Order must be passed in reasonable time in absence of prescribed statutory time limit with reference to collection of taxes

Adani Enterprise Ltd. Vs DCIT (ITAT Ahmedabad)

We notice that no time limit has been prescribed for passing order under s.206C of the Act. The CIT(A) has assumed that in the absence of statutory time limit provided, the provisions of Section 201(3) of the Act providing time limit for deduction of tax at source can be parallelly adopted for the purposes of viewing what is reasonable time. We do not see much force in such presumption especially in the matter of limitation. The limitation prescribed under one provision of the Act cannot be applied straightway to some other provisions of the Act. The legislature, in its wisdom, inserted subsection (3) under s. 201 of the Act by the Finance (No.2) Act, 2009 w.e.f. 2001 proposing time limit for passing orders under s.201 of the Act with reference to tax deduction at source. However, no such limitation provision has been enacted with regard to tax collection at source as provided in Section 206C till date. Under the circumstances, where no time limit has been prescribed by the statute for passing order in respect of default in collection of tax at source, a guidance can be possibly obtained from judicial precedents laying down a reasonable time limit as implicit for imposition of levy of tax at source. We notice that the judicial precedents cited on behalf of the assessee have read a period of four years to be reasonable time limit. Needless to say, the liability of the Collector of tax on behalf of the Government (assessee herein) is a vicarious liability and cannot be allowed to remain hanging on his head for all times to come where the department decides not to take action either by proceedings under s.206C of the Act or by making assessment on the deductee. The show cause notice in the instant case has been issued after five years from the end of the relevant FY 2008‑09. Thus, in the absence of statutory time limit prescribed for passing order with reference to collection of taxes, we follow the suit and read reasonable time limit to be four years from the end of the financial year for passing the order under s.206C in tune with the judicial precedents in NHK Japan Broadcasting Corporation 305 ITR 137 (Del) and CIT vs. Hutchison Essar Telecom Ltd. (2010) 323 ITR 230 (Del).

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