Shri Nagjibhai R. Patel, RAJKOT-GUJARAT V. The Income Tax Officer, TDS-2, RAJKOT-GUJARAT

CO 31/RJT/2012

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 9305 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 3 month(s) 12 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 10-01-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 09-01-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 28-09-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR JAYANT B JHAVERI
• Assessee Lawyers: D R ADHIA A R
• Keywords: Opportunity of being heard; Retrospective amendment

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBULAL; RAJKOT BENCH, RAJKOT BEFORE SHRI T. K. SHARMA, JM AND SHRI B. R. JAIN, A M ITA NOS. 377 & 423/RJT/2012 / ASSESSMENT YEAR : 2009-10 & 2010-11 INCOME-TAX OFFICER, TDS-2, RAJKOT ( / APPELLANT) SHRI NAGJIBHAI R. PATEL, PROP. OF M/S. R.M. ENTERPRISE, GIDC-II AJI VASAHAT, PLOT NO.141A, RAJKOT PAN : AEHPP 7645 D / RESPONDENT C.O. NOS. 30 & 31/RJT/2012 / ASSESSMENT YEAR : 2009-10 & 2010-11 SHRI NAGJIBHAI R. PATEL, PROP. OF M/S. R.M. ENTERPRISE,RAJKOT PAN : AEHPP 7645 D ( / APPELLANT) INCOME-TAX OFFICER, TDS-2, RAJKOT / RESPONDENT ! '# / REVENUE BY DR. JAYANT B. JHAVERI, DR $ % ! '# / ASSESSEE BY SHRI D. R. ADHIA, AR ' & ' %( / DATE OF HEARING 09.01.2014 ) %( / DATE OF PRONOUNCEMENT 10.01.2014 / ORDER .. , / T. K. SHARMA, J. M.: THESE TWO APPEALS BY THE REVENUE AND CROSS-OBJECTIONS BY THE ASSESSEE ARE AG AINST TWO SEPARATE ORDERS OF LD. CIT(A) FOR THE ASSESSMENT YEARS 2009-10 AND 2010-11 . BOTH THESE APPEALS AND CROSS- OBJECTIONS WERE HEARD ON THE SAME DATE, ARGUED BY C OMMON REPRESENTATIVE; THEREFORE, THESE ARE BEING DISPOSED OF BY THIS COMMON ORDER FO R THE SAKE OF CONVENIENCE. 2. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS A TRADER IN SCRAP. FOR BOTH THE ASSESSMENT YEAR UNDER APPEALS, THE ASSESSING OFFICE R PASSED ORDER U/S 260(C)(6) / 206C(7) OF THE INCOME-TAX ACT, 1961 AND CREATED A D EMAND OF RS.8,06,737/- PLUS INTEREST OF RS.96,808/- AND RS.15,81,432/- PLUS INT EREST OF RS.15,814/- FOR THE ASSESSMENT YEARS 2009-10 AND 2010-11 RESPECTIVELY. ON APPEAL, IN THE IMPUGNED ORDER, THE LD. CIT(A) FOR BOTH THE ASSESSMENT YEARS , FOLLOWING THE DECISION OF ITAT RAJKOT BENCH IN THE CASES OF SHRI NATHULAL LAVTI & SHRI RAMGOPAL MAHESHWARI IN ITA NO. 1167 & 1168/RJT/2010 AND 1169 & 1170/RJT/2010 R ESPECTIVELY, HELD THAT ACTION OF 377 & 423-RJT-2012 & CO 30 & 31-RJT-2012 - SHRI NAGJIBHAI R. PATEL 2 THE ASSESSING OFFICER IS NOT JUSTIFIED IN TREATING THE ASSESSEE TO BE IN DEFAULT U/S 206C(1) AND LIABLE FOR TCS. AGGRIEVED WITH THE ORDER OF LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE THIS TRIBUNAL FOR BOTH THE ASSESSMENT YEARS, ON THE FOLLOWING GROUNDS:- ITA NO. 423/RJT/2012 : ASSESSMENT YEAR 2009-10 1. THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FA CTS OF THE CASE IN DELETING THE ORDER PASSED U/S 206C(6) OF THE I.T. ACT OF RS.8,06 ,737/- AND INTEREST CHARGE UNDER SECTION 206C(7) OF THE I.T. ACT OF RS.96,808/ - BY THE A.O. EVEN THOUGH SECTION 206C OF THE I.T. ACT IS CLEAR TO SPECIFY TH AT SELLER IS REQUIRED TO COLLECT TAX AT SOURCE FROM THE BUYER ON SALE OF WASTE AND S CRAP EVEN THOUGH SUCH WASTE AND SCRAP IS NOT GENERATED FROM THE MANUFACTU RE OR MECHANICAL WORKING CARRIED OUT BY THE SELLER BUT THE OTHER PAR TY. THE BUSINESS OF THE ASSESSEE IS TO PURCHASE SUCH TYPE OF SCRAP IN BULK AND SELL IT TO VARIOUS PARTIES. THEREFORE, BEING OF A SELLER OF SCRAP, THE ASSESSEE IS LIABLE TO COLLECT TAX AT SOURCE. ITA NO. 377/RJT/2012 : ASSESSMENT YEAR 2010-11 1. THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FA CTS OF THE CASE IN DELETING THE ORDER PASSED U/S 206C(6) OF THE I.T. ACT OF RS.15,8 1,432/- AND INTEREST CHARGE UNDER SECTION 206C(7) OF THE I.T. ACT OF RS.15,814/ - BY THE A.O. EVEN THOUGH SECTION 206C OF THE I.T. ACT IS CLEAR TO SPECIFY TH AT SELLER IS REQUIRED TO COLLECT TAX AT SOURCE FROM THE BUYER ON SALE OF WASTE AND S CRAP EVEN THOUGH SUCH WASTE AND SCRAP IS NOT GENERATED FROM THE MANUFACTU RE OR MECHANICAL WORKING CARRIED OUT BY THE SELLER BUT THE OTHER PAR TY. THE BUSINESS OF THE ASSESSEE IS TO PURCHASE SUCH TYPE OF SCRAP IN BULK AND SELL IT TO VARIOUS PARTIES. THEREFORE, BEING OF A SELLER OF SCRAP, THE ASSESSEE IS LIABLE TO COLLECT TAX AT SOURCE. 3. WE HAVE HEARD BOTH THE SIDES AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WHEN THE LD. CIT(A) PASSED THE I MPUGNED ORDER, THE DECISION OF ITAT RAJKOT SPECIAL BENCH IN THE CASE OF BHARTI AUTO PRO DUCTS V. CIT, REPORTED IN [2013] 37 TAXMANN.COM 37 (RAJKOT TRIB.) (SB) WAS NOT AVAILA BLE. IN ITS DECISION OF ITAT RAJKOT SPECIAL BENCH IN THE CASE OF BHARTI AUTO PRODUCTS V . CIT (SUPRA), IT IS HELD THAT THE APPLICABILITY OF SECTION 206C IS NOT RESTRICTED TO SALE OF SCRAP GENERATED FROM MANUFACTURING BUSINESS UNDERTAKEN BY THE ASSESSEE H IMSELF BUT COVERS SALE OF SCRAP IN THE BUSINESS OF TRADING IN SCRAP ALSO. FURTHER, A ' SELLER' OF SCRAP IS NEITHER REQUIRED TO BE THE MANUFACTURER HIMSELF NOR THE SCOPE OF 'SCRAP' A S DEFINED IN EXPLANATION (B) RESTRICTED TO SCRAP GENERATED FROM THE MANUFACTURE OR MECHANICAL WORKING OF MATERIALS UNDERTAKEN BY THE SELLER HIMSELF. FOR THIS REASON, WE SET ASIDE THE IMPUGNED ORDERS OF LD. CIT(A) FOR BOTH THE ASSESSMENT YEARS AND DIRECT THE ASSESSEE TO APPEAR BEFORE THE ASSESSING OFFICER ALONG WITH RELEVANT DOCUMENTS AS STIPULATED BY THE FIRST PROVISO TO 377 & 423-RJT-2012 & CO 30 & 31-RJT-2012 - SHRI NAGJIBHAI R. PATEL 3 SUB-SECTION (6A) OF SECTION 206C WITHIN TWO MONTHS OF THE DATE ON WHICH THIS ORDER IS PRONOUNCED UPON WHICH THE ASSESSING OFFICER SHALL E XAMINE THE CLAIM OF THE ASSESSEE IN THE LIGHT OF FIRST PROVISO TO SUB-SECTION (6A) O F SECTION 206C INTRODUCED BY FINANCE ACT, 2012 W.E.F. 01.07.2012 WHICH HAS RETROSPECTIVE EFFECT AS HELD BY THE ITAT, RAJKOT SPECIAL BENCH IN THE CASE OF BHARTI AUTO PRODUCTS V . CIT (SUPRA). TO SUM-UP, THE ASSESSING OFFICER SHALL PASS A FRESH ORDER ACCORDIN GLY IN CONFORMITY WITH LAW AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. 4. THE CROSS-OBJECTIONS FOR BOTH THE ASSESSMENT YEA RS ARE IN SUPPORT OF THE LD. CIT(A). IN VIEW OF THE DECISION RENDERED BY US IN R EVENUES APPEALS (SUPRA), THE CROSS- OBJECTIONS FILED BY THE ASSESSEE ARE RENDERED INFRU CTUOUS AND THEREFORE DISMISSED. 5. IN THE RESULT, FOR STATISTICAL PURPOSES, BOTH TH E APPEALS OF THE REVENUE ARE TREATED AS ALLOWED AND CROSS-OBJECTIONS FILED BY THE ASSESS EE ARE DISMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON THE DATE MEN TIONED HEREINABOVE. SD/ SD/- (B. R. JAIN) (T. K. SHARMA) #( '* / ACCOUNTANT MEMBER '* /JUDICIAL MEMBER *#+ ,*-/ ORDER DATE 10.01.2014 /RAJKOT *BT / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT- INCOME-TAX OFFICER, TDS-2, RAJKOT 2. /RESPONDENT- SHRI NAGJIBHAI R. PATEL, PROP. OF M/S. R.M. ENTERPRISE, RAJKOT 3. '-2- % & 3% / CIT, TDS, RAJKOT 4. & 3%- / CIT (A)-II, RAJKOT 5 . 678 % , , / DR, ITAT, RAJKOT 6 . 89 :; / GUARD FILE. *#+ '# / BY ORDER , TRUE COPY PRIVATE SECRETARY, , INCOME TAX APPELLATE TRIBUNAL, RAJKOT.