I.T.O.((TDS) WARD -1(1), Nagpur V. SHRI AMARNATH BACHAIRAM GUPTA, Nagpur

ITA 382/NAG/2016

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 4502 (ITAT-NAGPUR)
• Duration Of Justice: 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-10-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 10-06-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A R NINAWE
• Keywords: Tax effect

Judgement Text

1 ITA NOS. 382 TO 385/NAG/2016. & ITA NOS. 387 TO 391/NAG/2016. IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. (S.M.C.) S.NO. ITA NO. ASSTT. YEA R. 1. 382/NAG/2016 2010 - 11. 2. 383/NAG/2016 2011 - 12. 3. 384/NAG/2016 2012 - 13. 4. 385/NAG/2016 2013 - 14. THE INCOME - TAX OFFICER, SHRI AMARNATH BACHIRAM G UPTA, (TDS), WARD - 1(1), NAGPUR. VS. NAGPUR. PAN ABQPG8852R. APPELLANT. RESPONDENT. S.NO. ITA NO. ASSTT. YEA R. 1. 38 7 /NAG/2016 2010 - 11. 2. 38 8 /NAG/2016 2011 - 12. 3. 38 9 /NAG/2016 2012 - 13. 4. 3 90 /NAG/2016 2013 - 14. 5. 3 91 /NAG/2016 20 14 - 15. SHRI AMARNATH BACHIRAM GUPTA, THE INCOME - TAX OFFICER, NAGPUR. VS. (TDS), WARD - 1(1), NAGPUR. APPELLANT. RESPONDENT. DEPARTMENT BY : SHRI A.R. NINAWE. ASSESSEE BY : NONE. DATE OF HEARING : 30 - 09 - 2016 DATE OF PRONOUNCEMENT : 3 RD OCT. , 2016 O R D E R . THESE ARE CROSS APPEALS BY THE ASSESSEE AND THE REVENUE EMANATING OUT OF ORDERS OF LEARNED CIT(APPEALS) DATED 22 - 03 - 2016 FOR THE CONCERNED ASSESSMENT YEARS. 2 ITA NOS. 382 TO 385/NAG/2016. & ITA NOS. 387 TO 391/NAG/2016. 2. REVENUES APPEALS: THE COMMON GROUNDS RAISED READ AS UNDER : 1. THE LEARNED CIT(APPEALS) - II, NAGPUR ERRED IN DELETING THE TOTAL DEMAND OF RS.10,47,761/ - RAISED U/S 206C(6A)/206C(7) OF THE I.T. ACT, 1961 FOR F.Y. 2009 - 10 (A.Y. 2010 - 11) TO F.Y. 2012 - 13 (A.Y. 2013 - 14) UPTO 30 - 06 - 2012 (TAX EFFECT FOR A.Y. 2010 - 2011 IS RS.2,53,493/ - ). 2. THE LEARNED CIT(APPEALS) - II, NAGPUR ERRED IN HOLDING THAT THE DECISION OF HONBL ITAT, AGRA BENCH, AGRA SQUARELY APPLIES TO THE FACTS OF THE CASE OF THE APPELLANT WITHOUT APPRECIATING THAT MERE FURNISHING OF PAN OF THE ASSESSEE IS NOT SUFFICIENT TO VERIFY WHETHER TAXES ARE PAID BY THE COLLECTEE (BUYERS) ON THE DISPUTED AMOUNT. 3. THE LEARNED CIT(APPEALS) - II, NAGPUR HAS ERRED IN NOT APPRECIATING THE FACT THAT THE ONUS LIES ON THE COLLECTOR TO PROVE THAT THE DISPUTED AMOUNT HAS BEEN INCLUDED BY THE COLLECTEE IN THE RETURN OF INCOME AND TX HAS BEEN PAID ON THE SAME AND THAT THE SAID ONUS HAS NOT BEEN DISCHARGED BY THE COLLECTOR. ASSESSEES APPEALS: THE COMMON GROUNDS RAISED READ AS UNDER : 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER OF THE LEARNED ASSESSING OFFICER IS BAD IN LAW. 2. THAT THE LEARNED CIT(A) - II ERRED IN REJECTING APPELLANTS PLEA ON MERIT THAT TCS IS NOT APPLICABLE ON SALES OF GOODS IN QUESTION AS THEY DO NOT SATISFY THE DEFINITION OF M.S. SCRAP AS DEFINED BY SECTION 206(C) OF THE INCOME TAX ACT, 1961. 3. THAT THE LEARNED CIT(A) - II ERRED IN LIMITING THE APPLICABILITY OF JUDGEMENT PASSED BY HONOURABLE ITAT, AGRA UPTO 30.06.2012. 4. THAT THE APPELLANT PRAYS TO GET OPPORTUNITY TO SUBMIT CONTACT AND PAN DETAILS OF REMAINING BUYERS WHOSE DETAILS CO ULD NOT BE SUBMITTED DUE TO PAUCITY OF TIME DURING THE COURSE OF FIRST APPELLATE PROCEEDINGS, SO AS TO GET RELIEF ON SALES TO SUCH BUYERS ON THE BASIS OF JUDGEMENT PASSED BY HONOURABLE ITAT, AGRA. 3. BRIEF FACTS OF THE CASE ARE AS UNDER : THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PURCHASING SCRAP FROM INDIAN RAILWAYS AND IS SUBSEQUENTLY SELLING SUCH SCRAP IN THE MARKET. A SPOT 3 ITA NOS. 382 TO 385/NAG/2016. & ITA NOS. 387 TO 391/NAG/2016. VERIFICATION WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE ON 28 - 02 - 2014 AND IT WAS NOTED THAT WHILE THE INDIAN RAIL WAYS WERE MAKING TCS WHILE SELLING SCRAP TO THE ASSESSEE, THE ASSESSEE WAS NOT MAKING TCS WHILE SELLING THE GOODS IN THE MARKET. THE ASSESSEE WAS ACCORDINGLY REQUIRED TO EXPLAIN THE REASON FOR NOT MAKING TCS. 4. THE ASSESSEE EXPLAINED THAT IT WAS COVERED B Y DECISION OF NAVINE FLUORINE INTERNATIONAL VS. ACIT TDS WHEREIN HONBLE ITAT, AHMEDABAD HAD DECIDED THE MATTER IN ITS FAVOUR AND ALSO SUBMITTED THAT THE ASSESSEE IS NOT DEALING IN SCRAP AND THAT THE PRODUCT SOLD BY IT IS NOT A RESULT OF ANY MANUFACTURING OR MECHANICAL WORK. THE AO, HOWEVER, DID NOT AGREE WITH THE SUBMISSIONS OF THE ASSESSEE AND HELD THE ASSESSEE TO BE AN ASSESSEE IN DEFAULT FOR TAX AND INTEREST AMOUNTING TO RS.13,86,432/ - , RS.15,04,272/ - , RS.10,07,602/ - , RS.10,24,091/ - AND RS.8,03,861/ - FO R ASSESSMENT YEARS 2010 - 11, 2011 - 12, 2012 - 13, 2013 - 14 AND 2014 - 15 RESPECTIVELY. 5. UPON ASSESSEES APPEAL , LEARNED CIT(APPEALS) ELABORATELY CONSIDERED THE ISSUE. HE OBSERVED AS UNDER : I HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS OF THE APPELL ANT. THE FIRST ARGUMENT OF THE APPELLANT IS THAT IT WAS NEVER REQUIRED TO COLLECT TAX IN RESPECT OF SCRAP SALE IN VIEW OF DETAILED FINDINGS GIVEN IN THE CASE OF NAVINE FLUORINE INTERNATIONAL LTD. VS. ACIT (SUPRA) SUCH A CONCLUSION OF THE APPELLANT IS ERRONEOUS AS THE SAID CASE LAW IS NO LONGER GOOD LAW IN VIEW OF THE FINDING OF SPECIAL BENCH, ITAT, RAJ KOT IN THE CASE OF BHARATT AUTO PRODUCTS VS. CIT, RAJKOT (SUPRA) WHEREIN IT HAS BEEN HELD THAT SECTION 206C FASTENED THE LIABILITY ON THE SELLER OF SCRAP FOR COLLECTION OF TAX AT SOURCE AND THAT THERE IS NO REQUIREMENT THAT SUCH A SELLER SHOULD HIMSELF GEN ERATE SCRAP FROM MANUFACTURING OR MECHANICAL WORKING OF MATERIAL UNDERTAKEN BY HIM. IN THE SAID ORDER IT WAS ALSO HELD THAT IN ORDER TO INVOKE PROVISION TO SECTION 206C, MODE OF SALE NEED NOT BE BY WAY OF AUCTION OR TENDER BUT IT COULD BE BY ANY OTHER MODE . ACCORDINGLY, THE LEARNED CIT(APPEALS) UPHELD THE AOS ACTION FOR TREATING THE ASSESSEE AS ASSESSEE IN DEFAULT. 4 ITA NOS. 382 TO 385/NAG/2016. & ITA NOS. 387 TO 391/NAG/2016. 6. LEARNED CIT(APPEALS) FURTHER GRANTED RELIEF TO THE ASSESSEE TO THE EXTENT FORM NO. 27BA WAS SUBMITTED. HOWEVER, LEARNED CIT(APPEALS) DID NO T ACCEPT THE ASSESSEES CONTENTION THAT DUE TO PAUCITY OF TIME FORM NO. 27BA ALL HAS NOT BEEN SUBMITTED. FURTHER LEARNED CIT(APPEALS) GRANTED RELIEF TO THE ASSESSEE IN TERMS OF ITAT, AGRA BENCH DECISION IN THE CASE OF ALLAHABAD BANK VS. ITO IN ITA NOS. 448 TO 454/AGRA/2011 VIDE ORDER DATED 20 - 06 - 2014 AND HONBLE KARNATAKA HIGH COURT DECISION IN THE CASE OF SHREE MANJUNATH WINES IN ITA NO. 333/2007 VIDE ORDER DATED 13 - 09 - 2011 . LEARNED CIT(APPEALS) CONCLUDED AS UNDER : 8 . 4 ON CAREFUL OBSERVATION , I T IS CLEA R LY SEEN THAT THE RAT I O { AID DOWN BY THE HON'BLE ITAT , AGRA BENCH , AGRA AND HON ' BLE KARNATAKA H I GH COURT SQUARELY APP LI ES TO THE FACTS I N THE CASE OF THE APPELLANT . THE DETA I LS OF ALL THE PERSONS FROM WHOM T AX W AS R EQU I RED TO BE DEDUCTED AT SOURCE ARE AVAILABLE ON RECORD AND W I TH THE LD . AO . THE PERMANENT ACCOUNT NUMBERS (PANS) OF SUCH PARTIES ARE ALSO AVAILABLE BEFORE THE ID . AO . RESPECTFULLY FOLLOWING THE DECISION OF HON ' BLE ITAT, AGRA BENCH, AGRA . AS WELL AS HON ' BLE KARNATAKA HIGH COURT, RELIEF HAS TO BE GRANTED TO THE APPELLANT ' AND THE DEMANDS RAISED U/S. 206(6A) I N RESPECT OF THE PARTIES WHOSE DETA I LS WERE MADE AVAILABLE BY THE APPELLANT TO THE ID . AO WOULD HAVE TO BE CANCELLED . 8 . 5 HOWEVER , AS DISCUSSED EARLIER , FIRST PROVISO TO SECTION 206C ( 6A ) WAS I NSERTED FROM 01 - 07 - 2012 WHICH REQUIRED FORM NO. 27BA TO BE SUBMITTED BY THE APPELLANT BEFORE THE LD . AO W . E . F . 01 - 07 - 2012 AND IN SUCH C I RCUMSTANCES THE ASSESSEE WOULD NOT BE TREATED TO BE THE ASSESSEE IN DEFAULT. IN V I EW OF THE ABOVE AMENDMENT TO THE I T ACT , THE FINDINGS GIVEN IN THE CASE OF ALLAHABAD BANK VS. ITO (SUPRA) AND MANJUNATH W I NES (SUPRA) WOULD NOT BE GOOD LAW AFTER 01 - 07 - 2012 . CONSEQUENTLY , THE BENEFIT OF THE ABOVE JUDGEMENTS WOULD BE LIM I TED TO A.Y 2010 - 11 , 2011 - 12 AND 2012 - 13 AN D UP TO 01 - 07 - 2 012 I N A.Y 2013 - 14. THUS THE SAID BENEFIT WOULD NOT BE AVA I LABLE FOR THE R EMAIN I NG PORT I ON OF A.Y 2013 - 14 AND FOR THE ENTIRE A . Y 2014 - 15 . THE LD . AO I S THEREFORE DIRECTED TO ACCORDINGLY GIVE RELIEF TO THE APPELLANT IN RESPECT OF SALES OF RS . 2,53,49 , 360/ - , RS . 3,77,18 , 524/ - AND RS . 2 , 46 , 94 , 083/ - FOR THE A . YRS. 2010 - 11, 2011 - 12 AND 2012 - 13 RESPECTIVELY . FOR THE A . Y 2013 - 14, THE LD. AO IS DIRECTED TO BIFURCATE THE SALE PARTIES I N RESPECT OF WH I CH DETAILS HAVE BEEN SUBMITTED AND FOR THE PER I OD BETWEEN 1 ST APRIL , 2012 AND 01 - 07 - 2012 AND CONSIDER THE APPELLANT NOT TO BE I N DEFAULT I N R ESPECT OF THE CORRESPONDING SALES. THUS THE GROUNDS OF APPEAL OF THE APPELLANT ARE PARTLY ALLOWED. 7. AGAINST THE ABOVE ORDER THE ASSESSEE AND REVENUE ARE IN CROSS APPEALS BEFORE THE ITAT. 5 ITA NOS. 382 TO 385/NAG/2016. & ITA NOS. 387 TO 391/NAG/2016. 8. I HAVE HEARD THE LEARNED D.R. NONE APPEARED ON BEHALF OF THE ASSESSEE. HOWEVER, IN MY CONSIDERED OPINION THE ISSUE CAN BE DISPOSED OF BY HEARING THE LEARNED D.R. AND PERUSING THE RECORDS. 9. UPON CAREFUL CONSIDERAT ION I FIND THAT LEARNED CIT(APPEALS) IS CORRECT IN HOLDING THAT THE ASSESSEES PLEA THAT SINCE THE ASSESSEE HAS NOT GENERATED THE SCRAP IS NOT LIABLE FOR COLLECTION OF TAX AT SOURCE IS NOT SUSTAINABLE IN VIEW OF THE DECISION OF SPECIAL BENCH OF ITAT, RAJKO T IN THE CASE OF BHARATI AUTO PRODUCTS VS. CIT IN ITA NOS. 391 & 392/ RJT/2011 DATED 06 - 09 - 2013. FURTHER MORE I FIND THAT THE ITAT SPECIAL BENCH IN THE CASE OF BHARATI AUTO PRODUCTS (SUPRA) HAS HELD AS UNDER : '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 NE LOSS TO THE REVENUE, 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 DUE 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. 278A CONFIRMING THE AFORESAID; (2) RATIONALIZE THE PROVISIONS RELATING TO COLLECTION OF TAX AT SOURCE ; (3) PROVIDE RELIEF TO THE COLLECTOR OF TAX AT SOURCE FROM THE CONSEQUENCES OF NON / SHORT D EDUCTION COLLECTION OF TAX AT SOURCE AND TO THAT EXTENT IT IS A BENEFICIAL PROVISION . IN THE AFORESAID BACKGROUND , THE ISSUE THAT ARISES FOR CONSIDERATION IS WHETHER THE FIRST PROVISO TO SECTION 206C(6A) IS APPLICABLE TO PENDING MATTERS ALSO NOTWITHSTA NDING THE FACT THAT IT HAS BEEN MADE EFFECTIVE FROM 1 . 7.2012 . 45. IN CIT V. CHANDULALVENICHAND [1994J 209 ITR 7 / 73 TAXMAN 349 (GUJ . ) , THE ISSUE BEFORE THE HON'BLE JURISDICTIONAL HIGH COURT WAS WHETHER THE FIRST PROVISO INSERTED IN SECTION 438 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 PROVISO IS INSERTED AS A REMEDIAL AND CURATIVE MEASURE FOR REMOVING THE DIFFICULTIES FAC ED BY THE TAXPAYERS BECAUSE OF INADVERTENT MISTAKE OR OMISSION WHICH HAS CREPT IN IN DRAFTING SECTION 438, IT WOULD BE JUST AND PROPER TO HOLD THAT IT WOULD RELATE BACK TO THE DATE WHEN SECTION 438 WAS INTRODUCED . ' THE AFORESAID JUDGMENT OF THE HON 'BLE JURISDICTIONAL HIGH COURT HAS BEEN APPROVED BY THE HON 'BIE SUPREME COURT IN ALLIED MOTORS (P.) LTD . V. CIT [1997J 224 ITR 677 / 91 T A X - M - AN 205. KEEPING IN VIEW THE FACT THAT THE FIRST PROVISO TO SUB - SECTION (6A T OF SECTION 206C NOT ONLY SEEKS TO RATIONALIZE THE PROVISIONS RELATING TO CO7LECTION 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 6 ITA NOS. 382 TO 385/NAG/2016. & ITA NOS. 387 TO 391/NAG/2016. FLOWING FROM NON / SHORT COLLECTION OF TAX AT SOURCE AFTER ENSUR I NG 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 . ESSESSMENT 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 PRONOUN CED 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 I SSUE RAISED IN ADD ITIONAL 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. 1 1 10. I FIND THAT IN THE PRESENT CASE ALSO THE ASSESSEE HAS CLAIMED THAT FROM SOME OF THE PARTIES FORM NO. 27BA WAS NOT OBTAINED DUE TO PAUCITY OF TIME. I FIND THAT INTEREST OF JUSTICE DEMANDS THAT SUCH PLEA OF THE ASSESSEE BE ACCEPTED. FURTHER I ALSO CONSIDER T HAT THE LEARNED CIT(APPEALS) ORDER NEED TO BE MODIFIED TO THE EXTENT THAT THE BENEFITS DIRECTED BY THE LEARNED CIT(APPEALS) IN HIS AFORESAID ORDER CAN BE AVAILED BY THE ASSESSEE ONLY AFTER THE DOCUMENTS CLAIMING THE BENEFIT ARE PRODUCED BEFORE THE AO. HEN CE I REMIT THIS ISSUE TO THE FILE OF THE AO. THE AO SHALL CONSIDER THE RELIEF THAT THE ASSESSEE IS ENTITLED IN TERMS OF FIRST PROVISO TO SECTION 6A OF SECTION 2 0 6C. THE AO SHALL ALSO CONSIDER THE ASSESSEES PLEA OF CONSIDERING FORM NO. 27BA WHICH WERE NOT OBTAINED EARLIER. ACCORDINGLY IN THE BACKGROUND OF AFORESAID DISCUSSION I HOLD THAT THE ASSESSEE IS LIABLE FOR TAX COLLECTION AT SOURCE ON THE SCRAP SALE MADE BY THE ASSESSEE. HOWEVER, THE ASSESSEE SHALL BE ENTITLE D TO THE RELIEF IN TERMS OF ITAT, AGRA BE NCH DECISION (SUPRA) TILL THE IN TRODUCTION OF FIRST PROVISO OF SECTION 206C(6A) FROM 01 - 07 - 2012 AND THEREAFTER THE ASSESSEE SHALL BE GRANTED NECESSARY RELIEF ONLY ON SUBMISSION OF FORM NO. 27BA. ACCORDINGLY THE ISSUE IS REMITTED TO THE FILE OF THE AO TO PR OCEED THE SAME IN THE LIGHT OF DISCUSSION AND DIRECTIONS AS ABOVE. 7 ITA NOS. 382 TO 385/NAG/2016. & ITA NOS. 387 TO 391/NAG/2016. 11. IN THE RESULT ALL THESE APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 3 RD DAY OF OCT. , 2016. SD/ - ( SHAMIM YAHYA) ACCOUNTANT MEMBER. NAGPUR, DATED: 3RD OCT. , 2016. COPY FORWARDED TO : 1. SHRI AMARNATH BACHAIRAM GUPTA, PROP. M/S GUPTA STEEL TRADERS, 524, NEAR GRAM PANCHAYAT AT KAPSI KHURD, BHANDARA ROAD, NAGPUR - 440008. 2. I.T.O., (TDS), WARD - 1(1), NAGPUR. 3. C.I.T. - ( TDS ), NAGPUR. 4. CIT(APPEALS), - II , NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. WAKOD E.