BASHCO ENGINEERING PVT.LTD,,SANGLI vs. INCOME-TAX OFFICER, (TDS),, KOLHAPUR

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI S. S. VISWANETHRA RAVI, JUDICIAL MEMBER आयकर अपील सं. / ITA No.894/PUN/2019 िनधा�रण वष� / Assessment Year: 2008-09 Bashco Engineering Pvt. Vs. ITO (TDS), Kolhapur. Ltd., Plot No. E-19, MIDC Kupwad, Sangli- 416436. PAN : AABCB1679A Appellant Respondent Assessee by : None Revenue by : Shri S. P. Walimbe Date of hearing : 19.05.2022 Date of pronouncement : 20.05.2022 आदेश / ORDER PER INTURI RAMA RAO, AM: This is an appeal filed by the assessee directed against the order of ld. Commissioner of Income Tax (Appeals)- 1, Kolhapur [‘the CIT(A)’] dated 04.04.2019 for the assessment year 2008-09. 2. The appellant raised the following grounds of appeal :- “1. The learned CIT(A) has erred in confirming interest liability u/s 206C(7) of RS. 28127/-. 2. The learned CIT(A) has failed to appreciate the fact that when the TCS demand is nullified in favour of assessee, interest liability on the same under 206C(7) does not arises. 3. The interest demand raised may please be deleted.

2 ITA No.894/PUN/2019 4. The appellant craves leave to add, modify, alter, delete all or any of the grounds of appeal.” 3. Briefly, the facts of the case are as under : The appellant is a company incorporated under the provisions of the Companies Act, 1956. It is engaged in the business of manufacturing of CI Casting etc. The Income Tax Officer (TDS), Kolhapur conducted a survey operations u/s 133A of the Income Tax Act, 1961 (‘the Act’) on 13.02.2009. During the course of survey proceedings, it was found that the appellant company had sold scrap of Rs.98,35,715/- and Rs.12,95,840/- during the financial years 2007-08 and 2008-09 respectively without collection of tax deducted at source as provided u/s 206C of the Act. Accordingly, a show-cause notice was issued to the appellant calling upon the assessee as to why the assessee should not be treated as an assessee in default. The appellant company filed explanation in response to the said show-cause notice stating that it had made the scrap sales to one customer, namely, Melting Point, Kolhapur from whom it had received declaration u/s 206C(IA) in Form No.27C dated 11.05.2007 and the same were forwarded to the Commissioner of Income Tax, Kolhapur vide letter dated 15.05.2007. The appellant company further stated that out of total scrap sales of Rs.98,35,715/- the appellant made sale to Melting Point, Kolhapur, to the extent

3 ITA No.894/PUN/2019 scrap sales of Rs.59,27,699/- was made during the financial year 2007-08 and in respect of balance of scrap sales of Rs.39,07,726/- during the financial year 2007-08, the tax was collected at source and credited to the Central Government’s Account. However, the TDS Officer by holding that the assessee had failed to deliver the copy of the declaration received in Form No.27C received from Commissioner of Income Tax, Kolhapur held that the assessee is in default and passed an order directing the assessee to pay a sum of Rs.67,160/- and interest thereon of Rs.28,127/- invoking the provisions of section 206C(7) of the Act. 4. Being aggrieved by the above order of the TDS Officer, an appeal was preferred before the ld. CIT(A), who vide impugned order taking cognizance of fact that the declaration in Form No.27C had been filed at the time of assessment, the assessee cannot be treated as assessee in default for TDS amount of Rs.67,160/-. However, the ld. CIT(A) confirmed the levy of interest u/s 206C(7) amounting to Rs.28,127/-. 5. Being aggrieved by the above decision of the ld. CIT(A), the appellant is in appeal before us with above extracted grounds of appeal.

4 ITA No.894/PUN/2019 6. When the appeal was called on for hearing, none appeared on behalf of the appellant-assessee despite due service of notice of hearing. 7. On the other hand, ld. Sr. DR placing reliance on the order of the ld. CIT(A) submitted that the assessee should be paid interest levied u/s 206C(7) of the Act. 8. We heard the ld. Sr. DR and perused the material on record. From the perusal of the order passed u/s 206C/206C(7) of the Act dated 28.03.2011, it would be clear that the TDS Officer had held that the assessee is in default for collecting tax at source on the sale of scrap made to one company, namely, Melting Point, Kolhapur on the ground that there was no proof of delivery of declaration obtained in Form No.27C from the Commissioner of Income Tax, Kolhapur. Accordingly, the TDS Officer demanded tax collection at source of Rs.67,160/- apart from interest thereon of Rs.28,127/-. On appeal before the ld. CIT(A), the ld. CIT(A) clearly held that the assessee cannot be treated as an assessee in default on being satisfied that the appellant had obtained declaration in Form No.27C, however, ld. CIT(A) held the assessee liable to pay interest thereon. The finding of the ld. CIT(A) that the assessee cannot be treated as assessee in default attained finality as the Department is not in appeal challenging this decision. When the assessee cannot

5 ITA No.894/PUN/2019 be treated as assessee in default, the question of holding the assessee liable to pay interest does not arise, as there was no liability to collect the tax at source. Hence, the findings of the ld. CIT(A) that the assessee is liable to pay interest u/s 206C(7) are reversed. Accordingly, the grounds filed by the assessee stand allowed. 9. In the result, the appeal filed by the assessee stands allowed. Order pronounced on this 20th day of May, 2022. Sd/- Sd/- (S. S. VISWANETHRA RAVI) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; �दनांक / Dated : 20th May, 2022. Sujeet आदेश क� �ितिलिप अ�ेिषत / Copy of the Order forwarded to : अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT(A)-1, Kolhapur. 4. The Pr.CIT-1, Kolhapur. िवभागीय �ितिनिध, आयकर अपीलीय अिधकरण, “A” ब�च, 5. पुणे / DR, ITAT, “A” Bench, Pune. गाड� फ़ाइल / Guard File. 6. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.