SRI KARAN NARENDRA AGRICULTURE UNIVERSIT V. INCOME TAX OFFICER

ITA/50/2018

AI Insights

The case involves Sri Karan Narendra Agriculture University, Jobner, which appealed against the judgment and order of the Tribunal concerning the non-deduction of TDS on pension payments for the financial year 2007-2008. The university argued that it was not in existence during the relevant financial year and thus not liable for the TDS. The Income Tax Officer had issued a demand for TDS and interest under sections 201(1) and 201(1A) of the Income Tax Act, which the university contested. The High Court of Rajasthan examined the applicability of TDS and the imposition of interest, considering the legal provisions and the facts presented.

• Counselvise Citation: [2018] 140 COUNSELVISE.COM (IT) 764116 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 24-04-2018
• Assessment Year: misc
• Other Referred Cases: Hindustan Coca Cola Beverages Pvt. Ltd. v. CIT, Mavany Brothers vs. Commissioner of Income Tax and Ors., Tata Teleservices vs. Union of India and Ors., DCIT (International Taxation) Jaipur Vs. M/s. National Highway Authority of India, Commissioner of Income Tax vs. Rajasthan Rajya Vidyut Prasaran Nigam Ltd., Commissioner of Income Tax vs. Rishikesh Apartments Co-operative Housing Society Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: R B MATHUR; PRATEEK KEDAWAT
• Assessee Lawyers: SIDDHARTH RANKA; SAURABH HARSH
• Keywords: Employer-employee relationship; Income Tax; Limitation; Pension; TDS
• Section: 192; 201(1); 201(1A)

Judgement Text

"HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 50/2018 Sri Karan Narendra Agriculture University, Jobner Having Its, Registered Address At V P Jobner Tehsil Phulera, Jaipur 303328 In The State Of Rajasthan ----Appellant Versus Income Tax Officer, Ward Tds-3 Jaipur, Having Its Address C-95 Baba Sidhnath Bhawan, Lal Kothi Scheme, Jaipur Raj ----Respondent For Appellant(s) : Mr. Siddharth Ranka with Mr. Saurabh Harsh For Respondent(s) : Mr. R.B. Mathur with Mr. Prateek Kedawat HON'BLE MR. JUSTICE K.S.JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS Judgment 24/04/2018 1. By way of this appeal, the appellant has challenged the judgment and order of the Tribunal whereby the Tribunal has partly allowed the appeal of the assessee. 2. This court while admitting the appeal on 08.02.2018 framed the following substantial questions of law:- “1. Whether the ld. ITAT was right in law in holding that even in absence of employer employee relationship, the assessee appellant University would be liable for non deduction of TDS for the financial period 2007-2008 even when the assessee appellant University itself came to be incorporated on 13.09.2013? 2. Whether the demand created against the assessee appellant University for the financial period 2007-2008 was barred by limitation? 3. Whether the ld. ITAT was correct in confirming demand of interest u/s 201(1A) of (2 of 25) [ITA-50/2018] the Act where the recipient of such income had discharged the applicable tax? 3. The brief facts of the case are that Sri Karan Narendra Agriculture University, Jobner (hereinafter referred to as the \"assessee appellant University\") came to be established for promoting agricultural sciences as an Agricultural University situated at Jobner by the Act of the Agriculture University, Jobner, Act, 2013 (Act No. 20 of 2013). On 13.09.2013, the gazettee notification for establishment of the assessee appellant University was issued after obtaining the approval of the Hon'ble Governor, State of Rajasthan. The assessee appellant University is an autonomous body functioning in public interest with no motive of profit or for profit. The assessee appellant University is functioning under overall management, control and supervision of the Government of Rajasthan. Rajasthan Agriculture Research Institute, Durgapura, Jaipur having TDS Number (hereinafter referred to as 'TAN') JPRA00923G was working under the aegis of Swami Keshwanand Agriculture University, Bikaner. On 10.12.2013 by an office order issued by the Registrar of the assessee appellant University, it was decided to shift the Sub-Treasury office along with staff located at Rajasthan Agriculture Research Institute, Durgapura, Jaipur to the assessee appellant University. On 17.03.2015 the controversy arose and came to light when the officials of the TDS Wing of the Income-tax department visited the premises of the assessee appellant University and on perusal of records, it was alleged that though pension was paid by the assessee appellant University for the financial year 2007-2008, i.e., assessment year 2008-2009 but TDS was not deducted on such pension paid as per the mandatory requirement of section (3 of 25) [ITA-50/2018] 192 of the Act and immediately on the same date, i.e., on 17.03.2015 a show cause notice was issued to the assessee appellant University asking as to why TDS was not deducted by it for the financial year 2007-2008, i.e., assessment year 2008-2009 on pension paid. The ld. Assessing Officer granted a short date of one week to file reply to the show cause notice as the matter was getting time barred by 31st March 2015 and accordingly the matter was fixed for 25.03.2015 and on 25.03.2015 the authorized representative of the assessee appellant University appeared and reiterated as under: a. the assessee appellant University had come into existence only on 13.09.2013 and that it cannot be held to be liable for non-deduction of TDS for the financial year under consideration, i.e., 2007-2008 and that liability, if any, was of the Rajasthan Agriculture Research Institute, Durgapura, Jaipur which was working under the aegis of Swami Keshwanand Agriculture University, Bikaner at that particular point of time. b. there was no employer employee relation between the assessee appellant University and the said pensioners for the year under consideration as the assessee appellant University had come into existence only on 13.09.2013. c. Income tax returns filed by some of the pensioners was also provided wherein it was submitted that the pensioners have deposited due Income-tax and hence, in light of judgment of Hon'ble Supreme Court in the case of Hindustan Coca Cola Beverages Pvt. Ltd. v. CIT the demand to that extent may be dropped. 4. The Assessing Officer was not satisfied with the submission of the assessee appellant University and passed the assessment order dated 27.03.2015 under TAN: JPRS14180F whereby demand of Rs.12,00,963/- was raised against the assessee appellant University u/s. 201(1)/201(1A) of the Act amounting to Rs.6,27,384/- and Rs.5,73,579/- respectively. (4 of 25) [ITA-50/2018] 5. Counsel for the appellant Mr. Ranka has taken us to the order of CIT(A) wherein it has been observed as under: 4.3 The appellant has contended that during the year under consideration, this university was looked after by Swami Keshwanand Agriculture University, Bikaner and therefore assessee was not in existence in the year under consideration. This university came into existence on 13.09.2013 and therefore when the assessee was not in existence, no such responsibility of deducting TDS can be cast on it. On perusal of the scheme of the Act, it is clear that liability of deducting TDS is that of respective DDO. In the year under consideration, this agricultural university was one of the DDOs of Bikaner University. It has not a separate TDS No. Therefore the contention of A/R cannot be accepted and AO has rightly made assessment in hands of assessee. This ground is dismissed. 6. He contended that the Assessing Officer while considering the matter has held that the amount was required to be treated penalty, and therefore, he has invited our attention to provisions regarding TDS for not deducting the TDS for the relevant year 2007-2008, which is reflected in the order of AO: a. During the course of Spot Verification proceedings, it is noticed that the Drawing & Disbursement Officer/Treasury Officer has made payment under the head Salary/Pension to the Pensioners of the University which falls under the section 192(1) of the Income tax Act, 1961. It is also found that the deductor has neither deducted TDS nor deposited in the Government account. Thus, TDS on this payment should have been deducted at average basis of Income tax as per section 192(1) of the Income tax Act, 1961 but the deductor has not deducted TDS as per under section 192(1) of the Income tax Act, 1961. On examination of the details of records of the deductor, the following discrepancies were found:- b. During the course of spot verification, the deductor was asked to explain the reason of non deduction of TDS and an opportunity was given (5 of 25) [ITA-50/2018] to furnish the details of declaration certificates & receipts of 80C etc. In response to Shri Om Prakash Bairwa, Treasury Officer replied stated that “Jh d.kZ ujsUnz Ñf\"k fo’o fo|ky; tkscusj dk xBu fnukad 13-9- 2013 dks gqvk gSA iSfrd fo’o fo|ky; Lokeh ds’kokuUn Ñf\"k fo’ofo|ky; chdkusj ls fdlh izdkj ds fn’kk funsZ’kksa ds vHkko ,oa tkudkjh ds vHkko esa isU’kulZ dh isU’ku ls vk;dj dh dVkSrh ugha dh tk ldh gSA 80 lh ds vUrxZr izek.k i= Jh tkudkjh ds vHkko esa izkIr ugha fd;s x;sA Hkfo\"; esa isUlulZ ls 80 lh dks vUrxZr nLrkost izkIr dj vk;dj dh dVkSrh dj nh tkosxhA 7. He has further taken us through the order of the Tribunal and contended that the CIT (A) as well as the Tribunal have committed serious error in deciding the matter and he has relied on following decisions: (I) Mavany Brothers vs. Commissioner of Income Tax and Ors. (17.04.2015 - BOMHC) : MANU/MH/0717/ 11. Mr. Robinson, learned Counsel for the appellant in support of the appeal submits as under: (A) So far as substantial question (4) is concerned the reopening of the notice dated 13/11/2000 is completely without jurisdiction as on that day the Assessing Officer did not have on record the original return of income filed by the appellant. It is submitted that only on examination of the same could the Assessing Officer have a reason to believe that income chargeable to tax has escaped assessment. Thus the entire proceedings are without jurisdiction. (B) The impugned orders failed to notice the appellant's contention that the original return of income filed in 1997 was not available with the respondent - Revenue when the notice dated 13/11/2000 was issued to the appellant was not considered. This is apparent from the fact that the appellant had while filing the return of income on 17/11/2000 consequent to the reopening notice on 13/11/2000 had indicated that profit and loss account and balance sheet were part of the original return and therefore were not being separately attached. The return as filed on 17/11/2000 was identical to one filed on 22/09/1997. Inspite of the same on 20/11/2000 the Assessing Officer called for the profit and loss account and balance sheet on the ground that the same is not attached to the return of the income filed on 17/11/2000. It is (6 of 25) [ITA-50/2018] submitted that if the return of income was available with the Assessing Officer there would have been no occasion for him to call for the balance sheet and profit and loss account by letter dated 20/09/2000 from the appellant. Thus the conclusion of the CIT(A) as well as the Tribunal that the original return of income may have been available on 13/11/2000 when the notice for reopening was issued without any evidence/basis cannot be sustained. 12. As against the above, Mrs. A. Desai submits that it is not open to the appellant to raise an issue of jurisdiction to issue notice under Section 148 of the Act before the first appellate authority. This is particularly so as the appellant had submitted to the jurisdiction of the Assessing Officer and had made no grievance with regard to lack of jurisdiction of the Assessing Officer. Even otherwise it is submitted the fact that income chargeable to tax has escaped assessment need not necessarily flow out to examination of return of income and the same could be from any other source. Thus, the requirement of having a return of income available at the time of issuing of the notice is not necessary. So far as the questions nos. 1 to 3 as admitted, it is submitted that the same would depend upon the view taken by the Court on the issue of jurisdiction. Therefore, at this stage no submissions were made with regard to questions nos.1 to 3 with liberty to make the same in case the Court is of the view that the issue of impugned notice dated 13/11/2000 was a notice within jurisdiction of the Assessing Officer. 13. We have considered the rival contentions. The jurisdiction under Section 147/148 of the Act is an extra ordinary jurisdiction and can only be exercised when condition precedent as provided in Sections 147/148 of the Act are satisfied. It is the appellant's case that the aforesaid conditions are not satisfied inasmuch as in the absence of the Assessing Officer having the original return of income available it would not be possible for him to have a reasonable belief that income chargeable to tax has escaped assessment. This issue of jurisdiction according to the respondent - Revenue could only have been raised before the Assessing Officer and not having been raised before him, the appellant had waived its rights to raise the same. The appellant having submitted to the jurisdiction of the Assessing Officer cannot now challenge the same. This is not entirely correct. It is well settled that mere acquiescence (7 of 25) [ITA-50/2018] will not give jurisdiction to an authority who has no jurisdiction. In fact this Court in CIT V/s. ITSC reported in MANU/MH/0996/2014 : 365 ITR 87 has held that mere participation by a party in proceedings without jurisdiction will not vest/confer jurisdiction on the authority. Reason to believe that income chargeable to tax has escaped assessment is a jurisdictional fact and only on its satisfaction does the Assessing Officer acquire jurisdiction to issue notice. Thus this lack of satisfaction of jurisdictional fact can never confer jurisdiction and an objection to it can be raised at any time even in appeal proceedings. The mere fact that no objection is taken before the Assessing Officer would not by itself bestow jurisdiction as the Assessing Officer. Such an objection can be taken in appeal also. Moreover, the Apex Court in its recent decision in Kanwar Singh Saini V/s. High Court Of Delhi reported in MANU/SC/1111/2011 : 2012(4) SCC 307 has held that it is settled position that conferment of jurisdiction is a legislative function and cannot be conferred by consent of petitioner. An issue of jurisdiction can be raised at any time even in appeal or execution. Reliance in this regard could usefully be made to Indian Bank v/s Manilal Govindji Khona reported in MANU/SC/0103/2015 : 2015 (3) SCC 712. Paras 22 of the said judgment read as under : \"22. In Sushil Kumar Mehta case [Sushil Kumar Mehta v. Gobind Ram Bohra, MANU/SC/0593/1989 : (1990) 1 SCC 193] this Court has elaborately considered the relevant factual and legal aspect of the case and has laid down the law at para 10, after referring to its earlier decision of a four-Judge Bench of this Court speaking through Venkatarama Ayyar, J. in Kiran Singh v. Chaman Paswan [MANU/SC/0116/1954 : AIR 1954 SC 340 : (1955) 1 SCR 117], which would be worthwhile to be extracted as under: (Sushil Kumar Mehta case [Sushil Kumar Mehta v. Gobind Ram Bohra, MANU/SC/0593/1989 : (1990) 1 SCC 193], SCC p. 199) 6. \"10. ... '6. ... It is a fundamental principle well established that a decree passed by a court without jurisdiction is a nullity and that its invalidity could be set up whenever and wherever it is sought to be enforced or relied upon, even at the stage of execution and even in collateral proceedings. A defect of jurisdiction, whether it is pecuniary or territorial, or whether it is in respect of the subject-matter of the action, strikes at the (8 of 25) [ITA-50/2018] very authority of the court to pass any decree, and such a defect cannot be cured even by consent of parties. If the question now under consideration fell to be determined only on the application of general principles governing the matter, there can be no doubt that the District Court of Monghyr was coram non judice, and that its judgment and decree would be nullities.' (Kiran Singh case [MANU/SC/0116/1954 : AIR 1954 SC 340 : (1955) 1 SCR 117], AIR p. 342, para 6)\" Thus, it is open to the petitioner to raise the issue of jurisdiction before the appellate authorities. 15. In view of the above, we set aside the impugned order of the Tribunal on the issue of reopening notice dated 13/11/2000 and restore the issue to Tribunal for fresh consideration. The appellant and the Revenue are granted liberty to lead such other evidence before the Tribunal as may be necessary to establish the existence/non- existence of the return of income filed originally on 22/09/1997. The Tribunal is also directed to examine all other contentions raised by the respondent - Revenue or appellant - Assessee on the issue of reopening notice. The Tribunal would also examine the issue whether the reason to believe that income has escaped assessment need not necessarily flow from examining the return of income but could also come from any other source. In case there is some other source for the Assessing Officer to come to the conclusion that income has escaped assessment then the same must be urged by the Revenue before the authorities. Further if such other source is relied upon then the principles of natural justice would require that before the passing of assessment orders, the same must be brought to the notice of the parties so as to enable the noticee to explain that the reliance upon the same is not justified. 17. Therefore in view of the above, the appeal is partly allowed. The impugned order dated 15/01/2007 passed by the Income Tax Tribunal, Panaji in ITA No. 24/PNJ/2005 is quashed and set aside. The appeal is restored to the file of the Tribunal. The Tribunal is directed to decide the appeal afresh on all issues after hearing the parties. As the appeal pertains to assessment year 1996-97, the Tribunal is directed to dispose of this appeal as expeditiously as possible. (9 of 25) [ITA-50/2018] Tata Teleservices vs. Union of India and Ors. (05.02.2016 - GUJHC) : MANU/GJ/0122/2016 10. All these petitions are opposed by Mr. M.R. Bhatt, learned counsel appearing on behalf of the revenue -Income Tax Department. 10.01. Mr. M.R. Bhatt, learned counsel appearing on behalf of the revenue has vehemently submitted that as in the present petition the respective petitioners have challenged the notices/summonses issued by the respondent No. 2, they cannot/may not be entertained solely on the ground that all these petitions are at the stage of Show Cause Notice. It is submitted that it is well settled proposition of law that ordinarily the petition against the Show Cause notice would not be entertained particularly when the petitioners are having adequate statutory remedy under the Income Tax Act itself. In support of his above submission he has heavily relied upon the decision of this Court in the case of INOX AIR PRODUCTS LTD Versus Union of India and others, rendered in Special Civil Application No. 16725 of 2013. It is submitted that in the aforesaid decision, relying upon the decision of the Hon'ble Supreme Court reported in the case of Bellary Steels & Alloys Ltd. Versus CCT, reported in (2009) 17 SCC 547 as well as in the case of Indo Asahi Glass Co. Ltd. Versus ITO, reported in MANU/SC/0306/2002 : (2002) 10 SCC 444, this court has not entertained the petitions which were filed against the Show Cause Notice. 10.02. Mr. M.R. Bhatt, learned counsel appearing on behalf of the revenue has further submitted that the contention on behalf of the petitioners that the impugned notices under section 201(1) are barred by proviso to section 201(3) of the Act, is untenable in law. It is submitted that section 201(3) as amended by Finance Act (No.2) of 2014 specifically provides for consequences of failure to deduct or pay the Income Tax and it further provides that no order shall be made under sub-section (1) deeming a person to be an assessee any 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 7 years from the end of the Financial year in which payment is made or credit is given. It is submitted that, therefore, the Section itself provides for limitation period of 7 years from the end of the financial year in which payment is made or credit is given. It is submitted that in the instant case, period of 7 years has not (10 of 25) [ITA-50/2018] elapsed from the end of financial year in which payment is made or credit is given. It is submitted that, therefore, the impugned notices/summonses cannot be said to be barred by period of limitation as provided under the Act. 10.03. Mr. M.R. Bhatt, learned counsel appearing on behalf of the revenue has further submitted that earlier provision had bifurcation as contained in clauses (i) and (ii) of sub- section (3) with regard to statement being filed, payment made or credit given. It is submitted that as compared thereto, the legislature has done away with this distinction and the amendment prescribes a common period of limitation so as to align the time limit with the provision of Section 148 of the Act. 10.04. Mr. M.R. Bhatt, learned counsel appearing on behalf of the revenue has heavily relied upon the Memorandum to the Finance Bill (No.2) 2014. It is submitted that in the Memorandum it is specifically noted that as TDS defaults are generally in respect of the transaction not reflected in the TDS statement, it is proposed to omit clauses (i) and (ii) of sub-section (3) of Section 201. 10.05. Mr. M.R. Bhatt, learned counsel appearing on behalf of the revenue has vehemently submitted that the legislature can provide for a larger period of limitation. In support of his above submission, he has heavily relied upon the following decisions of the Hon'ble Supreme Court:-- \"(1). AIR 1963 S.C. 1436 : 48 ITR 154 (Ahmedabad Manufacturing And Calico Printing Co. Ltd. Versus Income Tax Officer and others); (2). 1999(2) SCC 77 (Additional Commissioner v. Jyoti Traders); (3). 2007 (9) SCC 691 (N. Ranga Rao and Sons v. State of Karnataka) (4). 1996 (5) SCC 626 (CTO Versus Bishwanath Jhunjhunwala).\" 10.06. Mr. M.R. Bhatt, learned counsel appearing on behalf of the revenue has further submitted that in the present case section 201(3) does not provide that the period is available only where limitation has not expired. It is submitted that as (11 of 25) [ITA-50/2018] such the law that prevailed at the time of issuance of notice is required to be applied. It is submitted that section 201(3) provides for issuance of notice within 7 years. It is submitted that the language of section 201(3) as amended by Finance Act (No.2) 2014 being plain, unambiguous, literal, the same is required to be applied while giving liberal meaning to to it. 10.07. Mr. M.R. Bhatt, learned counsel appearing on behalf of the revenue has further submitted that in the present case larger period of limitation as provided under section 201(3) as amended by Finance Act (No.2) which provides for 7 years time is not applied, in that case, the purpose and object of amendment in section 201(3) of the Act would be frustrated. 10.08. Mr. M.R. Bhatt, learned counsel appearing on behalf of the revenue has further submitted that as such similar provision is also incorporated in Section 149(1)(c) of the Act providing for a larger period of limitation where foreign assets are involved. 10.09. Now, so far as the reliance placed upon the decision of the Hon'ble Supreme Court in the case of S.S. Gadgil (Supra), by the learned advocate appearing on behalf of the petitioners, is concerned, it is vehemently submitted by Mr. Bhatt, learned counsel appearing on behalf of the revenue that the said decision is distinguishable. It is submitted that in the aforesaid case, the Hon'ble Supreme Court was considering the provisions of Sections 37 of 1922 Act. It is submitted that unamended Section 34(1)(iii) provided for a period of one year in respect of an agent. It is submitted that by the amended clause (iii), a negative covenant was placed putting an embargo on the assessing officer not to issue a notice after an expiry of two years. It is submitted that it is only by reason of this negative proviso that petition came to be allowed by the Court as can be seen from para 3 of the judgment. It is submitted that In the present case, there is no such negative proviso. It is submitted that in fact in the said decision also in para 5, the Hon'ble Supreme Court has observed that \"there was no scope for issuing a notice unless the Legislature expressly gave power to the Income Tax officer to issue notice under the amended section notwithstanding the expiry of the period under the unamended provision or unless there was overlapping of the period within which notice could be issued under the old and (12 of 25) [ITA-50/2018] the amended provision\". 10.10. Mr. M.R. Bhatt, learned counsel appearing on behalf of the revenue has further submitted that the decision of the Hon'ble Supreme Court in the case of K.M. Sharma (supra), which has been heavily relied upon by the learned advocate appearing on behalf of the petitioners, shall not be applicable to the facts of the case on hand. It is submitted that in the aforesaid decision in the case of Ahmedabad Manufacturing & Calico Printing Co. Ltd. (supra) was not brought to the notice of the Hon'ble Court which is a Constitution Bench decision. It is submitted that, therefore, the decision in the case of Poolpandi Versus Superintendent, Central Excise, reported in MANU/SC/0339/1992 : 1992 (3) SCC 259 and decision in the case of CTO Versus Bishwanath Jhunjhunwala, reported in MANU/SC/0097/1997 : 1996 (5) SCC 626, which take note of the aforesaid Constitutional Bench decision, are required to be applied. 10.11. Mr. M.R. Bhatt, learned counsel appearing on behalf of the revenue has further submitted that even in the decision in the case of Thirumalai Chemicals Ltd. (supra), it is held that the aspect of limitation is a procedural matter. Making above submissions and heavily relied upon the statement and objects of amendment in Section 201(3) of the Act and relying upon the above decisions, it is requested to dismiss the present petitions. 12. While considering the aforesaid question, provisions of section 201 of the Income Tax Act, as amended from time to time, are required to be considered. 12.01. Section 201 of the Act provides for consequences of failure to deduct tax in accordance with the provisions of the Act. Section 201 of the Act as amended by Finance Act of 2008 with retrospective effect from 1/6/2002 reads as under : \"Consequences of failure to deduct or pay. 201. (1) Where any person, including the principal officer 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 (IA) of section 192, being an employer, does not deduct, or does not (13 of 25) [ITA-50/2018] pay, or after so deducting fails to pay, the whole or any part of the tax, as required by or under this Act, then, such person, shall, without prejudice to any other consequences which he may incur, be deemed to be an assessee in default in respect of such tax: Provided that no penalty shall be charged under Section 221 from such person, unless the Assessing Officer is satisfied that such person, without good and sufficient reasons, has failed to deduct and pay such tax. (1A) Without prejudice to the provisions of sub- section (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 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 deductible to the date on which such tax is actually paid and such interest shall be paid before furnishing the quarterly statement for each quarter in accordance with the provisions of sub-section (3) of section 20; (2) Where the tax has not been paid as aforesaid after it is deducted, the amount of the tax together with the amount of simple interest thereon referred to in Sub-section (IA) shall be a charged upon all the assets of the person, or the company, as the case may be. referred to in sub- section(1).\" 12.02. Subsequently, section 201 of the Act came to be amended. Sub-sections (3) and (4) came to be introduced w.e.f. 1/4/2010. Section 201 as amended by Finance Act No. 2 of 2009 w.e.f. 1/4/2010 reads as under : \"201. (1) Where any person, including the principal officer 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 (IA) of section 192, being an employer, does not deduct, or does not pay, or after so deducting fails to pay, the whole or any part of the tax, as required by or under this Act, then, such person, shall, without prejudice to any other consequences which he may incur, be deemed to be an assessee in (14 of 25) [ITA-50/2018] default in respect of such tax: Provided that no penalty shall be charged under section 121 from such person, unless the Assessing Officer is satisfied that such person, without good and sufficient reasons, has failed to deduct and pay such tax. (1A) Without prejudice to the provisions of sub- section (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, - (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 deductible to the date on which such tax is deducted; and (ii) at one and one half per cent for every month or part 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 the statement in accordance with the provisions of sub-section (3) of section 200. (2). Where the tax has not been paid as aforesaid after it is deducted, the amount of the tax together with the amount of simple 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, referred to in sub- section (1). (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 : 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. (15 of 25) [ITA-50/2018] (4). The provisions of sub-clause (ii) 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).\" 12.03. Subsequently, section 201(3)(ii) of the Act came to be amended by Finance Act of 2012 with retrospective effect from 1/4/2010 whereby in sub-section (3) in clause (ii) words \"four years\" came to be substituted by words \"six years\". Amended section 201(3) reads as under : 12.04. Subsequently, section 201(3)(ii) of the Act, was amended by Finance Act, 2012, with retrospective effect from 01/04/2010, whereby in sub-section (3), in clause (ii), for the words 'four years\", the words \"six years\" shall be substituted. The amended Section 201(3) read 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) six 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 March, 2011.\" 12.05. Subsequently, section 201(3) of the Act has been further amended by Finance Act No. 2 of 2014 w.e.f. 1/10/2014, which reads as under : \"Consequences of failure to deduct or pay : 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 seven years from the end of the financial year in which payment is made or credit is given.\" (16 of 25) [ITA-50/2018] As stated hereinabove, question posed before this Court is whether section 201(3) of the Income Tax Act as amended by Finance Act No. 2 of 2014 would be applicable prospectively or retrospectively. 12.06. From the aforesaid chronological events and section 201 as amended from time to time, it emerges that prior to section 201 came to be amended by Finance Act No. 2 of 2009, Income Tax Act did not provide for any limitation of time for passing an order under section 201(1) holding a person to be an assessee in default. It appears that in absence of such a time limit, dispute arose when the proceedings were taken up or completed after substantial time has elapsed. Therefore, by Finance Act No. 2 of 2009 sub- sections (3) and (4) came to be introduced w.e.f. 1/4/2010 and it provided that an order under section 201(1) for failure to deduct the whole or any part of the tax as required under the Act, if the deductee is a resident payer, shall be passed within two years from the end of the financial year in which statement of tax deducted at source is filed by the deductor. It further provides that where no such statement is filed, said order can be passed up till 4 years from the end of the financial year in which payment is made or credit is given. 12.07. At this stage, it is required to be noted that Sub-section (3)(i) of section 201 came to be introduced by Finance Act No. 2 of 2009 which 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 31st day of March, 2011. As per Memorandum of Finance Bill No. 2 of 2009, in respect of F.Y.2007- 08 and earlier years only proceedings that were pending could be completed by 31/3/2011 and as such no fresh proceedings could be commenced for the said period. 12.08. The reasons for amendment so stated in the memorandum to the Finance Bill No. 2 of 2009 reads as under; \"Providing time limits for passing of orders u/s. 201(1) holding a person to be an assessee in default. Currently, the Income Tax Act does not provide for any limitation of time for passing an order u/s. 201(1) holding a person to be an assessee in default. In the absence of such a time limit, (17 of 25) [ITA-50/2018] disputes arise when these proceedings are taken up or completed after substantial time has elapsed. In order to bring certainty on this issue, it is proposed to provide for express time limits in the Act within which specified order u/s. 201 (1) will be passed. It is proposed 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 within 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 is filed, such order can be passed up till four years from the end of the financial year in which the payment is made or credit is given. To provide sufficient time for pending cases, it is proposed to provide that such proceedings for a financial year beginning from 1st April, 2007 and earlier years can be completed by the 31st March, 2011. However, no time-limits have been prescribed for order under Sub-section (1) of section 201 where- (a). the deductor has deducted but not deposited the tax deducted at source, as this would be a case of defalcation of government dues; (b). the employer has failed to pay the tax wholly or partly, under sub-section (1A) of section 192, as the employee 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 the non-resident. It is proposed to make these amendments effective from 1st April, 2010. Accordingly it will apply to such orders passed on or after the 1st April, 2010. From the aforesaid chronological events, it appears that section 201(3)(iii) of the Act came to be further amended by Finance Act of 2012, however, with retrospective effect from 1/4/2010 whereby in sub-section (3) in clause (ii), further words \"four years\" came to be substituted by words \"six years\". (18 of 25) [ITA-50/2018] Thus, period for passing order in respect of cases where statement referred to in section 200 of the Act were not filed, was extended from four years to six years. 12.09. It is also required to be noted that other provisions of section 201(3) clause (1) and proviso thereof remain same including last date for passing order for F.Y. 2007-08. 12.10. At this stage, it is required to be noted that in the present cases, limitation for passing orders as per the provisions prevailing at the relevant time and even as provided under section 201(3)(i) as amended by Finance Act of 2012 had already expired on 31/3/2011 and 31/3/2012, respectively. 12.11. That thereafter, section 201(3) of the Act has been further amended by Finance Act No. 2 of 2014 w.e.f. 1/10/2014, by which, time limit provided under section 201(3)(ii) of the Act for passing order under section 201(1) of the Act came to be extended by one year and it also provides that no orders shall be made under sub- section (1) holding a person to be in default for failure to deduct whole or part of the tax from a person resident in India at any time after expiry of seven years from the end of the financial year in which payment is made or credit is given. 12.12. By Finance Act No. 2 of 2012, even distinction between the cases, statement has been filed and where such statement was not filed also has been removed and the amendment prescribes a common period of limitation i.e. seven years from the end of the financial year in which payment was made. 12.13. The reasons for amendment in section 201(3) so stated in the memorandum to the Finance Bill No. 2 of 2014 reads as under : \"Tax Deduction at Source : Under Chapter X Vll-B of the Act. a person is required to deduct tax on certain specified payments at the specified rates if the payment exceeds specified threshold. The person deducting tax (\"the deductor\") is required to 'file a quarterly statement of tax deduction at source (TDS) containing the prescribed details of deduction of tax made during the quarter by the prescribed due date. (19 of 25) [ITA-50/2018] Currently, a deductor is allowed to file correction statement for rectification/updation of the information furnished in the original TDS statement as per the Centralized Processing of Statements of Tax Deducted at Source Scheme, 2013 notified vide Notification No. 03/2013 : MANU/CUSN/0006/2013 dated 15th January, 2013. However, there does not exist any express provision in the Act for enabling a deductor to file correction statement. In order to bring clarity in the matter relating to filing of correction statement, it is proposed to amend section 200 of the Act to allow the deductor to file correction statements. Consequently. it is also proposed to amend provisions of section 200A of the Act for enabling processing of correction statement filed. The existing provisions of section 201(1) of the Act provide for passing of an order deeming a payer as assessee in default if he does not deduct or does not pay or after deduction fails to pay the whole or part of the tax as per the provisions of Chapter XVII-B of the Act. Section 201 (3) of the Act provides for time limit for passing of order under section 201(1) of the Act for deeming a payer as assessee in default for failure to deduct tax from payments made to a resident. Clause 201(3) of the Act provides that no order under section 201(1) of the Act shall be passed after expiry of two years from the end of the financial year in which TDS statement has been filed. Currently. the processing of TDS statement is done in the computerized environment and mainly focuses on the transactions reported in the TDS statement filed by the deductor. Therefore, there there is no rationale for not treating the deductor as assessee in default in respect of the TDS default after two years only on the basis that the deductor has filed TDS statement as TDS defaults are generally in respect of the transaction not reported in the TDS statement. It is, therefore, proposed to omit clause (i) of sub-section (3) of section 201 of the Act which provides time limit of two years for passing order under section 201(1) of the Act for cases in which TDS statement have been/filed. Currently, clause (ii) of section 201(3) of the Act provides a time limit of six years from the end of the financial year in which payment/credit is made for passing of order under section 201(1) of the Act for cases in which TDS statement has not been filed. However, notice under section 148 of the Act may be issued for reassessment up to (20 of 25) [ITA-50/2018] 6 years from the end of the assessment year for which the income has escaped assessment. Therefore, section 148 of the Act allows reopening of cases of one more preceding previous year than specified under section 201(3) (ii) of the Act. Due to this, order under section 201(1) of the Act cannot be passed in respect of defaults relating to TDS which comes to the notice during search/reassessment proceeding in respect of previous year which is not covered under section 201(3)(ii) of the Act for passing order under section 201(1) of the Act shall be extended by one more year. The existing provisions of section 271H of the Act provides for levy of penalty for failure to furnish TDS/TCS statements in certain cases or furnishing of incorrect information in TDS/TCS statements. The existing provisions of section 271H of the Act do not specify the authority which would be competent to levy the penalty under the said section. Therefore, provisions of section 271H are proposed to be amended to provide that the penalty under section 271H of the Act shall be levied by the Assessing officer.\" 12.14. At this stage, it is required to be noted that earlier section 201(3) of the Act as amended by Finance Act, 2012 amended on 28/5/2012 was specifically made applicable retrospectively w.e.f. 1/14/2012, whereby limitation period was substituted from four years to six years for passing orders where TDS Statement had not been filed. However, section 201(3) of the Act as amended by Finance Act No. 2 of 2014, as mentioned in the memorandum of the Finance Bill No. 2 of 2014 is stated to have effect from 1st October, 2014. Thus, wherever the Parliament/Legislature wanted to make provisions applicable retrospectively, it has been so provided. 12.15. At this stage, it is required to be noted that while making amendment in section 201(3) of the Act by Finance Act No. 2 of 2014, does not so specifically provide that the said amendment shall be made applicable retrospectively. 12.16. On the other-hand, it is specifically stated that the said amendment will take effect from 1/10/2014. As observed hereinabove, in the present cases, limitations provided for passing order under section 201(1) of the Act for A.Y. 2007-08 and 2008-09 had already been expired (21 of 25) [ITA-50/2018] on 31/3/2011 and 31/3/2012, respectively, i.e. prior to section 201(3) came to be amended by Finance Act No. 2 of 2014. 15. 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)(i) 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 a right has been accrued in favour of the assessee and considering the fact that wherever legislature wanted to give retrospective effect so 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(i) 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.” 7. Counsel for the respondent Mr. Mathur has taken us to the observations of AO which reads as under: . We are enclosing herewith the Income Tax Returns of 27 pensioners for the F.Y. 2007-08 to the extent we could collect from the pensioners which are still in touch with our university. We are also providing you the PAN of 9 pensioners which will help your good self to verify about the status of their Income Tax Return for the year 2007-08. The pension amount mentioned by your good self is exclusive of deduction available to pensioners under chapter VI of the I.T. Act, 1961. There is possibility that many of them may come (22 of 25) [ITA-50/2018] out from tax purview after considering chapter VI deduction. 8. He contended that the point of limitation cannot be allowed to be raised at this stage and even if it is allowed, the matter is required to be remitted back to the authority and from the facts which emerges from the record he contended that the view taken regarding TDS is required to be upheld and TDS is to be deducted and since it is not deducted a serious error has been committed and notice was issued on the law which was in existence on the date of issuance of notice. 9. In our considered opinion, the law which was applicable on the completion of financial year is applicable in the facts of the case and for assessment year 2007-08, the assessment year will expire on 31st March, 2008 which was over. However, even if the view canvassed by Mr. Mathur, counsel for the respondent is taken into consideration, the financial year expired on 31st March, 2008. In that view of the matter in view of decisions in Tata Teleservices (supra) which was followed in Mtroikaa Pharmaceuticals Ltd. Vs. Union of India & ors., (2016) 68 taxman.com 229 (Gujarat), we are of the opinion that question No.2 is required to be answered in favour of assessee. 10. On question No.1, the assessee-University has come into existence in the year 2013 and it has never made the payment during the assessment year under consideration as it was not in existence. In that view of the matter, the view taken by both the authorities is not correct. In that view of the matter, finding arrived at by the original authority is required to be accepted. The issue is answered in favour of assessee. (23 of 25) [ITA-50/2018] 11. With regard to question No.3, in view of decision of this Court in DCIT (International Taxation) Jaipur Vs. M/s. National Highway Authority of India, D.B. Income Tax Appeal No. 25/2016 and other connected appeal decided on 29.11.2017, wherein it has been held as under: “5. Counsel for the respondent has relied upon the decision of this Court in case of Commissioner of Income Tax vs. Rajasthan Rajya Vidyut Prasaran Nigam Ltd. [2006] 287 ITR 354 (Raj.) wherein it has been held as under:- “After perusal of the facts of the case and relevant law as on the subject, we are of the opinion that learned Commissioner of Income Tax (Appeals) had rightly held that interest under Section 201(1A) of the Act was to be deleted after due verification by the Assessing Officer from the enclosures with supporting documents. In all the cases, the recipient of the income had claimed refund, which had arisen due to tax deducted at source. Therefore, we find no infirmity in the order of the learned Commissioner of Income Tax (Appeals) and the same is hereby sustained.” 5.1. He has further relied upon the decision of Gujrat High Court in case of Commissioner of Income Tax vs. Rishikesh Apartments Co-operative Housing Society Ltd. 253 ITR 310 wherein it has been held as under:- “If one looks at the fact whether Ravi Builder had in fact paid the amount of tax payable by it on the amount which was paid to it by the assessee, one finds that Ravi Builder had paid the tax. In fact for both the years, it had paid more advance tax than what was payable by it. Thus, the entire amount of tax which was payable by it had been duly paid. Had Ravi Builder not paid tax on the amount which it had received from the assessee, the Revenue could surely saddle the assessee with the liability of payment of interest under the provisions of Section 201(1A) of the Act. But in the instant case, as Ravi Builder had already paid the tax on the income, in our opinion, there was no question of levying any interest on the assessee as the amount which was payable to the Revenue had been duly paid. In other words, we may say that the liability of the assessee-society to make deduction at source and pay the tax to the Revenue is not independent of the liability of the contractor or Ravi Builder to pay (24 of 25) [ITA-50/2018] the tax. If assessment in relation to income of Ravi Builder, i.e., the contractor, had become final and no further tax was found due from Ravi Builder, that would put an end to the liability of the assessee- society and as the asses-see-society was not liable to make any payment of tax on behalf of the contractor, no amount of interest could be leviable under the provisions of Section 201(1A) of the Act. If one looks at the facts of the present case, it is not in dispute that Ravi Builder, on whose behalf the tax was to be deducted and paid under Section 194C of the Act had paid more amount of tax by way of advance tax than what was payable and had also paid tax on self-assessment. Thus, it is not at all in dispute that for the relevant two years the amount of tax was paid by Ravi Builder on its income as per the provisions of the Act, and for the other two years, tax was paid by Ravi Builder a little late. So far as the late payment is concerned, the Appellate Assistant Commissioner held that the assessee had to pay interest under Section 201(1A) for the said years and the assessee accepted the said finding. Thus, it can very well be seen that the facts of the case which has been relied upon by Mr. Qureshi cannot help the Revenue for the reason that in the said case it was not known whether the person on whose behalf the tax was to be paid to the Revenue had in fact paid the tax payable by him. In the instant case, the contractor, viz., Ravi Builder, had admittedly paid the amount of tax payable by it and thus no loss of whatsoever nature had been caused to the Revenue on account of non-deduction of tax at source by the assessee. From the legal provisions discussed hereinabove, it is crystal clear that in the instant case Ravi Builder, on whose behalf the tax was to be paid by the assessee, had duly paid its tax and was not required to pay any tax to the Revenue in respect of the income earned by it from the assessee. If the tax was duly paid and that too at the time when it had become due, it would not be proper on the part of the Revenue to levy any interest under Section 201(1A) of the Act especially when Ravi Builder had paid more amount of tax by way of advance tax than what was payable by it. As the amount of tax payable by the contractor had already been paid by it and that too in excess of the amount which was payable by way of advance tax, in our opinion, the Tribunal was absolutely right in holding that the tax paid by the contractor in its own case, by way of advance tax and self-assessment tax, should be deducted from the gross tax that the assessee should have deducted under Section 194C of the Act while computing interest chargeable under Section 201(1A) of the Act. If the Revenue is permitted to (25 of 25) [ITA-50/2018] levy interest under the provisions of 201(1A) of the Act, even in a case where the person liable to pay the tax has paid the tax on the date due for the payment of the tax, the Revenue would derive undue benefit or advantage by getting interest on the amount of tax which had already been paid on the due date. Such a position, in our opinion, cannot be permitted. 6. In that view of the matter, the view taken by the jurisdiction High Court is required to be accepted and hence, the appeal being devoid of merit deserves to be dismissed. Even otherwise there is concurrent finding of the authorities.” 12. In view of the above, question No.3 is also required to be answered in favour of assessee. The question under Section 260 of the Income Tax Act with regard to cross-examination was not raised by the Department, hence need not be decided. 13. Thus, all the questions are answered in favour of assessee and against the Department. The appeal stands allowed. (VIJAY KUMAR VYAS),J (K.S.JHAVERI),J B.M.G/36 "