The ITO,TDS-4, Ahmedabad V. Shri Ibrahim Kasam Kalwa, Bhavnagar

ITA 2206/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89579 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 9 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 02-06-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 02-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Assessee Lawyers: B R POPAT
• Section: 234B; 201(1)

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI RAJPAL YADAV,JUDICIAL MEMBER NO.2206/AHD/2011 / ASSESSMENT YEAR: 2006-07 THE INCOME TAX OFFICER, TDS-4, AHMEDABAD. VS SHRI IBRAHIM KASANM KALWA, PROP. OF H.K. ENTERPRISES SHOP NO.17, HOTEL MAUSAM BUILDING, BHAVNAGAR. / (APPELLANT) / (RESPONDENT) PAN AFUPK 3450M REVENUE BY : MR. M.K. SINGH, SR. D.R. ASSESSEE(S) BY : MR. B.R. POPAT, A.R. / DATE OF HEARING : 02/06/2015 / DATE OF PRONOUNCEMENT: 05/06/2015 / O R D E R ITA NO 2206 /AHD/2011 ASSESSMENT YEAR 2006-07 2 PER N.S. SAINI, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-XXI, AHMEDABAD DATED 30-06- 2011. 2. THE SOLE GROUND OF APPEAL TAKEN BY THE REVENUE I S THAT THE CIT (A) HAS ERRED IN DELETING THE TAX LIABILITY UNDER SECTION 201(1) OF RS.6,57,988/- AND INTEREST OF RS.3,34,274/- UNDER S ECTION 201(1A) OF THE ACT. 3. BRIEF FACTS OF THE CASE ARE THAT ASSESSING OFFIC ER ON VERIFICATION OF THE RECORDS OF THE ASSESSEE FOUND THAT THE ASSESSEE HAD SOLD SCRAP OF RS.5,86,44,310/-. THE ASSESSEE HAD NOT DEDUCTED TCS FROM THE BUYER AND CREDITED TO THE GOVERNMENT ACCOUNT. THEREFORE, THE ASSESSING OFFICER ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE ON 16-09-2010. SINCE NO COMPLIANCE WAS MADE BY THE ASSESSEE HE PRESUMED THAT THE ASSESSEE HAD NOTHING TO SAY IN THIS REGARD. THEREF ORE, HE HELD THE ASSESSEE LIABLE FOR NOT COLLECTING THE TAX @1% ON T HE SALE CONSIDERATION INCLUDING INTEREST UNDER SECTION 234B OF RS.8,68,54 5/- AND ALSO HELD THE ASSESSEE LIABLE FOR INTEREST UNDER SECTION 201(1A) FOR RS.3,34,274/-. 4. ON APPEAL, THE CIT (A) DELETED THE TAX LIABILITY U/S. 201(1) OF RS.6, 57,988/- AND INTEREST U/S. 201(1A) OF RS.3,34 ,274/-. ITA NO 2206 /AHD/2011 ASSESSMENT YEAR 2006-07 3 5. THE DEPARTMENTAL REPRESENTATIVE SUPPORTED THE OR DER OF THE ASSESSING OFFICER WHEREAS THE AUTHORISED REPRESENTA TIVE OF THE ASSESSEE SUPPORTED THE ORDER OF THE CIT (A). 6. AFTER HEARING THE RIVAL SUBMISSIONS AND PERUSING THE MATERIAL AVAILABLE ON RECORD WE FIND THAT THE CIT(A) DELETED TAX DEMAND U/S. 201(1) OF RS.6,57,988/- AND INTEREST U/S. 201(1A) O F RS.3,34,274/- BY OBSERVING AS UNDER:- 11. I HAVE GONE THROUGH THE RIVAL CONTENTIONS; THE RATIO OF VARIOUS JUDGMENTS RELIED UPON BY THE ASSESSEE, EITH ER DIRECTLY OR THROUGH THE LEGAL OPINIONS OF THE TWO EXPERTS ALONG WITH THEIR OWN INTERPRETATION OF THE PROVISIONS OF THE SECTION. I HAVE ALSO NOTICED THAT THE ASSESSEE HAS PRIMARILY CARRIED OUT TWO TYP ES OF TRANSACTIONS TRANSACTIONS OF PURCHASING AND SELLI NG VARIOUS PRODUCTS COMMERCIALLY KNOWN AS SCRAP AND GENERATE D BY THE SHIP BREAKING AND OTHER INDUSTRIES; AND DEALING IN OTHER SCRAP PRODUCED FROM DISMANTLING OF THE