A.C.I.T.. (TDS)Cir.-1, Nagpur V. M/S ANSHUL IMPEX PVT. LTD, Nagpur

ITA 221/NAG/2015

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 4526 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 01-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AGNESH P THOMAS
• Assessee Lawyers: A C BAWANE
• Keywords: Competent authority
• Section: 131

Judgement Text

ITA NO. 221/NAG/2015 1 , INCOME TAX APPELLATE TRIBUNAL,NAGPUR BENCH . . , BEFORE S/SH. D T GARASIYA,JUDICIAL MEMBER & RAJENDRA,ACCOUNTANT MEMBER ./ I.T.A./ 221 / NAG /2015 , / ASSESSMENT YEAR: 201 3 - 14. ASSTT. COMMISSIONER OF INCOME - TAX , CIRCLE - 1, NAGPUR. VS. M/S ANSHUL IMPEX PVT. LTD., NAGPUR. TAN : NGPAO1334E. ( / APPELLANT ) ( / RESPONDENT) REVENUE BY: S MT. AGNESH P. THOMAS, DR ASSESSEE BY: SHRI A.C. BAWANE. / DATE OF HEARING: 2 9 - 08 - 2016 / DATE OF PRONOUNCEMENT: 29 - 08 - 2016. , 1961 254 ( 1 ) ORDER U/S.254(1)OF THE INCOME - TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER DATED 15 - 04 - 2015 OF OF CIT ( APPEALS ) - II , NAGPUR , THE ASSESSING OFFICER ( AO ) HAS FILED THE PRESENT APPEAL . THE ASSESSEE - COMPANY ENGAGED IN THE BUSINESS OF TRADING IN COAL . 2 . EFFECTIVE GROUND OF APPEAL IS ABOUT REVERSING THE ORDER OF THE AO IN TREATING THE ASSESSEE IN DEFAULT . A SPOT VERIFICATION U / S 133 A WAS CARRIED OUT IN THE BUSINESS PREMISES OF THE ASSESSEE ON 16 - 07 - 2013 AND STATEMENT OF ONE OF THE DIREC TORS WAS RECORDED ON OATH U / S 131 OF THE ACT . DURING THE SURVEY PROCEEDINGS , CERTAIN PAPERS WERE TAKEN FOR FURTHER VERIFICATION AND THE ASSESSEE WAS DIRECTED TO FILE FURTHER INFORMATION / EXPLANATION . AFTER CONSIDERING THE AVAILABLE INFORMATION , THE AO PASSED AN ORDER U / S 201 ( 1 ) AND 201 ( 1 A ) OF THE ACT . IN HIS ORDER , THE AO OBSERVED DURING THE YEAR UNDER APPEAL , ITA NO. 221/NAG/2015 2 TAX COLLECTED ON SOURCE ( TCS ) ON SALE AT 1 % WAS INTRODUCED U / S 206 C OF THE ACT WITH EFFECT FROM 01 - 07 - 2012 , THAT DURING THE YEAR UNDER A PPEAL , THE ASSESSEE HAD SOLD COAL WORTH RS . 3 , 78 , 62 , 95 , 816 / - WHICH INCLUDED SALE OF RS . 2 , 71 , 23 , 87 , 757 / - MADE FROM 01 - 07 - 2012 - 31 - 03 - 2013 . ACCORDING TO THE ASSESSEE OUT OF TOTAL SALE MADE FOR THE SAID PERIOD TCS AT THE RATE OF 1 % WAS MADE FROM THE BUYERS AT THE TIME OF SALE OF PRODUCTS , THAT THE REMAINING SALE OF RS . 43 . 09 CRORES WAS MADE TO THE BUYERS FOR THE PURPOSE OF MANUFACTURING ON WHICH EXEMPTION U / S 206 ( 1 A ) , WAS AVAILABLE . IT WAS CLAIMED THAT IT HAD COLLECTED FORM NO . 27 C AS PRESCRIBED UNDER RULE 37 C OF THE INCOME TAX RULES , 1962 ( RULES ). VIDE ORDERSHEET ENTRY , DATED 10 - 09 - 2013 , THE ASSESSEE WAS ASKED AS TO WHETHER IT HAD COLLECTED FORM NO . 27 C , AS PRESCRIBED IN SUB - SECTION ( 1 A ) OF SECTION 206 C AND AS TO WHETHER THE SAME HAD BEN SUBMITTED WITH THE CHIE F COMMISSIONER / COMMISSIONER OF INCOME - TAX AS PER THE PROVISIONS OF SECTION 201 ( 1 B ) OF THE ACT . THE ASSESSEE IN ITS REPLY DATED 10 - 10 - 2013 STATED THAT IT HAD DULY COLLECTED TCS WHEREVER APPLICABLE AND DEPOSITED THE SAME WITH THE EXCUEQUER , THAT THE BUYERS HAD FURNISHED DECLARATION IN FORM NO . 27 C , THAT IN SUCH CASES IT HAD NOT COLLECTED TCS FROM THOSE BUYERS , THAT IT HAD DULY SUBMITTED THE DECLARATION IN PRESCRIBED FORM IN THE OFFICE OF THE CHIEF COMMISSIONER OF INCOME - TAX , NAGPUR ON 26 - 08 - 2013 . AFTER CONSIDERING THE REPLY THE AO OBSERVED THAT REPLY SUBMITTED BY THE ASSESSEE WAS GENERAL IN NATURE , THAT DURING THE VERIFICATION , DIRECTOR HAD ACCEPTED THAT FORM NO . 27 C WERE NOT D EPOSITED WITH THE CHIEF COMMISSIONER / COMMISSIONER OF INCOME - TAX , NAGPUR IN THE PRESCRIBED TIME , THAT THE FORMS WERE SUBMITTED FIVE MONTHS LATER FROM THE END OF THE FINANCIAL YEAR , THAT THE ASSESSEE HAD NOT COLLECTED FORM NO . 27 C AT THE TIME OF SALE OF GOOD S , THAT IT DID NOT SUBMIT THE FORMS IN THE PRESCRIBED TIME , THAT THE ASSESSEE HAD NOT COMPLIED WITH THE PROVISIONS OF SUB - SECTION ( 1 A ) AND ( 1 B ) OF THE ACT AND RULE 37 OF THE INCOME - TAX RULES , THAT IT WAS IN DEFAULT FOR NOT MAKING THE TCS ON SALE OF COAL AT RS . 43 . 09 CRORES . HE CALCULATED THE TCS LIABILITY AT RS . 43 . 09 CRORES AND INTEREST AT RS . 5 . 09 CRORES RESPECTIVELY . ITA NO. 221/NAG/2015 3 3 . AGGRIEVED BY THE ABOVE ORDER OF THE AO DATED 14 - 10 - 2013 THE ASSESSEE PREERRED AN APPEAL BEFORE THE FAA . BEFORE HIM IT WAS ARGUED THAT SECTI ON 206 C ( 1 A ) WOULD START WITH NEGATIVE TERMS , THAT IT WAS OVERRIDE THE PROVISO OF SECTION 206 C ( 1 ) OF THE ACT , THAT THE SAID PROVISION WAS INSERTED WITH A VIEW TO BRING THE DEALERS INTO TAX NET WHO WERE NOT FILING RETURNS AND WERE DEALING IN COAL , THAT IT P ROVIDED EXEMPTION TO THE MANUFACTURER , THAT THE ASSESSEE HAD OBTAINED ALL THE DECLARATION IN PRESCRIBED FORM NO . 27 C , THAT THERE WAS DELAY IN FURNISHING THE FORMS WITH THE CHIEF COMMISSIONER OF INCOME - TAX / COMMISSIONER OF INCOME - TAX WITHIN THE PRESCRIBED T IME LIMIT , THAT EVEN DURING THE VERIFICATION THE DIRECTOR OF THE COMPANY HAD STATED THAT IT HAD OBTAINED ALL THE DECLARATIONS AND SOME OF THEM WERE LYING WITH ITS RACK AT MUMBAI , THAT MOST OF THE MANUFACTURER , WITH WHOM IT HAD BUSINESSE RELATION WERE LOCAT ED OUTSIDE NAGPUR , THAT ONCE THE DECLARATION FORM WAS FURNISHED BY THE BUYER TO THE ASSESSEE THE PROVISIONS OF SECTION 206 C WOULD BECOME INAPPLICABLE , THAT IN THE CASE UNDER CONSIDERATION ALL THE DECLARATIONS WERE RECEIVED BY THE ASSESSEE FROM THE CUSTOMER S , THAT THE ASSESSEE HAD DULY COLLECTED TCS OF RS . 228 . 14 CRORES AND HAD DULY DEPOSITED THE SAME WITH THE EXCHEQUERE , THAT THE ASSESSEE HAD NOT COLLECTED THE TCS , THAT AS PER THE PROVISIONS OF SECTION 206 C IF AN ASSESSEE WOULD PRODUCE A CERTIFICATE FROM THE BUYER TO THE EFFECT THAT THEY HAD FILED THEIR INCOME - TAX RETURNS AND HAD INCLUDED THE SAID PURCHASES IN THE RETURNS THEN THE ASSESSEE WOULD NOT BE DEEMED TO BE ASSESSEE IN DEFAULT FOR THE PURPOSE OF SECTION 201 AND 201 ( 1 A ) OF THE ACT , THAT AS PER THE ACT SEPARATE PENALTY WAS TO BE LEVIED FOR DELAY IN FURNISHING THE PRESCRIBED FORMS TO THE CHIEF COMMISSIONER OF INCOME - TAX IN TERMS OF SECTION 273 B , THAT THE DELAY IN FILING PRESCRIBED FORM WAS A DISTINCT DEFAULT AND THE ASSESSEE COULD NOT BE PENALISED FOR TH E SAME BY DRAWING THE INFERENCE THAT IT HAD NOT RECEIVED THE DECLARATION IN TIME . AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE , THE FAA HELD THAT IT IS A CASE WHERE FORMS NO . 27 C WERE SUBMITTED BELATEDLY WITH THE COMPETENT AUTHORITY , THAT THE PROVISIO NS OF THE ACT STIPULATE THE SEPARATE SET OF PENAL PROVISIONS THAT COULD BE INVOKED ITA NO. 221/NAG/2015 4 AND REPLY FOR DELAY IN FURNISHING THE PRESCRIBED FORM IN TERMS OF SECTION 273 B , THAT FOR FILING THE FORM NO . 27 C AFTER THE DUE DATE PENALTY AS PER THE PROVISIONS OF SECTIO N 271 A ( 2 )( J ) OF THE ACT WAS IMPOSABLE , THAT THE AO WAS NOT JUSTIFIED IN HOLDING THAT THE ASSESSEE HAD NOT RECEIVED THE DECLARATION AT THE TIME OF TRANSACTION , THAT ONCE THE DECLARATIONS WERE RECEIVED BY THE ASSESSEE IT WAS NOT COMPETENT AS PER LAW , TO COLL ECT TCS FROM SUCH BUYERS , THAT THE ASSESSEE COULD NOT BE TREATED AS ASSESSEE IN DEFAULT FOR NOT HAVING COLLECTED TCS FROM SUCH BUYERS . HE REFERRED TO THE ORDER OF ITAT , AHMEDABAD IN THE CASE OF KGP ENTERPRISES ( ITA NO . 2389 / AHM / 2012 ) AND HELD THAT THE AO HAD WRONGLY APPLIED THE PROVISIONS OF SECTION 206 C AND 206 C ( 1 A ) OF THE ACT . FINALLY , HE ALLOWED THE APPEAL FILED BY THE ASSESSEE . 4 . BEFORE US THE DEPARTMENTAL REPRESENTATIVE ( DR ) SUPPORTED THE ORDER OF THE AO AND STATED THAT FORMS 27 C WERE NOT FURNISHED I N TIME . THE AUTHORISED REPRESENTATIVE ( AR ) STATED THAT ALL THE FORMS NO . 27 C , OBTAINED FROM 82 PARTIES , WERE SUBMITTED TO THE CHIEF COMMISSIONER OF INCOME - TX ON 26 - 08 - 2016 , THAT ALL THOSE FORMS NO . 27 C WERE SUBMITTED BEFORE THE AO IN THE ASSESSMENT PROCEED INGS AND HE HAD NOT FOUND ANY FAULT , DEFECT IN THOSE FORMS , THAT THE MOMENT THE ASSESSEE HAD RECEIVED FORM NO . 27 C ITS LIABILITY TO COLLECT TAX AT SOURCE WAS NOT THERE , THE ASSESSEE WAS WRONGLY TREATED TO BE IN DEFAULT . HE RELIED UPON THE CASES OF KARNATAKA FOTESR DEVELOPMENT CORPORATION LTD . ( ITA NO . 1144 - 1146 / BANG / 2014 ) , IN THE CASE OF STEEL CORPN . ( ITA NO . 2201 / AHD / 2015 DT . 01 - 03 - 2016 ) AND KARWAT STEEL TRADERS ( 145 ITD 370 ). 4 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US . WE FIND THAT THE ASSESSEE HAD COLLECTED TCS FOR THE 85 % OF THE SALES MADE BY IT DURING THE YEAR , THAT FOR THE REMAINING 15 % OF THE SALES IT HAD OBTAINED FORM NO . 27 C OF THE ACT , THAT IT HAD SUBMITTED THE FORMS LATE IN THE OFFICE OF THE CHIEF COMMISSION ER OF INCOME - TAX , NAGPUR , THAT THE AO HAD TREATED THE ASSESSEE IN DEFAULT U / S 206 ( 1 ) OF THE ACT AND HAD ALSO LEVIED INTEREST U / S 206 ( 1 A ) OF THE ACT , ITA NO. 221/NAG/2015 5 THAT THE FAA HAD , AFTER CONSIDERING VARIOUS ORDERS OF THE TRIBUNAL AND THE FACTS OF THE CASE HAD QUASHED TH E ORDER OF THE AO . WE FIND THAT THE PROVISIONS OF SECTION 206 C WERE INCORPORATED IN THE ACT WITH A SPECIFIC PURPOSE , THAT THE SELLERS OF THE COAL WERE REQUIRED TO COLLECT TAX AT THE RATE OF 1 % ON SALES , THAT THEY WERE NOT TO COLLECT TAX IF THE BUYER PROD UCED A CERTIFICATE THAT IT WAS A MANUFACTURER , THAT THE ASSESSEE OBTAINED SUCH CERTIFICATES FROM THE MANUFACTURER , THAT IT DID NOT FILE THE CERTIFICATES IN TIME WITH THE COMPETENT AUTHORITY . THE ACT AS STIPULATED PENALTY U / S 271 ( A ) ( 2 ) ( J ) FOR NOT FILING THE FORM 27 C IN TIME . BUT FOR SUCH AN IRREGULARITY , THE ASSESSEE CANNOT BE TREATED AS AN ASSESSEE IN DEFAULT . THESE ARE TWO SEPARATE AND DISTINCT CONCEPTS . IF THE ASSESSEE FAILS TO COLLECT TAX OR FAILS TO OBTAIN A CERTIFICATE FROM THE BUYER STA TING THAT HE IS A MANUFACTURER ONLY AND ONLY THEN THE ASSESSEE CAN BE TREATED AS ASSESSEE IN DEFAULT AND NOT OTHERWISE . THE AO HAS NOT ALLEGED THAT FORMS WERE NOT COLLECTED . THE ONLY DEFAULT , AS STATEDE BY THE AO , IS THAT THE FORMS WERE NOT FURNISHED WITHI N THE STIPULATED TIME FRAMED . THE AO W A S WELL WIHIN HIS RIGHT TO LEVY PENALTY FOR THE DEFAULT . BUT INSTEAD OF INVOKING THE SAID PROVISIONS , HE TREATED THE ASSESSEE IN DEFAULT . IN OUR OPINION , THE ACTION OF THE AO CANNOT BE ENDORSED . THE CASES RELIED UPON B Y THE ASSESSEE BEFORE THE FAA AND US ALSO SUPPORT T HE VIEW TAKEN BY US . THEREFORE , CONFIRMING THE ORDER OF THE FAA WE DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE AO . AS A RESULT , APPEAL FILED BY THE AO STANDS DISMISSED . . ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH AUGUST ,2016. 29 TH AUGUST, 2016 SD/ - SD/ - ( . . / D T GARASIYA ) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER NAGPUR ; DATED :29 . 0 8 . 2016. ITA NO. 221/NAG/2015 6 / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR NAGPUR BENCH, ITAT, / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , / ITAT,NAGPUR.