATE MAY BE DRAWN UP UNDER TWO CIRCUMSTANCES I.E. 1) WHE N AN ASSESSEE IS IN DEFAULT, MEANING THEREBY, THAT IT IS PRECEDED BY OF THE ACT OR 2) WHE N HE IS DEEMED TO BE IN DEFAULT IN MAKING A PAYMENT OF TAX UNDER THE ACT, OF THE ACT. 17.5 OF THE JUDGMENT HAS MENTIONED AS UNDER : 27 ITA NO. 75-80/JP/2013 A.Y. 2004-05 TO 09-10. VODAFONE DIGILINK LTD. VS. ITO TDS-2,JAIPUR. 17.5 IT IS TRUE THAT THE TRIBUNAL CANNOT LEGISLATE. AT THE SAME TIME IN ORDER TO FIND OUT THE TIME-LIMITATION FOR A PARTICULAR ACTIO N, FOR WHICH NO TIME-LIMIT IS PRESCRIBED, ONE HAS TO EXAMINE THE SCHEME OF THE AC T ITSELF. IN ORDER TO REACH SUCH CONCLUSION IT IS OF UTMOST IMPORTANCE TO UNDER STAND THE FRAMEWORK OF WHICH THE TIME-LIMIT IS TO BE ASCERTAINED AND THEN CONSIDER THE RELEVANT PROVISIONS THROWING LIGHT ON IT. WE HAVE HELD ABOVE THAT EVEN IF NO TIME-LIMIT IS PRESCRIBED IN THE STATUTE FOR TAKING ANY ACTION, STILL SUCH ACTION CAN BE TAKEN ONLY WITHIN A REASONABLE TIME. NOW WHAT IS THE REAS ONABLE TIME VARIES FROM THE CONTEXT TO CONTEXT. IN ORDER TO APPRECIATE THE REASONABLE TIME UNDER S. 201(1), WE HAVE TO EXAMINE THE SCHEME OF THE ACT. W E HAVE NOTED ABOVE THE NATURE OF PROCEEDINGS AND ALSO THE TYPE OF ORDER UN DER S. 201(1) AND HAVE HELD THAT THE ORDER UNDER THIS SECTION IS AKIN TO T HE ASSESSMENT ORDER AS HAS BEEN LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF DELHI DEVELOPMENT AUTHORITY (SUPRA). WITH RESPECT, WE HAVE THE OCCASION TO GO THROUGH TH E JUDGMENT OF HONBLE SUPREME COURT IN THE MATTER OF DELHI DEVELOPMENT AUTHORITY. WE DO NOT FIND THAT THE HONBLE SUPREME COURT AT ANY POINT OF TIME HAS HELD THAT TH E ASSESSMENT UNDER SECTION 201 IS AKIN TO ASSESSMENT ORDER PASSED UNDER SECTION 143. ON THE CONTRARY, OUR READING CLEARLY DISCLOSES THAT THE HONBLE SUPREME COURT IN THE CASE OF INCOME TAX OFFICER VS. DELHI DEVELOPMENT AUTHORITY (2001) 252 ITR 772 (SC) WAS ONLY DEALING WITH THE ISSUE OF INTERPRETING WHETHER THE ASSESSEE DDA IS AN ASSE SSEE WITHIN THE MEANING OF THE IT ACT OR NOT. FOR THAT MATTER PARA 5 OF THE JUDGMENT IS REPRODUCED HEREIN BELOW WHICH CLEARLY LAID DOWN THAT THE ASSESSEE IN DEFAULT UNDE R THE ACT IS ALSO AN ASSESSEE. WITH RESPECT, THE JUDGMENT OF THE HONBLE SUPREME COURT HAS NOT DISCUSSED ABOUT THE PARITY OF THE PROCEEDINGS BETWEEN SEC. 201 AND THE OTHER L EGAL PROCEEDINGS U/S 143. THE WRONG CONCLUSION HAS BEEN CITED BY THE SPECIAL BENC H TO CONCLUDE THAT THE PROCEEDINGS UNDER SECTION 201 IS AKIN TO ASSESSMENT PROCEEDINGS . THE JUDGMENT OF THE HONBLE 28 ITA NO. 75-80/JP/2013 A.Y. 2004-05 TO 09-10. VODAFONE DIGILINK LTD. VS. ITO TDS-2,JAIPUR. SUPREME COURT NO WHERE MENTIONED THAT THE PROCEEDIN GS UNDER SECTION 201 EVEN REMOTELY AKIN TO ASSESSMENT PROCEEDINGS. ' IN THE CASE IN HAND, AS INDICATED EARLIER, THE DI RECTION TO REFUND THE AMOUNT HAS BEEN MADE IN APPELLATE PROCEEDINGS B EFORE THE TRIBUNAL. THE AMOUNT IS TO BE REFUNDED TO THE ASSES SEE. IT CANNOT BE SAID THAT THE REFUNDEE WILL NOT BE AN ASSESSEE ON LY FOR THE REASON THAT ACTUALLY NO ASSESSMENT PROCEEDING HAD TAKEN PL ACE. IT WOULD BE PERTINENT TO REFER TO THE PROVISION CONTAINED UNDER SECTION 201 OF THE INCOME-TAX ACT WHICH CLEARLY PROVIDES THAT IF THE P RINCIPAL OFFICER OR THE COMPANY LIABLE TO DEDUCT THE INCOME-TAX AT SOURCE F AILS TO DO SO, HE SHALL BE DEEMED TO BE ASSESSEE IN DEFAULT IN RESPEC T OF THE TAX. THE DEFINITION OF THE WORD ASSESSEE AS CONTAINED UNDE R CLAUSE (7) OF SECTION 2 OF THE ACT READS AS UNDER : 2. (7) ASSESSEE MEANS A PERSON BY WHOM ANY TAX O R ANY OTHER SUM OF MONEY IS PAYABLE UNDER THIS ACT, AND INCLUDES- (A) EVERY PERSON IN RESPECT OF WHOM ANY PROCEEDING UNDER THIS ACT HAS BEEN TAKEN FOR THE ASSESSMENT OF HIS INCOME OR OF T HE INCOME OF ANY OTHER PERSON IN RESPECT OF WHICH HE IS ASSESSABLE, OR OF THE LOSS SUSTAINED BY HIM OR BY SUCH OTHER PERSON, OR OF THE AMOUNT REFUND DUE TO HIM OR TO SUCH OTHER PERSON ; (B) EVERY PERSON WHO IS DEEMED TO BE AN ASSESSEE UN DER ANY PROVISION OF THIS ACT ; (C) EVERY PERSON WHO IS DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER ANY PROVISION OF THIS ACT. FROM THE ABOVE PROVISION, IT IS CLEAR THAT TERM AS SESSEE INCLUDES ACTUAL ASSESSEES AS WELL AS DEEMED ASSESSEES UNDER THE PROVISION OF THE ACT. IT IS THEREFORE NOT CORRECT TO CONTEND THA T UNLESS THERE ARE ACTUAL ASSESSMENT PROCEEDINGS PERTAINING TO ANY PER SON, HE CANNOT BE CONSIDERED TO BE AN ASSESSEE. IN THE PRESENT CASE T HE D. D. A. WAS CONSIDERED TO BE LIABLE TO DEDUCT THE TAX AT SOURCE . IT FAILED TO DO SO. HENCE, THE ORDER UNDER SECTIONS 201(1) AND 201(1A) WAS PASSED RAISING THE DEMAND AND THE AMOUNT OF TAX WAS PAID. THE ORDER OF REFUND WAS PASSED IN APPELLATE PROCEEDINGS UNDER TH E ACT ATTRACTING SECTION 240 OF THE ACT. CERTAIN DECISIONS WERE CITE D AT THE BAR TO SHOW THE MEANING OF THE WORDS ASSESSEE AND ASSESSMENT AND DIFFERENT STAGES OF THE ASSESSMENT PROCEEDINGS, NEED NOT BE D EALT WITH IN VIEW OF THE CLEAR DEFINITION OF THE WORD ASSESSEE UNDE R THE ACT AS QUOTED ABOVE. THE HIGH COURT HAS RIGHTLY PROVIDED IN PARA. 12 OF ITS JUDGMENT QUOTED EARLIER FOR APPLYING SUB-SECTION (1A) OF SECTION 24 4 OF THE ACT FOR DETERMINING INTEREST FOR THE PERIOD COVERED BY THE ASSESSMENT YEAR 29 ITA NO. 75-80/JP/2013 A.Y. 2004-05 TO 09-10. VODAFONE DIGILINK LTD. VS. ITO TDS-2,JAIPUR. 1988-89. IT IS SO ALSO FOR THE REASON THAT THE AMOU NT WAS PAID BY WAY OF DEDUCTIONS AFTER MARCH 31, 1975, AS PROVIDED UND ER SUB-SECTION (1A) OF SECTION 244 OF THE ACT. FOR THE DISCUSSION HELD ABOVE, WE FIND NO FORCE IN THE APPEAL. IT IS ACCORDINGLY DISMISSED. NO ORDER AS TO COSTS. '' THE SPECIAL BENCH, HAS DECIDED THE ISSUE ON THE ASS UMPTION THAT THE ORDER PASSED UNDER SECTION 201 IS AN ASSESSMENT WITHIN THE MEANI NG OF THE ACT. WITH RESPECT, THE SAID CONCLUSION OF THE SPECIAL BENCH WAS NOT CORREC T AND IS CONTRARY TO THE JUDGMENT OF HONBLE SUPREME COURT IN THE MATTER OF M.M. PARIKH, ITO VS. NAVANAGAR TRANSPORT AND INDUSTRIES LTD. (1967) 63 ITR 663 (SC) WHEREIN IN T HE FOLLOWING PARAGRAPH THE HONBLE SUPREME COURT HAS HELD THAT ''EVERY ORDER WHICH CON TEMPLATES COMPUTATION OF INCOME FOR DETERMINATION OF AMOUNT OF TAX PAYABLE IS NOT A N ORDER OF ASSESSMENT WITHIN THE MEANING OF THE ACT.'' THE RELEVANT PARA OF THE SAID JUDGMENT IS REPRODUCED HEREIN BELOW :- ' IT WAS URGED BEFORE THE HIGH COURT, AND THE ARGUM ENT APPEALED TO THE HIGH COURT, THAT AN ORDER UNDER SECTION 23A AS AMEN DED BY THE FINANCE ACT, 1955, AND AS FURTHER MODIFIED BY THE FINANCE ACT, 1 957, BY THE INCOME-TAX OFFICER DIRECTING PAYMENT OF ADDITIONAL SUPER-TAX W AS AN ORDER OF ASSESSMENT WHICH COULD ONLY BE MADE BEFORE THE EXPIRY OF THE P ERIOD OF LIMITATION PRESCRIBED BY SECTION 34(3) OF THE INCOME-TAX ACT, 1922. IN SUPPORT OF THIS VIEW, IT WAS SAID THAT THE EXPRESSION 'ASSESSMENT' USED IN THE INDIAN INCOME-TAX ACT, 1922, HAS DIFFERENT MEANINGS IN THE CONTEXT IN WHICH IT OCCURS: SOMETIMES IT IS USED AS MEANING COMPUTATION OF INCOME, SOMETIMES AS DETERMINATION OF THE AMOUNT OF TAX PAYABLE, AND SOMETIMES THE PROCEDURE FOR IMPOSING LIABILITY UPON THE TAXPAYER. RELIANCE IN THIS BEHALF WAS PLACED UPON THE JUDGMENT OF THE PRIVY COUNCIL I N COMMISSIONER OF INCOME-TAX V. KHEMCHAND RAMDAS*. BUT SECTION 23A DO ES NOT USE THE EXPRESSION 'ASSESSMENT' IN THE BODY OF CLAUSE (1): AND TO THE TITLE OF THE SECTION AFTER IT WAS AMENDED, VIZ., 'POWER TO ASSES S COMPANIES TO SUPER-TAX ON UNDISTRIBUTED INCOME IN CERTAIN CASES', IT IS IM POSSIBLE TO GIVE ANY EXALTED 30 ITA NO. 75-80/JP/2013 A.Y. 2004-05 TO 09-10. VODAFONE DIGILINK LTD. VS. ITO TDS-2,JAIPUR. MEANING SO AS TO CONVERT WHAT IS AN ORDER DIRECTING PAYMENT OF TAX INTO AN ORDER OF ASSESSMENT WITHIN THE MEANING OF SECTION 3 4(3) OF THE INDIAN INCOME-TAX ACT, 1922. EVERY ORDER WHICH CONTEMPLATES COMPUTATION OF INCOME FOR DETERMINATION OF THE AMOUNT OF TAX PAYAB LE IS NOT AN ORDER OF ASSESSMENT WITHIN THE MEANING OF THE ACT: NOR DOES PRESCRIBING OF PROCEDURE FOR DETERMINING AND IMPOSING TAX LIABILITY MAKE IT AN ORDER OF ASSESSMENT. THE INCOME-TAX ACT CONTEMPLATES MAKING OF DIVERSE O RDERS BY INCOME-TAX OFFICERS DIRECTING PAYMENTS OF SUMS OF MONEY BY TAX PAYERS WHICH ARE OF THE NATURE OF ORDERS FOR PAYMENT OF TAX, BUT WHICH ARE STILL NOT ORDERS OF ASSESSMENT. FOR INSTANCE, UNDER SECTION 18A(1) THE INCOME-TAX OFFICER IS ENTITLED TO DIRECT ADVANCE PAYMENT OF TAX. AN ORDER MAY ALSO BE MADE UNDER SECTION 35(9) WHERE THE INCOME- TAX OFFICER IS SATI SFIED THAT THE INCOME-TAX PAYABLE BY A COMPANY ON ITS PROFITS AND GAINS OUT O F WHICH THE COMPANY HAS DECLARED A DIVIDEND HAS NOT BEEN PAID WITHIN THREE YEARS AFTER THE FINANCIAL YEAR IN WHICH THE DIVIDEND WAS DECLARED, HE MAY PRO CEED TO RECOMPUTE THE AMOUNT BY REDUCING IT IN THE SAME PROPORTION AS THE AMOUNT OF INCOME-TAX REMAINING UNPAID BY THE COMPANY BEARS TO THE AMOUNT OF INCOME-TAX PAYABLE BY IT ON SUCH PROFITS AND GAINS. SIMILARLY, UNDER SUB-SECTION (10) OF SECTION 35, BEFORE IT WAS DELETED BY THE FINANCE AC T, 1959, WHERE A REBATE OF INCOME-TAX WAS ALLOWED TO A COMPANY ON A PART OF ITS TOTAL INCOME AND SUBSEQUENTLY THE AMOUNT ON WHICH THE REBATE OF INCO ME-TAX WAS ALLOWED WAS AVAILED OF BY THE COMPANY, FOR DECLARING DIVIDE NDS IN ANY YEAR, THE INCOME-TAX OFFICER HAD TO RECOMPUTE THE TAX BY REDU CING THE REBATE ORIGINALLY ALLOWED. AGAIN BY SECTION 35(11), AS ADD ED BY THE FINANCE ACT OF 1958, DEVELOPMENT REBATE IN RESPECT OF A SHIP, MACH INERY OR PLANT UNDER SECTION 10(2)(VIB) COULD BE DEEMED TO HAVE BEEN WRO NGLY ALLOWED IF THE SHIP, MACHINERY OR PLANT WAS SOLD OR OTHERWISE TRAN SFERRED, OR THE AMOUNT CREDITED TO THE RESERVE ACCOUNT UNDER THAT CLAUSE W AS DIVERTED FOR ANOTHER PURPOSE WITHIN TEN YEARS, AND THE INCOME-TAX OFFICE R HAD TO RECOMPUTE THE INCOME, AND LEVY TAX ON THE FOOTING OF SUCH RECOMPU TED INCOME. IN EACH OF THESE CASES THERE IS COMPUTATION OF INCOME, DETERMI NATION OF TAX PAYABLE AND PROCEDURE IS PRESCRIBED FOR IMPOSING LIABILITY UPON THE TAXPAYER. BUT STILL THESE ARE NOT ORDERS OF ASSESSMENT WITHIN THE MEANI NG OF SECTION 23. THE SALIENT FEATURE OF THESE AND OTHER ORDERS IS THAT T HE LIABILITY TO PAY TAX ARISES NOT FROM THE CHARGE CREATED BY STATUTE, BUT FROM TH E ORDER OF THE INCOME- TAX OFFICER. THE ARGUMENT THAT SECTION 23A IS A SELF-CONTAINED S ECTION IMPOSING LIABILITY TO PAY ADDITIONAL SUPER-TAX DOES NOT CONVERT THAT S ECTION INTO ONE FOR ASSESSMENT OF TAX. THERE IS UNDOUBTEDLY A HEARING B EFORE LIABILITY IS IMPOSED FOR PAYMENT OF ADDITIONAL SUPER-TAX; THERE IS DECLA RATION OF LIABILITY AND THE LIABILITY IS DETERMINED IN THE MANNER PRESCRIBED BY THE SECTION. THAT THERE IS, 31 ITA NO. 75-80/JP/2013 A.Y. 2004-05 TO 09-10. VODAFONE DIGILINK LTD. VS. ITO TDS-2,JAIPUR. AS WAS ARGUED BEFORE THIS COURT, 'A CONSIDERABLE PA RALLEL BETWEEN SECTIONS 23 AND 23A' WILL NOT JUSTIFY THE ASSUMPTION THAT WH AT IS DONE BY AN ORDER UNDER SECTION 23A AS AMENDED IS ASSESSMENT OF TAX L IABILITY THERE IS HOWEVER A VITAL DIFFERENCE BETWEEN THE ASSESSMENT O F TAX UNDER SECTION 23 AND IMPOSITION OF LIABILITY UNDER SECTION 23A. TAX LIABILITY QUANTIFIED BY AN ORDER UNDER SECTION 23 IS A CHARGE STATUTORILY IMPO SED BY SECTIONS 3 AND 4 OF THE ACT. IT IS TRUE THAT THE STATUTORY LIABILITY IS , TILL THE LAST DAY OF THE YEAR OF ACCOUNT, AMBULATORY, BUT THE CHARGE IS STILL A STAT UTORY CHARGE ON INCOME. THE FUNCTION OF THE INCOME-TAX OFFICER IS TO COMPUT E THE TAXABLE INCOME AND TO CRYSTALLIZE THE CHARGE ON THE TAXABLE INCOME. UN DER SECTION 23A THERE IS NO STATUTORY CHARGE IN RESPECT OF ADDITIONAL SUPER- TAX AND THE LIABILITY IS IMPOSED BY THE ORDER OF THE INCOME-TAX OFFICER. SOU RCE OF THE LIABILITY TO PAY ADDITIONAL SUPER-TAX IS NOT IN SECTIONS 3 AND 4 OF THE ACT: IT LIES IN AND ARISES OUT OF THE ORDER OF THE INCOME-TAX OFFICER. BEFORE IMPOSING LIABILITY FOR ADDITIONAL SUPER-TAX, THE INCOME-TAX OFFICER HAS TO DETERMINE WHETHER THE COMPANY IS ONE TO WHICH THE PROVISIONS OF SECTION 2 3A APPLY; HE HAS ALSO TO DETERMINE WHETHER THE COMPANY HAS DISTRIBUTED WITHI N TWELVE MONTHS IMMEDIATELY FOLLOWING THE EXPIRY OF THE PREVIOUS YE AR THE STATUTORY PERCENTAGE OF THE TOTAL INCOME OF THE COMPANY AS RE DUCED BY THE TAXES AND LEVIES PRESCRIBED THEREIN; HE HAS ALSO TO DETERMINE WHETHER, HAVING REGARD TO THE LOSS-INCURRED BY THE COMPANY IN THE EARLIER YEARS OR TO THE SMALLNESS OF THE PROFITS MADE IN THE PREVIOUS YEAR, THE PAYME NT OF A DIVIDEND OR A LARGER DIVIDEND THAN THAT DECLARED WOULD BE UNREASO NABLE. IT IS AFTER MAKING THESE ENQUIRIES THAT THE INCOME-TAX OFFICER MAY MAK E THE ORDER DIRECTING PAYMENT OF ADDITIONAL SUPER-TAX AT THE RATES PRESCR IBED. THE PROCESS TO BE FOLLOWED IS NOT THE PROCESS OF ASSESSMENT, BUT OF D ETERMINING WHETHER THE LIABILITY SHOULD BE CHARGED AND IMPOSED. FOR THAT P URPOSE THE COMPANY IS GIVEN A RIGHT TO EXPLAIN THE REASONS FOR FAILURE TO DISTRIBUTE THE STATUTORY PERCENTAGE OF PROFITS AS DIVIDENDS. IN CERTAIN SPEC IAL CIRCUMSTANCES CONTEM- PLATED BY SUB-SECTION (2) OF SECTION 23A, THE ORDER IMPOSING TAX LIABILITY CANNOT BE MADE UNLESS THE COMPANY AFTER RECEIVING A NOTICE FROM THE INCOME-TAX OFFICER THAT HE PROPOSES TO MAKE SUCH AN ORDER FAILS TO MAKE WITHIN THREE MONTHS OF THE ORDER FURTHER DISTRIBUTI ON OF ITS INCOME SO THAT THE TOTAL DISTRIBUTION MADE IS NOT LESS THAN THE STATUT ORY PERCENTAGE OF THE TOTAL INCOME OF THE COMPANY OF THE RELEVANT PREVIOUS YEAR AS REDUCED BY THE AMOUNTS, IF ANY, AFORESAID. PROVISION WAS, ALSO MAD E IN SUB-SECTION (3) INSERTED BY THE FINANCE ACT OF 1955 AUTHORISING THE COMMISSIONER OF INCOME- TAX TO REDUCE THE AMOUNT OF MINIMUM DISTRIB UTION REQUIRED OF A COMPANY, IF HAVING REGARD TO THE CURRENT REQUIREMEN TS OF THE COMPANY'S BUSINESS OR SUCH OTHER REQUIREMENTS AS MAY BE NECES SARY, OR ADVISABLE