Loading judgment…
Facts
The assessee, Ahmedabad Strips Pvt. Ltd., faced a demand of Rs. 4,03,139/- for alleged non-collection of TCS on scrap sales under Section 206C(6A) r.w.s 206C(7). The AO passed an order without giving an opportunity of being heard, and a subsequent application for rectification under Section 154 was rejected, leading to a penalty. The CIT(A) dismissed the assessee's appeal, despite the assessee contending that TCS was already collected at 1% on roll scrap sales and providing a reconciliation statement to address discrepancies between financial statements and TCS returns.
Held
The Tribunal found that the assessee had already deducted and paid the TCS, and the respective parties involved in the transactions had also paid their taxes. Therefore, the Assessing Officer and CIT(A) were incorrect in imposing the demand and penalty.
Key Issues
Whether the assessee was liable to pay TCS under Section 206C(6A)/(7) despite having already collected and paid it, and if the rejection of a rectification application under Section 154 without an opportunity of being heard was valid.
Sections Cited
206C(6A), 206C(7), 154, 210, 201A, 271CA, 206
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, AHMEDABAD “SMC” BENCH, AHMEDABAD
Before: Ms. Suchitra Kamble
आदेश/ORDER This is an appeal filed against the order dated 08-10- 2025 passed by Addl/JCIT(A), Panaji for assessment year 2012-13
The grounds of appeal
1. 1. 1. 1. 1. 1. are as under:- “01. That the Ld. A.O. has passed an order u/s 206C(6A) r.w.s. 206C (7) for A.Y. 2012-13 which was confirm by CIT(A) without appreciating the facts on records and as such the demand raised of Rs. 4,03, 139/- required to be deleted.
02. That the Ld. A.O. has rejected application of the appellant u/s 154 of the Income Tax Act, 1961 without giving opportunity of being heard and which was confirmed by CIT(A) is against the provision of natural justice. Therefore the order passed by Dy. CIT, TDS, Circle, Ahmedabad dated 27/03/2019 needs to be rectified.
3. That the Appellant Company has paid all the Taxes and liabilities of TDS/TCS for the year under consideration. However, the order passed u/s 2026C(6A) r.w.s. 206C (7) of the Act without appreciating the facts on records is erroneous and needs to be rectified and as such the matter may please be remand back to the JAO for fresh education and opportunity of being heard may please be provided.
That the appellant is not a assesses in default as mentioned in sec 206C(6A) r.w.s. 2026C (7) of the Act, and therefore the demand raised of Rs. 4,03,139/- including interest thereon may please be deleted.
5. Your appellant craves leave to add, amend, deleted or alter any of the grounds till the appeal is finally heard and decided.”
The status of assessee is a Private Limited Company. The assessee company has filed the TCS return for AY 2012- 13 in form 27EQ as under:
Quarter Acknowledgement no. Date of filing return 1 022850100052216 13.07.2011 2 022850200151030 13.10.2011 3 022850200166581 13.01.2012 4 022850100065671 14.05.2012 The assessee has received the show cause notice u/s 210/201A of the Act dated 26.02.2019 stating that the company has shown the sale of scrap of Rs. 14,08,93,916/-. As per the provisions of Section 206 of the Act, the company is required to collect TCS, however, no tax is collected at source on scrap sales of Rs. 14,08,939/-. In response to the show cause notice, the company has filed its reply on 08.03.2019 along with copy of TCS return in form no. 27EQ along with acknowledgement receipts for all 4 quarters for Ahmedabad Strips Pvt. Ltd., A.Y. 2012-13 AY 2012-13. The assessee company has also furnished the reconciliation statement for scrap sales as per profit and loss account and scrap sale shown in TCS return. However, The ld. A.O. has passed the order u/s 206C(6A) r.w.s 206C(7) on 27.03.2019 without giving any opportunity of being heard. Aggrieved by the order u/s 206C(6A) r.w.s 206C(7), the assessee company has filed the application u/s 154 of the Act to rectify the mistake apparent on record. The Ld. JCIT has passed the order u/s 271CA of the Act for penalty on 11.12.2019 mentioning that the rectification application was rejected by the ld. A.O. on 09.12.2019 and has imposed the penalty for Rs. 2,05,683/-. However, no such rejection order is received by the assessee company. The assessee company has received the copy of order of rejection u/s 154 of the Act on 22.01.2020, after personal visit to enquire about the same.
4. Being aggrieved by the rejection of application for rectification of mistake u/s. 154 of the Act and imposing the liability to pay TCS of Rs. 4,03,139/- u/s. 206C(6A) r.w.s 206C(7) of the Act. The assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.
The ld. A.R. submitted that the company has already collected and deposited the TCS @ 1% on sale of Roll scrap. The company has accounted amount of sale of Roll scrap as sale of asset in the books of accounts, whereas in the TCS return filed by the company said amount were disclosed as scrap sale. Therefore, to match the amount of scrap sales as 3
per TCS return and audited P & L A/c, a reconciliation statement was furnished to you on 8/03/2019, wherein the amount of Roll scrap sale was reduced from the scrap sale shown in TCS return to match the amount of scrap sales as per P & L A/c. Thus, the TCS was already collected @ 1% from gross value of roll scrap sales as reflected in the TCS return filed by the company and there was no default in collection and payment of TCS as computed by you as per the above referred order. Thus, the observation of that the assessee has not collected TCS on scrap sale of Rs. 4,73,213/- i.e. Rs. 4,732/- at the rate of 1% is wrong. Para no. 3 of the assessment order states as below: "On verification of the details submitted by the assessee that the total sales includes duties and taxes to the tune of Rs. 2,05,68,623/-. However the assessee has not furnished any supporting evidences of taxes and dues. Such amount was credited to the scraps sale and the assessee has failed to collect the tax at sources. In view of the above as per section 206C of the Income tax Act 1961 the assessee was required to collect TCS @ 1% of Rs. 2,05,683/-. As per the consistent practice followed by the company the sales is accounted net of duties and taxes and accordingly the amount of scrap sales disclosed in the audited P & L Account of the company is net of duties & taxed collected on sales, whereas in the TCS return the gross sales value including duties and taxes of scrap sales is furnished. Therefore, to match the amount of scrap sales as per TCS return and audited P & L A/c, a reconciliation statement was furnished to you on 8/03/2019, wherein the amount of 4 Ahmedabad Strips Pvt. Ltd., A.Y. 2012-13 duties and taxes was reduced from the scrap sale shown in TCS return to match the amount of scrap sales as per P & L A/c. Thus, the TCS was already collected @ 1% from gross value of scrap sales as reflected in the TCS return filed by the company and there was no default in collection and payment of TCS as computed by Assessing Officer.
The ld. D.R. relied upon the order u/s. 206C(6A) r.w.s 206C(7) and the rectification order as well as the order of the CIT(A).
Heard both the parties and perused all the relevant material available on record. At the time of hearing, the ld. A.R. pointed out the detailed summary of scrap sales and TCS collected thereon as follows:-
From the perusal of these details, it is categorically mentioned that the assessee already deducted TCS and also made the payment on account of sale of scrap for which the respective parties have also paid the taxes. Therefore, the Assessing Officer as well as CIT(A) was not right in making the said
In the result, the appeal of the assessee is allowed.