PERFECT CONSTECH PRIVATE LIMITED,NEW DELHI V. DEPUTY COMMISSSIONER OF INCOME TAX, CIRCLE 76(1), DELHI

ITA 1782/DEL/2024

AI Insights

The case involves Perfect Constech Private Limited, which appealed against an order demanding TDS on payments made for external development charges (EDC) to Haryana Urban Development Authority (HUDA). The primary legal contention was whether the assessee was required to deduct TDS on these payments, and if the order demanding such deduction was time-barred. The Tribunal examined the applicability of Section 201(3) of the Income Tax Act, particularly in light of amendments that altered the time limits for passing orders under this section. The Tribunal found that the order was issued beyond the permissible time limit, as the relevant financial year and the filing of TDS statements by the assessee occurred prior to the legislative changes that extended the time limit for such orders.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 471974 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2014-2015
• Other Referred Cases: DCIT, Laxmi Nagar, New Delhi vs. Turner General Entertainment Networks India Limited, Sodexo AVC India (P) Ltd. Vs Deputy Commissioner of Income Tax (TDS) 2(2) Mumbai, Tata Teleservices v. Union of India, Vatika Township Pvt. Ltd., Reliance Jute and Industries Ltd., Shah Sadiq & Sons, Toto Teleservices, Troykaa Pharmaceuticals Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside; Retrospective amendment; Period of limitation; TDS; Time period of passing order
• Section: 201; 153; 201(1); 194C

Judgement Text

"1 ITA no. 1782/Del/2024 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “F ”: NEW DELHI BEFORE SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER AND Ms. MADHUMITA ROY, JUDICIAL MEMBER ITA No. 1782 /DEL/2024 Assessment Year: 2014-15 Perfect Constech Private Limited, A-307, Ansal Chamber, Bhikaji Cama Place, Delhi-110056. PAN- AAGCP 0389 Q Vs DCIT, Circle 76(1), Delhi. APPELLANT RESPONDENT Assessee represented by Shri Parikshit Agarwal, CA Department represented by Ms. Harpreet Kaur Hansra, Sr. DR Date of hearing 10.02.2025 Date of pronouncement 27.02.2025 O R D E R PER Ms. MADHUMITA ROY, JM: The instant appeal, filed by the assessee, is directed against the order dated 30.03.2024 passed by the learned Commissioner of Income-tax (Appeals)-4, Kolkata, arising out of the order/ intimation under Section 201 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), dated 30.03.2021 for assessment year 2014-15. 2. The facts of the case giving rise to the instant appeal are, the assessee, a private limited company, made payment for external development charges (EDC) 2 ITA no. 1782/Del/2024 to Haryana Urban Development Authority (HUDA) who had merely received payment for and on behalf of Department of Town and Country Planning (DTCP), which is admittedly a government department and as per the assessee is not liable to deduct TDS on the said EDC. The Assessing Officer passed an order under Section 201(1) read with Section 201(1A) raising a demand of Rs. 1,64,24,800/-, including interest under Section 201(1A) on account of non-deduction of TDS under Section 194C of the Act. In the said assessment penalty under Section 271C to the tune of Rs. 83,80,000/- was levied much prior to the impugned order under Section 201 passed by the Assessing Officer. Such order passed by the learned Assessing Officer stood confirmed by the learned CIT(Appeals) in appeal preferred by the assessee, but penalty was subsequently deleted by the Coordinate Bench with the specific observation that the assessee was not required to deduct tax at source on payment of EDC as the same was not out of any statutory or contractual liability towards HUDA and therefore the impugned penalty was not leviable. A copy of the said order dated 29.12.2020 passed by the Coordinate Bench has also been placed before us by the learned counsel appearing for the assessee. 3. After the order passed by the Coordinate Bench the learned Assessing Officer passed order under Section 201(1) read with Section 201(1A) of the Act on 30.03.2021 raising a demand of Rs. 1,64,24,800/- including interest under Section 3 ITA no. 1782/Del/2024 201(1A) of the Act on account of non-deduction of TDS under Section 194C of the Act. In appeal the said order was further upheld by the learned CIT(Appeals). Hence the instant appeal before us. 4. The assessee joins the issue to this effect that the order passed by the learned AO dated 30.03.2021 is barred by limitation particularly in view of the provisions of Section 201(c) of the Act which provides the time limit to be adhered to while passing order under Section 201(1) of the Act. As the assessee has filed TDS statement within time the time limit for assessment is of two years. The provisions of Section 201(3) clearly stipulate that 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 a case where the statement referred to in Section 201(1) has been filed; and (ii) six years from the end of the financial year in which payment is made or credit is given for any other person. Such amendment has been brought by the Finance Act, 2014 w.e.f. 1.10.2014. 