CLOSED FACTORY PRE MISES SITUATED IN BARODA DISTRICT. I HAVE ALSO NOTICED THAT APART FROM SALE OF VARIOUS PRODUCTS COMMERCIALLY KNOWN AS SCRAP AND CONSISTING OF IRON AND STEEL SCRAP, FERROUS AND NON-FERROUS SCRAP , MELTING SCRAP ETC., THE ASSESSEE HAS ALSO EFFECTED SALE OF CERTAI N SECOND HAND MACHINERIES, MACHINERY PARTS AND OTHER ITEMS AS PAR T OF HIS ABOVE MENTIONED BUSINESS ACTIVITIES, WHICH CANNOT BE DENO TED AS SCRAP EVEN FROM COMMERCIAL POINTS OF VIEW. IT IS NOTICED THAT THE ASSESSEE HAS COLLECTED AND PAID THE TAX AT SOURCE I N SO FAR AS THE SAME RELATED TO THE PRODUCTS COMMERCIALLY DENOTED A S SCRAP AND OBTAINED FROM THE SHIP BREAKING INDUSTRY. ALTER NATIVELY, HE HAS OBTAINED DECLARATIONS IN PRESCRIBED FORM NO.27C FOR NON COLLECTION OF TAX AT SOURCE WHILE SELLING MATERIALS TO THE MANUFACTURING UNITS. THE FIRST PAPER BOOK FILED WIT H ME VERY MUCH CONTAINS THE COPIES OF THE RELEVANT CHARTS IN RESPE CT OF THE TCS RECOVERED AND PAID AND OF THE QUARTERLY RETURNS ELE CTRONICALLY FURNISHED WITH THE DEPARTMENT ETC., AS ALREADY MENTIONED ELSEWHERE. MERELY ON THIS SCORE AND WITHOUT HAVING REGARD TO THE MERIT OF THE CASE OTHERWISE, THE A.O. WAS CLEARLY N OT REQUIRED TO PASS ANY ORDER SO AS TO CREATE A DEMAND U/S. 201(1) /201(1A) OF THE I.T. ACT. UNFORTUNATELY, EVEN IN THE REMAND REP ORT, THE A.O. HAS NOT MENTIONED ANYTHING ABOUT THIS FACT IN HIS R EPORT. THE APPEAL IS REQUIRED TO BE ALLOWED EVEN ON THIS SCORE . ITA NO 2206 /AHD/2011 ASSESSMENT YEAR 2006-07 4 12. OVER AND ABOVE WHAT HAS BEEN MENTIONED ABOVE AN D GOING INTO THE MERIT OF THE LEGAL SUBMISSION MADE BY THE ASSESSEE, I AM IN COMPLETE CONFORMITY WITH HIS ARGUMENT THAT IN VI EW OF VERY NARROW DEFINITIONS OF THE TERMS SCRAP AND BUYER GIVEN IN SECTION 206C ITSELF, ANYTHING AND EVERYTHING CANNOT BE TREATED AS SUBJECT MATTER OF THE PROVISIONS OF THIS SECTION, M ERELY ON THE PLEA THAT THE PRODUCT BEING SOLD IS COMMERCIALLY KN OWN AS SCRAP. SIMILARLY, ON THE SAME ANALOGY, EVERY CUST OMER OF THE ASSESSEE CANNOT BE TREATED AS A BUYER WITHIN THE MEANING OF THE PROVISIONS OF THIS SECTION AND THERE HAS TO BE AN ELEMENT OF AUCTION, TENDER OR ANYTHING RESEMBLING EITHER OF TH E TWO. ANY TRANSACTION THAT MAY HAVE BEEN CARRIED OUT BETWEEN THE BUYER AND SELLER IN THE OPEN MARKET CONDITIONS, IN COMPET ITIVE ENVIRONMENT, ON ONE TO ONE BASIS AND WITHOUT THERE BEING ANY AUCTION/TENDER/ANY OTHER SIMILAR ARRANGEMENT; CANNO T THUS BE TREATED AS TRANSACTION OF SALE CARRIED OUT BY THE A SSESSEE WITH THE BUYER. SINCE THAT IS NOT THE CASE HERE, THERE WAS CLEARLY NO LEGAL REQUIREMENT ON THE PART OF THE ASSESSEE TO COMPLY W ITH THE REQUIREMENTS OF SECTION 206C AND NO CONSEQUENTIAL O RDER COULD THUS HAVE BEEN PASSED BY THE ASSESSING OFFICER CREA TING DEMAND U/S. 201(1) AND 201(1A) OF THE ACT. 13. I HAVE ALSO NOTICED THAT THE ASSESSEE HAS GIVEN BIFURCATION OF SALES SEPARATELY LISTING THE SALE OF PRODUCTS WH ICH WERE SUBJECTED TO COLLECTION AND PAYMENT OF THE TCS EITH ER AT THE PRESCRIBED RATE OR AT THE LOWER RATE AS MAY HAVE BE EN AUTHORIZED BY THE RESPECTIVE ASSESSING OFFICERS, APART FROM