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Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
Before: SHRI WASEEM AHMED
आदेश/O R D E R PER BENCH: The captioned two appeals have been filed at the instance of the Assessee against the orders of the Learned Commissioner of Income Tax (Appeals), Rajkot [Ld.CIT(A) in short] dated 29/02/2015 and 20/08/2018 arising in the matter of assessment order passed under s.206C(6) and 206C(7) of the Income Tax Act, 1961 (here-in-after referred to as "the Act") dated 17/03/2017 relevant to Assessment Years (A.Ys) 2013-14 & 2014-15.
ITA nos.336-337/Rjt/2018 Asstt. Years 2013-14 & 2014-15 2
First, we take ITA No.336/Rjt/2018 for A.Y. 2013-14. The assessee has raised the following ground of appeal: 1. Ld.CIT(A) has erred in law as well as on fact by dismissing the appeal filed against order u/s.234E passed by AO (TDS), Jamnagar treating it as non-maintainable. He ought to have admitted the appeal and decide case on merit since Ld.AO has treated assessee as ‘’assessee in default’’ u/s.206C(6)/(7) specially when assessee was not liable to file TCS return as required by section 206C.
The issue raised by the assessee is that the learned CIT-A erred in holding the order passed by the AO under section 234E of the Act as non- maintainable.
The facts, in brief, are that the assessee in the present case is an individual and engaged in the business of scrap. The AO during the assessment proceedings observed that the assessee is liable to collect the tax from the buyer on the sale made by him as per the provisions of section 206(C) of the Act and furnish the details of such tax collected in form No. 27 EQ within the prescribed time. But the assessee has defaulted in complying the said provisions. Accordingly, the AO worked out the fees for not filing the statement in form No. 27 EQ within the prescribed time amounting to ₹ 12,48,800.00 only but restricted the same to the actual amount of TCS, i.e. 11,02,685.00 only.
The aggrieved assessee preferred an appeal to the learned CIT (A) who has confirmed the order of the AO.
Being aggrieved by the order of the learned CIT (A) the assessee is in appeal before us.
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The learned AR before us filed a paper book running from pages 1 to 80 and submitted that the learned CIT-A deleted the demand raised by the AO on account of non-collection of TCS from the buyer under section 206 (C) of the Act vide order dated 16th January 2019. Therefore, there cannot be any demand under the provisions of section 234E of the Act.
On the other hand, the learned DR vehemently supported the order of the authorities below.
We have heard the rival contentions of both the parties and perused the materials available on record. In the instant case, the assessee was treated as the assessee in default for not collecting the TCS under section 206(C) of the Act. Accordingly, the demand was raised by the AO for the amount of the TCS not collected from the buyer amounting to ₹11,02,685.00 only. Similarly, the AO also calculated the fees under section 234E of the Act for not filing the details of the TCS collected amounting to ₹12,48,800.00, but it was restricted to the extent of the actual amount of the TCS liability, i.e., ₹11,02,685.00 only.
6.1 The provisions of section 234E of the Act requires that the person responsible for filing the statement under section 206(C)(3) of the Act, shall be liable to pay, by way of fee, a sum of ₹200 per day if he fails to file such the statement within the prescribed time. However, such an amount of fee cannot exceed the amount of TCS payable by the assessee. The relevant provisions of section 234E of the Act read as under: “Fee for default in furnishing statements. 89 234E. (1) Without prejudice to the provisions of the Act, where a person fails to deliver or cause to be delivered a statement within the time prescribed in sub- section (3) of section 200 or the proviso to sub-section (3) of section 206C, he
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shall be liable to pay, by way of fee, a sum of two hundred rupees for every day during which the failure continues. (2) The amount of fee referred to in sub-section (1) shall not exceed the amount of tax deductible or collectible, as the case may be.”
From the above provision, it is clear that the liability under section 234E of the Act cannot exceed the amount of TCS.
