SHRI PRAMOD KUMAR JAIN, AJMER V. INCOME TAX OFFICER, TDS, AJMER

ITA 1023/JPR/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 9776 (ITAT-JAIPUR)
• Duration Of Justice: 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-07-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2017-2018
• Appeal Filed On: 08-08-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: TDS; Set aside

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S,A JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NO. 1023/JP/2019 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2017-18 SHRI PRAMOD KUMAR JAIN PROP. M/S JKMK STEEL, 400/23, LAL KOTHI, KAISER GANJ, AJMER. CUKE VS. THE ITO, TDS, AJMER. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AARPJ5142P/JDHPO6656G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : NONE JKTLO DH VKSJ LS @ REVENUE BY : MISS. CHANCHAL MEENA (ADDL.CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 01/07/2020 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 03/07/2020 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 13.05.2019 OF LD. CIT(A), AJMER ARISING FROM THE OR DER OF THE ASSESSING OFFICER PASSED U/S 206C(6A)/206C(7) OF THE IT ACT F OR THE ASSESSMENT YEAR 2017-18. THE ASSESSEE HAS RAISED THE FOLLOWIN G GROUND:- 1. THE COMMISSIONER OF INCOME TAX (APPEALS) GROSSL Y ERRED IN LAW AND ON FACTS IN CONFIRMING THE ORDER PASSED U/S 206C(6A)/206C(7) BY INCOME TAX OFFICER TDS, AJMER. ITA NO.1023/JP/2019 SHRI PRAMOD KUMAR JAIN VS. ITO ,TDS 2 2. NONE APPEARED ON BEHALF OF THE ASSESSEE HOWEVER, THE ASSESSEE HAS SUBMITTED A LETTER DATED 22.01.2020 WHICH IS ON RECORD ALONG WITH WRITTEN SUBMISSION AND REQUESTED THAT THE APPEAL OF THE ASSESSEE MAY BE DECIDED BY CONSIDERING THE WRITTEN SUBMISSION OF THE ASSESSEE. 3. THE HEARING OF THIS APPEAL WAS CONCLUDED THROUGH VIDEO CONFERENCE IN VIEW OF THE PREVAILING SITUATION OF C OVID-19 PANDEMIC. THE ASSESSEE IS DEALING IN SCRAPED MATERIAL AND HAS PURCHASED RAILWAY SCRAP IN AUCTION WHICH WAS SUBJECTED TO TCS U/S 206 C(1) OF THE ACT. THE RAILWAY WHILE RECEIVING THE PAYMENT FROM THE AS SESSEE HAS ALSO COLLECTED TAX AT SOURCE. THE ASSESSEE SOLD THE SCRA P TO VARIOUS BUYERS WITHOUT COLLECTING TAX AT SOURCE AS REQUIRED U/S 20 6C OF THE INCOME TAX ACT. THE ASSESSING OFFICER INITIATED THE PROCEEDING S FOR HOLDING THE ASSESSEE AS DEFAULT IN RESPECT OF NON COLLECTION OF TAX IN TERMS OF SECTION 206C(6A)/(7) OF THE ACT. ACCORDINGLY, THE A O PASSED THE IMPUGNED ORDER DATED 23.03.2018 WHEREBY THE ASSESSE E WAS HOLD AS ASSESSEE IN DEFAULT AND LIABILITY U/S 206C(6A) OF T HE ACT WAS DETERMINED AT RS. 2,55,540/- AND INTEREST AS PER SECTION 206C( 7) OF THE ACT OF RS 97,651/- WAS ALSO CHARGED. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE LD. CIT(A) AND CONTENDED THAT THE PRO VISIONS OF SECTION 206C ARE NOT APPLICABLE IN THE CASE OF THE ASSESSEE AS THE MATERIAL ITA NO.1023/JP/2019 SHRI PRAMOD KUMAR JAIN VS. ITO ,TDS 3 PURCHASED BY THE ASSESSEE FROM THE RAILWAYS IN AUCT ION WHICH WAS SUBSEQUENTLY SOLD TO VARIOUS PARTIES DOES NOT FALL IN THE AMBIT OF DEFINITION OF SCRAP AS PROVIDED IN CLAUSE-(B) OF EX PLANATION TO SECTION 206C OF THE ACT. THE ASSESSEE ALSO DISPUTED THE COR RECT AMOUNT OF OLD MATERIAL SOLD BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION AND CONTENDED THAT A SOME OF THE GOODS SOLD BY THE ASSE SSEE WHICH WAS CONSIDERED BY THE AO AS SCRAP WERE NOT THE OLD IRON GOODS BUT IT IS NEW IRON GOODS. THE LD. CIT(A) CONFIRMED THE ORDER OF T HE ASSESSING OFFICER PASSED U/S 206C(6A)/( 7) OF THE ACT HOLDING THE ASS ESSEE IN DEFAULT FOR NOT COLLECT TAX AT SOURCE. 