SU BMITTING SEPARATE LISTS IN RESPECT OF THOSE SALE TRANSACTION S WHICH WERE EFFECTED AGAINST ACCEPTANCE OF THE DECLARATIONS IN PRESCRIBED FORM NO.27C, WHEREIN THE BUYER DECLARED THAT HE IS BUYIN G THE MATERIAL FOR HIS MANUFACTURING PURPOSES, THUS NOT REQUIRING ANY TCS TO BE EFFECTED. THERE IS ALSO ANOTHER LIST CONTAINING DET AILS OF THAT PART OF SALES WHICH WAS IN RELATION TO VARIOUS OTHER ITE MS, THUS CLEARLY NOT REQUIRING ANY TCS TO BE MADE. THE VERIFICATION OF THESE DETAILS HAS NOT BEEN MADE BY THE ASSESSING OFFICER EVEN WHE N THE MATTER WAS REMANDED TO HIM. THE SAME MAY NOT HOWEV ER BE OF ANY RELEVANCE NOW. AS I AM OF THE CLEAR OPINION THA T IN VIEW OF WHAT HAS BEEN MENTIONED ABOVE, THERE WAS ABSOLUTELY NO OBLIGATION ON THE PART OF THE ASSESSEE TO COMPLY WI TH THE REQUIREMENTS OF SECTION 206C IN RESPECT OF ALL THE TRANSACTIONS CARRIED OUT BY HIM AND THE SECTION NEVER APPLIED TO HIM. 14. AT THIS JUNCTURE, I WOULD ALSO LIKE TO MENTION THAT EVEN IF THE ASSESSEE VOLUNTARILY COMPLIED WITH THE REQUIREMENTS OF THE SECTION EITHER AS A MATTER OF ABUNDANT CAUTION OR DUE TO IGNORANCE OR EVEN OTHERWISE THE SAME CANNOT BE TR EATED AS THE ITA NO 2206 /AHD/2011 ASSESSMENT YEAR 2006-07 5 CORRECT INTERPRETATION OF LAW SO AS TO ENFORCE THE PROVISIONS OF THAT SECTION UPON HIM. THIS ISSUE HAS ALREADY BEEN DISCU SSED BY ME WHILE DECIDING THE CASE OF SHRI RAM VESSEL SCRAP PV T. LTD. IN APPEAL NO.914, WHICH HAS INCIDENTALLY BEEN RELIED U PON BY THE ASSESSEE AS WELL. 15. IN VIEW OF THE FACTS MENTIONED ABOVE AND THE FI NDINGS OF THE ITAT IN THE CASE OF NAVINE FLUORINE INTERNATIONAL L TD., AND RELYING UPON THE VARIOUS JUDGMENTS OF DIFFERENT COURTS AND TRIBUNALS PRIMARILY IN RESPECT OF INTERPRETATION OF STATUTE, I DELETE THE DEMAND OF TCS AND OF THE CORRESPONDING INTEREST AND ACCORDINGLY ALLOW THE APPEAL OF THE ASSESSEE IN THIS REGARD. 16. IN THE RESULT, THE APPEAL IS ALLOWED. 7. THE DEPARTMENTAL REPRESENTATIVE COULD NOT POINT OUT ANY SPECIFIC ERROR IN THE ORDER OF THE CIT (A). 8. IN ABSENCE OF THE SAME WE DO NOT FIND ANY GOOD R EASON TO INTERFERE WITH THE ORDER OF THE CIT (A) WHICH IS CO NFIRMED AND THE GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 9. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE COURT ON FRIDAY THE 5 TH DAY OF JUNE, 2015 AT AHMEDABAD. SD/- SD/- (RAJPAL YADAV) JUDICIAL MEMBER ( N.S. SAINI) ACCOUNTANT MEMBER AHMEDABAD: DATED 05 /0 6/2015 ITA NO 2206 /AHD/2011 ASSESSMENT YEAR 2006-07 6 PATKI !'# $# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)-XXI, AHMEDABAD. 5. !' ## , / DR, ITAT, 6. '$% & / GUARD FILE. % & ' / BY ORDER, ( / ' )* ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION- : 2-6-2015 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 2-6-2015 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S. 3-6-15 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5-6-2015. 5. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 5-6- 2015 6. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 7. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 8. DATE OF DESPATCH OF THE ORDER