5. The case of the assessee before us is for financial year 2013-14 and in that view of the matter the limitation period as prescribed under Section 201(3) cannot be made to be applicable. Rather, the earlier provision of Section 201(3)(i) prescribing two years limitation period is to be considered. In fact Section 201 of 4 ITA no. 1782/Del/2024 the Act provides consequences of failure to deduct or pay tax at source. Section 201(3) and Section 201(4) of the Act were inserted by Finance Act, 2009 w.e.f. 1.4.2010 prescribing period of limitation of two years from the end of the financial year in a case in which statement is filed and 4 years from the end of the financial year for other cases were also prescribed. The relevant provision of the said Act is as follows: \"The following sub-sections (3) and (4) shall be inserted after sub-section (2) of section 201 by the Finance (No. 2) Act, 2009, w.ef 1-4-2010 (3) No order shall be made under sub-section (1) deeming a person to an assessee in default for failure to deduct whole or any part of the tax from any 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; 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. (4) The provisions of sub clause (i) of sub-section (3) of section 153 and of Explanation 1 to section 153 shall, so far as may, apply to the time limit prescribed in sub section (3).\" 6. Subsequently, Section 201(3) of the Act was inserted by the Finance Act, 2012 having retrospective effect from 1.4.2010 whereby the limitation prescribed in the said Section was substituted from 4 years to 6 years in passing the order where withholding tax statement had not been filed and the limitation of two years 5 ITA no. 1782/Del/2024 continued in cases where the statement is filed. The relevant provisions of Section 201(3) of the Act post amendment by Finance Act, 2012 are as follows: “(3) No order shall be made under sub-section (1) deeming a person to be an assessee in default for failure to deduct the 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) [six] 1 years from the end of the financial year in which payment is made or credit is given, in another case: Provided that the 1st day of April, 2007 may be passed at any time on or before the 31st day of March 2011substantial” 7. Vide Finance Act, 2014, there was substantial overhauling of the provision of Section 201(3) of the Act, where the period of limitation was substituted from six years to seven years irrespective of the fact whether the statements were filed or not. The new Sub Section (3) to Section 201 was explicitly made applicable from 1.10.2014 in the following manner: “3) No order shall be made under sub-section (1) deeming a person be an failure to deduct the whole or any part of the tax from a person resident in India assessee in default for expiry of seven years from the end of the financial year in which payment is made or credit is given.\" 8. Thus, it appears that by Finance Act, 2014, Sub-Section (1) of Section 2014 w.e.f. 1.10.2014 by substituting the earlier provision and earlier provision with a uniform limitation period of seven years from the end of relevant financial year 6 ITA no. 1782/Del/2024 wherein payments made or credit given was made applicable. It further appears from the above that while making amendment by Finance Act, 2012, the provision of Section 201(3) has been given retrospective effect from 1.4.2010. Thus, it is quite clear that in the event the legislature intended to apply the amended provision of Dub-Section (3) brought in by the Finance Act 2014 w.e.f. 1.10.2014 for such retrospective effect, then they would have certainly mentioned the same a date prior to 1.10.2014 and not w.e.f. 1.10.2014, as has been specifically mentioned by the Finance Act, 2014. Therefore, the argument advanced by the learned counsel for the assessee that the amended provision made by the Finance Act, 2014 in respect of the limitation prescribed in Section 201(3) of the Act cannot at all be made applicable to the instant case in hand as for the particular reason that the assessee’s case was much before than that of the amendment made and the assessee since filed their TDS statement under Section 200 in due time, the order under Section 201(1) read with Section 201(1A) could not have been passed on 30.03.2021 rather the same ought to have been passed within two years