6.2 Indeed the AO has raised the demand under section 206C(6)/(7) of the Act vide order dated 17th March 2017 for ₹ 11,02,685.00, but the same was reduced by the learned CIT (A) vide order dated 16th January 2019 to NIL. The relevant extract of the order is reproduced as under:
“13.11 The hon, ITAT, Bangalore in the case of Karnataka Forest Development Corporation ltd. Vs. ITO, TDS 2015 ITL 1007 has held as under:- "Section 206C(1A) mandates that any person responsible for collecting tax u/s 206C(1) need not do so if he obtains a declaration from the buyer that he is purchasing the'goods for use in manufacturing, processing or producing articles or things. It does not say that such declaration has to be obtained at the very same moment when a sale is affected. A reading of sub-section (IB) clearly brings out this since obligation of the assessee to file a copy of the declaration arises only when the declaration is furnished to him by the buyer. The point of reference is furnishing of declaration by the buyer and not the month or date on which sale is affected by the assessee. Even if it is considered that there is a-breach on the part of the assessee in, not obtaining the declaration from the buyer the moment as sale was affected, and in filing it before the CCIT or CIT, as the case may be, a similar breach was considered to be only technical and one that could be condoned by Hon'ble Madras High Court in the case ofAdisankara Spg. Mills(P.) kd. Thus, assessee could not have been deemed as one in default under section 206C(6D) of the Act of liable for interest u/s206C(7)." 13.12 The AO in his remand report has mentioned that the department has filed SLP before the Supreme Court in the case of Siyaram Metal and the same is pending as on date. In this regard the the decision of hon'ble High Court of Bombay in the case of ITO vs. Seamens India Ltd., 15 taxmann 594 may be referred to wherein it is held that the ITO would be bound by decision of Supreme Court as also by a .decision of High Court of the state within whose jurisdiction he is^ functioning; irrespective of the pendency of any appeal or special leave application against that judgment. In view of this, the above stand of the ITO TDS, Jamnagar is not found to be sustainable.
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13.13 In View of the facts and legal position as discussed in preceding paragraphs of this appeal order it is held that the ITO TDS, Damnagar is not correct in raising demand u/s. 206C(6) /206C(7) on account of late filling of form nos.27C. In view of this, the ITO TDS, Jamnagar is directed to delete only those addition or demand which has been raised by him in his order u/s.206C(6)/206C(7) because of non collection of tax at source by the appellant on the sale made to the buyers and in respect of which form nos.27C are filed by the appellant to him as well as the office of Pr.CIT, Jamnagar. Thus the ground of appeal of the appellant is allowed subject to this direction.”
The learned DR has not brought anything on record suggesting that any appeal has been preferred by the Revenue to the ITAT against the aforesaid order of the Ld. CIT-A. Thus it is inferred that the order of the learned CIT (A) has reached to its finality. After reading the provisions of section 234E of the Act, it is clear that the fees leviable under the section cannot exceed the amount of the TCS. As in the case on hand, the amount of TCS has been reduced to nil, therefore in our considered view, the fees even otherwise leviable cannot exceed the amount of TCS, i.e. Nil in the present case. Accordingly, we hold that there cannot be any demand in the case on hand for the fee as prescribed under the provisions of section 234E of the Act. Hence, the ground of appeal of the assessee is allowed.
In the result, the appeal of the assessee is allowed.
Now coming to the ITA No.337/Ahd/2018 for A.Y. 2014-15. The assessee has raised following grounds of appeal: 1. Ld.CIT(A) has erred in law as well as on fact by dismissing the appeal filed against order u/s.234E passed by AO (TDS), Jamnagar treating it as non-maintainable. He ought to have admitted the appeal and decide case on merit since ''Ld.AO has treated assessee as “ assessee in default’’ u/s.206C(6)/(7) specially when assessee was not liable to file TCS return as required by section 206C.
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At the outset, we note that the facts of the present case are identical to the facts of the case bearing ITA 336/AHD/2018 which we have decided in favor of the assessee vide paragraph number 6 &7 of this order. Respectfully following the same, we reverse the order of the authorities below. Hence the ground of appeal of the assessee is allowed.
In the result, the appeal of the assessee is allowed.
In the combined result, both the appeals of the assessee are allowed.
Order pronounced in the Court on 25/06/2019 at Ahmedabad.
-Sd- -Sd- (Ms MADHUMITA ROY) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER (True Copy) Ahmedabad; Dated 25/06/2019 manish