Rajdhani Mineral Jaipur Pvt. LTD, Jaipur V. INCOME TAX OFFICER TDS-I , JAIPUR

ITA 333/JPR/2023

AI Insights

The case involves Rajdhani Minerals Jaipur Pvt. Ltd., which appealed against the order of the National Faceless Appeal Centre (NFAC) confirming the levy of Tax Collected at Source (TCS) on sales deemed as scrap. The Assessing Officer had initially classified the company's sales as scrap, subjecting them to TCS under section 206C of the Income Tax Act, 1961. The company contested this classification, arguing that the items sold were not scrap but usable iron materials, and provided additional evidence during the tribunal proceedings. The Tribunal found merit in the assessee's arguments and evidence, leading to the remand of the case for a fresh assessment.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 132337 (ITAT-JAIPUR)
• Duration Of Justice: 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 18-05-2023
• Other Referred Cases: Hindustan Coca Cola Beverage P. Ltd. (293 ITR 226)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SUBMISSIONS OR DOCUMENTARY
• Keywords: Opportunity of being heard; Additional evidence; TDS
• Section: 250

Judgement Text

vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”SMC” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ ITA. No. 333/JP/2023 fu/kZkj.k o"kZ@Assessment Years : 2014-15 Rajdhani Minerals Jaipur Pvt. Ltd., 167, Shiv Vihar Opp. Road No. 5, VKI Area, Jaipur cuke Vs. Income Tax Officer, TDS-1, Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAGCR 1382 R vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri P. C. Jain (CA) jktLo dh vksj ls@ Revenue by : Smt. Monisha Choudhary (Addl. CIT) a lquokbZ dh rkjh[k@ Date of Hearing : 13/09/2023 mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 21/09/2023 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM This appeal is filed by assessee and is arising out of the order of the National Faceless Appeal Centre, Delhi dated 24/03/2023 [here in after (NFAC)/ ld. CIT(A) ] for assessment year 2014-15 which in turn arise from the order dated 04.03.2021 passed under section 206C(6A)/206C(7) of the Income Tax Act, by ITO, TDS-1, Jaipur. 2. The assessee has marched this appeal on the following ITA No. 333/JP/2023 Rajdhani Minerals Jaipur vs. ITO 2 grounds:- “1. That the learned CIT(A) has erred in maintaining the levy of TCS of Rs. 7,67,235/- on turnover of Rs. 7,67,23,672/- as scrape sale while our sale was not of scrape therefore we are not liable for any TCS. 2. That the learned Commissioner of Income Tax (Appeal) has erred in confirming the levy of interest of Rs. 6,44,448/- on TCS. 3. That the assessee reserve his right to add alter or delete any ground of appeal on or before the date of hearing.” 3. The fact as culled out from the records is that a survey/spot verification u/s 133A(2A) was conducted on 24.02.2014 at the business premises of the assessee company for verification of compliance of provisions of Chapter XVII-B of the Income-tax Act, 1961. During the survey proceedings, it was noticed that the assessee company mainly deals in purchase/sale of old/waste and iron items. The sale of wastes attracts TCS provisions u/s 206C of the Income-tax Act, 1961. In this respect, spot verification, it was found that the assessee company had shown total sales at Rs. 9,32,95,220/- in the survey proceedings. The assessee has not furnished details of sales. Therefore, it has been concluded that the entire sales of Rs. 9,32,95,220/- represents scrapes sales liable to TCS. The ld. AO further noted that the assessee company collected TCS amounting to Rs. 1,65,717/- on sales of Rs. ITA No. 333/JP/2023 Rajdhani Minerals Jaipur vs. ITO 3 1,65,71,548/- only for the remaining sales of Rs. 7,67,23,672/-. The assessee company was held to be liable to collect TCS @ 1% as per provisions of section 206C of the Act. Accordingly, the demand for an amount of Rs. 14,11,683/- was raised as tabulated herein below:- Total sales (Rs.) TCS to be collected (Rs.) TCS collected (Rs.) Balance (Rs.) (2.3) Demand u/s 206C(6A) (Rs.) Interest u/s 206C(7) (Rs.) Total demand (Rs.) 1 2 3 4 5 6 7 93295220 932952 165717 767235 767235 644448 1411683 4. Aggrieved from the order of the Assessing Officer, assessee preferred an appeal before