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Facts
The assessee, engaged in coal and lignite trading, was subjected to a survey during which it was found that TCS was not collected on sales amounting to Rs. 78,83,014/- and Rs. 9,42,929/- for the period 01.07.2012 to 30.11.2012. The assessee claimed a delay in filing Form 27C due to a staff member being on leave.
Held
The Tribunal held that there was a reasonable cause for the failure to comply with the TCS provisions due to staff illness and belated payment of TCS. The decisions cited by the CIT(A) were related to concealment of income and not applicable to TCS provisions. The Tribunal also noted that the AO's order was time-barred.
Key Issues
Whether penalty under Section 271CA is leviable for non-deduction of TCS when there was a reasonable cause for the delay and the AO's order was time-barred.
Sections Cited
271CA, 206C, 133A, 273B, 271(1)(c)
AI-generated summary — verify with the full judgment below
Before: SHRI PAWAN SINGH & SHRI BIJAYANANDA PRUSETH
आदेश / O R D E R
PER BIJAYANANDA PRUSETH, AM:
This appeal by the assessee emanates from the order passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’) dated 15.10.2024 by the National Faceless Appeal Centre, Delhi /Commissioner of Income-tax (Appeals) [in short ‘CIT(A)’] for the Assessment Year (AY) 2013-14. which in turn arises out of the penalty order passed by Addl. CIT(TDS), Surat u/s 271CA the Act, dated 25.02.2022.
Grounds of appeal
raised by the appellant are as under: “1. On the facts and circumstances of the case as well as law on the subject, the learned CIT(A) has erred in confirming the action of Assessing Officer in levying of penalty of Rs.87,750/- u/s 271CA of the Act on account of non- deduction of TCS.
2. It is therefore prayed that penalty levied by the Assessing Officer and confirmed by CIT(A) may please be deleted.
/AY.2013-14 Rahul Coal India Pvt. Ltd.
Appellant craves leave to add, alter or delete any ground(s) either before or in course of hearing of the appeal.”
2. The appellant was engaged in business of coal and lignite trading during the year under consideration. A survey u/s 133A of the Act was conducted at the premises of the appellant on 25.12.2012. The order u/s 206C (6&6A) r.w.s. 206C(7) of the Act was passed on 11.02.2019. Pursuant to the order, penalty u/s 271CA was initiated for non-deduction of TCS of Rs.87,750/- on sale of coal and lignite by the appellant. The appellant was required to deduct 1% TCS on sale of coal and lignite in case the purchaser is going to further trade the same, whereas if the purchaser is going to use the coal and lignite for captive consumption, then the appellant is not required to deduct TCS and instead collect Form 27C from the purchaser. It was found that the assessee neither collected TCS nor obtained Form No. 27 on sale of coal and lignite amounting to Rs.78,83,014/- and Rs.9,42,929/- during FY.2012-13 (from 01.07.2012 to 30.11.2012). The assessee contended that the person responsible for collection of Form 27C was on leave due to illness during the month of December, 2012. Therefore, there was a delay in filing the Form 27C with the Department. Therefore, at the time of survey, appellant was not able to provide the Form 27C and had paid TCS @ 1% amounting to Rs.87,750/- on 25.12.2021. According to the assessee, the appellant was not required to deduct TCS on the sale of Rs.78,32,014/- but still had paid TCS of Rs.78,320/-. Thus, there is no failure on the part of appellant to collect TCS. Thereafter, AO had issued show cause notice to assessee for the default. In reply, assessee /AY.2013-14 Rahul Coal India Pvt. Ltd. stated that TCS payment of Rs.87,750/- was made on 25.12.2012 in FY.2012-13 itself. Hence, the AO did not raise any demand u/s 201(1) and 201(1A) of the Act. However, the AO passed order u/s 206(6&6A) r.w.s. 206C(7) of the Act later on 11.02.2019 and intimated the Addl. CIT, TDS on 11.02.2019 to initiate penalty u/s 271C(1)(a) of the Act. Resultantly, the Addl. CIT, TDS issued notices u/s 271CA on 26.08.2021, 13.10.2021 and 27.01.2022. The appellant received said notice on 13.10.2021 through mail and replied that there was no failure on the part of appellant to collect the tax in view of the facts stated above and requested not to levy penalty u/s 271CA r.w.s. 129 of the Act. The Addl. CIT (TDS) rejected the reply of appellant and passed the penalty order on 25.02.2022, mainly on the ground that had the survey not taken place, the assessee would not have suo motu complied with the TCS provisions of the Act. He held the appellant as assessee in default because it contravened provisions of section 206C(1) without reasonable cause. He levied penalty of Rs.87,750/- u/s 271CA of the Act vide order dated 25.02.2022.
3. Aggrieved by the order of AO, the assessee filed appeal before CIT(A). Before CIT(A), assessee made detailed submission, which is at para 3 in pages 2 to 7 of the order of CIT(A). The appellant relied on various decisions and submitted that as there was no failure to collect tax and the penalty u/s 271CA may be dropped. The CIT(A), however, dismissed the appeal and confirmed the levy of penalty of Rs.87,750/- by stating that the assessee deposited applicable /AY.2013-14 Rahul Coal India Pvt. Ltd. TCS only after default was detected during the survey. He has relied on various decisions as mentioned in the appellate order.
Further, aggrieved by the order of CIT(A), assessee has filed present appeal before the Tribunal. The learned Authorized Representative (ld. AR) of the assessee filed a paper book and submitted that assessee did not receive any notice and hence there was reasonable cause for failure to comply with notice u/s 271CA of the Act. He submitted that assessee was residing at 429 - 432, Golden Point, Falsawadi, Nr. BSNL Office, Ring Road, Surat and not at 1172, Abhishek Market, Ring Road, Surat, where the notices were sent. He submitted that had the AO been careful while communicating the hearing notices, assessee would have received the same and complied with the requirement in the notice. He submitted that there was actually no default because assessee had deposited TCS of Rs.87,750/- on 25.12.2012, i.e., in FY.2012-13 itself. He also contended that there was reasonable cause for delay in compliance for a small period. He also submitted that order of the AO was time barred. The ld. AR of the assessee relied the following cases (i) in case of ITO (TDS) vs. Shri Om Parksh Gupta (HUF)
& 342/Chd/2016 dated 20.06.2016, (ii) ITO (TDS) vs. Shri Tarsem Lal Prop dated 19.05.2017 (iii) Chandmal Sancheti vs. ITO (2016) 72 taxmann.com 237 (Jaipur- Trib.) (iv) G.K.Traders vs. ITO (2022) 143 taxmann.com 425 (Rajkot-Trib.) and (v) Nisarahmed Abdulsattar Shaikh vs. ITO-TDS in ITA Nos. 2505/Ahd/2018 and ITA No.339/Ahd/2020 dated 30.06.2023 and requested to allow the appeal.
/AY.2013-14 Rahul Coal India Pvt. Ltd.
On the other hand, learned Senior Departmental Representative (ld. Sr. DR) for the revenue supported the order of lower authorities. He stated that the address in the assessment order and the penalty order are the same. Hence, the plea that assessee did not receive notice is not tenable. He relied on the decisions which were referred to by the CIT(A).
We have heard both the parties and perused the materials on record. We have also deliberated various decisions relied upon by ld. AR of the assessee and the CIT(A). Penalty u/s 271CA is leviable for failure to collect tax at source by any person as required by or under the provisions of Chapter XVII – BB of the Act. In the present case, the appellant deposited TCS of Rs.87,750/- in the same FY.2012-13, albeit belatedly. The reason for the delay was the person for collection of Form No. 27C was on leave due to illness. Though the assessee was not required TCS but still had paid TCS of Rs.87,750/-. Copies of challans evidencing the payment are at pages 21 and 22 of the paper books. In our view, there was reasonable cause u/s 273B of the Act for failure to comply with the relevant provisions including section 271CA of the Act. The decisions referred to by the CIT(A) are on the issue of penalty for concealment of income u/s 271(1)(c) of the Act and not on the provisions of TCS or on 273B of the Act. On the other hand, the decisions relied upon by the ld. AR, mentioned at para 4 above, support the case of the appellant on the ground of “reasonable cause” u/s 273B of the Act and the order of AO dated 11.02.2019 being time barred. In view of the above facts and the decisions cited supra, the order of