Nilesh Shah writes:
E mail: nilesh63@vsnl.
Time limit for completion of TDS assessment.
The courts have held that the time limit for completion of TDS
assessment would be governed by section 231 of the Income tax Act.
Section 231 has been omitted by the Direct tax Laws (Amendment)
Act,1987 w.e.f. 1-4-89. A question therefore arise what will then
goven the time limit for completion of TDS assessment. In the
present Income Tax Act, there is no section which prescribes the
time limit for completion of TDS assessment i.e assessment u/s 201 &
Though no time-limit has been prescribed for passing orders u/s 201 &
201(1A), various Benches of the Tribunal have held that , the AO
cannot be permitted to pass order after undue delay & that some
reasonable time-limit must be prescribed within which the IT
authorities should pass an order. The Tribunals have further held
that an order be passed within four financial years from the end of
the financial year. Suppose, if the financial year ends on 31st
March, 2008 i.e assessment year 2008 - 2009 the order will be barred
by limitation if it is passed after 31st March, 2012. It will not
make any difference if there is a survey u/s 133A during the
The usual argument of the Dept is that since in many cases no TDS is
deducted no TDS returns are filed & by the time a survey action is
taken the time limit of 4 financial year might be near.
However, the aforesaid view of the Dept is not at all tenable. There
can be scrutiny proceedings u/s 143(2) & the AO during the course of
scrutiny will definitely come to know whether TDS has been deducted
or not & at the appropriate rate.
The aforesaid time limit will apply not only to a case where the
assessee is " an assessee in default " u/s 201 for non-deduction of
tax or for short deduction of tax, but will also govern levy of
interest u/s 201(1A) because both the proceeding are linked.
Though the time-limit of four financial years is a sufficiently long
time, yet the issue is before the Special Bench of the Mumbai
Tribunal in the case of Mahindra & Mahindra.
Nilesh Shah writes: