Mining Development Officer, Sheikhpura V. ITO (TDS), Begusarai

ITA 255/PAT/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9638 (ITAT-PATNA)
• Duration Of Justice: 3 year(s) 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 26-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHIKESH JHA SHRI K
• Assessee Lawyers: T VARKEY JUDIC IA L M EMBER
• Keywords: Recovery proceedings; Principle of natural justice
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PA T N A BENCH , PATNA BEFORE SHRI ABY. T. VARKEY , JUDICIAL MEMBER AND SHRI WASEEM AHMED , ACCOUNTANT MEMBER ITA NO. 254 - 257 / PAT / 2013 ASSESSMENT YEAR S : 2007 - 08 TO 2010 - 11 MINING DEVELOPMENT OFFICER, DISTRICT MINING OFICE, SHEIKHPURA, PIN CODE - 811105 [ T AN NO. PTNDO1791 G ] / V/S . INCOME TAX OFFICER (TDS), BEGUSARAI /APPELLANT .. /RESPONDENT / BY ASSESSEE SHRI SHIKESH JHA, ADVOCATE / BY RE V EN UE SHRI K.K. DAS, DR / DATE OF HEARING 11 - 04 - 2017 / DATE OF PRONOUNCEMENT 13 - 04 - 2017 /O R D E R PER BENCH : - TH E S E ARE FOUR APPEAL S BY THE ASSESSEE DIRECTED AGAINST THE COMMON ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - DHANBAD , CAMP OFFICE PATNA DATED 27 .0 2 .201 2 . ASSESSMENT S W ERE FRAMED BY ITO (TDS), BEUSARAI U/S 206C(6A) /206C (1C) & 206C(7) (3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER S DATED 29 . 03 .20 1 0 FOR ASSESSMENT YEAR S 2007 - 08 TO 2010 - 11 RESPECTIVELY . SHRI SHIKESH JHA, LD. ADVOCATE APPEARED ON BEHALF OF ASSESSEE AND SHRI K.K. DAS, LD. DEPARTMENTAL REPRESENTATIVE REPRESENTED ON BEHALF OF REVENUE. 2. AT THE TIME OF HEARING LD. COUNS EL FOR THE ASSESSEE FILED AN ADJOURNMENT APPLICATION ON THE GROUND THAT MINERAL DEVELOPMENT OFFICER RETIRED ON 31 ST MARCH 2017 . LD. DR FOR THE REVENUE RAISED OBJECTION ON THE ADJOURNMENT APPLICATION FILED BY THE ASSESSEE . WE ALSO FOUND THE REASON GIVEN BY THE ASSESSEE IS UNTENABLE. IT WAS ITA NO. 254 - 257/PAT/2013 A.YS 07 - 08 TO 10 - 11 MINING DEVELOPMENT OFFICER VS. ITO (TDS) BEGUSARAI PAGE 2 ALSO OBSERVED THAT THE APPEAL WAS EARL IER FIXED ON 0 7. 0 4.2017 AND AGAIN ADJOURN MENT PETITION FILED TODAY. H ENCE WE REJECT THE ADJOURNMENT APPLICATION AND PROCEED TO HEAR THE APPEAL IN PRES ENCE OF BOTH SIDES. 3. SINCE THE COMMON ISSUES ARE INVOLVED EXCEPT AMOUNT IN ALL THE CASES, THEREFORE, FOR THE SAKE OF CONVENIENCE, THESE CASES HAVE BEEN HEARD TOGETHER, AND THEREFORE, DISPOSE OF BY THIS CONSOLIDATED ORDER. WE WILL TAKE FIRST APPEAL IN ITA NO.254/PAT/2013 FOR A.Y. 2007 - 08 AS LEAD CASE AND THE OUTCOME OF THIS APPEAL WILL BE APPLICABLE IN ALL THE REMAINING APPEALS AS THE FACTS ARE SIMILAR AND THE SAME HAS BEEN ADMITTED BY BOTH THE PARTIES I.E. ASSESSEE AND THE DEPARTMENT. 4. IN THIS APPEAL VA RIOUS GROUNDS HAVE BEEN RA ISED OUT OF WHICH GROUNDS NO. 1, 3 AND 5 ARE GENERAL NATURE AND DO NOT REQUIRE SEPARATE ADJUDICATION. 5. THE ISSUE RAISED IN GROUND NO.2 IN THIS APPEAL OF ASSESSEE IS THAT LD. CIT(A) ERRED IN HOLDING THAT THE ASSESSEE IS GOVERNED BY PROVISION OF SEC. 206 C OF THE ACT. 6. BRIEFLY STATED FACTS ARE THAT ASSESSEE IS A DISTRICT MINING OFFICE, DEPARTMENT OF GOVT. OF BIHAR AND ENGAGED IN MINING ACTIVITIES. A SURVEY WAS CONDUCTED U/S. 133A OF THE ACT IN OFFICE PREMISES OF ASSESSEE. DURING THE SURVEY OPERATION, IT WAS OBSERVED THAT ASSESSEE WAS LIABLE FOR TAX COLLECTION AT SOURCE (TCS FOR SHORT) @ 2.24% AS PER THE PROVISION OF SEC. 206C ON THE AMOUNT RECEIVED FROM THE PARTIES ON ACCOUNT OF GRANTING OF LEASE FOR STONE CUTTING , ROYALTIES FROM BRICK KILNS ETC. T HE ASSESSEE FAILED TO COLLECT THE TCS ON THE AMOUNT RECEIVED FROM THE PARTIES IN THE YEAR UNDER CONSIDERATION. A CCORDINGLY, THE ASSESSING OFFICER RAISED THE DEMAND OF TAX AND INTEREST UNDER THE PROVISION OF SEC. 206C OF THE ACT. 7. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A). THE ASSESSEE SUBMITTED BEFORE LD. CIT(A) THAT THE ACTIVITIES ARE NOT SUBJECT TO THE PROVISION OF SEC. 206C OF THE ACT. HOWEVER, LD. CIT(A) REJECTED THE PLEA OF ASSESSEE BY OBSERVING THAT THE ITAT I N ITS ORDER IN DATED 25.05.2007 IN THE CASE OF ASSTT. DISTRICT MINING OFFICE B H OJPUR HELD THAT IN THE IMPUGNED MINING ACTIVITIES ARE COVERED UNDER THE PROVISION OF SEC. 206C OF THE ACT. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) ASSESSEE CAME IN SECOND A PPEAL BEFORE US ON THE FOLLOWING GROUND: - ITA NO. 254 - 257/PAT/2013 A.YS 07 - 08 TO 10 - 11 MINING DEVELOPMENT OFFICER VS. ITO (TDS) BEGUSARAI PAGE 3 2) FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) IS NOT JUSTIFIED IN HOLDING THAT THE ACTIVITIES OF THE APPELLANT IS IN THE NATURE OF MINING REQUIRING COLLECTION OF TAX AT SOURCE. 8. AT THE OUTSET, LD. AR FOR THE ASSESSEE RAISED NO OBJECTION ON THE ORDER OF LD. CIT(A) AND AGREED FOR THE SAME. HENCE, SAME IS DISMISSED. 9. NEXT ISSUE RAISED IN GROUND NO.4 IS THAT LD. CIT(A) ERRED IN IMPOSING INTEREST OF 1,69,759/ - U/S 206C(7) OF THE ACT. 10. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO IMPOSED INTEREST ON ACCOUNT OF DELAY IN THE DEPOSIT OF TCS AS PER THE PROVISION OF SEC. 206C(7) WHICH WAS SUBSEQUENTLY CONFIRMED BY LD. CIT(A). BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) ASSESSEE CAME IN SE COND APPEAL BEFORE US ON THE FOLLOWING GROUND: - 4) FOR THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE LD. CIT(A) IS NOT JUSTIFIED IN NOT ADJUDICATING THE FOLLOWING GROUNDS: FOR THAT THE IMPOSITION OF PENAL INTEREST OF RS.1,69,759/ - U/S 206(7) OF THE IT A CT, 1961 IN A SITUATION WHICH IS BEYOND THE CONTROL OF THE PETITIONER IS ARBITRARY IN NATURE AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE AND EVEN IGNORES THE LAW OF PRESUMPTION. 11. LD. AR FOR THE ASSESSEE BEFORE US SUBMITTED THAT THE TDC WAS NOT COLLECTED FROM THE CONCERNED PARTIES DUE TO UNAVOIDABLE SITUATION. THEREFORE, THE INTEREST U/S 206C(7) OF THE ACT SHOULD NOT BE CHARGED. ON THE OTHER HAND, LD. DR FOR THE REVENUE VEHEMENTLY SUPPORTED THE ORDER OF AUTHORITIES BELOW. 12. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE TCS PROVISIONS MANDATE COLLECTION OF TAX AT SOURCE ON THE RECEIPT BY ASSESSEE FROM THE PARTIES IF IT FALLS WITHIN THE PROVISIONS OF SECTION 206C OF THE ACT. THE PURPOSE OF TCS IS TO ENSURE THAT THE GOVERNMENT IS NOT DEPRIVED OF ITS DUE TAXES IN TIME. MOREOVER, RECOVERY OF TAXES THROUGH TCS IS ONE OF THE TAX COLLECTION MECHANISM FORMULATED BY THE GOVERNMENT. IF THE RECIPIENT (ASSESSEE HEREIN) FAILS TO COLLECT TAX AT SOURCE IN RESPECT OF CERTAIN ELIGIBLE RECEIPTS, THEN THE RECIPIENT COULD BE TREATED AS 'ASSESSEE - IN - DEFAULT' AS PER THE PROVISIONS OF SECTION 206C(6A) OF THE ACT AND SAID TAX COULD BE RECOVERED FROM THE RECIPIENT ON BEHALF OF THE PAYER AS PER THE PR OVISIONS OF SECTION 206C(6) OF THE ACT. HOW AS PER PROVISO TO ITA NO. 254 - 257/PAT/2013 A.YS 07 - 08 TO 10 - 11 MINING DEVELOPMENT OFFICER VS. ITO (TDS) BEGUSARAI PAGE 4 SECTION 206C(6A) OF THE ACT, THE ASSESSEE SHALL NOT BE TREATED AS ASSESSEE IN DEFAULT IF THE PAYER PAYS THE DUE TAXES ON HIS INCOME AFTER TAKING INTO ACCOUNT THE AFORESAID SUM IN ITS COMPUTATION OF INCOME. THE PROVISO TO SECTION 206C(6A) OF THE ACT READS AS UNDER: - PROFITS AND GAINS FROM THE BUSINESS OF TRADING IN ALCOHOLIC LIQUOR, FOREST PRODUCE, SCRAP ETC. 206C . [(1) EVERY PERSON, BEING A SELLER SHALL, AT THE TIME OF DEBITING OF AMOUNT PAYABLE BY THE BUYER TO THE ACCOUNT OF THE BUYER OR AT THE TIME OF RECEIPT OF SUCH AMOUNT FROM THE SAID BUYER IN CASH OR BY THE ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WHICHEVER IS EARLIER, COLLECT FROM THE BUYER OF ANY GOODS OF THE NATURE SPECIFIED IN C OLUMN (2) OF THE TABLE BELOW, A SUM EQUAL TO THE PERCENTAGE, SPECIFIED IN THE CORRESPONDING ENTRY IN COLUMN (3) OF THE SAID TABLE OF SUCH AMOUNT AS INCOME - TAX: - --- ---- ---- [6A) IF ANY PERSON RESPONSIBLE FOR COLLECTING TAX IN ACCORDANCE WITH THE PROVISIO NS OF THIS SECTION DOES NOT COLLECT THE WHOLE OR ANY PART OF THE TAX OR AFTER COLLECTING, FAILS TO PAY THE TAX AS REQUIRED BY OR UNDER THIS ACT, HE SHALL, WITHOUT PREJUDICE TO ANY OTHER CONSEQUENCES WHICH HE MAY INCUR, BE DEEMED TO BE AN ASSESSEE IN DEFAUL T IN RESPECT OF THE TAX: [PROVIDED THAT ANY PERSON, OTHER THAN A PERSON REFERRED TO IN SUB - SECTION (1D), RESPONSIBLE FOR COLLECTING TAX IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION, WHO FAILS TO COLLECT THE WHOLE OR ANY PART OF THE TAX ON THE AMOUNT R ECEIVED FROM A BUYER OR LICENSEE OR LESSEE OR ON THE AMOUNT DEBITED TO THE ACCOUNT OF THE BUYER OR LICENSEE OR LESSEE SHALL NOT BE DEEMED TO BE AN ASSESSEE IN DEFAULT IN RESPECT OF SUCH TAX IF SUCH BUYER OR LICENSEE OR LESSEE - (I) HAS FURNISHED HIS RETURN OF INCOME UNDER SECTION 139; (II) HAS TAKEN INTO ACCOUNT SUCH AMOUNT FOR COMPUTING INCOME IN SUCH RETURN OF INCOME; AND (III) HAS PAID THE TAX DUE ON THE INCOME DECLARED BY HIM IN SUCH RETURN OF INCOME, AND THE PERSON FURNISHES A CERTIFICATE TO THIS EFFECT FORM AN ACCOU NTANT IN SUCH FORM AS MAYBE PRESCRIBED:] IN TERMS OF THE ABOVE PROVISIONS THE LD. CIT(A) ACCORDINGLY DIRECTED THE ASSESSING OFFICER TO CHECK WHETHER THE PAYER HAS COMPLIED THE PROVISIONS OF PROVISO TO SECTION206C(6A) OF THE ACT AND TO GIVE THE RELIEF ACCO RDINGLY TO THE ASSESSEE. NOW, COMING TO THE PROVISIONS OF THE INTEREST AS SPECIFIED U/S 206(7) OF THE ACT, WE FIND THAT THE INTEREST IS ONLY COMPENSATORY IN NATURE AND IS COLLECTIBLE FROM THE RECIPIENT BY TREATING THE ASSESSEE AS ASSESSEE - IN - DEFAULT FOR DEPRIVING THE GOVERNMENT OF ITS LEGITIMATE DUES. THIS INTEREST IS TO BE CALCULATED FROM THE DATE OF TAX WAS COLLECTIBLE TO THE DATE ON WHICH TAX WAS ACTUALLY PAID. HOWEVER, AT THE SAME TIME ITA NO. 254 - 257/PAT/2013 A.YS 07 - 08 TO 10 - 11 MINING DEVELOPMENT OFFICER VS. ITO (TDS) BEGUSARAI PAGE 5 IF THE ASSESSEE IS NOT DEEMED AS ASSESSEE IN DEFAULT IN TERMS OF THE PROVISO TO SECTION 206(6A) OF THE ACT THEN INTEREST WILL BE CHARGED FROM THE DATE OF TAX WHICH WAS COLLECTIBLE TO THE DATE OF FURNISHING THE RETURN OF INCOME BY THE PAYER. THE RELEVANT PROVISIONS TO SECTION 206C(7) READS AS UNDER: - (7) WITHOUT PREJUDI CE TO THE PROVISIONS OF SUB - SECTIONS (6), IF THE [PERSON RESPONSIBLE FOR COLLECTING TAX] DOES NOT COLLECT THE TAX OR AFTER COLLECTING THE TAX FAILS TO PAY IT AS REQUIRED UNDER THIS SECTION, HE SHALL BE LIABLE TO PAY SIMPLE INTEREST AT THE RATE OF [ONE] PER CENT PER MONTH OR PART THEREOF ON THE AMOUNT OF SUCH TAX FROM THE DATE ON WHICH SUCH TAX WAS COLLECTIBLE TO THE DATE ON WHICH THE TAX WAS ACTUALLY PAID [AND SUCH INTEREST SHALL BE PAID BEFORE FURNISHING THE QUARTERLY STATEMENT FOR EACH QUARTER IN ACCORDAN CE WITH THE PROVISIONS OF SUB - SECTION (3)]: PROVIDED THAT IN CASE ANY PERSON, OTHER THAN A PERSON REFERRED TO IN SUB - SECTION (1D), RESPONSIBLE FOR COLLECTING TAX IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION, FAILS TO COLLECT THE WHOLE OR ANY PART OF T HE TAX ON THE AMOUNT RECEIVED FROM A BUYER OR LICENSEE OR LESSEE OR ON THE AMOUNT DEBITED TO THE ACCOUNT OF THE BUYER OR LICENSEE OR LESSEE BUT IS NOT DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER THE FIRST PROVISO OF SUB - SECTION (6A), THE INTEREST SHALL BE PA YABLE FROM THE DATE ON WHICH SUCH TAX WAS COLLECTIBLE TO THE DATE OF FURNISHING OF RETURN OF INCOME BY SUCH BUYER OR LICENSEE OR LESSEE.] ADMITTEDLY, THE INTEREST AS PROVIDED U/S. 206C(C) IS COMPENSATORY IN NATURE AND CONSEQUENTIAL TO THE AMOUNT OF TCS DEPOSIT ED LATE WITH GOVERNMENT EXCHEQUER. IN TERMS OF ABOVE AND FOR THE INTEREST OF NATURAL JUSTICE , WE ARE INCLINED TO RESTORE THIS ISSUE TO THE FILE OF ASSESSING OFFICER FOR FRESH COMPUTATION OF INTEREST AS PER THE PROVISO TO SECTION 206C(7) OF THE A CT AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HE A RD TO ASSESSEE . HENCE, THIS GROUND ASSESSEES APPEAL IS ALLOWED FOR STATISTIC A L PURPOSE. 13. IN RELATION TO THE RESULT, ALL THE APPEALS OF ASSES SEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSE . ORDER PRONOUNCED IN OPEN COURT ON 13 / 04 /201 7 SD/ - SD/ - ( ABY. T. VARKEY ) ( WASEEM AHMED ) JUDICIAL MEMBER ACCOUNTANT MEMBER * DKP , SR.P.S - 13 / 04 /201 7 PATNA COPY OF ORDER FORWARDED TO: - 1 . /ASSESSEE - MINING DEVELOPMENT OFFICER, DIST. MINING OFFICE, SHEIKHPURA PIN CODE - 811105 2 . /REVENUE - ITO(TDS), BEGHUSARAI 4 . CIT (A) 3 . CONCERNED CIT 5 . DR, ITAT, PATNA 6 . GUARD FILE. BY ORDER/ , /TRUE COPY/ SR.PS/PS, ITAT, PATNA