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Income Tax Appellate Tribunal, RAJKOT BENCH, RAJKOT
Before: Smt. Annapurna Gupta & Shri T.R. Senthil Kumar
Shri Sundarlal Chotmal The ITO (TDS) Jain, Ward-3, Jamnagar Prop. Jain Metal Vs Corporation, (Respondent) Shed No. 21/2/13- 3/GIDC, Udhoyognagar, Jamnagar-361004 Gujarat PAN No: ABMPJ0048A (Appellant) Assessee Represented: Shri Mehul Ranpura, A.R. Revenue Represented: Shri B.D. Gupta, Sr.D.R. Date of hearing : 19-06-2023 Date of pronouncement : 19-07-2023 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:-
This appeal is filed by the Assessee against the Appellate order dated 17.11.2022 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, (in short referred to as “NFAC”), arising out of the order passed under section 206C of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year (A.Y) 2012-13.
2.1. The brief fact of the case is that the assessee is an individual and engaged in the business of trading of brass scarps. During the Financial Year 2011-12, the assessee sold scrap of Rs. 4,28,43,222/- to various manufacturers for which declaration in Form No. 27C was collected. However the assessee filed the same belatedly on 01-09-2015 before Commissioner of Income Tax, Jamnagar. However the Assessing Officer issued a show cause notice dated 18-08-2015, 01-06-2016 that the assessee has not collected TCS to the tune of Rs. 4,28,432/- sale of scraps for the for the relevant Assessment Year 2012-13 and assesse has not filed statement in Form 27EQ.
2.2. The assessee replied about the belated filing of Form 27C in the Office of Commissioner of Income Tax, Jamnagar and therefore requested not to treat him as “the assessee in default” and not to levy tax and the interest thereon. However the Assessing Officer considered the above reply and held that the assessee filed Form 27C on 01-09-2015 which is long after the time limit prescribed in Rule 37(3) of the Income Tax Rules. Further the assessee ought to have submitted the Form 27C to CIT (TDS) at Ahmedabad, who is the prescribed Authority. Therefore the late filing of Form 27C looses its sanctity and judicial stand, thus the assessee was treated “as a defaulter” and thereby determined tax of Rs. 4,28,432/- and interest of Rs. 3,25,608/-.
Aggrieved against the same, the assessee filed an appeal before Ld. NFAC wherein the Ld. CIT(A) dismissed the appeal on the ground that Form 27C were not filed by the assessee and thereby confirmed the levy of tax and interest u/s. 206C of the Act.
Aggrieved against the same, the assessee is in appeal before us raising the following Grounds of Appeal:
1. The grounds of appeal mentioned hereunder are without prejudice to one another.
2. The Ld. Commissioner of Income Tax (Appeals) - 2, Rajkot [hereinafter referred to as the CIT(A)] erred in law as also on facts in confirming AO's action of determining tax liability of Rs.4,28,432/- by alleging that the appellant is liable for making TCS, which he failed to make. The tax liability confirmed is totally unjustified on facts as also in law and may kindly be deleted.
3. The Ld. CIT(A) erred in law as also on facts in confirming charging of interest u/s.206C(7) of the Act at Rs.3,25,608/-. The interest levied on tax liability determined u/s. 206C(6) is totally unjustified on facts as also in law and may kindly be deleted.
4. Your Honour's appellant craves leave to add, to amend, alter, or withdraw any or more grounds of appeal on or before the hearing of the appeal. 4.1. Ld. Counsel Shri Mehul Ranpura appearing for the assessee submitted before us a Paper Book which contains copies of Form 27C belatedly filed by the assessee before Ld. CIT, Jamnagar at pages nos. 8 to 115 of the Paper Book and various case laws in support of his claim and prayed that the tax and interest levied u/s. 206C is liable to be deleted, since there is no time limit prescribed in Section 206C(1A) of the Act for filing the declaration in Form 27C and relied upon Gujarat High Court judgment in the case of CIT -V- Siyaram Metal Udyog Pvt. Ltd.
5. Per contra, the Ld. Sr. D.R. Shri B.D. Gupta appearing for the Revenue submitted that the assessee though filed Form 27C belatedly it was filed before Ld. CIT, Jamnagar which ought to have been filed before CIT (TDS), Ahmedabad who is the competent Authority. Thus the late filing of Form 27C not within the provisions of Act, therefore the Lower Authorities are correct in levying tax at 1% and charging interest for the above default committed by the assessee, which does not require any interference and the assessee appeal is liable to be dismissed.