FOR THE MAINTENANCE OR DEVELOPMENT OF THE BUSINESS, THE DECLARATION OR PAYMENT 32 ITA NO. 75-80/JP/2013 A.Y. 2004-05 TO 09-10. VODAFONE DIGILINK LTD. VS. ITO TDS-2,JAIPUR. OF A DIVIDEND OR A LARGER DIVIDEND THAN THAT PROPOS ED TO BE DECLARED WAS UNREASONABLE.'' IN OUR OPINION, THE PROCEEDINGS UNDER SECTION 143, 147, 153 ETC. COMES UNDER THE CHAPTER XIV TITLED AS PROCEDURE FOR ASSESSMENT WH EREAS SECTION 194, 194-I, 194-J, 194-H AND 201 COMES UNDER THE CHAPTER COLLECTION A ND RECOVERY OF TAX. THE PROCEDURE AS CONTEMPLATED FOR ASSESSMENT, IS GIVEN UNDER CHAPTER XIV AND THE PROCEDURE FOR COLLECTION/RECOVERY OF TAX IS GIVEN U NDER CHAPTER XVIII OF THE ACT. IN OUR VIEW TWO DIFFERENT SET OF RULES AND LOGIC ARE REQUI RED TO BE APPLIED FOR DETERMINING THE LIMITATION. IN CIVIL LAW , THE LIMITATION FOR FILLI NG THE SUIT FOR RECOVERY CAN NOT BE EQUATED WITH LIMITATION FOR FILLING THE APPLICATION FOR EXE CUTION OF DECREE . THE LIMITATION FOR EXECUTING THE DECREE HAS ALWAYS BEEN LONGER THE FIL LING THE SUIT FOR RECOVERY. IN OUR VIEW THE CONCLUSION OF THE SPECIAL BENCH MENTIONED IN PARA 17.10 OF THE ORDER WHEREBY THE PERIOD FOR INITIATION OF PROCEEDINGS AND FOR CO MPLETION OF PROCEEDINGS HAS BEEN PROVIDED BY THE JUDICIAL ORDER IS NOT CORRECT INTER PRETATION OF LAW FOR SECTION 201. IN OUR VIEW THE ANALOGY DRAWN BY THE SPECIAL BENCH IS CONTRARY TO THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN NHK BROADCASTING CORPOR ATION JAPAN WHEREIN THE HONBLE DELHI HIGH COURT IN THE FOLLOWING PARAGRAPH HAS HE LD THAT THERE IS QUALITATIVE DIFFERENCE BETWEEN THE JUDGMENT OF BHARAT STEEL TUBES LTD. AND THAT OF BHATINDA DISTRICT CO-OP. MILK (P) UNION LTD. IN THE FORMER CASE THE QUESTIO N PERTAINS TO COMPLETION OF PROCEEDINGS WHILE THE LATER CASE PERTAINS TO INITIA TION OF PROCEEDINGS. THE HONBLE DELHI HIGH COURT WAS ONLY CONCERNED WITH INITIATION OF PR OCEEDINGS. HOWEVER, THE COURT HAS CATEGORICALLY MENTIONED THE PROVISIONS OF REASSES SME THE ACT AND THEY ARE ON A COMPLETELY DIFFERENT FOOT ING AND THEREFORE, DO NOT MERIT FOR CONSIDERATION FOR THE PURPOSE OF THIS CASE. IN OUR VIEW, THE DIVISION BENCH OF HONBLE DELHI HIGH COURT HAS NOT DECIDED THE ISSUE FOR COMP SECTION 201. AT THIS STAGE IT WILL BE RELEVANT TO M ENTION THAT THE ASSESSEE HAS RELIED UPON THE JUDGMENT OF S.S. GAGGIL VS. LAL AND COMPAN Y WHEREIN THE HONBLE SUPREME COURT AFTER DETAILED EXAMINATION OF THE LAW HAS HEL D IN AS UNDER :- 11. A PROCEEDING FOR ASSESSMENT IN NOT A SUIT FOR A DJUDICATION OF A CIVIL DISPUTE. THAT AN INCOME PROCEEDING BETWEEN CONTESTING PARTIES, IS A MATTER WHICH IS NOT CAPA EVEN A PLAUSIBLE ARGUMENT. THE INCOME ASSESS AND RECOVER TAX ARE NOT ACTING AS JUDGES DEC IDING A LITIGATION BETWEEN THE CITIZEN AND THE STATES : THEY ARE ADMIN ISTRATIVE AUTHORITIES WHOSE PROCEEDINGS ARE REGULATED BY ESTIMATE THE INCOME OF THE TAXPAYER AND TO ASSESS H IM TO TAX ON THE BASIS OF THAT ESTIMATE. TAX LEGISLATION NECESSITATES THE SETTING UP OF MACHINERY TO AS CERTAIN THE TAXABLE INCOME, AND TO ASSESS TAX ON THE INCOME, BUT T DOES NOT IMPRESS THE PROCEEDING WITH THE CHARACTER OF AN ACTION BETWEEN THE CITIZEN AND THE STATE : THE COMMISSIONER OF INL AND REVENUE V. SNEATH 17 T.C. 149, 164;. AND SHELL COMPANY OF AUSTRALIA L TD. V. FEDERAL COMMISSIONER OF TAXATION 12. AGAIN THE PERIOD PRESCRIBED BY S. IS NOT A PERIOD OF LIMITATION. THE SECTION IN TERMS IMPOSES A FETTER UPON THE POWER OF THE INCOME PRESCRIBES DIFFERENT PERIODS IN DIFFE THE RIGHT OF THE STATE TO RECOVER TAX. IT WAS OBSER VED BY THIS COURT IN AHMEDABAD MANUFACTURING AND CALICO PRINTING CO. LTD . V. S. C. MEHTA, INCOME- TAX OFFICER AND ANOTHER S.C.R. 92 : 'IT MUST BE REMEMBERED THAT IF THE INCOME DURING WHICH TAX DUE IN ANY PARTICULAR ASSESSMENT Y EAR MAY BE ASSESSED, 33 ITA NO. 75- 80/JP/2013 A.Y. 2004 VODAFONE DIGILINK LTD. VS. ITO TDS CATEGORICALLY MENTIONED THE PROVISIONS OF REASSES SME NT UNDER SECTION 147 & 148 OF THE ACT AND THEY ARE ON A COMPLETELY DIFFERENT FOOT ING AND THEREFORE, DO NOT MERIT FOR CONSIDERATION FOR THE PURPOSE OF THIS CASE. IN OUR VIEW, THE DIVISION BENCH OF HONBLE DELHI HIGH COURT HAS NOT DECIDED THE ISSUE FOR COMP LETION OF THE PROCEEDINGS UNDER SECTION 201. AT THIS STAGE IT WILL BE RELEVANT TO M ENTION THAT THE ASSESSEE HAS RELIED UPON THE JUDGMENT OF S.S. GAGGIL VS. LAL AND COMPAN Y WHEREIN THE HONBLE SUPREME COURT AFTER DETAILED EXAMINATION OF THE LAW HAS HEL D IN RESPECT OF A NON RESIDENT PARTY 11. A PROCEEDING FOR ASSESSMENT IN NOT A SUIT FOR A DJUDICATION OF A CIVIL DISPUTE. THAT AN INCOME - TAX PROCEEDING IS IN THE NATURE OF A JUDICIAL PROCEEDING BETWEEN CONTESTING PARTIES, IS A MATTER WHICH IS NOT CAPA EVEN A PLAUSIBLE ARGUMENT. THE INCOME - TAX AUTHORITIES WHO HAVE POWER TO ASSESS AND RECOVER TAX ARE NOT ACTING AS JUDGES DEC IDING A LITIGATION BETWEEN THE CITIZEN AND THE STATES : THEY ARE ADMIN ISTRATIVE AUTHORITIES WHOSE PROCEEDINGS ARE REGULATED BY STATUTE, BUT WHOSE FUNCTION IS TO ESTIMATE THE INCOME OF THE TAXPAYER AND TO ASSESS H IM TO TAX ON THE BASIS OF THAT ESTIMATE. TAX LEGISLATION NECESSITATES THE SETTING UP OF MACHINERY TO AS CERTAIN THE TAXABLE INCOME, AND TO ASSESS TAX ON THE INCOME, BUT T DOES NOT IMPRESS THE PROCEEDING WITH THE CHARACTER OF AN ACTION BETWEEN THE CITIZEN AND THE STATE : THE COMMISSIONER OF INL AND REVENUE V. 17 T.C. 149, 164;. AND SHELL COMPANY OF AUSTRALIA L TD. V. FEDERAL COMMISSIONER OF TAXATION [1931] A.C. 275. 12. AGAIN THE PERIOD PRESCRIBED BY S. 34 FOR ASSESSMENT OR RE IS NOT A PERIOD OF LIMITATION. THE SECTION IN TERMS IMPOSES A FETTER UPON THE POWER OF THE INCOME - TAX OFFICER TO BRING TO TAX ESCAPED INCOME. IT PRESCRIBES DIFFERENT PERIODS IN DIFFE RENT CLASSES OF CASES FOR ENFORCEMENT OF THE RIGHT OF THE STATE TO RECOVER TAX. IT WAS OBSER VED BY THIS COURT IN AHMEDABAD MANUFACTURING AND CALICO PRINTING CO. LTD . V. S. C. MEHTA, TAX OFFICER AND ANOTHER MANU/SC/0210/1962 : [1963] SUPP. 2 'IT MUST BE REMEMBERED THAT IF THE INCOME - TAX ACT PRESCRIBES A PERIOD DURING WHICH TAX DUE IN ANY PARTICULAR ASSESSMENT Y EAR MAY BE ASSESSED, 80/JP/2013 A.Y. 2004 -05 TO 09-10. VODAFONE DIGILINK LTD. VS. ITO TDS -2,JAIPUR. NT UNDER SECTION 147 & 148 OF THE ACT AND THEY ARE ON A COMPLETELY DIFFERENT FOOT ING AND THEREFORE, DO NOT MERIT FOR CONSIDERATION FOR THE PURPOSE OF THIS CASE. IN OUR VIEW, THE DIVISION BENCH OF HONBLE LETION OF THE PROCEEDINGS UNDER SECTION 201. AT THIS STAGE IT WILL BE RELEVANT TO M ENTION THAT THE ASSESSEE HAS RELIED UPON THE JUDGMENT OF S.S. GAGGIL VS. LAL AND COMPAN Y WHEREIN THE HONBLE SUPREME RESPECT OF A NON RESIDENT PARTY 11. A PROCEEDING FOR ASSESSMENT IN NOT A SUIT FOR A DJUDICATION OF A CIVIL TAX PROCEEDING IS IN THE NATURE OF A JUDICIAL PROCEEDING BETWEEN CONTESTING PARTIES, IS A MATTER WHICH IS NOT CAPA BLE OF TAX AUTHORITIES WHO HAVE POWER TO ASSESS AND RECOVER