M/S ALPHONSA TIMBERS AND TRADERS PRIVATE LIMITED,MARADU vs. ITO(TDS), KOCHI

The facts stated for AY 2012-13 show that the assessee is a dealer in imported timber who imports the timber and sells it to registered dealers. On 11.3.2013, the ITO(TDS), Cochin issued a notice to the assessee to show cause for recovery of tax and interest thereon u/s. 206C(7) of the Act for failure to collect tax at source as provided u/s. 206C of the Act for AYs 2010-11 to 2014-15. In response to notice, the assessee submitted that tax is not collected at source because assessee is a second dealer, the timber is not sold which is collected from Indian forest and imported timber is sold to the suppliers which does not attract tax collection at source u/s. 206C of the Act. The ld. AO disbelieved the explanation of assessee and passed an order u/s. 206C(1) & (7) of the Act on 25.11.2014 wherein he noted that taxable sale is of Rs.136,63,23 on which tax should have been collected of Rs.1,36,632, which the assessee has failed to do so and therefore interest u/s. 206C(7) of the Act is chargeable amounting to Rs.52,497 and accordingly total tax and interest payable was determined at Rs.1,89,129.

The assessee aggrieved with the same preferred appeal before the ld. CIT(A) wherein assessee contested the same arguments, and also submitted additional evidence as Form 27C is now available from the parties to whom timber is sold. The ld. CIT(A) rejected the additional evidence and did not admit it and confirmed the order of the ld. AO. The appellate order was passed on 22.8.2022 which is under challenge before us.

The appeals for AY 2013-14 in is also on similar lines. Further, the other 2 appeals are for levying penalty u/s. 221(1) of the Act on the same evidence.

The ld. AR submitted that the assessee is in possession of declaration in Form 27C which has been placed before the first appellate authority which were not admitted and therefore the above appeal has been filed. Though these forms could not be filed before the ld. AO, but were filed before the ld. CIT(A) and therefore they should have been admitted. He referred to the written submissions placed before us. It was the claim that identical issue arose in the case of assessee for AYs 2010-11, 2011-12 & 2014-15 which has already been decided by the coordinate Bench by order dated 19.5.2023 wherein the issue was restored back to the file of ITO(TDS) to verify Form 27C, take them on record and if found in order, to cancel the demand raised of interest and TCS.

The ld. DR supported the order of ld. lower authorities.

We have carefully considered the rival contentions and perused the orders of ld. lower authorities. We find that when the survey was caried out, a demand was raised u/s. 206C (1) & (7) with respect to 4 different assessment years. The appeals of the assessee for AY 2010-11 & 2011-12 as well as 2014-15 travelled before the coordinate Bench wherein in order dated 19.5.2023 on identical facts and circumstances, following the decision of coordinate Bench in to 120/COCH/2017 dated 11.9.2017, the coordinate Bench in the case of assessee also set aside the impugned orders and restored the issue back to the file of AO to examine and verify Form 27 and thereafter, if found in order, cancel the amount of short collection of tax at source and interest thereon.

As there is no change in the facts and circumstances and the issue involved is on the same survey wherefrom it was found that assessee has failed to collect tax at source on sale of imported timber, we also, respectfully following the order of the coordinate Bench, direct the assessee to submit Form 27C before the ld. AO and direct the ld. AO to decide the issue in terms of para 7 of the order of the coordinate Bench dated 19.5.2023. Accordingly, & 242/COCH/2024 for AYs 2012-13 & 2013-14 involving similar issues are allowed for statistical purposes. are with respect to levy of penalty u/s. 221(1) of the Act for failure to collect tax at source for AYs 2012-13 & 2013-14. The coordinate Bench in assessee’s own case in & 930/COCH/2022 for AYs 2010-11, 2011-12 & 2014-15 has cancelled the penalties for the reason that the original appeal for failure to collect tax at source u/s. 206C(1) and consequent interest thereon is restored to the file of ld. AO for verification of Form 27C. As the penalties are also levied for the same offence of non- collection of tax at source, we also cancel the penalties levied u/s. 221 for the above two assessment years respectfully following the decision of the coordinate Bench. Accordingly, we set aside the penalty orders by the AO u/s. 221(1) of the act for both these years.