New Ambika Saw Mill, Tirunelveli V. ITO, Tirunelveli

CO 91/CHNY/2017

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 3069 (ITAT-CHENNAI)
• Duration Of Justice: 20 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 12-07-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 22-06-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: C EDSER RAJ
• Assessee Lawyers: C YAMUNA
• Keywords: Procedural lapse

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , !, # !$ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NOS.976, 977 & 978/MDS/2017 & C.O. NOS.78, 79 & 80/MDS/2017 (IN ITA NOS.976, 977 & 978/MDS/2017) ' (' / ASSESSMENT YEARS : 2013-14, 2014-15 & 2015-16 THE INCOME TAX OFFICER, TDS WARD, TIRUNELVELI. V. M/S UMIYA TIMBER DEPOT, 1/952, PIRANOOR BORDER, TENKASI ROAD, SHENCOTTAH, TIRUNELVELI DIST. 627 809. PAN : AAOFS 3892 G (*+/ APPELLANT) ( RESPONDENT & CROSS OBJECTOR) ./ ITA NOS.979, 980 & 981/MDS/2017 & C.O. NOS.81, 82 & 83/MDS/2017 (IN ITA NOS.979, 980 & 981/MDS/2017) ' (' / ASSESSMENT YEARS : 2013-14, 2014-15 & 2015-16 THE INCOME TAX OFFICER, TDS WARD, TIRUNELVELI. V. M/S AMBIKA WOOD INDUSTRIES, 1/9(1)(VII), COUTRALAM CROSS ROAD, PIRANOOR BORDER, SHENCOTTAH, TIRUNELVELI DIST. 627 809. PAN : AAGFA 2502 D (*+/ APPELLANT) ( RESPONDENT & CROSS-OBJECTOR) 2 I.T.A. NOS.976 TO 993/MDS/17 C.O. NOS.78 TO 95/MDS/17 ./ ITA NOS.982, 983 & 984/MDS/2017 & C.O. NOS.84, 85 & 86/MDS/2017 (IN ITA NOS.982, 983 & 984/MDS/2017) ' (' / ASSESSMENT YEARS : 2013-14, 2014-15 & 2015-16 THE INCOME TAX OFFICER, TDS WARD, TIRUNELVELI. V. M/S UMIYA TIMBER PVT. LTD., 1/952, PIRANOOR BORDER, TENKASI ROAD, SHENCOTTAH, TIRUNELVELI DIST. 627 809. PAN : AAACU 4351 M (*+/ APPELLANT) ( RESPONDENT & CROSS-OBJECTOR) ./ ITA NOS.985, 986 & 987/MDS/2017 & C.O. NOS.87, 88 & 89/MDS/2017 (IN ITA NOS.985, 986 & 987/MDS/2017) ' (' / ASSESSMENT YEARS : 2013-14, 2014-15 & 2015-16 THE INCOME TAX OFFICER, TDS WARD, TIRUNELVELI. V. M/S SRI AMBIKA SAW MILL, 1/515, PIRANOOR BORDER, TENKASI ROAD, SHENCOTTAH, TIRUNELVELI DIST. 627 809. PAN : AAOFS 3889 D (*+/ APPELLANT) ( RESPONDENT & CROSS-OBJECTOR) ./ ITA NOS.988, 989 & 990/MDS/2017 & C.O. NOS.90, 91 & 92/MDS/2017 (IN ITA NOS.988, 989 & 990/MDS/2017) ' (' / ASSESSMENT YEARS : 2013-14, 2014-15 & 2015-16 THE INCOME TAX OFFICER, TDS WARD, TIRUNELVELI. V. M/S NEW AMBIKA SAW MILL, 1/952, PIRANOOR BORDER, TENKASI ROAD, SHENCOTTAH, TIRUNELVELI DIST. 627 809. PAN : AACCA 9132 C (*+/ APPELLANT) ( RESPONDENT & CROSS-OBJECTOR) 3 I.T.A. NOS.976 TO 993/MDS/17 C.O. NOS.78 TO 95/MDS/17 ./ ITA NOS.991, 992 & 993/MDS/2017 & C.O. NOS.93, 94 & 95/MDS/2017 ' (' / ASSESSMENT YEARS : 2013-14, 2014-15 & 2015-16 THE INCOME TAX OFFICER, TDS WARD, TIRUNELVELI. V. M/S AMBIKA WOODS PVT. LTD., 1/351, PIRANOOR BORDER, TENKASI ROAD, SHENCOTTAH, TIRUNELVELI DIST. 627 809. PAN : AACCA 9132 C (*+/ APPELLANT) ( RESPONDENT & CROSS-OBJECTOR) *+ , - / APPELLANT BY : MS. C. YAMUNA, JCIT ./*+ , - / RESPONDENTS BY : SHRI C. EDSER RAJ, ADVOCATE 0 , 1# / DATE OF HEARING : 04.07.2017 23( , 1# / DATE OF PRONOUNCEMENT : 12.07.2017 / O R D E R PER BENCH: ALL THE APPEALS FILED BY THE REVENUE IN RESPECT O F DIFFERENT ASSESSEES ARE DIRECTED AGAINST THE RESPECTIVE ORDER S OF THE COMMISSIONER OF INCOME TAX (APPEALS)-2, MADURAI. T HE ASSESSEES HAVE ALSO FILED CROSS-OBJECTIONS. THEREFORE, WE HE ARD THE APPEALS AND CROSS-OBJECTIONS TOGETHER AND DISPOSING OF THE SAME BY THIS COMMON ORDER. 2. MS. C. YAMUNA, THE LD. DEPARTMENTAL REPRESENTATI VE, SUBMITTED THAT THE ASSESSING OFFICER ON INSPECTION, FOUND THAT THE 4 I.T.A. NOS.976 TO 993/MDS/17 C.O. NOS.78 TO 95/MDS/17 ASSESSEES HAVE NOT COLLECTED TAX AS REQUIRED UNDER SECTION 206C OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). THE LD. D.R. POINTED OUT THAT WHEN THE ASSESSEES DEBITING ACCOUNT OF THE BUYER WHILE SELLING FOREST PRODUCE OR AT THE TIME OF RECEIPT OF THE AMOUNT, SHALL COLLECT A SUM EQUAL TO SPECIFIED IN THE TABLE IN SE CTION 206 OF THE ACT. IN CASE THE BUYER FURNISHES DECLARATION AS PR OVIDED IN RULE 37C OF INCOME-TAX RULES, 1962, THEN NO TAX SHALL BE COLLECTED. IN THIS CASE, THE ASSESSEES HAVE NOT COLLECTED ANY TAX AT THE TIME OF DEBITING THE BUYERS ACCOUNT OR ON RECEIPT OF THE M ONEY AND NO DECLARATION IN FORM 27C AS REQUIRED UNDER RULE 37C WAS ALSO RECEIVED. AFTER THE INSPECTION, THE ASSESSEES COLL ECTED FORM 27C DECLARATION AND FILED THE SAME ONLY BEFORE THE ASSE SSING OFFICER. ACCORDING TO THE LD. D.R., FORM 27C HAS TO BE FILED EITHER BEFORE THE PRINCIPAL COMMISSIONER OR COMMISSIONER AND NOT BEFORE THE ASSESSING OFFICER. THEREFORE, THE ASSESSING OFFICE R LEVIED PENALTY UNDER SECTION 206C OF THE ACT. HOWEVER, THE CIT(AP PEALS) BY REFERRING TO THE JUDGMENT OF GUJARAT HIGH COURT IN SIYARAM METAL UDYOG (P) LIMITED IN 2016 ITL 4028, FOUND THAT FORM 27C IS ONLY A PROCEDURAL ASPECT, THEREFORE, NO DEMAND COULD BE RA ISED FOR THE PROCEDURAL LAPSE. ACCORDINGLY, THE CIT(APPEALS) DE LETED THE PENALTY LEVIED BY THE ASSESSING OFFICER. 5 I.T.A. NOS.976 TO 993/MDS/17 C.O. NOS.78 TO 95/MDS/17 3. THE LD. DEPARTMENTAL REPRESENTATIVE FURTHER SUBM ITTED THAT IT IS NOT A PROCEDURAL LAPSE. SECTION 206C OF THE ACT MANDATES THAT THE ASSESSEE HAS TO COLLECT TAX AT THE TIME OF DEBI TING OR RECEIPT OF MONEY IN CASE FORM 27C DECLARATION IS NOT FILED. T HEREFORE, THE CIT(APPEALS) IS NOT JUSTIFIED IN PLACING RELIANCE O N THE JUDGMENT OF GUJARAT HIGH COURT IN SIYARAM METAL UDYOG (P) LIMIT ED (SUPRA). ON A QUERY FROM THE BENCH, WHEN THE OBJECT OF THE FILI NG OF FORM 27C IS ACHIEVED ULTIMATELY, AFTER THE INSPECTION, WHETHER IS THERE ANY NECESSITY TO LEVY PENALTY? THE LD. DEPARTMENTAL RE PRESENTATIVE SUBMITTED THAT WHEN THE ASSESSEES FAILED TO COMPLY WITH MANDATORY PROVISIONS OF SECTION 206C OF THE ACT, THE ASSESSIN G OFFICER HAS RIGHTLY LEVIED INTEREST UNDER SECTION 206C OF THE A CT. 4. ON THE CONTRARY, SHRI C. EDSER RAJ, THE LD.COUNS EL FOR THE ASSESSEES, SUBMITTED THAT NO DOUBT, THE ASSESSEES H AD NOT COLLECTED FORM 27C AT THE TIME OF DEBITING THE ACCO UNT OR RECEIPT OF MONEY. HOWEVER, AFTER INSPECTION, FORM 27C WAS COL LECTED AND THE SAME WAS FILED BEFORE THE ASSESSING OFFICER. PLACI NG RELIANCE ON THE JUDGMENT OF GUJARAT HIGH COURT IN SIYARAM METAL UDYOG PVT. LTD. (SUPRA), THE LD.COUNSEL SUBMITTED THAT THE GUJ ARAT HIGH COURT FOUND THAT SUB-SECTION (2) OF SECTION 206C OF THE A CT DOES NOT 6 I.T.A. NOS.976 TO 993/MDS/17 C.O. NOS.78 TO 95/MDS/17 PROVIDE ANY TIME LIMIT FOR FILING DECLARATION UNDER RULE 37C OF INCOME-TAX RULES, 1962. THE MAIN THRUST OF SUB-SEC TION (1A) OF SECTION 206C OF THE ACT IS TO MAKE DECLARATION AS P RESCRIBED, UPON WHICH, THE LIABILITY TO COLLECT TAX AT SOURCE UNDER SUB-SECTION (1) WOULD NOT APPLY. ACCORDING TO THE LD. COUNSEL, WHE N THERE WAS NO DISPUTE ABOUT SUCH A DECLARATION BEING FILED IN A P RESCRIBED FORMAT AND THERE IS NO DISPUTE ABOUT THE GENUINENESS OF DE CLARATION, MERE DELAY IN FILING OF DECLARATION WOULD NOT AFFECT THE VERY CLAIM, THEREFORE, THE GUJARAT HIGH COURT ULTIMATELY FOUND THAT THERE WAS SUBSTANTIAL COMPLIANCE WITH THE REQUIREMENT OF FILI NG OF DECLARATION. IN THIS CASE ALSO, ACCORDING TO THE LD. COUNSEL, EV EN THOUGH THERE WAS A LITTLE DELAY, ULTIMATELY FORM 27C WAS FILED A S PRESCRIBED UNDER RULE 37C, THEREFORE, THE REQUIREMENT OF SECTION 206 C OF THE ACT WAS SUBSTANTIALLY COMPLIED WITH. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. SECTION 206C(1A) OF THE ACT MANDATES FOR COLLECTION OF TAX ON SALE OF FOREST PRODUCE AT SPECIFIED RATE WHILE RECEIVING MONEY OR DEBITING THE BUYERS ACCOUNT IN CASE DECLARATION IN FORM 27C AS PROVIDED UNDER RULE 37C OF THE INCOME-TAX RULES IS NOT FILED. IN THE CASE ON OUR 7 I.T.A. NOS.976 TO 993/MDS/17 C.O. NOS.78 TO 95/MDS/17 HAND, ON INSPECTION, IT WAS FOUND THAT THE ASSESSEE S HAVE NOT COLLECTED TAX AS PRESCRIBED AND ALSO NOT COLLECTED FORM 27C AS PROVIDED IN SECTION 206C(1A) OF THE ACT. THEREFORE , THE ASSESSING OFFICER DIRECTED THE ASSESSEES TO PAY THE TAX AS PR OVIDED IN SUB- SECTION (6) OF SECTION 206C OF THE ACT. THE ASSESS ING OFFICER HAS ALSO LEVIED INTEREST AS PROVIDED IN SECTION 206C(7) OF THE ACT. 6. HOWEVER, AFTER THE INSPECTION BY THE ASSESSING O FFICER, THE ASSESSEES COLLECTED FORM 27C AND FILED THE SAME BEF ORE THE ASSESSING OFFICER INSTEAD OF THE COMMISSIONER OR PR INCIPAL COMMISSIONER AS THE CASE MAY BE. THE ASSESSING OFF ICER, BEING A PUBLIC AUTHORITY, AS SOON AS RECEIVED THE FORM 27C, OUGHT TO HAVE FORWARDED THE SAME TO THE PRESCRIBED AUTHORITY. TH E QUESTION ARISES FOR CONSIDERATION IS WHEN THE ASSESSEES COLL ECTED FORM 27C AS PRESCRIBED FOR NOT COLLECTING TAX AFTER THE SALE OF TIMBER, WOULD IT ATTRACT PAYMENT OF TAX AND INTEREST? THIS ISSUE WA S EXAMINED BY THE GUJARAT HIGH COURT IN SIYARAM METAL UDYOG PVT. LTD. (SUPRA). THE GUJARAT HIGH COURT FOUND THAT WHEN THERE WAS NO DISPUTE ABOUT THE GENUINENESS OF THE DECLARATION FILED, MERE DELA Y IN FILING THE DECLARATION WOULD NOT DEFEAT THE VERY CLAIM. IN FA CT, THE GUJARAT HIGH COURT OBSERVED AS FOLLOWS AT PARA 8 OF ITS ORD ER:- 8 I.T.A. NOS.976 TO 993/MDS/17 C.O. NOS.78 TO 95/MDS/17 8. THUS, IN TERMS OF THE EXPLANATION CLAUSE (AA) ANY PERSON WHO PURCHASES THE GOODS IN RETAIL SALE OR PE RSONAL CONSUMPTION WOULD NOT BE INCLUDED WITHIN THE DEFINI TION OF TERM BUYER. IT IS, THEREFORE, THAT UNDER SUB-SEC TION (1A) OF SECTION 206C, CALCULATION OF TAX UNDER SUB-SECTION 1 WO ULD NOT BE MADE, IF THE BUYER FURNISHES TO THE PERSON RESPO NSIBLE FOR THE TAX A DECLARATION IN WRITING IN PRESCRIBED FORM DECLARING THAT THE GOODS IN QUESTION ARE TO BE UTILIZED FOR T HE PURPOSES OF MANUFACTURING PROCESS OR PRODUCING ARTICLES OR T HINGS OR FOR THE PURPOSE OF GENERATION OF POWER AND NOT FOR TRADING PURPOSES. THE DECLARATION TO BE MADE IN SUB-SECTIO N (1A) OF SECTION 206C THUS WOULD ENABLE THE REVENUE AUTHORITIES TO, AND WHEN THE NEED SO ARISES MAKE PROPER VERIFICATIO NS. THIS SUB-SECTION ITSELF DOES NOT PROVIDE FOR ANY TIME LI MIT WITHIN WHICH, SUCH DECLARATION IS TO BE MADE. THE TIME LI MIT, 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 W HICH, 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 DECLARATIO N, MERE MINOR DELAY IN FILING THE SAID DECLARATION WOULD NO T DEFEAT THE VERY CLAIM. THE TRIBUNAL THEREFORE, VIEWED SUCH DE LAY LIBERALLY AND IN ESSENCE HELD THAT THERE WAS SUBSTA NTIAL COMPLIANCE WITH THE REQUIREMENT OF FILING THE DECLA RATION. 7. IN VIEW OF ABOVE, EVEN THOUGH THERE WAS A DELAY IN GETTING FORM 27C FROM THE RESPECTIVE PURCHASERS OF TIMBER A ND THE SAME WAS FILED BEFORE THE ASSESSING OFFICER INSTEAD OF C OMMISSIONER OR PRINCIPAL COMMISSIONER, THE FACT REMAINS THAT THE A SSESSEES COMPLIED WITH THE REQUIREMENT SUBSTANTIALLY, SINCE THE GENUINENESS OF SUCH DECLARATION WAS NOT IN DISPUTE. WHEN THE A SSESSEES HAVE COMPLIED WITH THE REQUIREMENT SUBSTANTIALLY EVEN TH OUGH THERE WAS 9 I.T.A. NOS.976 TO 993/MDS/17 C.O. NOS.78 TO 95/MDS/17 A LITTLE DELAY, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE OBJECT SOUGHT TO BE ACHIEVED BY FILING FORM 27C IS SUBSTANTIALLY ACHIEVED. THEREFORE, THE CIT(APPEALS) HAS RIGHTLY SET ASIDE THE ORDERS OF THE ASSESSING OFFICER. HENCE, THIS TRIBU NAL DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDERS OF THE LOWE R AUTHORITY AND ACCORDINGLY THE SAME ARE CONFIRMED. 8. THE CROSS-OBJECTIONS FILED BY THE ASSESSEES ARE ONLY TO SUPPORT THE ORDERS OF THE CIT(APPEALS), THEREFORE, ALL THE CROSS- OBJECTIONS BECOME INFRUCTUOUS. 9. IN THE RESULT, ALL THE APPEALS FILED BY REVENUE AND THE CROSS- OBJECTIONS FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON 12 TH JULY, 2017 AT CHENNAI. SD/- SD/- ( ! ) ( . . . ) (S. JAYARAMAN) (N.R.S. GANESAN) # / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 12 TH JULY, 2017. KRI. 10 I.T.A. NOS.976 TO 993/MDS/17 C.O. NOS.78 TO 95/MDS/17 , .167 87(1 /COPY TO: 1. *+ /APPELLANT 2. ./*+ /RESPONDENT 3. 0 91 () /CIT(A)-2, MADURAI 4. 0 91 / CIT, TDS, COIMBATORE 5. 7: .1 /DR 6. ;' < /GF.