from the end of the financial year in which the statement was filed particularly having regard to the provisions of Section 200 of the Act, is found to be acceptable. We also note that the learned DR has not been able to bring on record anything contrary to the facts made available before us. 7 ITA no. 1782/Del/2024 9. We also find that the identical issue has been considered by the Coordinate Bench in the case of DCIT, Laxmi Nagar, New Delhi vs. Turner General Entertainment Net Works India Limited Mahipalpur, Delhi dated 14.10.2024, wherein under identical facts and circumstances of the case the assessment order completed on 28.03.2018 for F.Y. 2010-11 was found to be beyond the prescribed time limit and therefore quashed with the following observations: “10. As could be seen from a reading of the aforesaid provision, the only change which was effected from the earlier provision was the limitation period of four years in case of a deductor not filing TDS statement was extended to six years from four years. Whereas, in case of a person /deductor filing TDS statement, the limitation period of two years remained unchanged. The aforesaid sub section (3) of section 201 was again amended by Finance Act, 2014 w.e.f 1 October 2014 by substituting the earlier provision and earlier provision with a uniform limitation period of seven years from the end of relevant financial year wherein payments made or credit given was made applicable. If the legislature intended to apply the amendment provision of sub-section (3) retrospective it would definitely have provided such retrospective effect expressing in clear terms while making such amendment. In the case of Sodexo AVC India (P) Ltd. Vs Deputy Commissioner of Income Tax (TDS) 2(2) Mumbai (2018) 92 taxmann.com 260(Mumbai) the coordinate Bench held as under :- 6. We have heard the rival submissions and perused materials available on record in the light of the decisions cited. So far as fled statements of the issue is concerned, there is no dispute that in terms of Section 200(3), the assessee has field statements of TDS before the Department within the prescribed time. In fact, in the assessee has TDS before the Department within the prescribed time. In fact in the submissions made by the assessee as reproduced in Para 5.2 of the impugned order of the learned Commissioner (Appeals) the fact of filing of TDS statements by the assessee has been clearly brought out. Therefore, we have to proceed on the basis that in assessee's case, the statements of TDS have been filed. Keeping the aforesaid factual 8 ITA no. 1782/Del/2024 position in view it is necessary to examine the relevant statutory provisions. Section 201 which lays down the consequences of failure to deduct tax at source or having deducted not remitted to the Government account, in its original form, did not provide any time limit for passing the order under sub-section (1) of section 201. Looking at the dispute arising out of proceedings being taken up and completed after lapse of substantial time in the absence of a time limit, the legislature through Finance Act, 2009, introduced sub- section (3) to section 201 providing limitation period of two years for passing the order under section 201(1) from the end of the financial year in which statement of TDS is filed by the deductor and in a case where no statement is filed the limitation was extended therefore expiry of four years from the end of financial year in which the payment was made or credit given. The aforesaid amendment was made effective from 1st April 2010. Subsequently, by Finance Act, 2012, sub-section (3) of section 201 was again amended with retrospective effect from 1st April 2010. The aforesaid amended provision reads as under:- \"(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) Six years from the end of the financial year in which payment is made or credit is given, in any other case: 8. As could be seen from a reading period aforesaid provision, the only change which was effected from the 8. As could be seen the limitation period of four years in case of a deductor not filing TDS statement was extended to six years from four years. Whereas in of a person/deductor filing TDS statement, the limitation period of two years remained unchanged. The aforesaid sub-section (3) of section 201 was again amended by Finance Act, 2014 w.e.f. 1st October 2014 by substituting the earlier provision with the following: 9 ITA no. 1782/Del/2024 \"(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 of it of the tax from a person resident in India, at any time after the expiry of seven years from the end of the financial year in which payment is made or credit is given.