The Income Tax Office, TDS-3, JAMNAGAR V. M/s. Dudani Metal Agencies, Prop. Sampatlal M. Dudani, JAMNAGAR

ITA 349/RJT/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2247 (ITAT-RAJKOT)
• Duration Of Justice: 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 03-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 43B; 201(1); 145

Judgement Text

I.T.A. NOS. 348 AND 349/RJT/2015 ITA NOS 337 AND 338/RJT/2014 ASSESSMENT YEARS: 2010 - 11 AND 2011 - 12 PAGE 1 OF 9 IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT [CONDUCTED THROUGH E COURT AT AHMEDABAD] [ CORAM: PRAMOD KUMAR AM AND KUL BHARAT JM ] I.T.A. NOS. 348 AND 349 / RJT/2015 ASSESSMENT YEAR S: 2010 - 11 AND 2011 - 12 INCOME TAX OFFICER TDS WARD 3, JAMN AGAR . .APPELLANT VS. DUDANI METAL AGENCIES RESPONDENT PROP: SAMPATLAL M DUDANI K 1/79/4, SHANKAR TEKRI UDYOGNAGAR JAMNAGAR [PAN: ABNPD8660R] I.T.A. NOS. 337 AND 338/RJT/2014 ASSESSMENT YEAR S : 2010 - 11 AND 2011 - 12 DUDANI ME TAL AGENCIES . .APPELLANT PROP: SAMPATLAL M DUDANI K 1/79/4, SHANKAR TEKRI UDYOGNAGAR JAMNAGAR [PAN: ABNPD8660R] VS. INCOME TAX OFFICER TDS WARD 3, JAMNAGAR RESPONDENT APPEARANCES BY: C S ANJARIA , FOR THE ASSESSING OFFICER SAGAR S HAH , FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : DECEMBER 10, 201 5 DATE OF PRONOUNCING THE ORDER : FEBRUARY 29 , 2016 I.T.A. NOS. 348 AND 349/RJT/2015 ITA NOS 337 AND 338/RJT/2014 ASSESSMENT YEARS: 2010 - 11 AND 2011 - 12 PAGE 2 OF 9 O R D E R PER PRAMOD KUMAR: 1. THIS SET OF FOUR APPEALS, CONTAINING TWO APPEALS EACH FROM THE ASSESSEE AND THE ASSESSING OFFICER, PERTAIN TO THE SAME ASSESSEE, INVOLVE A COMMON ISSUE ARISING OUT OF THE SIMILAR SET OF FACTS, AND WERE HEARD TOGETHER. AS A MATTER OF CONVENIENCE, THEREFORE, WE ARE DISPOSING OF ALL THESE FOUR APPEALS BY WAY OF THIS COMMON ORDER. 2 . LET US FIRST TAKE A L OOK AT THE APPEALS FILED BY THE ASSESSING OFFICER. BY WAY OF THESE APPEAL S , THE ASSESSING OFFICER APPELLANT HAS CALLED INTO QUESTION CORRECTNESS OF TWO SEPARATE BUT MATERIALLY SIMILAR ORDER S DATED 31 ST OCTOBER 2014 PASSED BY THE LEARNED CIT(A) IN THE MATT ER OF A DEMAND OF RS 17,26,998 AND RS 6,33,864 RAISED ON THE ASSESSEE UNDER SECTION 206C(6)/ 206(7) OF THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEAR S 2010 - 11 AND 2011 - 12 RESPECTIVELY. 3 . GRIEVAN CES RAISED BY THE ASSESSING OFFICER , WHICH ARE COMMON IN BOTH THE YEARS, ARE AS FOLLOWS: 1. THE LEARNED CIT(A) GAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITIONS MADE UNDER SECTION 206C(1) OF THE INCOME TAX ACT ON ACCOUNT OF NON COLLECTION OF TCS ON SALE OF SCRAP, AND INTEREST CHARGED UNDER SECTION 206C( 7) IN SPITE OF THE FACT THAT THE ASSESSEE WAS A TRADER OF SCRAP AND THE PROVISIONS OF SECTION 206C(1) APPLY TO THE ASSESSEE. 