TAX ARE NOT ACTING AS JUDGES DEC IDING A LITIGATION BETWEEN THE CITIZEN AND THE STATES : THEY ARE ADMIN ISTRATIVE AUTHORITIES STATUTE, BUT WHOSE FUNCTION IS TO ESTIMATE THE INCOME OF THE TAXPAYER AND TO ASSESS H IM TO TAX ON THE BASIS OF THAT ESTIMATE. TAX LEGISLATION NECESSITATES THE SETTING UP OF MACHINERY TO AS CERTAIN THE TAXABLE INCOME, AND TO ASSESS TAX ON THE INCOME, BUT T HAT DOES NOT IMPRESS THE PROCEEDING WITH THE CHARACTER OF AN ACTION BETWEEN THE CITIZEN AND THE STATE : THE COMMISSIONER OF INL AND REVENUE V. 17 T.C. 149, 164;. AND SHELL COMPANY OF AUSTRALIA L TD. V. FEDERAL FOR ASSESSMENT OR RE -ASSESSMENT IS NOT A PERIOD OF LIMITATION. THE SECTION IN TERMS IMPOSES A FETTER UPON THE TAX OFFICER TO BRING TO TAX ESCAPED INCOME. IT RENT CLASSES OF CASES FOR ENFORCEMENT OF THE RIGHT OF THE STATE TO RECOVER TAX. IT WAS OBSER VED BY THIS COURT IN AHMEDABAD MANUFACTURING AND CALICO PRINTING CO. LTD . V. S. C. MEHTA, : [1963] SUPP. 2 TAX ACT PRESCRIBES A PERIOD DURING WHICH TAX DUE IN ANY PARTICULAR ASSESSMENT Y EAR MAY BE ASSESSED, 34 ITA NO. 75-80/JP/2013 A.Y. 2004-05 TO 09-10. VODAFONE DIGILINK LTD. VS. ITO TDS-2,JAIPUR. THEN ON THE EXPIRY OF THAT PERIOD THE DEPARTMENT CA NNOT MAKE AN ASSESSMENT. WHERE NO PERIOD IS PRESCRIBED THE ASSES SMENT CAN BE COMPLETED AT ANY TIME BUT ONCE COMPLETED IT IS FINA L. ONCE A FINAL ASSESSMENT HAS BEEN MADE, IT CAN ONLY BE REOPENED T O RECTIFY A MISTAKE APPARENT FROM THE RECORD (S. 35) OR TO REASSESS WHE RE THERE HAS BEEN AN ESCAPEMENT OF ASSESSMENT OF INCOME FOR ONE REASON O R ANOTHER (S. 34). BOTH THESE SECTIONS WHICH ENABLE REOPENING OF BACK ASSESSMENTS PROVIDE THEIR OWN PERIODS OF TIME FOR ACTION BUT ALL THESE PERIODS OF TIME, WHETHER FOR THE FIRST ASSESSMENT OR FOR RECTIFICATION, OR F OR REASSESSMENT, MERELY CREATE A BAR WHEN THAT TIME PASSED AGAINST THE MACH INERY SET UP BY THE INCOME-TAX ACT FOR THE ASSESSMENT AND LEVY OF THE T AX. THEY DO NOT CREATE AN EXEMPTION IN FAVOUR OF THE ASSESSEE OR GRANT AN ABSOLUTION ON THE EXPIRY OF THE PERIOD. THE LIABILITY IS NOT ENFORCEA BLE BUT THE TAX MAY AGAIN BECOME EXIGIBLE IF THE BAR IS REMOVED AND THE TAXPA YER IS BROUGHT WITHIN THE JURISDICTION OF THE SAID MACHINERY BY REASON OF A NEW POWER. THIS IS, OF COURSE, SUBJECT TO THE CONDITION THAT THE LAW MUST SAY THAT SUCH IS THE JURISDICTION, EITHER EXPRESSLY OR BY CLEAR IMPLICAT ION. IF THE LANGUAGE OF THE LAW HAS THAT CLEAR MEANING, IT MUST BE GIVEN THAT E FFECT AND WHERE THE LANGUAGE EXPRESSLY SO DECLARES OR CLEARLY IMPLIES I T, THE RETROSPECTIVE OPERATION IS NOT CONTROLLED BY THE COMMENCEMENT CLA USE.' IN OUR OPINION, THE SAID JUDGMENT DOES NOT COME FOR RESCUE OR ADVANCE THE CASE OF THE ASSESSEE BEFORE US. THE SAID JUDGMENT WITH RESPECT WAS FOR INITIATION OF THE PROCEEDINGS. IF THE PROCEEDINGS ARE NOT INITIATED WITHIN TIME LIMIT PRESCRIBED THE ACT, THEN THE STATE LOOSES THE POWER TO INITIATE THE PRO CEEDINGS FOR ASSESSMENT/REASSESSMENT. 9.8. WE ARE ONLY CONCERNED WITH THE ORDER PASSED UN DER SECTION 201 ON 24.3.2011. AS MENTIONED HEREIN ABOVE, BY REFERRING TO THE JUDG MENT OF M.M. PARIKH (1967) 63 ITR 663 THAT EVERY COMPUTATION OF INCOME FOR DETERMINAT ION OF AMOUNT OF TAX IS NOT AN ORDER OF ASSESSMENT. TO SUPPLEMENT THAT WE WISH TO REFER THE JUDGMENT OF ITAT IN THE MATTER OF SAFARI MERCANTILE P. LTD. VS. ACIT (2008) 21 SOT 531 (MUMBAI) AND HOPE 35 ITA NO. 75-80/JP/2013 A.Y. 2004-05 TO 09-10. VODAFONE DIGILINK LTD. VS. ITO TDS-2,JAIPUR. MICRO CREDIT FINANCE PVT. LTD. VS. ACIT, (2014) 47 TAXMANN.COM 422 (COCHIN TRIB.), IN BOTH THE JUDGMENT IT WAS HELD THAT IF AN ASSESSEE F AILS TO PAY WHOLE OR ANY PART OF SELF ASSESSMENT TAX OR INTEREST OR BOTH IN ACCORDANCE WI TH PROVISIONS OF SECTION (1) OF SECTION 140A OF THE ACT, HE SHALL BE DEEMED TO BE A N ASSESSEE IN DEFAULT AND NO SEPARATE NOTICE IS REQUIRED TO BE ISSUED. THE PROVI SIONS OF SECTION 221 WILL AUTOMATICALLY COME INTO FORCE IF THE ASSESSEE FAILS TO EXPLAIN TH E REASONABLE CAUSE AS PROVIDED UNDER SECTION 273 OF THE ACT. 9.9. THE HONBLE SUPREME COURT IN THE MATTER OF BHA RAT STEEL TUBES LTD. (1988) 70 STC 122 HAS HELD AS UNDER :- 14. THE SHORT QUESTION THAT REALLY FALLS FOR EXAMIN ATION IN THIS CASE IS WHETHER AN ORDER OF ASSESSMENT UNDER SUB-SECTION (3) OF SECTIO N 11 OF THE PUNJAB ACT OR SECTION 28(3) OF THE HARYANA ACT CAN NOW BE COMPLET ED OR WOULD THAT BE BARRED BY LIMITATION. UNDOUBTEDLY, THE ASSESSMENT PROCEEDI NGS HAVE BEEN VERY DELAYED. AS THE MATERIAL PLACED BEFORE US SHOWS, THE ASSESSE E HAD GONE BEFORE DIFFERENT COURTS FROM TIME TO TIME TO ASK FOR INJUNCTION AGAI NST THE COMPLETION OF ASSESSMENT BUT THAT TRIAL APPEARS TO HAVE STARTED IN DECEMBER, 1980 WHERE A SUIT WAS FILED AND INJUNCTION WAS OBTAINED. THOUGH NOTICES WERE IS SUED UNDER SECTIONS 11(2) OF THE PUNJAB ACT OR 28(2) OF THE HARYANA ACT WITHIN A REASONABLE PERIOD FROM THE FILING OF RETURNS FOR THE RESPECTIVE QUARTERS IN TH E ASSESSMENT YEARS UNDER CONSIDERATION, FURTHER ACTION HAS NOT BEEN TAKEN BY THE ASSESSING OFFICER TO COMPLETE THE ASSESSMENTS. BUT AS WE HAVE SAID ABOVE , IN THE ABSENCE OF ANY PRESCRIBED PERIOD OF LIMITATION, THE ASSESSMENT HAS TO BE COMPLETED WITHIN A REASONABLE PERIOD. WHAT SUCH REASONABLE PERIOD WOUL D BE, WOULD DEPEND UPON FACTS OF EACH CASE. ONE VIEW CAN BE THAT IT SHOULD BE A PERIOD NOT EXCEEDING FIVE YEARS AS THE LEGISLATURE HAS FIXED THE LIMITATION O F FIVE YEARS FOR COMPLETING ASSESSMENTS IN CASE OF ESCAPED TURN-OVER. UNLESS TH EN BEAN ASSESSMENT MADE SOON AFTER THE PERIOD TO WHICH SUCH ASSESSMENT RELA TES, THE QUESTION OF CONSIDERATION OF ESCAPEMENT WOULD INDEED BECOME DIF FICULT TO CONSIDER AND EXAMINE. WE ARE, HOWEVER, NOT INCLINED TO EXTEND IN TO A SITUATION LIKE THE ONE BEFORE US, A PERIOD OF LIMITATION FOR COMPLETION OF ASSESSMENTS UNDER SECTIONS 11(3) OR 28(3) OF THE RESPECTIVE ACTS. THE ASSESSEE HAS MADE RETU RNS FOR ALL THE QUARTERS AND MUST HAVE PAID ITS ADMITTED TA X. NOW THAT THE ASSESSING AUTHORITY INTENDS TO COMPLETE ASSESSMENTS UNDER SEC TION 11(3) OF THE ACT, WE SEE NO PREJUDICE TO THE ASSESSEE IF THE ASSESSING AUTHO RITY IS PERMITTED TO COMPLETE THE 36 ITA NO. 75-80/JP/2013 A.Y. 2004-05 TO 09-10. VODAFONE DIGILINK LTD. VS. ITO TDS-2,JAIPUR. ASSESSMENTS NOW. ON THE OTHER HAND, IF NO ASSESSMEN T IS MADE AN ANOMALOUS SITUATION MIGHT ARISE AND EVEN THOUGH THE ASSESSEE HAS COLLECTED THE SALES TAX ON ITS SALES TURN-OVER, IT MIGHT RAISE A CLAIM FOR REF UND OF IT IN THE ABSENCE OF AN ASSESSMENT. WE DO NOT PROPOSE TO CREATE SUCH A SITU ATION. IT WOULD SUFFICE TO SAY THAT IN THE SITUATION WHICH HAS ARISEN IN THE MATTE R BEFORE US, IT WOULD BE APPROPRIATE TO CALL UPON THE ASSESSING AUTHORITY TO COMPLETE ALL THESE PENDING ASSESSMENTS WITHIN A TOTAL PERIOD OF FOUR MONTHS FR OM TODAY ON THE BASIS OF AVAILABLE MATERIAL IN THE RECORD BEFORE HIM AND SUC H OTHER MATERIAL AS THE