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Income Tax Appellate Tribunal, KOLKATA BENCH “A” KOLKATA
Before: Shri P.M.Jagtap, Vice- & Shri S.S.Godara
आदेश /O R D E R PER S.S.Godara, Judicial Member:- These five assessee’s appeals for assessment years 2010-11 to 2014-15 arise against the Commissioner of Income Tax (Appeals)-Burdwan’s separate orders, all dated 19.01.2016, passed in case Nos. 14-18/CIT(A)/ITO/TDS/Bwn/2014-15, affirming the Assessing Officer’s action raising tax collection at source (TCS for short) demands of ₹35,75,160/-,₹39,50,890/-, ₹53,65,680/-, ₹54,69,100/- & ₹37,30,050/-; respectively involving proceedings u/s 206C(1C) r.w.s. 206C(7) of the Income Tax Act, 1961; in short ‘the Act’.
ITA No.614-618/Kol/2017 A.Ys. 10-11 to14-15 Dist. Land & Land Reforms Officer BWD Vs. ITO Wd-4(2), BWD Page 2 Case(s) called twice. None appears at the assessee’s behest. Case file(s) suggest that the registry has already sent intimation to the assessee / appellant who has seeking adjournments in the past on one pretext or the other. We accordingly proceed ex parte against the assessee. All these appeals are taken up for adjudication on merits.
It emerges that assessee / appellant’s instant five appeals suffer from identical 341 days delay in filing. He has placed on record its condonation petition dated 29.03.2017 explaining reasons thereof to various administrative and financial approvals to be obtained from the District Magistrate Burdwan involving financial obligation, the West Bengal Assembly Election schedule announced by the Election Commission of India on 04.03.2016 to 21.05.2016, necessary administrative follow- up thereafter, relevant amendment in West Bengal Mines concession rules and on-line tender process, various administrative transfers, puja vacation in October, 2016 etc. to plead that the above stated delay is attributable to circumstances beyond his control. The Revenue is fair enough in not rebuting all these averments supported by the necessary press note(s) as well as appellant / assessee’s duly sworn affidavits. Hon'ble apex court’s landmark decision COLLECTOR, LAND ACQUISITION VS. Mst. KATIJI (1987) 167 ITR 471 (SC) settled the law long back that the case of substantial justice must prevail our all technical aspects. We therefore condone the impugned identical delay of 341 days in filing all the instant five appeal(s). These cases are therefore taken up for adjudication on merits.
We find that the assessee has challenged correctness of the lower authorities action raising the impugned Tax Collection at Source demands of ₹35,75,160/- ,₹39,50,890/-, ₹53,65,680/-, ₹54,69,100/- & ₹37,30,050/-; (assessment year-wise) respectively. There are does not appear in dispute between the parties that this assessee; the District Land & Land Reforms Office, is the tax collector since functioning as the administrative District Magistrate collecting royalty and cess against short term quarry permit (licence) for extracting minor minerals like sand, morum, clay, stones and such other minerals during the relevant five previous year(s)
ITA No.614-618/Kol/2017 A.Ys. 10-11 to14-15 Dist. Land & Land Reforms Officer BWD Vs. ITO Wd-4(2), BWD Page 3 is TCS collector within the meaning of sec. 206C(1C) of the Act defining tax collection at source as recipient of minor royalty and licences fee from the mining companies. And also that although he had received the aforesaid varying head(s) of royalties and other payments from various payers, he failed to collect the TCS in the capacity of specified collector under the provision of the Act. The appellant / assessee had also not filed any return in the Form 27EQ. We find from the Assessing Officer’s order dated 22.01.2015 in the “lead” assessment year 2010-11 that the losses of revenue from non collection of TCS @ 2% as prescribed in sec. 206(1C) from April 2009 to March 2010 came to be ₹21,91,571/- qua total receipts of ₹10,98,78,646/-. The assessee pleaded ignorance of the TCS provision prescribed under Chapter-XVII of the Act envisaging TCS collection of recipient in case of the specified payments received from the payer / licencer holders. The Assessing Officer rejected the said explanation in his order to conclude that assessee’s failure in ensuring necessary compliance to provision of the Act could not be held to be justifiable. And also that the mere fact of non-issuance of state government’s instructions to this effect would not absolve him from collecting TCS u/s. 206(1C) of the Act. He therefore raised the impugned TCS as well as interest payable thereupon demands coming to ₹35,75,157/- in the said “lead” assessment year 2010-11 and similar amounts in remaining four assessment year(s) (supra).
