ITO(TDS), ROURKELA, ROURKELA vs. M/S. S.N.MOHANTY, KEONJHAR

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK

BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER

ITA No.431/CTK/2014 Assessment Year : 2013-14

Income Tax Officer (TDS), Vs. M/s. S.N. .Mohanty, Weigh Aayakar Bhawan, Uditnagar, Bridge Road, At/PO: Barbil, Rourkela Dist: Keonjhar PAN/GIR/TAN: BBNMO 0442 D (Appellant) .. ( Respondent)

Assessee by : None Revenue by : Shri B.N.Das, DR

Date of Hearing : 30/05/ 2017 Date of Pronouncement : 31 /05/ 2017

O R D E R Per Pavan Kumar Gadale, JM This is an appeal filed by the revenue against the order of CIT(A)-1,

Bhubaneswar, dated 23.9.2014, for the assessment year 2012-13 on the

following grounds:

“1. ”The Learned CIT (A) does not appear to be justified in holding that the delay in submitting 27C Form by the buyer to the seller only entails initiation of penal provisions u/s. 272A(2)(j) of I.T. Act and not treating the assessee as an assessee default.

2 ITA No. 431/CT K/ 2014 Asse ssment Year : 20 13- 14 equal to 1% as tax collection at source. This implies that the buyer has to furnish Form No. 27C to the seller before or at the time of debiting of the amount payable by the buyer to the account of the buyer or at the time of receipt of such amount from the said buyer. The Ld. CIT (A) does not appear to be justified in holding that Form No. 27C can be filed at any time by the buyer to the seller.

the respondent-assessee and neither any application for adjournment was

filed despite service of notice through Speed Post. Therefore, we proceed

to dispose of the appeal of the revenue exparte qua the respondent-

assessee after hearing ld D.R. and on the basis of materials available on

record.

engaged in the business of Excavation of Iron Ore/bauxite/manganese ore

from mines and sale thereof in the name and style of M/s. S..Mohanty.

During TDS inspection , the Assessing Officer found that the assessee has

sold iron ore worth Rs.107,25,73,794/- during the period July to December,

2012 as per the Sale Invoice Register. The assessee was required to deduct

1% tax on sale of iron ore of Rs.107,25,73,794/- from the buyers of

Rs.1,07,25,738/- u/s.206C (1) of Income Tax Act, 1961. On perusal of

books of account, it was found that the assessee has deposited

Rs.21,36,945/- only on account of TCS as per the challan found in the

course of inspection. Thus, there was a shortfall of Rs.85,88,793/- on

3 ITA No. 431/CT K/ 2014 Asse ssment Year : 20 13- 14 account of TCS on sale of iron ore. In the course of inspection, it was

submitted by the assessee that due to submission of declaration form(s)

No.27C, TCS was not collected referred at page 1 of the assessment order,

and the Revenue found that these forms were not forwarded to the Chief

Commissioner as per the provisions of section 206C(1B) of the Act. In

respect of other buyers, the assessee has neither furnished declarations

forms 27C nor collected tax. In reply to show cause notice issued by the

Assessing Officer, the assessee in a written submissions filed a statement

showing TCS deposit month wise and declarations in Forms 27C . The

contention of ld A.R. has been considered and examined and the Assessing

Officer dealt at page 4 on the provisions and explanations in respect of

section 206C(1) of the Act in the assessment order. Further, the Assessing

Officer is of the opinion that the assessee has contravened the provisions

of section 206C(1) of the I.T.Act, 1961 by not collecting tax at source (TCS)

from buyers on sale of iron ore, therefore, the assessee is liable to pay

interest @ 1% per month for the sale of iron ore in accordance with the

provisions from the date on which such tax was collectible to the date on

which the tax was actually paid and raised demand of Rs.89,41,764/- and

passed order u/s.206C(6)/206C(7) of the Income tax Act, 1961 on

1.3.2013.