AUTHORITY MAY OBTAIN. WE, HOWEVER, MAKE IT CLEAR THAT SUCH AS SESSMENT HAS TO BE ONLY UNDER SECTION 11(3) OF THE ACT. 15. BEFORE WE PART WITH THE CASE, WE WOULD LIKE TO INDICATE THAT ASSESSMENT OF TAX SHOULD BE COMPLETED WITH EXPEDITION. IT INVO LVES THE REVENUE TO THE STATE. IN THE CASE OF A REGISTERED DEALER WHO COLLE CTS SALES-TAX ON BEHALF OF THE STATE, THERE IS NO JUSTIFICATION FOR HIM TO WIT HHOLD THE PAYMENT OF THE TAX SO COLLECTED. IF A TIMELY ASSESSMENT IS COMPLET ED, THE DUES OF THE STATE CAN BE CONVENIENTLY ASCERTAINED AND COLLECTED. DELA Y IN COMPLETION OF ASSESSMENT OFTEN CREATES PROBLEMS. THE ASSESSEE WOU LD BE REQUIRED TO KEEP UP ALL THE EVIDENCE IN SUPPORT OF HIS TRANSACT IONS. WHERE EVIDENCE IS NECESSARY, WITH THE LAPSE OF TIME, THERE IS SCOPE F OR ITS BEING LOST. ORAL EVIDENCE AS AND WHEN REQUIRED TO BE PRODUCED BY THE ASSESSING AUTHORITY MAY NOT BE AVAILABLE IF A LONG PERIOD INTERVENES BE TWEEN THE TRANSACTIONS AND THE CONSIDERATION OF THE MATTER BY THE ASSESSIN G AUTHORITY. LONG DELAY THUS IS NOT IN THE INTEREST OF EITHER THE ASSESSEE OR THE STATE. IN VIEW OF THE FACT THAT A PERIOD OF LIMITATION HAS BEEN PRESCRIBE D FOR BRINGING THE ESCAPED TURN-OVER INTO THE NET OF TAXATION, SUCH AN EVENTUA LITY CANNOT BE GRAPPLED WITH APPROPRIATELY UNLESS TIMELY ASSESSMENT IS COMP LETED. IN SEVERAL TAXING STATUTES, EVEN IN A SITUATION LIKE THIS, WHERE ASSE SSMENT UNDER SECTIONS 11(3) OR 28(3) OF THE RESPECTIVE ACTS IS CONTEMPLATED, A PERIOD O F LIMITATION IS PROVIDED. UNTIL BY STATUTE, SUCH A LIMITATION IS PROVIDED, IT IS PROPER FOR THE STATE GOVERNMENTS TO REQUIRE, BY STATUTORY RULES OR APPROPRIATE INSTRUCTIONS, TO ENSURE COMPLETION O F ASSESSMENTS WITH EXPEDITION AND REASONABLE HASTE BUT SUBJECT TO RULES OF NATURAL JUSTICE. WE ARE BOUND BY THE JUDGMENT OF THE HONBLE SUPREME COURT AND THEREFORE, WE ARE OF THE VIEW THAT THE LIMITATION FOR COMPLETING THE PRO CEEDINGS UNDER SECTION 201, IS ONLY REQUIRED TO BE PROVIDED BY THE ACT OF PARLIAMENT OR BY STATUTORY LEGISLATION OR BY THE BINDING INSTRUCTIONS ISSUED BY THE REVENUE. 37 ITA NO. 75-80/JP/2013 A.Y. 2004-05 TO 09-10. VODAFONE DIGILINK LTD. VS. ITO TDS-2,JAIPUR. 9.10. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTE D THAT EVEN THE JUDGMENT OF THE SPECIAL BENCH HAS BEEN APPROVED BY THE HONBLE MUMB AI HIGH COURT VIDE ORDER DATED 3.7.2014. THE MUMBAI HIGH COURT IN PARA 35 HAS UPHE LD THE VIEW TAKEN BY HONBLE DELHI HIGH COURT IN THE MATTER OF NHK JAPAN BROADCA STING CORPORATION. THE LD. A/R FOR THE ASSESSEE HAS REFERRED TO PARAS 35 & 36 OF THE S AID JUDGMENT. THE SAME ARE AS UNDER :- 35. ONCE SAME PROVISIONS ARE INVOKED THE PRESENT CA SE, THEN, THE HONOURABLE DELHI HIGH COURT WITH RESPECT, RIGHTLY C ONCLUDED THAT THOUGH SECTION 201 DOES NOT PRESCRIBE ANY LIMITATION PERIOD FOR THE ASSESSEE BEING DECLARED AS AN ASSESSEE IN DEFAULT Y ET THE REVENUE WILL HAVE TO EXERCISE THE POWERS IN THAT REGARD WIT HIN A REASONABLE TIME. IN SUCH CIRCUMSTANCES WE ARE OF THE VIEW THAT THE TRIBUNAL'S ORDER IN THIS CASE DOES NOT SUFFER FROM ANY ERROR O F LAW APPARENT ON THE FACE OF RECORD OR PERVERSITY, WARRANTING OUR IN TERFERENCE IN APPELLATE JURISDICTION. 36. WE ARE ALSO SHOWN THE JUDGMENT OF THE CALCUTTA HIGH COURT IN THE CASE OF BHURA EXPORTS LTD. V/S. INCOME TAX OFFIC ER (TDS), WARD 57(2) IN G.A. NO. 1319 AND ITAT NO. 118 AND IT APPE AL NO. 116/2011 AND IT 1163/2011 DECIDED ON 30.08.2011. WI TH RESPECT AND FOR THE REASONS INDICATED BY US ABOVE WE CANNOT AGREE WITH THE VIEW TAKEN BY THE DIVISION BENCH OF THE CALCUTT A HIGH COURT. THAT DECISION OVERLOOKS THE FUNDAMENTAL PRINCIPLES NOTED ABOVE. THEY NEED NOT BE REITERATED HERE. WE ARE OF THE VIEW THAT THE DIVISION BENCH OF THE H ONBLE MUMBAI HIGH COURT HAS APPROVED THE JUDGMENT OF HONBLE DELHI HIGH COURT I N THE CASE OF NHK JAPAN BROADCASTING CORPORATION. WHEREAS IN THE NHK MATTER NO FINDING WAS GIVEN BY THE DIVISION BENCH WITH RESPECT TO COMPLETION OF PROCEE DINGS UNDER SECTION 201 AS THE HONBLE COURT HAS ONLY DECIDED THE ISSUE OF PERIOD OF INITIATION OF PROCEEDINGS UNDER 38 ITA NO. 75-80/JP/2013 A.Y. 2004-05 TO 09-10. VODAFONE DIGILINK LTD. VS. ITO TDS-2,JAIPUR. SECTION 201 AND WAS NOT ADJUDICATING THE ISSUE OF P ERIOD FOR COMPLETING THE PROCEEDINGS. WE FIND THAT THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF NHK JAPAN BROADCASTING CORPORATION WAS SUBJECT MATTER O F CIVIL APPEAL BEFORE THE HONBLE SUPREME COURT AND THE HONBLE SUPREME COURT AT PAGE 149 OF THE PAPER BOOK HAS DISPOSED OFF THE CIVIL APPEAL LEAVING THE QUESTION OF LAW OPEN ON LIMITATION. THEREFORE, EVEN THE ISSUE FOR INITIATION OF PROCEEDINGS WAS NO T FINALLY ADJUDICATED BY THE HONBLE SUPREME COURT. 9.11. WE ARE INFORMED BY LD. D/R THAT EVEN THE JUDG MENT PASSED BY THE DIVISION BENCH IN MAHINDRA & MAHINDRA MATTER IS ALSO SUBJECT MATTER OF SLP CIVIL NO. 1434 OF 2015 AND THE LEAVE HAS BEEN GRANTED BY THE HONBLE COURT. 9.11. NOW WE WILL BE DEALING WITH THE CONTENTION OF THE EFFECT OF AMENDMENT CAME INTO EFFECT WITH EFFECT FROM 1.4.2010. THE SAID AME NDED PROVISION WAS INTRODUCED BY THE FINANCE (NO. 2) ACT, 2010 AND PROVIDES AS UNDER :- ' 201 (3) 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; 39 ITA NO. 75-80/JP/2013 A.Y. 2004-05 TO 09-10. VODAFONE DIGILINK LTD. VS. ITO TDS-2,JAIPUR. PROVIDED THAT SUCH ORDER FOR A FINANCIAL YEAR COMME NCING ON OR BEFORE THE 1ST DAY OF APRIL, 2007 MAY BE PASSED AT ANY TIME ON OR BEFORE THE 31ST DAY OF MARCH, 2011.' THE EXPLANATORY NOTE OF THE NEWLY INSERTED PROVISIO N PROVIDES AS UNDER :- ' 50. PROVIDING TIME LIMITS FOR PASSING OF ORDERS U /S 201(1) HOLDING A PERSON TO BE AN ASSESSEE IN DEFAULT, 50.1. CURRENTLY, THE INCOME TAX ACT DOES NOT PROVID E FOR ANY LIMITATION OF TIME FOR PASSING AN ORDER U/S 201(1) HOLDING A PERS ON TO BE AN ASSESSEE IN DEFAULT. IN THE ABSENCE OF SUCH A TIME LIMIT, DI SPUTES ARISE WHEN THESE PROCEEDINGS ARE TAKEN UP OR COMPLETED AFTER SUBSTAN TIAL TIME HAS ELAPSED. IN ORDER TO BRING CERTAINTY ON THIS ISSUE, SPECIFIC TIME LIMITS IS PROVIDED IN THE ACT WITHIN WHICH ORDER U/S 201(1) WILL BE PASSE D. 50.2. IT HAS BEEN PROVIDED THAT AN ORDER U/S 201(1) FOR FAILURE TO DEDUCT THE WHOLE OR ANY PART OF THE TAX AS REQUIRED UNDER THIS ACT, IF THE DEDUCTEE IS A RESIDENT TAXPAYER, SHALL BE PASSED WI THIN TWO YEARS FROM THE END OF THE FINANCIAL YEAR IN WHICH THE STATEMENT OF TAX DEDUCTION AT SOURCE IS FILED BY THE DEDUCTOR. WHERE NO SUCH STATEMENT I S FILED, SUCH ORDER CAN BE PASSED UP TILL FOUR YEARS FROM THE END OF THE FI NANCIAL YEAR IN WHICH THE PAYMENT IS MADE OR CREDIT IS GIVEN. TO PROVIDE SUF FICIENT TIME FOR PENDING CASES, IT IS PROVIDED THAT SUCH PROCEEDINGS FOR A FINANCIAL YEAR BEGINNING FROM 1ST APRIL, 2007 AND EARLIER YEARS CAN BE COMPL ETED BY THE 31ST MARCH, 2011. 50.3. HOWEVER, NO TIME-LIMITS HAVE BEEN PRESCRIBED FOR ORDER UNDER SUB- SECTION (1) OF SECTION 201 WHERE:- 40 ITA NO. 75-80/JP/2013 A.Y. 2004-05 TO 09-10. VODAFONE DIGILINK LTD. VS. ITO TDS-2,JAIPUR. (A) THE DEDUCTOR HAS DEDUCTED BUT NOT DEPOSITED THE TAX DEDUCTED AT SOURCE, AS THIS WOULD BE A CASE OF DEFA LCATION OF GOVERNMENT DUES, (B) THE EMPLOYER HAS FAILED TO PAY THE TAX WHOLLY O R PARTLY, UNDER SUB-SECTION (1A) OF SECTION 192, AS THE EMPLO YEE WOULD NOT HAVE PAID TAX ON SUCH PERQUISITES, (C) THE DEDUCTEE IS A NON-RESIDENT AS IT MAY NOT BE ADMINISTRATIVELY POSSIBLE TO RECOVER THE TAX FROM T HE NON-RESIDENT. 50.4. APPLICABILITY - THIS AMENDMENT HAS BEEN MADE APPLICABLE WITH EFFECT FROM 1ST APRIL, 2010 AND WILL ACCORDINGLY AP PLY IN RELATION TO ASSESSMENT YEAR 2011-12 AND SUBSEQUENT ASSESSMENT Y EARS.' FROM THE PLAIN READING OF AMENDED PROVISIONS, IT IS CLEAR THAT IF THE PROCEEDINGS FOR THE FINANCIAL YEAR COMMENCING ON OR BEFORE APRIL, 2007 IS PENDING, THEN THE PROCEEDINGS MAY BE COMPLETED ON OR BEFORE 31 ST DAY OF MARCH, 2011. THE LEGISLATURE BY INSERTING THE PROVISIONS BY WAY OF AMENDMENT HAS CONFERRED UP ON THE AO TO ASSESS A PERSON AS AN ASSESSEE IN DEFAULT UPTO 31 ST MARCH, 2011. IN THE PRESENT CASE THE PROCEEDINGS, ON THE DATE OF INSERTION OF THE FINANCE (NO. 2) ACT, 2 009 WERE PENDING AND HAS NOT COME TO AN END. THEREFORE, IN OUR VIEW THE AMENDED PROVI SION WILL COME TO ASSIST THE REVENUE FOR COMPLETING THE PROCEEDINGS. THE NOTICE WAS ISS UED PURSUANT TO THE SURVEY CARRIED OUT ON 28.12.2008 BUT THE PROCEEDINGS HAVE NOT BEEN COMPLETED. THE LEGISLATURE HAS GIVEN SUB-SECTION (3) AND (4) OF SECTION 201 A LIMI TED RETROSPECTIVE OPERATION FOR COMPLETING ASSESSMENT PROCEEDINGS FOR SUCH ORDER FO R FINANCIAL YEAR COMMENCING ON OR 41 ITA NO. 75-80/JP/2013 A.Y. 2004-05 TO 09-10. VODAFONE DIGILINK LTD. VS. ITO TDS-2,JAIPUR. BEFORE THE 1 ST DAY OF APRIL, 2007. IF THE LEGISLATURE DOES NOT I NTEND TO RESTRICT IN RESPECT OF THE MATTER WHICH ARE PENDING PRIOR TO 1.4.2007, THEN THE LEGISLATURE WOULD HAVE PROVIDED LONGER PERIOD RETROSPECTIVITY IN RESPECT O F THE COMPLETION OF PROCEEDINGS. IN OUR VIEW THE NEWLY INSERTED AMENDMENT WITH EFFECT F ROM 1.4.2010 WAS A CURATIVE AMENDMENT AS THERE WAS NO PROVISION UNDER THE INITI ATION AND COMPLETION OF PROCEEDINGS UNDER SECTION 201. BY PROVIDING THE LIM ITATION FOR COMPLETION OF PROCEEDINGS, THE PARLIAMENT CLEARED THE DOUBTS AND HAVE SETTLED THE POSITION IN VIEW OF THE CONFLICTING JUDGMENTS OF THE HIGH COURTS AND OF THE SPECIAL BENCH. THE INSERTION OF THE AMENDMENT, IS ALSO IN ACCORDANCE WITH THE GUIDE LINES LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF BHARAT STEEL TUBES LTD . WHEREBY THE HONBLE SUPREME COURT HAS CATEGORICALLY MENTIONED THAT THE PERIOD F OR COMPLETING THE PROCEEDINGS CAN ONLY BE PROVIDED BY THE ACT OF PARLIAMENT OR BY WAY OF STATUTORY INSTRUCTIONS. THE LD. COUNSEL FOR THE ASSESSEE SOUGHT TO DRAW ABSTRACT FR OM THE JUDGMENT IN THE MATTER OF ACIT VS. CATHOLIC RELIEF SERVICES AND ALSO FROM THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE MATTER OF ORACLE INDIA PVT. LTD. VS. D CIT IN WPC NO. 3075/2015. WE ARE AFRAID THAT BOTH THE JUDGMENTS ARE NOT APPLICABLE T O THE FACTS OF THE CASE, RATHER THE JUDGMENT OF ORACLE INDIA PVT. LTD. ADVANCES THE CAS E OF THE REVENUE. IT WILL BE USEFUL TO REPRODUCE THE PARA, THE CONCLUSION OF THIS JUDGM ENT :- ' MR. SYALI, THE LEARNED SENIOR COUNSEL APPEARING O N BEHALF OF THE PETITIONER RELIED UPON THE SUPREME COURT'S D ECISION IN THE CASE OF S.S. GADGIL V. LAL & CO.: 53 ITR 231 (S C) WHICH HAS BEEN SUBSEQUENTLY FOLLOWED IN SEVERAL OTHER DEC ISIONS OF 42 ITA NO. 75-80/JP/2013 A.Y. 2004-05 TO 09-10. VODAFONE DIGILINK LTD. VS. ITO TDS-2,JAIPUR. THE SUPREME COURT INCLUDING K.M. SHARMA V. ITO : 25 4 ITR 772 (SC) AND NATIONAL AGRICULTURAL COOPERATIVE MARK ETING FEDERATION OF INDIA V. UNION OF INDIA : 260 ITR 548 (SC) TO SUBMIT THAT THE LIMITATION PRESCRIBED THE INCOME TA X ACT WAS NOT MERE A PERIOD OF LIMITATION BUT THAT IT IMPOSES A FETTER UPON THE POWER OF THE ASSESSING OFFICER TO TAKE ACT ION UNDER THE SAID PROVISIONS. IN THIS CONTEXT, IT WAS SUBMIT TED THAT SINCE POWER IN RESPECT OF FINANCIAL YEAR 2007-08 EX PIRED ON 31.03.2011, IT COULD NOT BE REVIVED UNLESS THE LEGI SLATURE SPECIFICALLY MADE A RETROSPECTIVE AMENDMENT TO THE SAME. THE SUBSTITUTION OF SECTION 201(3) BY THE FINANCE ( NO.2) ACT, 2014 WAS WITH EFFECT FROM 01.10.2014 AND NOT WITH RETROSPECTIVE EFFECT. MR. SAHNI APPEARING ON BEHALF OF REVENUE SUBMITTED THAT IF NEW INFORMATION CAME TO T HE KNOWLEDGE OF THE ASSESSING OFFICER AFTER THE AMENDM ENT OF 2014 THEN THE PERIOD OF LIMITATION WOULD BE SEVEN Y EARS FOR COMPLETION OF THE ASSESSMENT. HOWEVER, WE NEED NOT GO INTO THAT ASPECT OF THE MATTER INASMUCH AS, IN THE PRESENT CASE, NO NEW INFORMATION HAS COME AND THE IMPUGNED NOTICE THAT WAS ISSUED ON 20.01.2015 WAS NO THE BAS IS OF THE SAME INFORMATION IN RESPECT OF WHICH THE NOTICE DATED 17.02.2014 HAD BEEN ISSUED. THUS, THOSE PROCEEDINGS WHICH HAD ENDED AND ATTAINED FINALITY WITH THE PASSING OF THE ORDER DATED 05.12.2014 OF THIS COURT IN WP(C) 2061/2014 C ANNOT NOW BE SOUGHT TO BE REVIVED THROUGH THIS METHODOLOG Y ADOPTED BY THE ASSESSING OFFICER. EVEN OTHERWISE, IN SOFAR AS THE FINANCIAL YEAR 2007-08 IS CONCERNED, THE PERIOD FOR 43 ITA NO. 75-80/JP/2013 A.Y. 2004-05 TO 09-10. VODAFONE DIGILINK LTD. VS. ITO TDS-2,JAIPUR. COMPLETING THE ASSESSMENT UNDER SECTION 201(1)/201( 1A) HAS EXPIRED ON 31.03.2015.' 9.12. BEFORE THE JUDGMENT OF JULY 9, 2015 IN THE EA RLIER WRIT PETITION MENTIONED IN THE ORDER REFERRED HEREIN ABOVE, THE HONBLE DELHI HIGH COURT IN WPC NO. 2061/2014 ON 5.5.2015 HAS OBSERVED : ONE OF THE POINTS RAISED BY THE PETITIONER WAS OF LIMITATION. THE LD. COUNSEL FOR THE PETITIONER D REW OUR ATTENTION TO SECTION 201(3) WHICH HAS BEEN INTRODUC ED IN THE SAID ACT WITH EFFECT FROM 1.4.2010. THE PROVISO TO SUB SECTION (3) STIPULATES THAT AN ORDER CAN BE PASSED AT ANY TIME BEFORE 31.3.2011. THIS MAKES IT CLEAR THAT IN SO FAR AS THE FINANCIAL YEAR 2007-08 IS CONCERNED, IN THE CIRCUMSTANCES OF THE CASE NO ORDER CAN BE PASSED UN DER SUB-SECTION (1) OF SECTION 201 AFTER 31.3.2011. SIN CE THE NOTICE ITSELF HAD BEEN ISSUED ON 17.09.2014, IT WAS CLEARLY TIME BARRED.' IN THE PRESENT CASE THE NOTICE WAS ISSUED ON 9.2.20 09 AND WAS IN RESPECT OF FINANCIAL YEAR 2003-04 TO 07-08, THEREFORE, THE ORDER, CAN BE PASSED UPTO 31.3.2011. BESIDES THE ABOVE, THE MOOT QUESTION, WHICH WAS REQUIRED TO BE ADJUDICATED WAS ' WHETHER THE PROCEEDINGS UNDER CHALLENGE WOULD BE GOVERNED BY T HE JUDGMENT OF SPECIAL BENCH IN THE CASE OF MAHINDRA & MAHINDRA AS PER THE ASSESSEE OR IT WILL BE GOVERNED BY THE AMENDMENT CAME INTO EFFECT WITH EFFECT FROM 01.04.2 010. 44 ITA NO. 75-80/JP/2013 A.Y. 2004-05 TO 09-10. VODAFONE DIGILINK LTD. VS. ITO TDS-2,JAIPUR. 9.13. AS HELD BY US, THE PROVISION WAS NEWLY INSERT ED BY THE FINANCE ACT, 2009 WITH EFFECT FROM 01.04.2010 AND THE PROCEEDINGS WERE PEN DING. THE NEWLY INSERTED PROVISION HAS SPECIFICALLY PROVIDED THE LIMITATION FOR COMPLETING THE PROCEEDINGS, THEREFORE, IN OUR VIEW THE LAW PREVAILING AT THE TI ME OF PENDENCY OF THE ISSUE OR THE AMENDMENT BROUGHT IN BY WAY OF NEW INSERTION OF THE PROVISION DURING THE PENDENCY OF THE PROCEEDINGS WOULD GOVERN THE PERIOD FOR COMPLET ING THE PROCEEDINGS AND NOT THE LAW EXISTING PRIOR TO THE INSERTION OF SAID PROVISI ON. WE DRAW OUR STRENGTH FROM THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE MATTER OF HOWRAH MUNICIPAL CORPORATION VS. GANGES ROAPWAY (2004)1SCC 663 . FURTHER THE SP ECIAL BENCH, WHILE INTERPRETING EFFECT OF AMENDMENT AND ITS APPLICABILITY, IN THE M ATTER OF [ 2008] 301 ITR (A.T.) 111 (ITAT[DEL])AQUARIUS TRAVELS P. LTD. V. INCOME-TAX OFFICER (I. T. A. NO. 260/DEL/2002) HELD AS UNDER : ' 43. FOR PROPER APPRAISAL OF THE ABOVE REFERRED ARGU MENTS OF THE LEARNED REPRESENTATIVES OF THE PARTIES WE HAVE TO EXAMINE T HE SCOPE OF THE RETROSPECTIVE AND PROSPECTIVE LEGISLATION, PARTICUL ARLY WITH REFERENCE TO SECTION 14A AND PROVISO ATTACHED THERETO. 44. WE HAVE CAREFULLY CONSIDERED THE ARGUMENTS OF T HE LEARNED REPRESENTATIVES OF THE PARTIES AND HAVE ALSO GONE T HROUGH ALL THE RELEVANT AUTHORITIES CITED BY THEM IN SUPPORT OF THEIR RESPE CTIVE CONTENTIONS. 45. THE SCOPE OF APPLICABILITY OF RETROSPECTIVELY A MENDED PROVISION HAS BEEN ELABORATED BY THE HON' BLE SUPREME COURT IN THE CAS E OF CIT V. STRAW PRODUCTS LTD. [1966] 60 ITR 156 . IN THAT CASE THE RESPONDENT-COMPANY HAD OBTAINED CERTAIN CONCESSIONS AND FACILITIES UNDER A N AGREEMENT WITH THE GOVERNMENT OF BHOPAL DATED SEPTEMBER 30, 1938. UNDE R THE AGREEMENT THE RESPONDENT WAS NOT REQUIRED TO FILE ANY RETURN OF I NCOME UNDER THE BHOPAL INCOME-TAX ACT. THIS PERIOD OF TEN YEARS EXPIRED ON OCTOBER 31, 1948. LATER ON BHOPAL STATE MERGED IN INDIA ON AUGUST 1, 1949 A ND THE INCOME-TAX OFFICER COMPUTED THE WRITTEN DOWN VALUE OF THE ASSE TS OF THE ASSESSEE AS ON JANUARY 1, 1951, DEDUCTING THEREFROM THE DEPRECIATI ON ACTUALLY ALLOWED TILL 45 ITA NO. 75-80/JP/2013 A.Y. 2004-05 TO 09-10. VODAFONE DIGILINK LTD. VS. ITO TDS-2,JAIPUR. DECEMBER 31, 1950, AND ACCORDINGLY, REDUCED THE DEP RECIATION ALLOWED IN THE ORIGINAL ASSESSMENT. IN THE APPEAL, THE APPELLATE A SSISTANT COMMISSIONER RESTORED THE DEPRECIATION AS COMPUTED IN THE ORIGIN AL ASSESSMENTS. IN THE SECOND APPEAL, THE INCOME-TAX APPELLATE TRIBUNAL UP HELD THE ORDER OF THE APPELLATE ASSISTANT COMMISSIONER. BEFORE THE HIGH C OURT, UNDER REFERENCE, THE QUESTION WAS AS TO WHETHER, HAVING REGARD TO TH E PROVISIONS OF PARAGRAPH 2 OF THE TAXATION LAWS (MERGED STATES) (REMOVAL OF DIFFICULTIES) ORDER, 1949, AND CLAUSE 8 OF THE AGREEMENT, THE CORRECT BASIS FO R COMPUTING THE WRITTEN DOWN VALUE OF THE DEPRECIABLE ASSETS WAS THE ONE WH ICH WAS ADOPTED BY THE INCOME-TAX OFFICER OR THE ONE ADOPTED BY THE APPELL ATE ASSISTANT COMMISSIONER. THE HIGH COURT HELD THAT THE CORRECT BASIS WAS THE ONE ADOPTED BY THE APPELLATE ASSISTANT COMMISSIONER. TH EREAFTER, ON APRIL 20, 1962, PARAGRAPH 2 OF THE TAXATION LAWS (MERGED STAT ES) (REMOVAL OF DIFFICULTIES) ORDER, 1949, WAS AMENDED AND AN EXPLA NATION WAS INSERTED. ON APPEAL TO THE SUPREME COURT, THE DEPARTMENT RELIED UPON THE AMENDED PROVISION. THE HON' BLE SUPREME COURT HELD THAT THE ANSWER TO THE REFERENCE WAS TO BE GIVEN IN ACCORDANCE WITH THE AMENDED LAW UNLESS THE QUESTION REFERRED BY THE APPELLATE TRIBUNAL WAS NOT COUCHED IN TERMS OF SUFFICIENT AMPLITUDE TO COVER AN INQUIRY INTO THE QUESTION IN THE LIGHT OF THE AMENDMENT. 46. THE HON' BLE SUPREME COURT WHILE HOLDING SO, PL ACED RELIANCE ON ITS EARLIER DECISION IN THE CASE OF CST V. BIJLI COTTON MILLS 1 5 STC 656; AIR 1965 SC 1594. THE OBSERVATIONS MADE BY JUSTICE SHAH J. IN T HAT CASE, WHICH HAVE BEEN QUOTED BY THE APEX COURT IN ITS DECISION IN TH E CASE OF CIT V. STRAW PRODUCTS LTD. [1966] 60 ITR 156 , AT PAGE 163 OF THE REPORT, ARE AS UNDER : ' UNDOUBTEDLY THE TRIBUNAL CALLED UPON TO DECIDE A TAXING DISPUTE MUST APPLY THE RELEVANT LAW APPLICABLE TO A PARTICULAR TRANSAC TION TO WHICH THE PROBLEM RELATES AND THAT LAW NORMALLY IS THE LAW APPLICABLE AS ON THE DATE ON WHICH THE TRANSACTION IN DISPUTE HAS TAKEN PLACE. IF THE LAW WHICH THE TRIBUNAL SEEKS TO APPLY TO THE DISPUTE IS AMENDED, SO AS TO MAKE T HE LAW, APPLICABLE TO THE TRANSACTION IN DISPUTE, IT WOULD BE BOUND TO DECIDE THE QUESTION IN THE LIGHT OF THE LAW SO AMENDED. SIMILARLY, WHEN THE QUESTION HA S BEEN REFERRED TO THE HIGH COURT AND IN THE MEANWHILE THE LAW HAS BEEN AM ENDED WITH RETROS- PECTIVE OPERATION, IT WOULD BE THE DUTY OF THE HIGH COURT TO APPLY THE LAW SO AMENDED IF IT APPLIES. BY TAKING NOTICE OF THE LAW WHICH HAS BEEN SUBSTITUTED FOR THE ORIGINAL PROVISION, THE HIGH COURT IS GIVIN G EFFECT TO LEGISLATIVE INTENT AND DOES NO MORE THAN WHAT MUST BE DEEMED TO BE NEC ESSARILY IMPLICIT IN THE QUESTION REFERRED BY THE TRIBUNAL, PROVIDED THE QUE STION IS COUCHED IN TERMS OF SUFFICIENT AMPLITUDE TO COVER AN ENQUIRY INTO TH E QUESTION IN THE LIGHT OF THE AMENDED LAW, AND THE ENQUIRY DOES NOT NECESSITATE I NVESTIGATION OF FRESH FACTS. IF THE QUESTION IS NOT SO COUCHED AS TO INVI TE THE HIGH COURT TO DECIDE THE QUESTION IN THE LIGHT OF THE LAW AS AMENDED OR IF IT NECESSITATES INVESTIGATION OF FACTS WHICH HAVE NOT BEEN INVESTIG ATED, THE HIGH COURT MAY 46 ITA NO. 75-80/JP/2013 A.Y. 2004-05 TO 09-10. VODAFONE DIGILINK LTD. VS. ITO TDS-2,JAIPUR. REFUSE TO ANSWER THE QUESTION. APPLICATION OF THE R ELEVANT LAW TO A PROBLEM RAISED BY THE REFERENCE BEFORE THE HIGH COURT IS NO T NORMALLY EXCLUDED MERELY BECAUSE AT THE DATE WHEN THE TRIBUNAL DECIDED THE Q UESTION THE RELEVANT LAW WAS NOT OR COULD NOT BE BROUGHT TO ITS NOTICE.' 47. IN VIEW OF THE ABOVE PROPOSITION LAID DOWN BY T HE HON' BLE SUPREME COURT, IT IS CLEAR THAT THE AMENDED LAW HAS TO BE GIVEN EFFECT EVEN BY THE APPELLATE AUTHORITIES AND COURTS, IF TH E MATTER IS PENDING BEFORE THEM. IN VIEW OF THIS POSITION, THE AMENDMEN T MADE WITH RETROSPECTIVE EFFECT UNDER SECTION 14A OF THE INCOM E-TAX ACT HAS TO BE GIVEN EFFECT BY THE COMMISSIONER OF INCOME-TAX ( APPEALS) AND THE INCOME-TAX APPELLATE TRIBUNAL IF THE MATTER IS HEAR D BY SUCH AUTHORITIES AFTER THE AMENDMENT HAS BECOME OPERATIV E. 48. IN THE CASE OF CIT V. ASHISH RATILAL SHAH [1991 ] 189 ITR 359 THE HON' BLE BOMBAY HIGH COURT HAS ALSO CONSIDERED THE POSITION REGARDING INTERPRETATION OF RETROSPECTIVE AMENDMENT MADE IN LAW. IT HAS BEEN OBSERVED THAT WHEN THE LAW IS AMENDED WITH RETROSPECTIVE EFFECT, THE COURT WHEN IT DECIDES ANY PROCEEDINGS, HAS TO APPLY AMENDED LAW RETROSPECTIVE LY AS IF IT WERE IN FORCE AT THE MATERIAL TIME. IN THAT CASE THE COURT HAS FURTH ER OBSERVED THAT UNDER BOTH SUB-SECTIONS (1) AND (2) OF SECTION 256 OF THE INCO ME-TAX ACT, THE HIGH COURT HAS TO CONSIDER, WHETHER A QUESTION OF LAW AROSE FR OM THE ORDER OF THE INCOME-TAX APPELLATE TRIBUNAL IN APPEAL AND WHEN TH E REFERENCE IS BEING DECIDED, THE HIGH COURT HAS TO TAKE INTO ACCOUNT AN Y RETROSPECTIVE AMENDMENT OF THE LAW WHICH MAY HAVE TAKEN PLACE AFT ER THE TRIBUNAL' S DECISION AND DURING THE PENDENCY OF THE REFERENCE. 49. IN THE CASE OF STATE OF U. P. V. MODI INDUSTRIE S LTD. 40 STC 73 (SC), AFTER DECISION IN THE REFERENCE BY THE HIGH COURT AND BEF ORE THE TRIBUNAL COULD ACT UPON IT, THE LAW WAS AMENDED RETROSPECTIVELY. THE T RIBUNAL, THEREUPON, DID NOT ACT ON THE BASIS OF THE DECISION OF THE HIGH CO URT UNDER THE REFERENCE. THE ASSESSEE MOVED THE HIGH COURT UNDER ARTICLE 226 AND THE HON' BLE HIGH COURT VIEWED THAT THE REVISING AUTHORITY WAS NOT FREE TO TAKE A DIFFERENT VIEW FROM THE ONE EXPRESSED BY THE HIGH COURT ON ANY GROUND W HATSOEVER, INCLUDING ANY SUBSEQUENT AMENDMENT IN THE LAW AND THAT IT WAS BOUND TO DECIDE THE CASE IN CONFORMITY WITH THE JUDGMENT OF THE HIGH CO URT. ON APPEAL, THE HON' BLE SUPREME COURT SET ASIDE THE DECISION OF THE HIG H COURT BY HOLDING THAT THE RETROSPECTIVE AMENDMENT CLEARLY INDICATED THE I NTENTION OF THE LEGISLATURE OF RESTORING THE ASSESSMENTS AND ORDERS MADE EARLIE R AND HENCE, THE TRIBUNAL WAS ENTITLED TO TAKE SUCH RETROSPECTIVE AMENDMENT I NTO ACCOUNT. 50. IN THE CASE OF CIT V. MAY AND BAKER (INDIA) P. LTD. [1991] 192 ITR 239 (BOM) WHILE ANSWERING THE REFERENCE ON THE BASIS OF OLD LAW, THE HON' BLE 47 ITA NO. 75-80/JP/2013 A.Y. 2004-05 TO 09-10. VODAFONE DIGILINK LTD. VS. ITO TDS-2,JAIPUR. BOMBAY HIGH COURT CAUTIONED THE TRIBUNAL TO TAKE IN TO ACCOUNT THE RETROSPECTIVELY AMENDED PROVISION WHILE PASSING A F INAL ORDER IN THE APPEAL. 51. IN THE CASE OF CIT V. SMT. EVA RAHA [1980] 121 ITR 293 THE HON' BLE GUWAHATI HIGH COURT HAS OBSERVED AS UNDER (PAGE 303 ) : ' THEREFORE, IN THE INSTANT CASE, THE ORDERS WHICH HAD BEEN RENDERED BY THE TRIBUNAL, WERE GOOD AND VALID WHEN THEY WERE SO REN DERED. BUT THE ORDERS SO RENDERED ARE PATENTLY INVALID AND WRONG BY VIRTUE O F THE RETROSPECTIVE OPERATION OF THE AMENDMENT ACT. THEREFORE, WHEN THE APPLICATION FOR RECTIFICATION WAS MADE WITHIN THE PERIOD OF LIMITAT ION PRESCRIBED UNDER SECTION 254(2) OF THE ACT AS A RESULT OF THE RETROSPECTIVE OPERATION OF THE AMENDMENT ACT, THE CONCLUSION IS NOW INESCAPABLE THAT THE ORD ER IN QUESTION IS INCONSISTENT WITH THE PROVISION OF THE AMENDED ACT AND ' MUST BE DEEMED TO SUFFER FROM A MISTAKE APPARENT FROM THE RECORD' AND THAT IS WHY THE APPLICATIONS FOR RECTIFICATION OUGHT TO HAVE BEEN E NTERTAINED AND DIS POSED OF BY THE TRIBUNAL. THE TRIBUNAL HAS POWER UNDER SECTI ON 254(2) TO RECTIFY THE MISTAKE.' 52. THE ISSUE WAS ALSO CONSIDERED BY THE HON' BLE S UPREME COURT IN THE CASE OF UJAGAR PRINTS V. UNION OF INDIA [1989] 179 ITR 317 . IN THAT CASE THE HON' BLE SUPREME COURT HELD THAT A COMPETENT LEGISLATURE CAN ALWAYS VALIDATE A LAW WHICH HAS BEEN DECLARED BY THE COURTS TO BE INVALID AND SUCH VALID LAW CAN ALSO BE MADE RETROSPECTIVE. 53. THE SAME VIEW HAS BEEN EXPRESSED IN THE FOLLOWI NG CASES : ASST. CIT V. SHAKTI BUILDERS [2005] 93 ITD 269 (DELHI) ; J. M. BHATIA, APPELLATE ASST. CWT V. J. M. SHAH [19 85] 156 ITR 474 (SC) ; CIT V. DEVIDAYAL STAINLESS STEEL INDIA P. LTD. [199 1] 189 ITR 506 (BOM) ; AND CIT V. SHAH ELECTRICAL CORP. [1994] 207 ITR 350 (GUJ). 54. IN VIEW OF THE ABOVEMENTIONED AUTHORITIES, THER E REMAINS NO DOUBT THAT SECTION 14A HAS TO BE APPLIED RETROSPECTIVELY BY AL L THE COURTS BEFORE WHOM THE PROCEEDINGS ARE PENDING I.E., IF THE ISSUE IS R ELATED TO THE SUBJECT-MATTER PERTAINING TO DEDUCTION OF EXPENSES IN RELATION TO EXEMPT INCOME, THEN SUCH ISSUE HAS TO BE DECIDED BY TAKING COGNIZANCE OF THE AMENDED LAW. LEARNED COUNSEL FOR THE ASSESSEE HAS NOT BEEN ABLE TO POINT OUT ANY AUTHORITY TO THE EFFECT THAT WHILE DECIDING THE MATTER THE AMENDED L AW EXISTING AT THE TIME OF PENDENCY OF SUCH MATTER CAN BE IGNORED. THUS, IN OU R OPINION THE AMENDMENT 48 ITA NO. 75-80/JP/2013 A.Y. 2004-05 TO 09-10. VODAFONE DIGILINK LTD. VS. ITO TDS-2,JAIPUR. MADE RETROSPECTIVELY HAS TO BE GIVEN FULL EFFECT AN D HAS TO BE APPLIED BY ALL AUTHORITIES INCLUDING THE INCOME-TAX APPELLATE TRIB UNAL, IF THE FACTS INVOLVE THE ISSUE WARRANTING APPLICATION OF THE AMENDED LAW AS CONTAINED UNDER SECTION 14A OF THE INCOME-TAX ACT. '' FURTHER IT WAS HELD BY THE SUPREME COURT IN THE CAS E OF IPCA LABORATORY LIMITED VS. DCIT (SC) 266 ITR 521 THAT WHEN THERE IS NO AMB IGUITY, PROVISIONS CANNOT BE INTERPRETED TO CONFER A BENEFIT UPON THE ASSESSEE. WE ARE BOUND BY THE JUDGMENT OF SPECIAL BENCH DELHI AS WELL AS BY HON'BLE SUPREME COURT ON THE ISSUE OF APPLICABILITY OF NEWLY INSERT ED PROVISION IN RESPECT TO PENDING PROCEEDINGS BEFORE THE ASSESSING OFFICER AS HELD H EREIN ABOVE THE NEWLY INSERTED PROVISION HAS CATEGORICALLY PROVIDED 31 MARCH 2011 AS LAST DATE OF COMPLETING THE PENDING PROCEEDINGS IN RESPECT OF THE PROCEEDINGS I NITIATED AND PENDING AT THE TIME OF INSERTION OF NEW PROVISION IN RELATION TO FINANCIAL YEAR COMMENCING ON OR BEFORE THE 1ST DAY OF APRIL, 2007. ADMITTEDLY, THE PROCEEDINGS WE RE PENDING BEFORE THE ASSESSING OFFICER AT THE TIME OF INSERTION OF THE NEW PROVISI ONS BY THE FINANCE ACT 2009 AND EVEN WHERE WE CONSIDER THE LAW LAID DOWN BY THE SPECIAL BENCH IN MAHINDRA AND MAHINDRA, THE SAME HAS BEEN AMENDED BY THE LEGISLATURE BY WAY OF INSERTION OF NEW PROVISION IE 201(3) READ WITH THE PROVISO. MOREOVER, THE LAW LA ID DOWN BY THE SPECIAL BENCH DELHI AND THE HON'BLE SUPREME COURT THOUGH RENDERED IN TH E CONTEXT OF SECTION 14A, THE PRINCIPLE AS LAID DOWN WOULD CLEARLY BE APPLICABLE TO THE ISSUE IN HAND IE, LIMITATION FOR COMPLETING THE PENDING PROCEEDINGS. 49 ITA NO. 75-80/JP/2013 A.Y. 2004-05 TO 09-10. VODAFONE DIGILINK LTD. VS. ITO TDS-2,JAIPUR. 9.14. IN THE LIGHT OF ABOVE DISCUSSIONS WE HOLD TH AT THE ORDER PASSED BY THE AO IS WITHIN LIMITATION AND IS NOT BARRED BY LIMITATION. IN VIEW OF THIS, THE ISSUE IS DECIDED AGAINST THE ASSESSEE AND IN FAVOUR OF THE REVENUE. 10. IN THE RESULT, ASSESSEES APPEALS ARE DISMISSED ON THE GROUND OF LIMITATION. 11. THE HEARING ON MERIT IS FIXED FOR 21.1.2016 ORDER PRONOUNCED IN THE OPEN COURT ON 27/11/2015. SD/- SD/- VH-VKJ-EHUK YFYR DQEKJ (T.R. MEENA) (LALIET KUMAR) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 27/11/2015 DAS/ VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- VODAFONE DIGILINK LTD., JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE INCOME TAX OFFICER, TDS-2, JAIPUR . 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO.75 TO 80/JP/2013) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR 50 ITA NO. 75-80/JP/2013 A.Y. 2004-05 TO 09-10. VODAFONE DIGILINK LTD. VS. ITO TDS-2,JAIPUR. 51 ITA NO. 75-80/JP/2013 A.Y. 2004-05 TO 09-10. VODAFONE DIGILINK LTD. VS. ITO TDS-2,JAIPUR.