In a recent ruling, the Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) held that the assessment order passed by the Assessing Officer ( AO ) was invalid due to the expiry of the statutory time limit of 2 years under Section 201 of the Income Tax Act, 1961.
The main issue in this case is whether the assessment order passed under Section 201(1) and 201(1A) of the Income Tax Act, against the respondent for the assessment year ( AY )2011-12 was time-barred.
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In this case, the assessee, Turner General Entertainment Net Works India Limited, in the business of broadcasting general entertainment television channel Imagine TV, had filed its income tax returns ( ITR ) for the assessment year (AY) 2011-12, declaring a total loss of Rs 262.04 crore.
The jurisdictional AO found that the assessee company failed to deduct tax at source, as noted in the Tax Auditor’s report. The AO informed the Joint Commissioner of Income Tax to initiate penalty proceedings under Section 271C. A notice under Sections 201(1) and 201(1A), along with a questionnaire, was issued on 26-02-2018. The assessee’s representative attended the proceedings. The AO concluded that tax deducted at ( TDS ) was not deducted from the expenses incurred during the year.
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The AO had completed the assessment under Section 201(1)/ (1A) of the Income Tax Act, holding that the assessee company was in default to deduct tax for the amount of Rs 5,00,40,103, which was required to be deducted under various TDS sections but was not deducted.
The assessee, who was aggrieved by the above order, appealed before the Commissioner of Income Tax( Appeals ) [ CIT( A ) ].
The CIT( A ) allowed the appeal filed by the assessee, due to which the revenue approached the ITAT.
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It was contended by the counsel on behalf of the assessee that the order passed by the AO was time-barred and that the assessee had filed the TDS statement within time, so the time limit for assessment was two years.
The ITAT bench held that the time limit for passing an order under Section 201(1) of the Income Tax Act regarding the financial year 2010-11 in which a statement under Section 200 of the Income Tax Act was two years from the end of the financial year in which such a statement was filed. The bench, by noting the assessment order passed by the AO, held that the order was passed beyond the prescribed time limit.
The ITAT, comprising Sudhir Kumar ( Judicial Member ) and M. Balaganesh ( Accountant Member ) dismissed the revenue’s appeal.
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