The CIT(A) has affirmed the Assessing Officer’s action vide his following detailed discussion:- “2. Grounds of Appeal: Aggrieved by the said decision dated 22.01.2015 the appellant preferred on appeal on the following grounds: "1) That Ld. AO has erred in real fact. 2) That A. O. is not justified to reject prayer for waiving default amount, because it purely a State Government concern and there has no tax collection from parties and the entire amount will be paid from Government from her own fund and after it will be the huge loss of State Government. 3) That the appellant craves leave to add to, alter, amend, modify, substitute, delete and/or rescind all or any of the grounds of appeal on or before the final hearing if necessary. 11 3. Discussions and Findings; The present appeal is for the assessment year 2010-11, but the facts and issues are identical for five assessment years against which appeals have been filed and are being disposed off
ITA No.614-618/Kol/2017 A.Ys. 10-11 to14-15 Dist. Land & Land Reforms Officer BWD Vs. ITO Wd-4(2), BWD Page 4 along with this appeal. The default on the part of the appellant had occurred over five assessment years: 2010-11, 2011-12, 2012-13, 2013-14 and 2014-15. The appeals for all the five assessment years are being disposed off through different orders after examination of all facts for the relevant assessment years. The facts of each appeal are found to be identical. These are as enumerated below. The undisputed facts of this appeal, in brief, are as under: • The appellant is a body that is part of the State Government of West Bengal working as Tax Deductor and Collector under TAN- CALD04421E. The appellant is also the additional District' Magistrate for the District of Burdwan. • The appellant has collected Royalty and Cess against short term quarry permit/license for extraction of Minor Minerals like sand, morum,c lay, stones and such other minerals during the period under consideration. • The aforementioned payments of Royalty and Cess attract the provisions of section 206C(lC) of the Income Tax Act as per which Tax has to be collected at source by the appellant at the "time of such payments. • The appellant, it is a matter of undisputed fact, failed to comply with the aforesaid provisions of the Income Tax Act. During the assessment proceedings, • The AO, upon verification of AST database, found that the appellant had not filed any return of Income for the said period, in the Form 27EQ. • Letters dated 28.8.2013 and 12.9.2013 were issued to the appellant by the AO to furnish certain details for establishing the compliance by the appellant of section 206C(1C) of the Act. • The appellant did not respond to this communication. • A spot inspection, on 13.9.2013 , was therefore carried out in the office of the District Land and Land Reforms Officer, Burdwan. During assessment proceedings, the AO • Collected information segregating the amount of Royalty and Cess collected in each month (excluding penalty amount) from the appellant • He then determined the quantum of loss of revenue over a span of five years, 2009- 10, 2010-11, 2011-12, 2012-13 and 2013-14 financial years. • Thereafter, a month-wise collection of Royalty and Cess and the amount of TCS so collectible was worked out by him. When queried, the appellant made two submissions: • That the amount of TCS had not been collected by him prior to the meeting with Income Tax Officials on 30.9.2013 since its office was not aware of such a provision and there had been no instruction or orders from within their department to effect such a collection. • That the appellant had in fact, accepted the position of the revenue and started collecting TCS from the financial year 2013-14 after the aforesaid meeting. The AO, held that ignorance of law could hardly be considered a reason for non-compliance, of statutory provisions especially by an appellant that itself was part of the government and that the provisions of the statute could not be made subject to circulars/instructions etc. from superior authorities of any deductor/collector. He then proceeded to hold that since the appellant was responsible for the deduction of TCS in respect of the said payments and for its deposition in the government treasury, and had failed to do either, the appellant falls within
ITA No.614-618/Kol/2017 A.Ys. 10-11 to14-15 Dist. Land & Land Reforms Officer BWD Vs. ITO Wd-4(2), BWD Page 5 the section 206C(1C) of the Act and was also liable to pay simple interest at the specified rates for the failure to collect and pay tax so collectible from source. During appeal proceedings, the appellant reiterated his stand that he was ignorant of the said provisions and had received no instructions from his superiors regarding these provisions of the Income Tax Act. The appellant states that he has started collecting TCS after coming to know of the said provisions and this proves' his bona fides. The appellant further states that since the leases for the said 4quarries had expired quite some time back, it was difficult to trace the lessees or even obtain their PANs, hence it was difficult to realize the tax from these persons. He however assured that all efforts were being made to trace the persons from whom tax was to be collected at source. In his submissions, however, the appellant also fairly concedes that even if such persons are traced, it will not undo the infringement that has already occurred. He however prays for relief on two grounds; that he was ignorant of the provisions of law and that he is in fact a part of the government itself. I have gone examined all the material on record as well as the appellant's submissions. I find no merit in the assertion that he was ignorant of law. It must be pointed out that the appellant is also the additional district magistrate - responsible position with magisterial duties and responsibilities. The appellant, of all the assessees has an even greater responsibility of law enforcement and such enforcement requires a knowledge of the relevant portions of law that might have a bearing on the duties being performed by the appellant. It is an admitted fact that the appellant was leasing out quarries which involved commercial implications and elements of profit. Where there is profit, there is the question of application of Income Tax laws. As such, it is the responsibility of the appellant, with the vast resources at his disposal and the entire government machinery to rely upon, to keep itself aware of the relevant portions of income tax that might apply to such commercial activities of the appellant. This he has failed to do; instead denying responsibility by relying upon passing this responsibility to someone else in the government who should have been issuing circulars and instructions. I cannot agree with the stand of the appellant in this regard and have no hesitation in confirming the action of the AO.” 5. We have given our thoughtful consideration to assessee’s pleadings and Revenue’s arguments strongly reiterating their respective stand against and infavour of both the learned lower authorities’ action raising the impugned TCS demands in the former case. Learned departmental representative vehemently contended during the course of hearing that this assessee had been exercising very important function of TCS collection since acting as the licencor of mines and minerals side (supra) and therefore, he cannot plead ignorance of statutory provisions requiring TCS collection in the Act. Our attention has been invited to the assessee’s categorical explanation in the lower proceedings that the state government had not issued any instructions regarding TCS collection in case of receipts coming from mining companies. We find merit in learned departmental representative’s argument in principle. There is hardly any dispute that legislature has prescribed TCS collection u/s. 206(1C) @ 2% regarding mining and quarry lincence or lease etc., at the time of receipt of the
ITA No.614-618/Kol/2017 A.Ys. 10-11 to14-15 Dist. Land & Land Reforms Officer BWD Vs. ITO Wd-4(2), BWD Page 6 specified sums. We therefore observe that the mere fact that the state government had not issued any instructions to the field authorities regarding compliance of the impugned statutory provision does not carry any merit since ignorance of law by either the government or its agency is exercising various statutory functions cannot be accepted as a justifiable reason. We therefore concur with the Revenue’s argument supporting the Assessing Officer as well as CIT(A)’s action raising the impugned demands in assessee’s case since he had not collected TCS from the mining companies.
Next comes yet another equally important aspect as to whether the assessee deserves the benefit of sec. 206C(6A) first proviso inserted by the Finance Act, 2012 with effect from 01.07.2012 as under:- “206C. ***** [(6A) if any person responsible for collecting tax in accordance with the provision of this section does not collect the whole or any part of the tax or after collecting, fails to pay the tax as required by or under this Act, he shall, without prejudice to any other consequences which he may incur, be deemed to be an assessee in default in respect of the tax: [Provided that any person [***] responsible for collecting tax in accordance with the provisions of this section, who fails to collect the whole or any part of the tax on the amount received from a buyer or licensee or lessee or on the amount debited to the account of the buyer or licensee or lessee shall note deemed to be an assessee in default in respect of such tax if such buyer or licensee or lessee- (i) has furnished his return of income under section 139; (ii) has taken into account such amount for computing income in such return of income; and (iii) has paid the tax due on the income declared by him in such return of income. And the person furnishes a certificate to this effect form an accountant in such form as may be prescribed.] 7. Learned departmental representative fails to rebut the basic fact that neither the Assessing Officer nor the CIT(A) have examined the effect of above inserted proviso in case of non compliance of the impugned statutory provision requiring TCS collection. It is strongly argued that the aforesaid proviso stood inserted in the Act with effect from 01.07.2012 relevant to assessment year 2013-14 having prospective
ITA No.614-618/Kol/2017 A.Ys. 10-11 to14-15 Dist. Land & Land Reforms Officer BWD Vs. ITO Wd-4(2), BWD Page 7 effect only than covering the assessee’s former three assessment year(s) i.e. 2010-11 to 2012-13. We find no substance in Revenue’s technical argument contesting retrospectively operation of the aforesaid proviso to sec. 206(6A) inserted by the Finance Act, 2012 with effect from 01.07.2012. The legislature had inserted a similar proviso in sec. 201(1) of the Act by the very Finance Act, 2012 with effect from 01.07.2012 that an assessee shall not be treated as a prayer assessee in default for not deducting TDS in case the other party / payee has furnished in return of income u/s. 139 taking into account the sum in question for computing income followed by payment of taxes dues thereupon as accompanied by certificate to this effect from the accountant concerned. We wish to observe here that sec. 201 applies in case of TDS deduction as against the impugned reverse mechanism of TCS collection. The above former limb applies in case of payer / assessee acting as TDS deductor and latter one comes into play in an instance of a specified recipient receiving the specified payments from the payer. In other words, the purpose of both these mechanism is to ensure compliance of the provision at the time of payment of the specified sums.
The legislature had instituted the aforesaid proviso in the Act vide Finance Act, 2012 with effect from 01.07.2012 in sec. 201(1) of the Act to be applicable in case of TDS deductor at the time of his assessment u/s. 40(a)(ia) vide second proviso inserted by the Finance Act, 2012 with effect from 01.04.2013. And also that various recent judicial precedents (2016) 279 CTR 384 Commissioner of Income-tax vs. Ansal Landmark Township hon'ble Bombay high court’s decision in PCIT vs. Perfect Circle India Pvt. Ltd. in Tax Appeal No.707 of 2016 dated 07.01.2019 and tribunal’s co- ordinate bench’s orders hold that the aforesaid proviso carries retrospective effect being curative in nature. We observe that the very line of reasoning also deserves to be adopted qua application of sec. 206A (first proviso) as well inserted by the Finance Act, 2012 with effect from 01.07.2012 to this effect as applicable in case of TCS collection than TDS deduction. We therefore decline the Revenue’s instant technical argument that the foregoing proviso to sec. 206C(6A) does not carry any retrospective operation and leave it open for the Assessing Officer to verify all necessary facts about the assessee’s payers to have been assessed qua the very income under the
ITA No.614-618/Kol/2017 A.Ys. 10-11 to14-15 Dist. Land & Land Reforms Officer BWD Vs. ITO Wd-4(2), BWD Page 8 provision of the Act. The assessee is directed to place on record all necessary documents in consequential proceedings within three effective opportunities of hearing the assessee’s “lead” case ITA No.614/Kol/2017 as well as remaining four appeal(s) ITA No.615 to 618/Kol/2017 raising the above material issue are partly allowed for statistical purposes.
These assessee’s five appeal(s) are partly allowed for statistical purposes in above terms. Order pronounced in open court on 04/10/2019
Sd/- Sd/- (उपा$य%) ('या(यक सद�य) (P.M.Jagtap) (S.S.Godara) Vice President Judicial Member *Dkp-Sr.PS *दनांकः- /10/2019 कोलकाता / Kolkata आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. आवेदक/Assessee-Dist. Land & Land Reforms Officer, Rajbati, P.O. Rajbati, Burdwan-713104 2. राज�व/Revenue-ITO Ward-4(2), Burdwan 3. संबं-धत आयकर आयु/त / Concerned CIT 4. आयकर आयु/त- अपील / CIT (A) 5. 0वभागीय �(त(न-ध, आयकर अपील�य अ-धकरण कोलकाता / DR, ITAT, Kolkata 6. गाड4 फाइल / Guard file. By order/आदेश से, /True Copy/ सहायक पंजीकार आयकर अपील�य अ-धकरण, कोलकाता ।