The ITO, TDS-3, JAMNAGAR V. Shri Sampatlal Badrilal Somani, JAMNAGAR

ITA 382/RJT/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2231 (ITAT-RAJKOT)
• Duration Of Justice: 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 17-03-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 31-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C S ANJARIA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENC H, RAJKOT [CONDUCTED THROUGH E-COURT AT AHMEDABAD] (BEFORE SHRI ANIL CHATURVEDI, A.M. & SHRI S. S. GOD ARA, J.M.) ( , , ) ITA NOS. 382 & 523/RJT/2015 (ASSESSMENT YEAR: 2010-11) INCOME-TAX OFFICER, TDS-3, JAMNAGAR VS. SAMPATLAL BADRILAL SOMANI PROP. S.B. METAL UDYOG, B-33, GIDC, SHANKER TEKRI, UDHYOGNAGAR, JAMNAGAR PAN NO. AHHPS0245D (APPELLANT) (RESPONDENT) / BY REVENUE : SHRI C. S. ANJARIA, SR. D.R. / BY ASSESSEE : SHRI CHETAN AGRAWAL, A.R. DATE OF HEARING : 17-03-201 6 DATE OF PRONOUNCEMENT : 21-03-2016 ( )/ ORDER PER ANIL CHATURVEDI, ACCOUNTANT MEMBER THESE TWO APPEALS FILED BY THE REVENUE ARE AGAINST THE ORDERS OF CIT(A), JAMNAGAR, DATED 26.06.2015 WHEREBY THE ISSUE OF LIA BILITY U/S. 206C WAS DECIDED IN FAVOUR OF ASSESSEE AND PENALTY ORDER DATED 24.08.2 015 FOR A.Y. 2010-11 WHEREBY PENALTY LEVIED U/S. 271CA BY THE A.O. WAS DELETED. ITA NOS. 382 & 523/RJT/2015 . A.Y. 2010- 11 (ITO VS. SAMPATLAL B. SOMANI) 2 2. THE FACTS AS CULLED OUT FROM THE MATERIAL ON REC ORD ARE AS UNDER. 3. THE ASSESSEE IS AN INDIVIDUAL AND STATED TO BE E NGAGED IN THE TRADING OF FERROUS AND NON-FERROUS METAL SCRAP AND BRASS SCRAP . DURING THE COURSE OF AN INTERNAL AUDIT, IT WAS NOTICED THAT DURING F.Y. 200 9-10, ASSESSEE HAD SOLD SCRAP OF RS.10,56,43,645/- ON WHICH ACCORDING TO A.O., ASSES SEE WAS REQUIRED TO COLLECT TAX AT SOURCE (TCS) U/S.206C(1) OF THE ACT BUT ASSESSEE HAD NOT COLLECTED TAX. ASSESSEE WAS THEREFORE ASKED TO SHOW AS TO WHY THE ORDER U/S .206C(6) OF THE ACT SHOULD NOT BE PASSED AND INTEREST U/S.206C(7) OF THE ACT BE NO T LEVIED, TO WHICH, ASSESSEE INTER ALIA SUBMITTED THAT ASSESSEE HAD SOLD GOODS TO 121 MANUFACTURING ENTITIES FROM WHOM ASSESSEE HAD COLLECTED FORM NO.27C, BUT SINCE THE FORMS WERE MISPLACED, THE SAME COULD NOT BE FILED. WITH RESPECT TO SALE TO 6 ENTITIES, IT WAS SUBMITTED THAT THE SALE WAS TO TRADERS AND THEREFORE ASSESSEE WAS NOT REQUIRED TO COLLECT TAX. THE SUBMISSIONS OF THE ASSESSEE WERE NOT FOUND ACCEPTAB LE TO THE A.O. HE CONCLUDED THAT SINCE ASSESSEE WAS A TRADER IN SCRAP, PROVISIO NS OF EXPLANATION (B) OF SECTION 206C(11) OF THE ACT APPLIES TO THE ASSESSEE. HE T HEREAFTER WORKED OUT THE TCS AMOUNTING TO RS.10,56,436/- WHICH ASSESSEE OUGHT TO HAVE COLLECTED AND SINCE ASSESSEE HAD NOT COLLECTED THE TAX, INTEREST THEREO N FROM 01.10.2004 TO 31.03.2014 WAS WORKED OUT TO RS.5,07,089/- AND THUS, THE TOTAL DEFAULT ON THE PART OF ASSESSEE WAS WORKED