We have given our thoughtful consideration and perused the materials available on record. It is an admitted fact that the assessee filed Form 27C namely declaration as prescribed in Section 206C(1A) of the Act to be filed by a buyer before delivery of the goods namely “scraps” in this case, without collection of tax. The Assessing Officer has not accepted the late filing of the declaration, as the same is again Rule 37C of the Income Tax Rules and thereby charged tax at 1% and also levied interest u/s. 206C of the Act. However sub-section (1A) of section 206C does not provide for any time limit within which, such declaration is to be filed by the buyer. However time limit is prescribed in Rule 37C of the I.T. Rules. The Hon’ble Gujarat High Court in the case of CIT (TDS) Vs. Siyaram Metal Udyog Pvt. Ltd. in Tax Appeal Nos. 510 to 526 of 2016 vide judgment dated 27/06/2016 held that when there was no dispute about the declaration being filed in prescribed Form 27C and there was no dispute about the genuineness of such declaration, mere minor delay in filing the said declaration would not defeat the very claim made by the assessee and thereby dismissed the Revenue appeal observing as follows:
“……6. Section 206C of the Act pertains to profits and gains from the business of trading in liquor, forest produce, scrap, etc. alcoholic Sub- section 1 of section 206C provides that every person being a seller shall at the time of debiting of the amount payable by the buyer collect from the buyer of any of the goods specified in column (2) of the table, a sum equal to the percentage specified in the corresponding entry of the table as income tax. Clause (aa) of the explanation to section 206C, inter alia, provides that buyer with respect to sub-section (1) means a person who obtains in sale by way of auction, tender or any other mode, goods of the nature specified in the table or the right to receive any such goods but does not include a buyer in the retail sale of such goods purchased by him for personal consumption.
7. In the context of this exclusion clause contained in explanation of the term 'buyer', sub-section (1A) of section 206C provides as under: (1A) Notwithstanding anything contained in sub- section (1), no collection of tax shall be made in the case of a buyer, who is resident in India, if such buyer furnishes to the person responsible for collecting tax, a declaration in writing in duplicate in the prescribed form and verified in the prescribed manner the effect that the to goods referred to in column (2) of the aforesaid Table are to be utilised for the purposes of manufacturing, processing or producing articles or things [or for the purposes of generation of power] and not for trading purposes.
Thus, in terms of the explanation clause (aa) any person who purchases the goods in retail sale for personal consumption would not be included within the definition of term 'buyer'. It is therefore, that under sub section (1A) of section 206C, calculation of tax under sub-section 1 would not be made, if the buyer furnishes to the person responsible for the tax a declaration in writing in prescribed form declaring that the goods in question are to be utilized for the purposes of manufacturing process or producing articles or things or for the purpose of generation of power and not for trading purposes. The declaration to be made in sub-section (1A) of section 206C thus would enable the Revenue authorities to, as and when the need so arises make proper verifications. This sub-section itself does not provide for any time limit within which, such declaration is to be made. The time limit, of course, would be found in Rule 37C of Income Tax Rules, 1962. The main thrust of sub-section 1A of section 206C thus is to make a declaration as prescribed, upon which, the liability to collect tax at source under sub-section (1) would not apply. When there was no dispute about such a declaration being filed in a prescribed format and there was no dispute about the genuineness of such declaration, mere minor delay in filing the said declaration would not defeat the very claim. The Tribunal therefore, viewed such delay liberally and in essence held that there was substantial compliance with the requirement of filing the declaration.”
Respectfully following the above judgment of the Hon’ble High Court of Gujarat, we hereby set aside the orders passed by the Lower Authorities for the reason, the A.O. failed to verify the Form 27C though the assessee submitted belatedly and the Ld. A.O. declined to accept the same in view of Rule 37C of the I.T. Rules. Further there is no issue qua genuineness of these Forms.
8. Thus the appeal filed by the Assessee is hereby partly allowed with a direction to the A.O. to verify Form 27C filed by the Assessee and compute the tax or otherwise in accordance with law by giving proper opportunity.
In the result, the appeal filed by the Assessee is allowed for statistical purpose.