\" 9. Thus, as could be seen from the aforesaid amended provision a uniform limitation period of seven years from the end of relevant financial year wherein payments made or credit given was made applicable. The issue before us is, whether the un-amended sub- section (3) which existed before introduction of amended sub- section (3) by Finance Act, 2014, will apply to assessee's case or not. It is the case of the assessee that, since, clause (1) of sub-section (3) of section 201 is applicable to the assessee and the limitation period of two years has expired by the time the provision was amended by Finance Act, 2014, the extended period of limitation of seven years as per the amended provision will not apply. Whereas, it is the case of the Department that the amended sub-section (3) brought into the statute by Finance Act, 2014, will apply retrospectively, hence, the impugned order passed by the Assessing Officer within the period of seven years is valid. It is a fact on record that by the time the amended provisions of sub-section (3) was introduced by Finance Act, 2014, the limitation period of two years as per clause (1) of sub-section (3) of section 201 (the un-amended provision) has already expired. The learned Commissioner (Appeals) has applied the amended provision of sub- section (3) of section 201 by referring to the objects for making such amendment and on the reasoning that the said provision being a machinery provision will apply retrospectively. However, on a careful perusal of the objects for introduction of the amended provision of sub-section (3), we do not find any material to hold that the legislature intended to bring such amendment with retrospective effect. If the legislature intended to apply the amended provision of sub-section (3) retrospectively it would definitely have provided such retrospective effect expressing in clear terms while making such amendment. This view gets support from the fact that while amending sub-section (3) of section 201 by Finance Act, 2012, by extending the period of limitation under sub-clause (ii) to six years, the legislature has given it retrospective effect from 1st April 2010. Since, no such retrospective effect was given by the legislature while amending sub- section (3) by Finance Act, 2014, it has to be construed that the 10 ITA no. 1782/Del/2024 legislature intended the amendment made to sub-section (3) to take effect from 1st October 2014, only and not prior to that. The Hon'ble Supreme Court in Vatika Township Pvt. Ltd. (supra) while examining the principle concerning retrospectivity of an amendment brought to the statutory provisions has observed that unless a contrary intention appears, a legislation is presumed not to be intended to have retrospective operation. The idea behind the rule is that a current law should govern current activities. Law passed today cannot apply to the events of the past. The Hon'ble Court observed, legislations which modified accrued rights or which impose obligations or imposes new duties or attach a new disability have to be treated as prospective unless the legislative intent is clearly to give the enactment a retrospective effect. It was observed, if a provision is not for the benefit of a community, but, imposes some burden or liability the presumption would be it will apply prospectively. The rule against retrospective operation is a fundamental rule of law that no statute shall be construed to have retrospective operation unless such a construction appears very clearly in the terms of the Act, or arises by necessary and distinct implication. Similar view has been expressed in the case of Reliance Jute and Industries Ltd. (supra) as well as Shah Sadiq & Sons (surpa). In case of Toto Teleservices (supra), which is directly on the issue of retrospective application of the amended sub- section (3) of section 201, the Hon'ble Gujarat High Court, after extensively dealing on the issue of retrospective applicability of the provisions and applying the principles laid down by the Hon'ble Supreme Court in a number of cases, held as under :- \"15.00 Considering the law laid down by the Hon'ble Supreme Court in the aforesaid decisions, to the facts of the case on hand and more particularly considering the fact that while amending section 201 by Finance Act, 2014, it has been specifically mentioned that the same shall be applicable w.e.f. 1/10/2014 and even considering the fact that proceedings for F.Y. 2007-08 and 2008-09 had become time barred and/or for the aforesaid financial years, limitation under section 201(3)(1) of the Act had already expired on 31/3/2011 and 31/3/2012, respectively, much prior to the amendment in section 201 as amended by Finance Act, 2014 and therefore as such right has been accrued in favour of the assessee and considering the fact that wherever legislature wanted to give retrospective effect so 11 ITA no. 1782/Del/2024 specifically provided while amending section 201(3) (ii) of the Act as was amended by Finance Act, 2012 with retrospective effect from 1/4/2010, it is to be held that section 201(3), as amended by Finance Act No.2 of 2014 shall not be applicable retrospectively and therefore, no order under section 201(1) of the Act can be passed for which limitation had already expired prior to amended section 201(3) as amended by Finance Act No.2 of 2014. Under the circumstances, the impugned notices/summonses cannot be sustained and the same deserve to be quashed and set aside and writ of prohibition, as prayed for, deserves to be granted.