2. THE LEARNED CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN ISSUE OF DIRECTION IN VIOLATION OF PROVISO TO SUB SECTION (7) OF SEC TION 206 C OF THE IT ACT, THAT THE INTEREST SHOULD BE CALUCULATED ONLY IN RESPECT OF THOSE BUYERS WHO HAVE NOT PAID TAX DUE ON THE RETURNED INCOME WHEREAS INTEREST SHOULD BE CALCULATED IN CASES OF ALL THE BUYERS WHO HAVE FILED FORM NO. 27BA AS PROVIDED IN ABOVE SECTION. I.T.A. NOS. 348 AND 349/RJT/2015 ITA NOS 337 AND 338/RJT/2014 ASSESSMENT YEARS: 2010 - 11 AND 2011 - 12 PAGE 3 OF 9 3. THE LEARNED CIT(A) HAS ERRED IN LAW AS WELL AS ON FACTS IN DIRECTING NOT TO TREAT THE ASSESSEE IN DEFAULT FOR NON COLLECTION OF TCS ON SALE OF SCRAP TO MANUFACTURER WHERE FORM 27C HAS NOT BEEN FILED WITH THE DEPARTMENT, EVEN THOUGH THE SAME WERE FILED INORDINATELY LATE AND AFTER THE DETECTION OF DEFAULT BY THE DEPARTMENT. 4. THE LEARNED CIT(A) HAS ERRED IN LAW, AS WELL AS ON FACTS, IN DIRECTING NOT TO CHARGE INTEREST ON SALES WHERE FORM 27C ARE FILED BELATEDLY AND AFTER DETECTION OF DEF AULT BY THE DEPARTMENT. 5. THE LEARNED CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING TO REDUCE THE LIABILITY, EVEN THOUGH THE AO HAS, ON VERIFICATION OF DETAILS FILED IN CERTIFICATE FORM 27BA, FOUND THAT THE ASSESSEE HAS NOT COMPLIED WITH THE REQUIREM ENTS OF THE APPELLATE DECISION DATED 28.3.2014 OF THE LEARNED CIT(A), THUS REVERSING THE DECISION OF THE PREDECESSOR CIT(A). 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE AO PASSED UNDER SEC TION 206C(6A) AND 206C(7) OF THE ACT. 4 . COMING TO THE APPEALS FILED BY THE ASSESSEE, WE FIND THAT THESE TWO APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST TWO SEPARATE BUT MATERIALLY SIMILAR ORDERS DATED 28 TH MARCH 2014, PASSED BY THE CIT(A) IN THE MATTER OF DEMAND OF RS 16,39,218 AND RS 4,80,598 RAISED ON THE ASSESSEE UNDER SECTION 206C(6)/ 206(7) OF THE INCOME TAX ACT, 1961 FOR THE ASSESSMENT YEARS 2010 - 11 AND 2011 - 12 RESPECTIVELY 5. GRIEVANCES RAISED BY THE ASSESSEE, WHICH ARE COMMON TO OTHER TH E YEARS - EXCEPT FOR VARIATION IN THE AMOUNTS, ARE AS FOLLOWS: 1 . THE ORDER PASSED BY THE LEARNED CIT(A), AS WELL AS BY THE ITO, IS BAD IN LAW AND BAD ON FACTS. 2. THE LEARNED CIT(A), AS WELL AS LEARNED ITO, HAS ERRED IN LAW AND ON FACTS BY CONSIDERING TH E TRADING OF USED DISCARDED ITEMS AS SCRAP DEFINED IN SECTION 206C(1) OF THE INCOME TAX ACT, 1961, WHICH I.T.A. NOS. 348 AND 349/RJT/2015 ITA NOS 337 AND 338/RJT/2014 ASSESSMENT YEARS: 2010 - 11 AND 2011 - 12 PAGE 4 OF 9 WAS NEITHER GENERATED OUT OF ANY MANUFACTURING ACTIVITY NOR FROM ANY OF MECHANICAL WORKING OF MATERIALS AT ANY POINT OF TIME, WHICH WAS AT ALL THE TIME OF PREVIOUS SALES, FINISHED PRODUCT AND DUE TO NON USAGE OF IT, IS BEING DISCARDED AND WORDED AS USED SCRAP. 