Ld A.R. argued and reiterated the submissions made during the TDS

proceedings. The assessee filed written submission dated 12.8.2013 and

remand report was called for by the CIT(A) and a copy of the remand report

4 ITA No. 431/CT K/ 2014 Asse ssment Year : 20 13- 14 was furnished to the assessee for comments and the assessee filed

submission dated 11.9. 2014 referred at pages 4 to 11 of the order. The

CIT(A) has dealt exhaustively on the provisions, judicial decisions and

submissions of the assessee and observed that all parties Form 27C were

not available during the TDS inspection and the reasons were also explained

for not filing and further the staff present during the inspection was not

conversant with TCS issues. The assessee at the time of inspection has

explained that forms were collected and could not be filed. The CIT(A) found

that the assessee has complied the conditions of obtaining Forms 27C and

there is delay in filing the Forms with the Income tax department and for

such default in filing, the assessee has to be penalized under other

provisions of the Act. Whereas the Assessing Officer treated the assessee

in default for TCS amount of Rs.85,61,075/-. The CIT(A) is of the opinion

that the delay in collecting the Forms 27C are technical in nature and any

contravention shall invite appropriate penal provisions and also there is no

reason for the ITO (TDS) to treat assessee in default and finally with these

observations, the CIT(A) allowed the appeal of the assessee.

before the Tribunal. Before us, ld D.R. argued that the CIT(A) is not

justified in holding that the delay in submitting the Forms 27C cannot be a

reason to treat assessee as in default and further provisions of section

206C(1) of the Act has to be considered. The CIT(A) has relied on the

submissions of the assessee without considering the fact that the assessee

5 ITA No. 431/CT K/ 2014 Asse ssment Year : 20 13- 14 has delayed in collecting Form No. 27C and, prayed to restoring the order

of the Assessing Officer. Ld A.R. relied on the order of the CIT(A).

authorities and materials available on record. The sole crux of the issue is

that the assessee has delayed in collecting the Forms 27C to deposit with

Income tax Department, whereas the Assessing officer treated assessee as

“assessee in default” . The CIT(A) has dealt on merits at page 4 of the

order explaining that the assessee could not be penalized and there are

other separate provisions for levy of penalty u/s.272A(i) of the Act.

Whether TCS is liable to be made or not depends on the merits of each case

and not technical violation based on non-submission of Forms. Further,

before treating as an assessee in default, the ITO (TDS) is required to

consider the conditions and proviso to section 206C(6A) and also no TCS is

made in respect of buyers on filing declarations in Form No.27C. The only

objection of the revenue was delay in submitting the declarations with the

Revenue, we find delay in collecting the said declarations are

technical/procedural in nature and contravention shall invite appropriate

penal provisions. Accordingly, we consider the apparent facts and the

material on record on obtaining Form No.27C and are not inclined to

interfere with the order of the CIT(A), who has discussed elaborately vis-

à-vis the explanations of the assessee on the disputed issue and allowed

the appeal and we uphold CIT(A)’s order and dismiss the grounds of appeal

of the revenue.

6 ITA No. 431/CT K/ 2014 Asse ssment Year : 20 13- 14 7. In the result, the appeal filed by the revenue is dismissed. Order pronounced in the open court on 31 /05/2017 in the presence of parties. Sd/- sd/- (N.S Saini) (Pavan Kumar Gadale) ACCOUNTANT MEMBER JUDICIALMEMBER Cuttack; Dated 31 /05/2017 B.K.Parida, SPS Copy of the Order forwarded to : 1. The Appellant : Income Tax Officer (TDS), Aayakar Bhawan, Uditnagar, Rourkela 2. The Respondent. M/s. S.N. .Mohanty, Weigh Bridge Road, At/PO: Barbil, Dist: Keonjhar 3. The CIT(A)-1, Bhubaneswar 4. Pr.CIT-1, Bhubaneswar, 5. DR, ITAT, Cuttack 6. Guard file. BY ORDER, //True Copy//

SR.PRIVATE SECRETARY ITAT, Cuttack