the ld. CIT(A)/NFAC. A propose to the grounds so raised before ld. CIT(A)/NFAC, the relevant finding of the ld. CIT(A)/NFAC on the issue is reiterated here in below:- “8.5 However, the appellant has not submitted any information or documentary evidences in support of his claim in his ground of appeal mentioned above. In this regard, it is further brought to the notice of the appellant that though number of notices and reminders u/s 250 of the Income Tax Act, 1961 were issued to the appellant, he had not preferred to respond even to the one notice and opt to submit the documentary evidence in support of his contention in ground of appeal. Copies of screen shots taken from ITBA-Send Email portal’ have been affixed above as a proof that the notices and reminder issued to the appellant were duly served on the appellant. 9. However, no submission was given in respect of sold iron material on which no TCS in was payable and it is not scrap. Therefore, I do not have any reason to interfere in the order initiated by the Assessing Officer in the order dated 04.03.2021. ITA No. 333/JP/2023 Rajdhani Minerals Jaipur vs. ITO 4 10. The submissions made in the statement of facts by the appellant have not be backed by the appellant by submissions or documentary evidences. Hence, they are rejected. 11. Therefore, the addition made in the order in this regard is sustained. Accordingly, grounds of appeal Nos. 1 & 2 are dismissed.” 5. As the assessee not satisfied with the finding of ld. CIT(A), the assessee preferred present appeal before this tribunal on the ground as stated in para 2 above. Apropos to the grounds so raised before us, the ld. AR of the assessee submitted that confirmation on accounts declaration of the parties’ consent and copy of income tax ITR were submitted as additional evidence and the relevant statement of the assessee is reproduced herein below: ” 1. We Purchase the goods which are mainly Iron material and which are usable as such and which is tantamount to scrap or waste. Our items in question were usable as such and therefore do not fall within definition "scrap" as given in explanation (b) to section 206C (1) of the act. The expression of scrap is defined under clause (b) to the explanation to section 206 of the act to mean waste and scrap from manufacture or mechanical working of materials which is definitely no usable as such because of breakage cutting up, wear and other reasons. On a plain reading of the said expressions, it is evident that any material which is usable as such would not fall within the ambit of the expression "scrap" as envisaged under clause (b) of the explanation to section 206C of the act. The waste and scrap must be from manufacturing or mechanical working of material which is definitely not usable as such because of breakage cutting up, ware and other reasons. The assessee purchased MS material and plates ETC which are usable as such therefore it does fall within the definition of scrap. We are not liable for TCS because we sold the goods which are usable as such and finally not scrap. Kindly therefore delete the turnover of Rs. 76723672/- for levy of TCS of Rs.767235/- and cancel the total demand of tax, interest levied by AO. ITA No. 333/JP/2023 Rajdhani Minerals Jaipur vs. ITO 5 2. We are enclosing here with declaration and copy of IT return received from purchaser which shows that they have shown the purchases in their books of account and have paid Tax thereon. We are not defaulter within the definition section 206(1) of the act for non- deduction of TCS. S. NO. NAME OF PARTY TOTAL SALE 1. AGARSEN FOUNDARY PVT LTD. 530413.00 2. ANKIT TRADING COMPANY 2193591.00 3. HARI INDUSTRIES 1992497.00 4. K.M INDUSTRIES 800226.00 5. KHANDELWAL TRADING COMPANY 976152.00 6. MANGLA ISPAT JAIPUR LTD 3551632.00 7. MANGLA PRODUCTS PVT LTD 1331287.00 8. MUKESH IRON FOUNDARY PVT LTD 1218693.00 9. NK INDUSTRIES 824144.00 10. INRMAL INDUCTOMELT PVT LTD 4545309.00 11. PADAM ISPAT 408212.00 12. PRIEMER BARS PVT LTD 1057754.00 13. RN FORGING PVT LTD 227320.00 14 RAJDHANI FERROS PVT LTD 2667618.00 15 SAVITRI CONCAST LTD 1872783.00 16. SHREE BHAGWATI STEELS 5591681.00 17. SHREE GANPTI STEELS 466570.00 18. SHREE HARI IRON STEELS 1203287.00 19. SHREE KRISHNA ROLLING MILLS 1005605.75 20. SHREE RAM STEELS 1336028.00 21. SHREE SIDDHI VINAYAK INDUCTION LTD. 11197956.00 22 SHARI BALAJI INDUSTRIAL PRODUCTS LTD 1746904.00 23 VIJAY TRADING CORPORATION 572208.00 24 VINAYAK INTERNATIONAL 24042435.00 ITA No. 333/JP/2023 Rajdhani Minerals Jaipur vs. ITO 6 "The Hon'ble supreme court in its decision in the case of Hindustan coca cola Beverage P. Itd. (293 ITR 226) has held that where tax deductor has satisfied the officer in charge of TDS that taxes due have been paid by the deductee the same should not be recovered from the deductor. Keeping in view of the aforesaid decision of hon'ble supreme court where the assessee has submitted the declaration /copy of income tax filed by purchaser regarding the receipt such sale having been taken into account for computing income in such return of income and have paid the due Taxes on such income therefore we are not defaulter for non-collection of TCS although items sold by us was not scrap and it was only iron steel. We request please to delete the addition of turnover of Rs.76723672/-for the levy of TCS and kindly therefore cancel the total demand of Tax and interest accordingly.” 6. The ld. AR of the assessee in addition to the submission made so submitted that all the parties are assessed to tax and the assessee has not sold the scrap not usable as such. Therefore, considering that plea and the additional evidence placed on record, the ld. AR of the assessee requested to remand back to the issue to file of ld. AO so as to decide the applicability of the TCS based on the evidences placed on record. 7. Per contra, the ld. DR objected to the request of ld. AR of the assessee and submitted that assessee failed to substantial the merit of the case before the lower authorities. Therefore, the prayer of the assessee should not be entertained. ITA No. 333/JP/2023 Rajdhani Minerals Jaipur vs. ITO 7 8. We have heard the rival contentions and perused the material placed on record. The bench noted that the assessee contended before us by filing the confirmation of party, copy of ITR declaration of the parties, all these evidence were not placed before lower authorities. Therefore, considering the request of the assessee, these additional evidences are accepted and the matter is remand back to the file of ld. AO to decide the issue afresh after hearing the contentions of the assessee as additional evidence filed before us were never before the lower authorities. Based on the contentions and evidence placed on record we find force in the arguments advanced by the ld. AR of the assessee. The grounds of the appeal of are only for the levy of TCS and interest there upon. Thus, considering the prayer of the assessee, we consider it deem fit to remand back the matter before the ld. AO to decide afresh on merit first as to decide as to whether the sale is sale of scrap or of the finished goods and if not then to consider the additional evidence. Based on that set of facts, we are of the considered view that the assessing officer should hear the assessee’s submission on merits after affording proper opportunity of being heard and pass speaking order in the matter. With these observations we set aside the matter to the file of the learned assessing officer with a direction to ITA No. 333/JP/2023 Rajdhani Minerals Jaipur vs. ITO 8 hear the merits of the case after affording a reasonable opportunity of being head to the assessee pass an appropriate order in accordance with the law. At the same time assessee is directed to represent and present all the facts before the assessing officer and should not ask for the adjournment on frivols grounds. At this stage we remand back the issues raised without commenting upon the merits of the case and the ld. AO is directed to complete the assessment. In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on 21/09/2023 . Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judcial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 21/09/2023 *Ganesh Kumar, PS vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. vihykFkhZ@The Appellant- Rajdhani Minerals Jaipur Pvt. Ltd., Jaipur 2. izR;FkhZ@ The Respondent- Income Tax Officer, TDS-1, Jaipur 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. 333/JP/2023} vkns'kkuqlkj@ By order lgk;d iathdkj@Asst. Registrar