While Jesse_b is correct about how shells generally look up commands, there's an easier fix.
Bash, ksh, zsh, and I believe a few other common shells will treat a leading backslash on a command with no path as 'skip to looking into the PATH for this thing.'
Also, knowing what the time builtin is, we could also get around this by running
time time --version
After all, the reason for the command not found error rather than a no such option error is because the shell builtin just runs the command that follows and checks how long it took to run when it finishes... which is the same thing that /bin/time does.
If you're expecting time to take arguments... are you wanting to find out what time it is? Because that's the