OUT AT RS.15,63,525/-. HE THEREAFTER CO NCLUDED THAT SINCE ASSESSEE HAS DEFAULTED IN COMPLYING WITH THE PROVISIONS OF SECTI ON 206C, ASSESSEE WAS LIABLE FOR PENALTY U/S.271CA OF THE ACT AND THEREFORE VIDE ORD ER DATED 22.08.2014 LEVIED PENALTY OF RS.11,83,208/- U/S.271CA OF THE ACT. AG GRIEVED BY THE ORDERS OF A.O., ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A). LD. CIT(A) ON THE ISSUE OF 206C, VIDE ORDER DATED 26.06.2015 PARTLY ALLOWED THE GROU ND OF ASSESSEE BY HOLDING AS UNDER: 6. I HAVE DULY CONSIDERED THE SUBMISSION OF THE AP PELLANT AND ALSO GONE THROUGH THE DISCUSSION MADE IN THE ORDER U/S.206C(6)/206C(7). ITA NOS. 382 & 523/RJT/2015 . A.Y. 2010- 11 (ITO VS. SAMPATLAL B. SOMANI) 3 6.1 ALTHOUGH I DONT AGREE WITH THE APPELLANTS SUB MISSION THAT SECTION 206C(1) IS NOT APPLICABLE IN TRADER CASE, IT IS VERY MUCH APPLICAB LE WHICH HAS NOW BEEN CLARIFIED IN M/S. BHARTI AUTO CASE. HOWEVER, IT HAS ALSO BEEN CLARIF IED THAT LATE SUBMISSION OF FORM 27C & 27BA DOES NOT MAKE THE ASSESSEE IN DEFAULT, BECAUSE PROCEDURAL PROVISIONS ARE GENERALLY CURATIVE IN NATURE. HENCE, THE TCS AS WELL AS INTE REST ON TCD DEMAND IS HEREBY CANCELLED. HOWEVER, INTEREST IS LEVIABLE ON THE TC S TO BE DEDUCTED FROM THE DUE DATE OF DEDUCTION TO THE DATE OF FILING THE RETURN OF INCOM E BY THE BUYERS. ACCORDINGLY THE A.O. IS DIRECTED TO CHARGE THE INTEREST IN CASE OF 27BA FOR MS SUBMISSION. 3.1 ON THE ISSUE OF PENALTY LEVIED U/S.271CA, LD. C IT(A) DECIDED THE ISSUE IN FAVOUR OF ASSESSEE BY HOLDING AS UNDER: 6. I HAVE DULY CONSIDERED THE SUBMISSION OF THE AP PELLANT AND ALSO GONE THROUGH THE ORDER U/S.206CA. 6.1 AS THE ISSUE U/S.206C(6)/206C(7) HAS ALREADY BE EN DECIDED IN FAVOUR OF THE APPELLANT NOT TREATING IT AS ASSESSEE IN DEFAULT THE QUESTION OF PENALTY ALSO DOES NOT ARISE. HENCE, PENALTY LEVIED U/S.271CA IS HEREBY C ANCELLED. 4. AGGRIEVED BY THE ORDER OF LD. CIT(A), REVENUE IS NOW IN APPEAL BEFORE US AND HAS RAISED FOLLOWING GROUNDS: GROUNDS OF ITA NO.382/RJT/2015 1. THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON F ACTS IN LAW IN DELETING THE ADDITIONS MADE U/S.206C(1) OF THE I.T ACT ON ACCOUN T OF NON COLLECTION OF TCS ON SALE OF SCRAP IN SPITE OF THE FACT THAT THE ASSESSE E IS A TRADER OF SCRAP AND THE PROVISION OF SECTION 206C(1) APPLY TO THE ASSESSEE. 2. THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FA CTS IN ISSUE OF DIRECTION IN VIOLATION OF PROVISO TO SUB SEC. (7) OF SECTION 206 C OF I.T. ACT TO THE A.O. THAT INTEREST SHOULD BE CALCULATED ONLY IN RESPECT OF TH OSE BUYERS WHO HAVE NOT PAID TAX DUE ON THE RETURNED INCOME WHEREAS INTEREST SHOULD BE CALCULATED IN CASE OF ALL BUYERS, WHO HAVE FILED FORM NO.27BA AS PROVIDE IN THE ABOVE SECTION. 3. THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FA CTS IN DIRECTING NOT TO TREAT THE ASSESSEE IN DEFAULT FOR NON COLLECTION OF TCS ON SA LE OF SCRAP TO MANUFACTURER WHERE FORM NO.27C HAVE BEEN FILED WITH THE DEPARTME NT EVEN THOUGH THE SAME WERE FILED INORDINATELY LATE AND AFTER THE DETECTIO N OF DEFAULT BY THE DEPARTMENT. ITA NOS. 382 & 523/RJT/2015 . A.Y. 2010- 11 (ITO VS. SAMPATLAL B. SOMANI) 4 4. THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FA CTS IN DIRECTING NOT TO CHARGE INTEREST ON SALES WHERE FORM NO.27C ARE FILED BELAT EDLY AND AFTER DETECTION OF DEFAULT BY THE DEPARTMENT. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. PASSED U/S.206C(6A) & 206C(7) OF THE ACT. GROUNDS OF ITA NO.523/RJT/2015 1. THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON F ACTS IN LAW IN DELETING THE PENALTY U/S.271CA OF THE ACT ON ACCOUNT OF NON COLLECTION O F TCS ON SALE OF SCRAP IN SPITE OF THE FACT THAT THE ASSESSEE IS A TRADER OF SCRAP AND THE PROVISION OF SECTION 206CA SQUARELY APPLY TO THE ASSESSEE. 2. THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON FA CTS IN DIRECTING NOT TO TREAT THE ASSESSEE IN DEFAULT FOR NON COLLECTION OF TCS ON SA LE OF SCRAP TO MANUFACTURER WHERE FORM NO.27C HAS NOT BEEN FILED WITH THE DEPAR TMENT IN PRESCRIBED TIME LIMIT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. PASSED U/S.271CA OF TH E ACT. 4.1 BEFORE US, LD. D.R. SUPPORTED THE ORDER OF A.O. ON THE OTHER HAND, LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE THE A.O. AND LD. CIT(A) AND SUPPORTED THE ORDER OF LD. CIT(A). 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASES ARE WITH RESPECT TO HOLD ING ASSESSEE IN DEFAULT U/S.206C OF THE ACT AND PENALTY U/S.271CA OF THE ACT. WE FIND THAT WHILE DECIDING THE ISSUE IN FAVOUR OF ASSESSEE, LD. CIT(A) AND AFTER RELYING UP ON THE DECISION OF SPECIAL BENCH OF TRIBUNAL IN CASE OF M/S. BHARTI AUTO PRODUCTS IN ITA NOS. 391 & 392/RJT/2011, ORDER DATED 06.09.2013 HAS HELD THAT THE LATE SUBMI SSION OF FORM NO.27C AND 27BA DOES NOT MAKE ASSESSEE IN DEFAULT. AS FAR AS REVEN UES APPEAL WITH RESPECT TO LEVY OF PENALTY U/S.271CA IS CONCERNED, LD. CIT(A) HELD THAT SINCE THE ASSESSEE HAS NOT BEEN TREATED AS ASSESSEE IN DEFAULT U/S.206C(6) AND 206C(7), THE QUESTION OF PENALTY ITA NOS. 382 & 523/RJT/2015 . A.Y. 2010- 11 (ITO VS. SAMPATLAL B. SOMANI) 5 DOES NOT ARISE. BEFORE US, REVENUE HAS NOT BROUGHT ON RECORD ANY CONTRARY BINDING DECISION IN ITS SUPPORT. IN VIEW OF THE AFORESAID FACTS, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A). THUS, THE GROUNDS OF REVENUE IN BOTH THE APPEALS ARE DISMISSED. 6. IN THE RESULT, BOTH THE APPEALS OF REVENUE ARE D ISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 21/03/2016 SD/- SD/- (S. S. GODARA) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED. 21/03/2016 TRUE COPY S K SINHA COPY OF THE ORDER FORWARDED TO:- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT, RAJKOT