Is there any time limit to held Assessee in default if TCS not collected ?

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Is there any time limit to held Assessee in default if TCS not collected ?

Query –

Is there any time limit to held Assessee in default if TCS not collected ?

Reply :

No, there is no time limit specified in the Act as such. However, there is an important ruling in the case of

ITO vs. Eid Mohammad Nizamuddin (ITAT Jaipur) wherein a very important observation was made.

It was observed that even though s. 206C does not impose any limitation period for the AO to hold the assessee to be in default for collection of tax at source, a reasonable time limit of four years has to be read into the statute. Orders passed after this period are beyond the limitation and are void. The fact that the Dept became aware of the default later is irrelevant. The fact that the assessee admitted his liability is also irrelevant.
 
It was held that , there is no dispute that Section 206C or any other provisions of the Income Tax Act do not provide any limitation for passing the order by the Assessing Officer U/s 206C(6)/206C(7) of the Act holding the assessee in default due to failure to collect tax at source. However, non-providing the limitation in the statute would not confer the jurisdiction/powers to the Assessing Officer to pass order U/s 206C at any point of time disregarding the amount of time lapse from such default of collection of tax at source

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