Notice u/s 201 and 201(1A) for recovery of tax not deducted/short-deducted and interest thereon cannot be issued beyond a period of 4 years

R.K. Gupta, Judicial Member. - These are three appeals filed by the assessee against the orders of CIT(A) who confirmed the orders of the Assessing Officer under section 201(1A) of the Act read with section 195 of the Act vide its order dated 4-1-2000. Similar grounds have been taken in all these three appeals. The common grounds of all these appeals are as under : "The learned Commissioner of Income-tax (Appeals)-XXV, Mumbai ["the CIT(A)"] erred in confirming the order passed by the Deputy Commissioner of Income-tax, TDS Circle-I, Mumbai (for brevity, "Assessing Officer") levying interest under section 201(1A) of the Act by treating the appellant as an assessee in default in respect of non-deduction/short-deduction under section 201(1) of the Act. The CIT(A) failed to appreciate and ought to have held that before section 201(1A) can apply, the applicability of section 201(1) has to be established and that on the facts and circumstances of the case, the appellant could not lawfully be asked to pay or make good any tax allegedly not deducted having regard to the principles laid down by the Courts and the Income-tax Appellate Tribunal that a demand from the assessee cannot be lawfully made unless there is a failure to act honestly and fairly. The appellant denies its liability to interest under section 201(1A) and prays that the levy of such interest be quashed. Without prejudice and in the alternative, the appellant prays that since the foregoing order under appeal is linked to the order purporting to have been passed under section 195 of the Act, the same may be regarded as a part of the order purportedly passed under section 195 of the Act so that, on a combined reading of both the orders, the grounds taken by the appellant in a separate appeal filed against the foregoing purported order under section 195 of the Act be considered as the grounds herein and that such grounds in that event be adjudicated as if they were comprised individually and specifically in this appeal." Besides these common grounds, the assessee has also challenged the proceedings so initiated are beyond and reasonable time period and hence barred by limitations. 2. The ld. counsel of the assessee, who appeared before the Tribunal stated that on identical facts the Tribunal in case of Raymond Woollen Mills Ltd. v. ITO [1996] 57 ITD 536 (Bom.), in case of Indian Rayon and Industries Ltd. decided in [IT Appeal No. 2479 (Mum.) of 2004] assessment year 1994-95 decided on 24-1-2006 and in case of Raymond Ltd. v. Dy. CIT [2003] 86 ITD 791 (Mum.) and in case of Wockhardt Life Sciences Ltd. [IT Appeal No. 3625 (Mum.) of 2002] for assessment year 1999-2000 vide its order dated 8-6-2005 have decided the issues in favour of the assessee. It was further submitted that the orders of the Assessing Officer were barred by limitation as there were passed beyond four years time. It was further submitted that on merit also the identical issue has been decided in favour of assessee. Attention of the Bench was drawn on copies of order of the Tribunal placed on record. Therefore, it was submitted that the appeals of the present assessee should be allowed in view of the orders of the Tribunal for the sake of consistency. The ld. DR on the other side firstly placed reliance on the orders of the CIT(A). It was further submitted that in case of Gujrath Ambuja Cement Ltd. decided in [IT Appeal No. 3642 (Mum.) of 2000] a contrary view has been taken i.e., in favour of the department. In this case the Tribunal has held that no time-limit has been framed for passing order under section 201, therefore, the ground of the assessee was dismissed. On merit also the Bench has taken a contrary view, however, on a later stage it was fairly stated by ld. DR that this order of the Tribunal has been recalled partly. Further, it was submitted that on the point of issue of limitations, the order of the Tribunal is final as on this issue the Tribunal refused to recall the order of the Tribunal. Copy of order passed in M.A. No. 569/Mum./05, dated 10-4-2006 along with copy of the order of the Tribunal in ITA No. 3462/Mum./2000, dated 18-2-2005 was also filed. In his reply the ld. Counsel stated that the order of the Tribunal in cases of Raymond Ltd. (supra) and Wockhardt Life Sciences Ltd. (supra) have been decided after considering the decision of the Hon'ble Supreme Court wherein it has been held that if there is no time-limit is framed in the law, then a reasonable time-limit has to be taken into consideration and the reasonable time-limit is of four years. Accordingly, it was submitted that the orders of the Tribunal in cases of Wockhardt and Raymond Ltd. are correct orders and the same have not reversed by any of the High Courts till date. It was therefore, submitted that there are plethora judgments by the Tribunal regarding time limitation and they have not taken into consideration by the Tribunal while deciding the appeal of Gujrath Ambuja Cement Ltd. It was further submitted that as per the information, the Gujrath Ambuja Cement Ltd. has filed Miscellaneous Application again, which is pending before the Tribunal for disposal. In view of these arguments, it was submitted that earlier orders of the Tribunal, which are of later dated should be considered while deciding the present appeals. 3. We have heard rival submissions and considered them carefully. We have also taken into consideration the various decisions of the Tribunal relied upon by both the parties. After considering the rival submission and perusing the material on record along with various case laws, we find that all the issues involved in the present appeals are covered by the various orders of the Tribunal and in favour of the assessee. These orders have been decided by the Tribunal in the following cases : (i) in the case of ICICI Ltd. [IT Appeal No. 293 (Mum.) of 2001, dated 5-4-2006] (ii) in the case of Raymond Woollen Mills Ltd. (supra) (iii) in the case of Indian Rayon and Industries Ltd. (supra) (iv) in the case of Raymond Ltd. (supra) (v) in the case of Wockhardt Life Sciences Ltd. (supra) In last order i.e., in case of Wockhardt Life Sciences Ltd., which was decided in the Bench where both of us were party. While deciding identical issues i.e., limitations point, order under sections 201(1) and 201(1A) were involved. In this case also the GDR issue was involved in this case also the Indian company who made the issue for an amount US$ 75 million. On information, the Assessing Officer issued notice to the assessee that provisions of section 9(1)(vii) of the Act be not attracted and how the TDS under section 195(1) was not deducted and therefore, why the assessee should not be treated in default in view of the provisions of section 201(1) and consequently interest under section 201(1A) should not be charged. Detailed reply was filed, however, the Assessing Officer was not satisfied. Accordingly he passed orders under section 201(1) and also held that the assessee is liable to interest under section 201(1A). CIT(A) confirms the action of the Assessing Officer. The Tribunal after considering the various case laws i.e., in case of Raymond Woollen Mills (supra), in case of Sahara Airlines Ltd. v. Dy. CIT [2002] 83 ITD 11 (Delhi) and in case of Mitsubishi Corpn. v. Dy. CIT [2003] 85 ITD 414 (Delhi) held that if the notices are issued beyond the period of four years then the order passed by Assessing Officer is void ab initio. The decision of the Hon'ble Supreme Court in case of State of Gujarat v. Patel Raghav Nath AIR 1969 SC 1297 and in case of S.B. Gurbaksh Singh v. UOI AIR 1976 SC 1115 where it has been held that the proceedings should be initiated within the reasonable time, even in the absence of the time-limit for initiations of any proceedings in the statute, as held that the order passed beyond four years time limitation was barred by limitations. On merit also the issue was decided in favour of assessee in following the decisions in case of Raymond Ltd. (supra) decided by the Bombay Bench. In the present case the issue the GDR issue was brought by the assessee in September 1994 amounting to rupees 100 US Million representing through equity shares of the company. Similarly, on the basis of the information received by the Assessing Officer the assessee-company was issued a notice with why in view of the provisions of the section 9(1)(vii) of the Act and why in the view of the provisions of the section 195 the assessee should not be held as in default under section 201(1) and consequently why the interest under section 201(1A) be not charged. In this case also the detailed reply was filed however, the Assessing Officer was not satisfied accordingly the assessee was held in default under section 201(1) and consequently interest under section 201(1A) was charged. CIT(A) confirmed the action of the Assessing Officer. Now the assessee is in appeal here before the Tribunal against the orders of the lower authorities. 4. As stated above, the facts are identical with the facts of the case, which were decided by the Tribunal in favour of assessee as mentioned above. In the present case also the proceedings were initiated beyond the four years limitations as information was received with the GDR issue was brought in 1994 whereas, proceedings under sections 201(1) and 201(1A) were initiated in the orders of the 2000. Following the earlier decisions of the Tribunal, which were decided, by following the decision of the Apex Court, we hold that proceedings initiated in the present case are also barred by limitations. Accordingly, all these orders are liable to be quashed. Accordingly we cancelled all the orders. 5. Regarding the decision relied upon by ld. DR in case of Gujrath Ambuja Cement Ltd., we find that the order of the Tribunal has already been recalled partially and it was informed that regarding the ground No. 2 on which the order has not been recalled again and the assessee has filed Miscellaneous Application, which is pending for disposal. We further noted that the decisions, which are in favour of assessee, have not taken into consideration by the Tribunal in case of Gujrath Ambuja Cement Ltd. We further noted that the earlier decisions of the Tribunal are in consonance with the findings of the Hon'ble Apex Court on the issue, on which the order of the Tribunal in case of Gujrath Ambuja Cement Ltd. was not recalled. Therefore, in view of all these facts and circumstances and with utmost respect of the order of the Tribunal in case of Gujrath Ambuja Cement Ltd., we are not inclined to follow; as the order of the Tribunal has already been recalled partly and on remaining point the M.A. is pending. 6. On merit also all the issues are covered by the decisions of the various Benches of the Tribunal (Supra), therefore, following the precedents, we allow the grounds on merit in all these appeals also. 7. In the result the appeals of the assessee are allowed.