ITO(TDS), ROURKELA, ROURKELA vs. M/S. MANGALAM METALS & ORES LTD., KEONJHAR

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.

from the said buyer in cash by the issue of the cheque or draft or by any other mode, whichever is earlier, collect from the buyer a sum 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.

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.

Metals & Ores ltd. During TDS inspection, the Assessing Officer found that the assessee has sold iron ore worth Rs.39,62,42,155/- during the period

July to November, 2012. As per the Sale Invoice Register, the assessee was required to deduct 1% tax on sale of iron ore of Rs.39,62,42,155/- from the buyers of Rs.39,62,422/- u/s.206C (1) of Income Tax Act, 1961. In the course of inspection, it was submitted by the assessee that due to submission of declaration form(s) No.27C no TCS was collected referred at page 1 of the assessment order and the Revenue found that these forms Asse ssment Year : 20 13- 14

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.41,37,981/- and passed order u/s.206C(6)/206C(7) of the Income

tax Act, 1961 on 31.1.2013. 4. Aggrieved by the order, the assessee has filed appeal with the CIT(A).

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

proceedings. The assessee filed written submission dated 8.8.2013 and remand report was called for by the CIT(A) and a copy of the remand report

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 Asse ssment Year : 20 13- 14

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.39,62,42,155/-. 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 has delayed in Asse ssment Year : 20 13- 14

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 Asse ssment Year : 20 13- 14

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

of the revenue.