DISTRICT LAND & LAND REFORMS OFFICER, BURDWAN,BURDWAN vs. ITO, WARD-4(2):TDS: BURDWAN, BURDWAN

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 -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 -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 -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.

6. 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 -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.

8. 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 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.