3. THE LEARNED CIT(A), AS WELL AS LEARNED ITO, HAS ERRED IN LAW AND ON FACTS, BY INVOKING PROVISIONS OF SECTION 206C OF THE INCOME TAX ACT, 1961, SINCE THE PURCHASER OF USED DISCARDED ITEMS DOES NOT FALL WITHIN THE MEANINGS OF BUYER GIVEN IN SECTION 206C OF THE INCOME TAX ACT, 1961. 4. THE LEARNED CIT(A), AS WELL AS LEARNED ITO, HAS ERRED IN LAW AND ON FACTS, BY INVOKING THE PROVISIONS OF SECTION 206C OF THE INCOME TAX ACT, AND IGNORING THE FACT THAT THE PROVISION IS APPLICABLE TO THOSE SCRAP WHICH ARISES FROM MANUFACTURING ACTIVITY OR MECHANICAL WORKING ON MATERIALS AND SALE OF USED DISCARDED ITEM MADE BY ITEM IS NOT GENERATED FROM ANY MANUFACTU RING ACTIVITY NOR MECHANICAL WORKING OR MATERIALS TRADED. 5. THE LEARNED CIT(A), AS WELL AS LEARNED ITO, HAS ERRED IN LAW AND ON FACTS WHILE WORKING OUT THE FIGURE OF SALE OF DISCARDED ITEMS AT RS 11,63,40,150 (AY 10/11) AND RS 4,35,22,374 (AY 11/12) AS WELL AS TCS @ 1% AMOUNTING TO RS 11,63,401 (AY 10/11) AND RS 4,35, 223 (AY 11/12) UNDER THE PROVISIONS OF SECTION 206C OF THE ACT. 6. THE LEARNED CIT(A), AS WELL AS LEARNED ITO, HAS ERRED IN LAW AND ON FACTS WHILE WORKING OUT THE INTEREST CHARGEABLE UND ER SECTION 206C(7) OF THE ACT 6. BRIEFLY STATED, THE RELEVANT MATERIAL FACTS, AS NECESSARY FOR ADJUDICATION ON THESE APPEALS, ARE AS FOLLOWS. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN RECYCLED NON FERROUS METAL SUCH AS BRASS SCRAP, COPPER SCR AP, ZINC SCRAP, LEAD SCRAP AND OTHER METAL SCRAP. THE ASSESSEE IMPORTS SCRAP MATERIAL, CONTAINING COPPER ZINC OR BRASS, FROM DIFFERENT COUNTRIES, AND SELLS THE SAME IN THE DOMESTIC MARKET. THE ASSESSEE WAS SUBJECTED TO A TDS COMPLIANCE SURVEY ON 2 ND DECEM BER 2010. DURING THE COURSE OF THIS SURVEY, IT WAS NOTED THAT THE ASSESSEE HAS SOLD SCRAP OF RS 11,63,40,150 DURING THE FINANCIAL YEAR 2009 - 10 AND OF RS 4,35,22,374 DURING THE YEAR 2010 - 11, BUT HAS NOT COLLECTED THE TAX AT I.T.A. NOS. 348 AND 349/RJT/2015 ITA NOS 337 AND 338/RJT/2014 ASSESSMENT YEARS: 2010 - 11 AND 2011 - 12 PAGE 5 OF 9 SOURCE AS REQUIRED UNDER SECTION 206C(1). THE STAND OF THE ASSESSEE WAS THAT THE ASSESSEE IS A DEALER IN SCRAP AND THE SCRAP IS NOT GENERATED BY MANUFACTURE OR ANY MECHANICAL PROCESS AT ASSESSEE S END . THE ASSESSEE ALSO OBJECTED TO THE QUANTIFICATION OF SALES, AS WAS DONE BY THE ASSESSIN G OFFICER AT THE TIME OF RAISING LIABILITY UNDER SECTION 206C(1). IT WAS ALSO SUBMITTED THAT SINCE THE PERSONS BUYING THE SCRAP HAVE ANYWAY PAID THEIR TAXES, THIS LAPSE, EVEN IF THAT BE SO, IS TAX NEUTRAL. THESE, AND OTHER SUBMISSIONS, WERE REJECTED BY T HE ASSESSING OFFICER. IT WAS IN THIS BACKDROP THAT THE DEMANDS FOR NON COLLECTION OF TAX AT SOURCE AND INTEREST THEREON WERE RAISED ON THE ASSESSEE. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). LEARNED CIT(A), INTER ALIA, DIRECTED TH E ASSESSEE TO FURNISH FORM 27BA IN THE PRESCRIBED FORMAT AND THE ASSESSING OFFICER TO VERIFY THE DETAILS. HE FURTHER HELD THAT WHEREVER THE BUYERS HAVE COMPLIED WITH SECTION 206C, BY FURNISHING THE REQUISITE FORM 27BA, TO THAT EXTENT, THE ASSESSEE SHOULD N OT BE HELD TO THE ASSESSEE IN DEFAULT. THE CIT(A) FURTHER HELD THAT THE SALE OF INGOTS DOES NOT AMOUNT TO SALE OF SCRAP, AND THE RELATED DEMAND WAS DELETED. WITH THESE DIRECTIONS, THE MATTER WAS REMITTED TO THE FILE OF THE ASSESSING OFFICER. 7. AGGRIEVED BY THE ORDER SO PASSED BY THE CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. HIS CONTENTION IS THAT THE PROVISIONS OF SECTION 206C(1) DONOT APPLY AT ALL TO THE SCRAP MATERIAL TRADED BY HIM. 8. IN THE MEANTIME, GIVING EFFECT TO THE DIRECTIONS OF THE CIT(A) , THE ASSESSING OFFICER DELETED DEMAND IN RESPECT OF SALE OF INGOT. HOWEVER, AS REGARDS THE REMAINING SALES, THE ASSESSING OFFICER NOTED THAT SINCE THE ASSESSEE IS NOT CONCLUSIVELY ABLE TO ESTABLISH THAT THE SALES WAS INCLUDED IN PURCHASES OF THE BUYERS AN D THE PROFITS EARNED BY THEM ON THESE PURCHASES WERE OFFERED TO TAX, RELIEF CANNOT BE GRANTED. THE ASSESSEE ONCE AGAIN PROCEEDED IN APPEAL BEFORE THE CIT(A). THE CIT(A) NOTED THAT THE ASSESSEE HAS DULY FURNISHED THE FORM 27BA, AND IN THE LIGHT OF THE SPEC IAL BENCH DECISION OF THIS TRIBUNAL, IN THE CASE OF BHARTI AUTO PRODUCTS VS CIT [(2013) 145 ITD SB 1 (RJT)], LEARNED CIT(A) I.T.A. NOS. 348 AND 349/RJT/2015 ITA NOS 337 AND 338/RJT/2014 ASSESSMENT YEARS: 2010 - 11 AND 2011 - 12 PAGE 6 OF 9 DIRECTED THE ASSESSING OFFICER TO GRANT RELIEF ON THE BASIS OF FORM 27BA FILED BY THE ASSESSEE. THE ASSESSING OFFICER IS AGGRIEVED A ND IS IN APPEAL BEFORE US. 9. HAVING HEARD THE RIVAL CONTENTIONS, AND HAVING PERUSED THE MATERIAL ON RECORD, WE FIND THAT THE ISSUE IS SQUARELY COVERED BY THE SPECIAL BENCH DECISION OF THIS TRIBUNAL, IN THE CASE OF BHARTI AUTO PRODUCTS (SUPRA), WHEREIN TH E TRIBUNAL HAS, INTER ALIA, HELD AS FOLLOWS: 42. WE SHALL NOW TURN TO ADDITIONAL GROUND NO. 3. AT THE TIME OF HEARING, OUR ATTENTION WAS ALSO DRAWN TO THE FIRST PROVISO INSERTED IN SUB - SECTION (6A) OF SECTION 206C WITH EFFECT FROM 1.7.2012 ACCORDING TO WHI CH ANY PERSON, OTHER THAN A PERSON REFERRED TO IN SUB - SECTION (1D) OF SECTION 206C, 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 RECEIVED 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 SECTIO N 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 RESPONSIBLE FOR COLLECTING TAX AT SOURCE FURNISHES A CERTIFI CATE TO THIS EFFECT FROM AN ACCOUNTANT IN SUCH FORM AS MAY BE PRESCRIBED, WHICH, ACCORDING TO RULE 37J OF THE INCOME - TAX RULES, SHALL BE FURNISHED IN FORM NO. 27BA. THE AFORESAID PROVISO RELAXES THE RIGOURS OF CONSEQUENCES FLOWING FROM NON - COLLECTION OF TA X AT SOURCE IF THE CONDITIONS STIPULATED BY THE SAID PROVISO ARE FULFILLED. 43. THERE IS NO DISPUTE THAT THE SAID PROVISO HAS BEEN INSERTED IN SUB - SECTION (6A) OF SECTION 206C WITH EFFECT FROM 1.7.2012. AMENDMENTS ON EXACTLY SIMILAR LINES HAVE BEEN CARRIED OUT IN SECTION 201 OF THE INCOME - TAX ACT BY INSERTING A PROVISO TO SUB - SECTION (1) THEREOF WITH EFFECT FROM 1.7.2012. THE NEED FOR SUCH AMENDMENT HAS BEEN EXPLAINED IN THE EXPLANATORY NOTES TO THE FINANCE BILL 2012 AS UNDER: E. RATIONALIZATION OF TAX DED UCTION AT SOURCE (TDS) AND TAX COLLECTION AT SOURCE (TCS) PROVISIONS IN ORDER TO PROVIDE CLARITY REGARDING DISCHARGE OF TAX LIABILITY BY THE RESIDENT PAYEE ON PAYMENT OF ANY SUM RECEIVED BY HIM WITHOUT DEDUCTION OF TAX, IT IS PROPOSED TO AMEND SECTION 201 TO PROVIDE THAT THE PAYER WHO FAILS TO DEDUCT THE WHOLE OR ANY PART OF THE TAX ON THE PAYMENT MADE TO A RESIDENT PAYEE SHALL NOT BE DEEMED TO BE AN ASSESSEE IN DEFAULT IN RESPECT OF SUCH TAX IF SUCH RESIDENT PAYEE I.T.A. NOS. 348 AND 349/RJT/2015 ITA NOS 337 AND 338/RJT/2014 ASSESSMENT YEARS: 2010 - 11 AND 2011 - 12 PAGE 7 OF 9 (I) HAS FURNISHED HIS RETURN OF INCOME U NDER SECTION 139; (II) HAS TAKEN INTO ACCOUNT SUCH SUM 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 PAYER FURNISHES A CERTIFICATE TO THIS EFFECT FROM AN ACCOUN TANT IN SUCH FORM AS MAY BE PRESCRIBED. THE DATE OF PAYMENT OF TAXES BY THE RESIDENT PAYEE SHALL BE DEEMED TO BE THE DATE ON WHICH RETURN HAS BEEN FURNISHED BY THE PAYEE. IT IS ALSO PROPOSED TO PROVIDE THAT WHERE THE PAYER FAILS TO DEDUCT THE WHOLE OR ANY PART OF THE TAX ON THE PAYMENT MADE TO A RESIDENT AND IS NOT DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER SECTION 201(1) ON ACCOUNT OF PAYMENT OF TAXES BY THE SUCH RESIDENT, THE INTEREST UNDER SECTION 201(1A)(I) SHALL BE PAYABLE FROM THE DATE ON WHICH SUCH TA X WAS DEDUCTIBLE TO THE DATE OF FURNISHING OF RETURN OF INCOME BY SUCH RESIDENT PAYEE. AMENDMENTS ON SIMILAR LINES ARE ALSO PROPOSED TO BE MADE IN THE PROVISIONS OF SECTION 206C RELATING TO TCS FOR CLARIFYING THE DEEMED DATE OF DISCHARGE OF TAX LIABILITY B Y THE BUYER OR LICENSEE OR LESSEE. THESE AMENDMENTS WILL TAKE EFFECT FROM 1ST JULY, 2012. 44. FIRST PROVISO INSERTED IN SUB - SECTION (6A) OF SECTION 206C SEEKS TO ACHIEVE THREE - FOLD OBJECTIVES. ONE, IT SEEKS TO (1) ENSURE THAT THERE IS NO LOSS TO THE REVENU E, I.E., (I) THE BUYER HAS FURNISHED HIS RETURN OF INCOME U/S 139, (II) THE BUYER HAS TAKEN INTO ACCOUNT SUCH SUM ON WHICH TAX WAS REQUIRED TO BE COLLECTED AT SOURCE U/S 206C FOR COMPUTING INCOME IN SUCH RETURN OF INCOME, (III) THE BUYER HAS PAID THE TAX D UE ON THE INCOME DECLARED BY HIM IN SUCH RETURN OF INCOME, (IV) THE PAYER, I.E., THE PERSON RESPONSIBLE FOR COLLECTING THE TAX AT SOURCE U/S 206C, HAS FURNISHED A CERTIFICATE IN FORM NO. 27BA CONFIRMING THE AFORESAID; (2) RATIONALIZE THE PROVISIONS RELATIN G TO COLLECTION OF TAX AT SOURCE; (3) PROVIDE RELIEF TO THE COLLECTOR OF TAX AT SOURCE FROM THE CONSEQUENCES OF NON/SHORT DEDUCTION COLLECTION OF TAX AT SOURCE AND TO THAT EXTENT IT IS A BENEFICIAL PROVISION. IN THE AFORESAID BACKGROUND, THE ISSUE THAT ARI SES FOR CONSIDERATION IS WHETHER THE FIRST PROVISO TO SECTION 206C(6A) IS APPLICABLE TO PENDING MATTERS ALSO NOTWITHSTANDING THE FACT THAT IT HAS BEEN MADE EFFECTIVE FROM 1.7.2012. 45. IN CIT V. CHANDULAL VENICHAND, 209 ITR 7 (GUJ.), THE ISSUE BEFORE THE H ON BLE JURISDICTIONAL HIGH COURT WAS WHETHER THE FIRST PROVISO INSERTED IN I.T.A. NOS. 348 AND 349/RJT/2015 ITA NOS 337 AND 338/RJT/2014 ASSESSMENT YEARS: 2010 - 11 AND 2011 - 12 PAGE 8 OF 9 SECTION 43B WITH EFFECT FROM 1.4.1988, WHICH WAS INTENDED TO BE A BENEFICIAL PROVISION, WOULD APPLY RETROSPECTIVELY. THE HON BLE HIGH COURT HAS HELD: ONCE IT IS HELD THAT THE PROVI SO IS INSERTED AS A REMEDIAL AND CURATIVE MEASURE FOR REMOVING THE DIFFICULTIES FACED BY THE TAXPAYERS BECAUSE OF INADVERTENT MISTAKE OR OMISSION WHICH HAS CREPT IN IN DRAFTING SECTION 43B, IT WOULD BE JUST AND PROPER TO HOLD THAT IT WOULD RELATE BACK TO T HE DATE WHEN SECTION 43B WAS INTRODUCED. THE AFORESAID JUDGMENT OF THE HON BLE JURISDICTIONAL HIGH COURT HAS BEEN APPROVED BY THE HON BLE SUPREME COURT IN ALLIED MOTORS (P.) LTD. V. CIT, 224 ITR 677 (SC). KEEPING IN VIEW THE FACT THAT THE FIRST PROVISO TO SUB - SECTION (6A) OF SECTION 206C NOT ONLY SEEKS TO RATIONALIZE THE PROVISIONS RELATING TO COLLECTION OF TAX AT SOURCE BUT IS ALSO BENEFICIAL IN NATURE IN THAT IT SEEKS TO PROVIDE RELIEF TO THE COLLECTORS OF TAX AT SOURCE FROM THE CONSEQUENCES FLOWING FROM NON/SHORT COLLECTION OF TAX AT SOURCE AFTER ENSURING THAT THE INTEREST OF THE REVENUE IS WELL PROTECTED, WE HAVE NO HESITATION TO HOLD THAT THE SAID PROVISO WOULD APPLY RETROSPECTIVELY AND THEREFORE TO BOTH THE ASSESSMENT YEARS UNDER APPEAL. WE THEREFORE DIRECT THE ASSESSEE TO APPEAR BEFORE THE ASSESSING OFFICER ALONG WITH RELEVANT DOCUMENTS AS STIPULATED BY THE FIRST PROVISO TO SUB - SECTION (6A) OF SECTION 206C WITHIN TWO MONTHS OF THE DATE ON WHICH THIS ORDER IS PRONOUNCED UPON WHICH THE AO SHALL EXAMINE THE CLAIM OF THE ASSESSEE IN THE LIGHT OF THE SAID PROVISIONS AND PASS APPROPRIATE ORDER ACCORDINGLY IN CONFORMITY WITH LAW AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. THUS THE ISSUE RAISED IN ADDITIONAL GROUND NO. 3 STANDS RESTORED TO THE FILE OF THE AO WITH THE AFORESAID OBSERVATIONS. 46. IN VIEW OF THE FOREGOING, BOTH THE APPEALS FILED BY THE ASSESSEE ARE PARTLY ALLOWED. 10. IN THE CASES BEFORE US, THERE IS NO DISPUTE THAT ALL THE REQUISITE PAPERS ARE DULY FURNISHED TO THE ASSESSING OFFICER, AND IT IS ONLY AFTER VERIFYING THESE PAPERS THAT THE ASSESSING OFFICER HAS GIVEN THE IMPUGNED RELIEF AND THEREBY RAISED THE TCS DEMANDS. UNDOUBTEDLY, THE PROVISO INSERTED TO 206C(6A) IS INSERTED WITH EFFECT FROM 1 ST APRIL 2012, BUT, AS THE SPECI AL BENCH HAD HELD, IT IS RETROSPECTIVE IN EFFECT. A SIMILAR PROVISO ADDED TO SECTION 40(A)(IA), EVEN THOUGH STATED TO BE EFFECTIVE FROM 1 ST APRIL 2012, HAS BEEN HELD TO BE RETROSPECTIVE IN EFFECT, IN THE CASE OF CIT VS ANSAL LANDMARK TOWNSHIP PVT LTD [ (201 5) 61 TAXMANN.COM 45 (DELHI) ]. THE CONCLUSIONS ARRIVED AT BY THE SPECIAL BENCH ARE NOW SUPPORTED BY THE ESTEEMED VIEWS OF HON BLE DELHI HIGH COURT AS WELL. IT IS ALSO IMPORTANT TO BEAR IN MIND THE FACT THAT LIKE TDS DEMANDS RAISED UNDER SECTION 201, TCS DE MANDS RAISED UNDER SECTION 206C ARE IN THE NATURE OF I.T.A. NOS. 348 AND 349/RJT/2015 ITA NOS 337 AND 338/RJT/2014 ASSESSMENT YEARS: 2010 - 11 AND 2011 - 12 PAGE 9 OF 9 VICARIOUS LIABILITIES WHICH SURVIVE ONLY AS LONG AS PRINCIPAL LIABILITY OF THE TAXPAYER REMAINS IN EXISTENCE. WHEN THE PRINCIPAL TAX LIABILITY ITSELF IS EXTINGUISHED, THE VERY RAISON D'TRE OF THE DEMAND RAISED UNDER SECTION 206C CEASES TO HOLD GOOD IN LAW. THE DETAILS FURNISHED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER AND THE VERIFICATIONS BY THE ASSESSING OFFICER ARE INTENDED TO ENSURE THAT THE BUYER OF THE GOODS HAS DULY DISCHARGED HIS TAX LIABILI TY IN RESPECT OF THE INCOME EARNED IN RESPECT OF GOODS IN QUESTION. ONCE THAT SATISFACTION IS ARRIVED AT, THERE CANNOT BE ANY JUSTIFICATION OF RECOVERING THE TAX COLLECTIBLE AT SOURCE WHICH IS, IN ANY EVENT, ADJUSTABLE AGAINST THE TAX LIABILITY OF THE BUYE R OF THE SCRAP. THE RELIEF GRANTED BY THE ASSESSING OFFICER IS IN ACCORDANCE WITH THE LA W LAID DOWN BY THE BINDING JUDICIAL PRECEDENTS . IN VIEW OF THESE DISCUSSIONS THE CIT(A), IN THE SECOND ROUND, WAS INDEED JUSTIFIED IN GRANTING THE IMPUGNED RELIEF. AS FOR THE APPEALS FILED BY THE ASSESSEE AGAINST THE ORDER PASSED BY THE CIT(A) IN THE FIRST ROUND, THESE APPEALS ARE NOW INFRUCTUOUS AS THE RELIEF IS GRANTED TO THE ASSESSEE BY THE AO WHILE GIVING EFFECT TO THE DIRECTIONS OF T HE CIT(A) IN THE SECOND ROUND WH ICH NOW STANDS CONFIRMED AND APPROVED BY US. 11. IN THE RESULT, ALL THE APPEALS ARE DISMISSED. PRONOU NCED IN THE OPEN COURT TODAY ON THE 29 TH DAY OF FEBRUARY 2016. SD/ - SD/ - KUL BHARAT PRAMOD KUMAR (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AHMEDABAD; 29 TH DAY OF FEBRUARY , 2016 COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ETC ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT