Amendment to Section 201(1) regarding Providing time limits for passing of orders holding a person to be an assessee in default

Currently, the Act does not provide for any limitation of time for passing an order under section 201(1) holding a person to be an assessee in default. In the absence of such a time limit, disputes arise when these proceedings are taken up or completed after substantial time has elapsed. For this purpose, sub-section (3) has been inserted in section 201

with effect from April 1, 2010. It provides that an order
under section 201(1) for failure to deduct the whole or any
part of the tax as required under this Act, if the deductee is a
resident taxpayer, shall be passed within the time-limit
given below –
1. In case statement is filed by the deductor under section 200 -
Within 2 years from the end of the financial year in which statement is filed under section 200.

2.In case no such statement is filed - Within 4 years from the
end of the financial year in which payment ismade or credit is given.



However, order pertaining to the financial year 2007-08 (or
earlier years) can be passed at any time up toMarch 31, 2011.

* Certain period to be excluded - n computing the period of
limitation for above purposes, certain period prescribed under Explanation 1 to section 153 shall be excluded. For instance, if a Court stays the proceeding under section 200(1), the aforesaid time-limit shall be extended by the period duringwhich the proceeding is stayed by the Court.


* No time-limit in some cases - No time-limit has been prescribed for order under section 201(1) in the following cases—
a. the deductor has deducted but not deposited the tax deducted at source, as this would be a case of defalcation of government dues,
b. the employer has failed to pay the tax wholly or partly, under section 192(1A), as the employee would not have paid tax on such perquisites,
c. The deductee is a non-resident as it may not be administratively possible to recover the tax from the non-resident.