4. BEFORE US, THE ASSESSEE IN THE WRITTEN SUBMISSIO N AS REITERATED ITS CONTENTIONS THAT THE ASSESSEE IS A TRADER OF OLD IR ON GOODS AS WELL AS NEW IRON GOODS. THE TRADING IN ALL IRON GOODS MAINL Y CONSIST OF OLD MATERIAL PURCHASED FROM THE RAILWAY. THE SALES HAVE BEEN MADE BY THE ASSESSEE TO OTHER TRADERS AND SELLERS. THE ASSESSEE HAS CONTENDED THAT SINCE THE MATERIAL PURCHASED BY THE ASSESSEE FROM T HE RAILWAY IN THE AUCTION IS NOT GENERATED IN THE MANUFACTURER OR MEC HANICAL WORKING PROCESS AND THEREFORE, DOES NOT FALL IN THE DEFINIT ION OF SCRAPE AS IN PROVIDED CLAUSE-(B) OF EXPLANATION TO SECTION 206C OF THE ACT. HENCE, THE ASSESSEE HAS CONTENDED THAT THE PROVISIONS OF S ECTION 206C ARE NOT ITA NO.1023/JP/2019 SHRI PRAMOD KUMAR JAIN VS. ITO ,TDS 4 APPLICABLE. IN SUPPORT OF HIS CONTENTION, HE HAS RE LIED UPON THE DECISION OF HONBLE GUJARAT HIGH COURT IN CASE OF PRIYA BLUE INDUSTRIES (P) LTD 381 ITR 210 AS WELL AS DECISION OF AHMEDABAD BENCH OF THE TRIBUNAL IN CASE OF NAVINE FLUORINE INTERNATIONAL LIMIT VS. ACI T, TDS IN ITA NO. 1213 AND 1214/AHD/2010 . RELIANCE WAS ALSO PLACED O N THE DECISION OF RAJKOT BENCH OF THE TRIBUNAL IN CASE OF NATHULAL P. LAVATI VS ITO 65 DTR 133. ALTERNATIVELY, THE ASSESSEE HAS SUBMITTED THAT THE AO WHILE PASSING THE IMPUGNED ORDER HAS NOT EXCLUDED THE SAL E OF NEW IRON GOODS TO THE EXTENT OF RS. 1,88,60,145/- AND THEREF ORE, TO THAT EXTENT THE LIABILITY OF THE ASSESSEE IS NOT JUSTIFIED. THE ASSESSEE HAS FILED CERTAIN SALES BILLS IN SUPPORT OF THE CONTENTION TH AT SOME OF THE SALES WHICH WERE CONSIDERED BY THE AO AS SCRAP SALE IN FA CT IS SALE OF NEW GOODS. 5. ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THAT THE ASSESSING OFFICER HAS CLEARLY GIVEN THE DETAILS OF THE OLD GO ODS AS WELL AS NEW GOODS IN THE ASSESSMENT ORDER ITSELF. THE ASSESSING OFFICER HAS ALSO POINTED OUT THAT DURING THE SPOT VERIFICATION THE A SSESSEE HIMSELF HAS IDENTIFIED THE SALE OF NEW GOODS AND MARKED WITH N IN THE LEDGER ACCOUNT. THE ENTIRE LEDGER HAS BEEN REPRODUCED BY T HE AO IN THE ASSESSMENT ORDER. THUS THE CLAIM OF THE ASSESSEE TH AT THE AO HAS ITA NO.1023/JP/2019 SHRI PRAMOD KUMAR JAIN VS. ITO ,TDS 5 CONSIDERED THE SALE OF NEW GOODS AS SALE OF SCRAP W HILE PASSING THE IMPUGNED ORDER U/S 206C(6A)/(7) OF THE ACT IS CONTR ARY TO THE FACT OF ASSESSEES OWN ADMISSION DURING THE SPOT VERIFICATI ON. THE LD. DR HAS FURTHER CONTENDED THAT WHEN THE RAILWAY ITSELF SOLD THIS MATERIAL AS SCRAP MATERIAL AND COLLECTED THE TAX AT SOURCE WHIL E ACCEPTING THE PAYMENT FROM THE ASSESSEE THEN THE ASSESSEE CANNOT RECLASSIFY GOODS AT THE TIME OF SALE OF THE SAID SCRAP PURCHASE FROM THE RAILWAY. SHE HAS RELIED UPON THE ORDER OF THE AUTHORITIES BELOW. 