\" 10. Following the aforesaid decision of the Hon'ble Gujarat High Court in Troykaa Pharmaceuticals Ltd. (supro) again expressed the same view. \"7. Examining the facts of the present case in the light of the principles enunciated in the above decision, the present case relates to financial year 2008-2009. The petitioner had filed statements as required under section 200 of the Act. The limitation for initiating proceedings under section 201(1) of the Act would, therefore, be governed by section 201(3)(i) of the Act as it stood at the relevant time which provided for a period of limitation of two years from the end of the financial year in which statement was filed in a case where the statement referred to in section 200 has been filed. The limitation for initiating action under section 201(1) of the Act, therefore, elapsed on 31st March, 2012 whereas the amendment in section 201 of the Act as amended by Finance Act No. 2 of 2014 came into force with effect from 28th May, 2012. The impugned notice, therefore, is clearly barred by limitation and, therefore, cannot be sustained. For the detailed reasons recorded in the judgment and order dated 5th February, 2016 rendered in the case of Tata Teleservices v. Union of India (supra), this petition also deserves to be allowed.\" 11. No contrary decision has been brought to our notice by the learned Departmental Representative. Therefore, considering the principle laid down by the Hon'ble Supreme Court in the decisions as well as the ratio laid down by the Hon'ble Gujarat High Court in the decisions referred to above which are directly on the issue, we hold 12 ITA no. 1782/Del/2024 that the order passed under section 201(1) and 201(1A) having been passed after expiry of two years from the financial year wherein the TDS statements were filed by the assessee under section 200 of the Act, is barred by limitation, hence, has to be declared as null and void. 12. Before parting, we must put it on record that since we have decided the appeal on the issue of limitatior we have consciously restrained ourselves from touching upon the merits of the issue regarding applicability c section 194C of the Act which is left open to be decided if it arises in case of the assessee in any other assessment year. 13. In the result, assessee's appeal is partly 11. In the instant case the time limit for passing order u/s 201(1) of the Act pertaining to financial year 2010-11 where a statement u/s 200 of the Act has been filed was two years from the end of the financial year in which such statement was filed. It is evident from the order of the AO that the tax statement in the relevant form i.e. Form 26Q for F.Y. 2010-11 was filed by the assessee on 13-05-2011. The time limit for passing an order u/s 201(1) of the Act was up to 31-03-2014. The assessment order was completed on 28-03-2018 by the AO beyond the prescribed time limit. The sub-section (3) of the Section 201 of the Act does not applicable in this case. 12. For the foregoing reasons we find that the assessment was made by the AO was time barred has no leg to stand and the Ld. CIT(A) has rightly allowed the appeal. The appeal of the revenue is liable to be dismissed. 13. In the result, the appeal of the revenue is dismissed. Order pronounced in the open court on 14.11.2024.” 10. Having regard to the entire aspect of the matter, the case made out before us, as enunciated hereinbefore, and the order passed by the Coordinate Bench on identical issue, we find no reason to deviate from the stand taken therein and respectfully relying upon the same we find that the order impugned dated 13 ITA no. 1782/Del/2024 30.03.2021 for A.Y. 2014-15 is beyond limitation in view of the amended provision of Section 201(3) of the Act and the same is not found to be sustainable and thus, quashed. 10. In the result, assessee’s appeal is allowed. Order pronounced in open court on 27.02.2025. Sd/- Sd/- (S. RIFAUR RAHMAN ) (Ms. MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER *MP* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI "