The Income Tax Appellate Tribunal (ITAT), Bangalore Bench quashed the proceedings initiated under section 201 against Cafe Coffee Day as it was barred by limitation.
Facts of the case:-
The question raised was whether the order passed under section 201(1) and 201(1A) of the Act for the assessment year 2011-12, was barred by limitation was decided against the assessee by the CIT(A), on the reason that it is observed from the provisions of section 201(3) that the time limit period of six years is applicable for the failure to deduct whole or any part of the tax from the person resident in India and in the appellant’s case the deductee is not an Indian resident company and therefore the time limit period of six years prescribed under section 201(3) will not apply to the present case.
Interpretation of law:-
The Department submitted that the order passed under section 201(1) and 201(1A) was not barred by limitation under section 201(3) for the reason that the payee in the instant case is a non-resident, whereas, the limitation prescribed under section 201(3) of the I.T.Act would apply only to payments made to Indian resident company.
The assessee relied on the decision laid down by the High Court of Delhi in the case of CIT, Delhi XVII vs. NHK Japan Broadcasting Corpn. wherein it was held that where no limitation is prescribed under the provisions of the Act as in the provisions of section 201(1) of the Act, action must be initiated by the competent authority within a period of four years and in the light of this ratio, the proceedings initiated in the case of the appellant is barred by limitation.
The Coram headed by Vice President N.V.Vasudevan and Chandra Pujari noted that the orders under section 201(1) or 201(1A) of the Income Tax Act was finally passed on March 31, 2018, which is seven years from the end of the financial year. Therefore, the ITAT held that the order under section 201(1) or 201(1A) was not passed within a reasonable time.