6. WE HAVE CONSIDERED THE WRITTEN SUBMISSIONS AS SU BMITTED BY THE ASSESSEE AND ARGUMENTS OF LD. DR. WE HAVE ALSO CAR EFULLY PERUSED THE ORDER PASSED U/S 206C(6A)/(7) OF THE IT ACT. THERE IS NO DISPUTE THAT THE ASSESSEE PURCHASED SCRAP MATERIAL FROM THE RAIL WAYS WHICH WAS SUBJECTED TO TCS AND THE SAID MATERIAL WAS AGAIN SO LD BY THE ASSESSEE TO VARIOUS PARTIES WHO WERE STATED TO BE TRADERS AS WELL AS CONSUMERS OF THE SCRAPED WITHOUT COLLECTING THE TAX AT SOURCE BY THE ASSESSEE. THEREFORE, THE AO INITIATED THE PROCEEDINGS FOR HOL DING THE ASSESSEE IN DEFAULT U/S 206C(6A)/(7) OF THE ACT. THE FIRST CONT ENTION OF THE ASSESSEE IS THAT THE MATERIAL SOLD BY THE ASSESSEE WHICH WAS PURCHASED FROM THE RAILWAYS IN THE AUCTION DOES NOT FALL IN T HE DEFINITION OF SCRAP ITA NO.1023/JP/2019 SHRI PRAMOD KUMAR JAIN VS. ITO ,TDS 6 AS PROVIDED IN CLAUSE (B) OF SECTION 206C OF THE AC T. FOR READY REFERENCE WE QUOTE CLAUSE (B) OF EXPLANATION TO SEC TION 206C AS UNDER:- 'SCRAP' MEANS WASTE AND SCRAP FROM THE MANUFACTURE OR MECHANICAL WORKING OF MATERIALS WHICH IS DEFINITELY NOT USABLE AS SUCH BECAUSE OF BREAKAGE, CUTTING UP, WEAR AND OTHE R REASONS; FOR THE PURPOSE OF SECTION 206C OF THE ACT THE SCRA P HAS BEEN DEFINED AS WASTE AND SCRAP FROM THE MANUFACTURE OR MECHANIC AL WORKING OF MATERIAL WHICH IS DEFINITELY NOT USABLE BECAUSE OF THE REASON OF BREAKAGE, CUTTING, WEAR AND OTHER REASONS. THE SCRA P SOLD BY THE RAILWAY WAS CERTAINLY NOT USABLE DUE TO ITS BREAKAG E OR WEAR AND TEAR AND IT WAS ALSO SUBJECTED TO TCS FOR WHICH THE ASSE SSEE HAS NOT RAISED ANY OBJECTION. ONCE THE ASSESSEE HAS ACCEPTED THE G OODS PURCHASED FROM THE RAILWAY AS SCRAP AND ALLOWED THE TCS THEN THE RESALE OF THE SAME GOODS BY THE ASSESSEE WILL NOT PART TAKE A DIF FERENT CHARACTER. THEREFORE, IN VIEW OF THE UNDISPUTED FACT THAT WHAT WAS PURCHASED BY THE ASSESSEE IS SCARP SUBJECTED TO TCS THEN THE RES ALE OF THE SAME MATERIAL IS ALSO BE TREATED AS SCRAP AND THERE IS N O SCOPE OF RE- CLASSIFICATION OF THE THESE GOODS AT THE TIME OF SA LE. THEREFORE, WE DO NOT FIND ANY MERITS OR SUBSTANCE IN THE CONTENTION OF THE ASSESSEE. THE DECISIONS RELIED UPON BY THE ASSESSEE ARE ON SPECIF IC FACTS OF THOSE CASES AND THEREFORE, WOULD NOT HELP THE CASE OF THE ASSESSEE. ITA NO.1023/JP/2019 SHRI PRAMOD KUMAR JAIN VS. ITO ,TDS 7 7. AS REGARDS THE CONTENTION OF THE ASSESSEE THAT SOME OF THE SALES CONSIDERED BY THE AO AS SCRAP WAS ACTUALLY SALE OF NEW GOODS. WE NOTE THAT THE ASSESSING OFFICER HAS CONSIDERED THE SALE ON THE BASIS OF THE SPOT VERIFICATION. HOWEVER, NOW THE ASSESSEE HAS AL SO PLACED CERTAIN SALE BILLS IN SUPPORT OF HIS CONTENTION THAT THE SA LES TO THE EXTENT OF RS. 1,88,60,145/- IS SALE OF NEW IRON GOODS AND NOT SCR AP. SINCE, THIS IS A FACTUAL ASPECT OF THE MATTER AND NEEDS PROPER A VER IFICATION. THEREFORE, WE SET ASIDE ON THIS ISSUE TO THE RECORD OF THE ASS ESSING OFFICER FOR VERIFICATION OF THE SAME BY CONSIDERING THE EVIDENC E FILED BY THE ASSESSEE AND THEN DECIDE THE SAME. NEEDLESS TO SAY THE ASSESSEE BE GIVEN AN APPROPRIATE OPPORTUNITY OF HEARING BEFORE PASSING THE FRESH ORDER ON THIS ISSUE. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 03/07/2020. SD/- SD/- FOE FLAG ;KNO FOT; IKY JKO (VIKRAM SINGH YADAV) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 03/07/2020. * SANTOSH. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: ITA NO.1023/JP/2019 SHRI PRAMOD KUMAR JAIN VS. ITO ,TDS 8 1. VIHYKFKHZ@ THE APPELLANT- SHRI PRAMOD KUMAR JAIN, AJMER. 2. IZR;FKHZ@ THE RESPONDENT- ITO,TDS, AJMER. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 1023/JP/2019} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR