HCL Technologies Ltd. v. ACIT [ITA No.
1723/Del/2017, dt. 20-7-2020] : 2020 TaxPub(DT) 2894 (Del.-Trib.)
Time limits amended in section 201(3) vide Finance Act 2 of
2014 with effect from 1-10-2014 are these retrospective or prospective?
Facts:
Assessee was served a notice under section 201(1)/(1A) read
with 201(3) holding them in default for non-deduction of TDS under various
sections for assessment year 2009-10 on 11-1-2016 in respect of years prior to
amendment of section 201(3) vide Finance Act 2 of 2014 (whereby the time limit
for notice under section 201(3) was enhanced from 2 to 7 years). The ground of
revenue being that the extended time limit would apply to assessee
retrospectively. This was upheld by lower authorities. Aggrieved assessee
sought higher appeal with ITAT-
Held in favour of the assessee that the enhanced time limit
will not be applicable for the assessee and the notice under section 201(3) was
held to be time barred. The amendment in section 201(3) cannot be read
retrospective.
Actual time limit if one reckons the pre-amended law of two
years in section 201(3) for assessment year 2009-10 would be 31-3-2012. The
notice was dated 11-1-2016 much later to thus date. Meanwhile section 201(3)
went thru a slew of amendments first one being vide Finance Act, 2012 with
retrospective effect from 1-4-2010. The next one being vide Finance Act 2 of
2014 with effect from 1-10-2014 where the time limit was extended from 2 to 7
years. There was no explicit retrospective mention of this amendment so it could
only be read prospective is what ITAT decided in this case.
Departmental plea was the since being a procedural
provision the extended time limit ought to apply for all notices issued under
section 201(3) after 1-10-2014.
Assessee's ground was if it was a retrospective amendment
it would have been confirmed by law as it had done earlier on the same section.
In the absence of an explicit mention retrospective reading is not possible.
Though a procedural provision the scope was to fasten assessee in default thus
an indirectly taxing provision. A taxing provision thus cannot be read
retrospectively unless law intended it thus. This appealed to the ITAT holding
it in their favour.
Applied: Tata
Teleservices v. Union of India (2016) 385 ITR 497 (Guj-HC) : 2016
TaxPub(DT) 1126 (Guj-HC).
Editorial Note: The entire discussion of the decision is from the above cited case
of Tata Teleservices supra but it needs to be borne in mind that section
201(3) has had an amendment as well vide Finance Act 2 of 2019 with effect from
1-9-2019 where the time limit is 7 year or a 2 year period from the end of the
financial year in which the correction statement is delivered under the proviso
to sub-section (3) of 200 whichever is later. Will this amendment be read
retrospective or prospective whereby only correction statements issued after
1-9-2019 be subjected to this 2/7 year later limitation or even existing
notices issued where department may claim 7 year window instead of 2 year
period? This decision might benefit those certainly.