Limitation period does not apply to withholding tax proceedings – Punjab & Haryana HC

Commissioner of Income Tax (TDS), Chandigarh Vs M/s H.M.T. Ltd.

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

ITA No. 524 of 2009

Date of Decision: 14.07.2011

“i) Whether, in the facts and circumstances of the case, the ld ITAT has erred in law in allowing the appeal of the assessee by holding that four years was the reasonable period to issue show cause under section 201 by the Assessing Officer to assessee though no such limitation was provided in section 201 of the Income Tax Act, 1961?

ii) Whether, in the facts and circumstances of the case the ld. ITAT has erred in law in holding that the Assessing Officer was not empowered to issue show cause u/s 201 after a period of four years in view of Hon’ble Supreme Court order passed in the case of Padmasundra Rao & others v. State of Tamil Nadu and others, 255 ITR 147?”

2. Put shortly, the facts necessary for adjudication as narrated in the appeal are that the assessee is a Government of India Undertaking. The pay scales of the employees of the assessee were revised by the Government of India w.e.f. 1.1.1992 and the arrears of pay were paid to them between the financial years 1994-95 and 1997- 98. During the assessment years in question, the assessee had made the following payments of arrears of salary to its employees:-