M/S EID MOHAMMADNIZAMUDDIN , TONK V. INCOME TAX OFFICER, JAIPUR

ITA 422/JPR/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2081 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-04-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 02-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C GUPTA
• Keywords: Recovery proceedings; Additional evidence; Question of law; Reasonable cause; TDS; Set aside
• Section: 40(a)(ia); 194C; 201(1); 201; 208; 139(1); 43; 48; 13; 119; 22; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S A JAIPUR BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI VIKRAM SING H YADAV, AM ITA. NO. 422, 423 & 424/JP/2018 ASSESSMENT YEAR : 2013-14, 2014-15 & 2015-16 M/S EID MOHAMMAD NIZAMUDDIN, SUBHASH BAZAR, TONK VS. ITO TDS-3, JAIPUR PAN/GIR NO.: JDH101315G APPELLANT RESPONDENT ITA. NO. 778, 776 & 777/JP/2018 ASSESSMENT YEAR : 2013-14, 2014-15 & 2015-16 ITO TDS-3, JAIPUR VS. M/S EID MOHAMMAD NIZAMUDDIN, SUBHASH BAZAR, TONK PAN/GIR NO.: JDH101315G APPELLANT RESPONDENT ASSESSEE BY : SH. MAHENDRA GARGIEYA (ADV) REVENUE BY : SH. K. C. GUPTA (JCIT) DATE OF HEARING : 20/01/2020 DATE OF PRONOUNCEMENT : 15/04/2020 ORDER PER: VIKRAM SINGH YADAV, A.M. THESE ARE CROSS APPEALS FILED BY THE ASSESSEE AND THE REVENUE AGAINST THE RESPECTIVE ORDERS OF LD. CIT(A)-3, JAIPUR DATED 05.03.2018 FOR A.Y 2013- 14, 2014-15 AND 2015-16 RESPECTIVELY. SINCE THE COM MON ISSUES ARE INVOLVED, ALL THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER. ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 2 2. WITH THE CONSENT OF BOTH THE PARTIES, THE MATTER PERTAINING TO FINANCIAL YEAR 2012-13 RELEVANT TO A.Y 2013-14 IS T AKEN AS THE LEAD CASE FOR THE PURPOSES OF PRESENT DISCUSSIONS WHEREIN THE RES PECTIVE GROUNDS OF APPEAL ARE AS UNDER:- ITA NO. 422/JP/18 (ASSESSEES APPEAL): 1. THE IMPUGNED ORDER PASSED U/S 206C(6) R/W 206C( 7) OF THE ACT DATED 05.03.2018 IS BAD IN LAW AND ON FACTS OF THE CASE, FOR WANT OF JURISDICTION AND FOR VARIOUS OTHER REASONS AND HENC E, THE SAME KINDLY BE QUASHED. 2. THE LD. CIT(A)-III, JAIPUR ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN HOLDING THAT THE IMPUGNED ORDER PASSED U/S 206C(6) R/W 206C(7) OF THE ACT DATED 06.03.2017 BY THE ITO, IS NOT BARR ED BY LIMITATION AND THEREFORE, ERRED IN UPHOLDING THE VALIDITY OF THE I MPUGNED ORDER. THE IMPUGNED ORDER SO PASSED ON DATED 06.03.2017 I.R.T F.Y 2012-13 AFTER A LAPSE OF A LONG PERIOD, IS CONTRARY TO THE INTENTIO N OF THE LEGISLATURE AND TO THE VARIOUS JUDICIAL PRONOUNCEMENTS AND HENCE, I S CERTAINLY BARRED BY LIMITATION AND THEREFORE, THE SAME KINDLY BE QUASHE D IN LIME LINE. 3.1 RS. 1,77,360/-: THE LD. CIT(A)-III, JAIPUR ERRE D IN LAW AS WELL ON THE FACTS OF THE CASE IN CONFIRMING THE DEMAND RAIS ED BY THE ITO DUE TO ALLEGED NON COLLECTION OF TAX AT SOURCE (TCS) U/S 2 06C(6) OF THE ACT, WHICH IS THE ENTIRE AMOUNT OF SALES ITSELF AND OTHE RWISE ALSO IS COMPLETELY CONTRARY TO THE PROVISIONS OF LAW AND FACTS IN AS M UCH AS RS. 1,77,360/- IS GROSS AMOUNT OF SALES EFFECTED BY THE ASSESSEE AND NOT MERELY 5% TCS THEREON. HENCE, THE IMPUGNED DEMAND KINDLY BE QUASH ED AND DELETED IN FULL. 3.2 THE LD. CIT(A)-III, JAIPUR FURTHER ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN RAISING DEMAND OF INTEREST IN RELATION TO THE ALLEGED ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 3 NON COLLECTION OF TAX AT SOURCE (TCS) U/S 206C(7) O F THE ACT, WHICH IS COMPLETELY CONTRARY TO THE PROVISIONS OF LAW AND FA CTS HENCE, KINDLY BE QUASHED AND DELETED IN FULL. 4. THE LD. CIT(A)-III, JAIPUR FURTHER ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN NOT CONSIDERING THAT THE PRESE NT CASE FALL UNDER U/S 206C(1A) R/W RULE 37C IN AS MUCH AS THE ENTIRE SUBJ ECTED SALES WAS MADE TO THE ULTIMATE CONSUMERS FOR USE IN MANUFACTU RING, PROCESSING OR PRODUCING AND HENCE THE PROVISION OF S. 206C WAS NO T APPLICABLE. ITA NO. 778/JP/18 (REVENUES APPEAL): 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LD. CIT(A) IS JUSTIFIED IN ALLOWING RELIEF ON THE BASIS OF ADDITIONAL EVIDENCE WITHOUT CALLING FOR REMAND REPORT UNDER RULE 46A AN D ENQUIRY UNDER SEC 250(4) OF THE INCOME TAX ACT, 1961. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) IS JUSTIFIED IN DELETING THE DEMAND WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE DEDUCTOR HAS FAILED TO MAKE PAYME NT OF INTEREST U/S 206C(7) AND NOT MENTIONING DETAILS OF CHALLANS IN T HE PRESCRIBED FORM 27BA BEFORE SUBMISSION WITH CLAIM OF RELIEF IN VIEW PROVISO TO SEC. 206C READ WITH NOTIFICATION NO.12/2016 DATED 08.12.2016. 3. WHETHER ON THE FACTS AND IN THE LAW, THE LD. CI T(A) IS JUSTIFIED IN SETTING ASIDE THE ISSUE TO THE AO FOR VERIFICATION AND DIRECTED TO ALLOW RELIEF ON VERIFICATION U/S 250(1) AS PER THE RATIO OF JUDGMENT IN THE CASE OF M/S HINDUSTAN COCA COLA (P) LTD. WHERE THE WORDS HE MAY SET ASIDE HAVE BEEN OMITTED AFTER AMENDMENT W.E.F. 01.06.2001 . 4. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) IS JUSTIFIED IN HOLDING THAT THERE IS NO MATERIAL DIFFERENCE IN THE PROVISIONS OF TAX DEDUCTION AT SOURCE (TDS) UNDER C HAPTER-XVIIB AND TAX COLLECTION AT SOURCE (TCS) UNDER CHAPTER-XVIIBB OF THE INCOME TAX ACT, ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 4 1961 AND THE FACTS & THE JUDGMENT HELD ON ASSESSMEN T PROCEEDINGS U/S 201(1)/201(1A) FOR DEFAULT IN THE CASE OF M/S H INDUSTAN COCA COLA (P) LTD ARE SQUARELY APPLICABLE IN THE CASE OF THE ASSESSEE FOR ASSESSMENT PROCEEDINGS U/S 206C(6)/206C(7) OF THE ACT FOR TCS DEFAULTS. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF MANUFACTURING & TRA DING OF BIDI LEAVES AT TONK AND UNIYARA & IN TRADING OF TENDU LEAVES, WHICH ARE MAINLY AFFECTED IN STATES OF RAJASTHAN, M.P (BETUL) & MAHARASHTRA. A SURVEY U /S 133A(2A) WAS CONDUCTED ON 23.03.2015 AT THE BUSINESS PREMISES OF THE ASSESSEE AND DURING THE COURSE OF SURVEY PROCEEDINGS, IT WAS FOUND THAT THE ASSESSEE FIRM HAS SOLD TENDU LEAVES TO VARIOUS PARTIES WHICH FALLS UNDER T HE CATEGORY OF FOREST PRODUCE AND THE ASSESSEE WAS REQUIRED TO COLLECT TA X AT SOURCE AS PER THE PROVISIONS OF SECTION 206C(1) OF THE INCOME TAX ACT , 1961. DURING THE COURSE OF SURVEY, STATEMENT OF SH. MOINUDDIN, A PARTNER OF THE ASSESSEE FIRM WAS ALSO RECORDED AND THE RELEVANT CONTENTS OF THE STATEMENT , REPRODUCED IN THE ASSESSMENT ORDER PASSED U/S 206C(6)/206C(7) DATED 6 .03.2017, READS AS UNDER:- IZ'U&4 D`I;K VKI CRK,A FD RSANQ IRRSA DK O;KIKJ RFK K CHMH+ CUKUS DH IZF;K CRK,A ,OA FDU&FDU JKT;KSA DS LKFK RFKK JKT;KSA DK UKE HKH CRK,A MRJ & ESA CHM+H RFKK RSANW IRRS DK O;KIKJ ESA- BZ N EKSGEEN FUTKEQ}HU QEZ DS VURXZR LK>SNKJ DS :I ESA DK;Z DJRK GWWA RFKK RSANW IRRS DK O;KIKJ JKTLFKKU] E/;IZNSK ,OA EGKJK'V JKT;KSA DS LKFK DJRK GWWA RFKK CHM+H CUKUS DK DK;Z MFU;KJK RFKK VKSAD ESA FD;K TKRK GSA IZU&7 LOSZ VK;DJ VF/FU;E DH /KKJK 133, 2, DH DK; ZOKGH DS NKSJKU RFKK CGH[KKRKSA DS FUJH{K.K DJUS IJ IK;K X;K FD MIJKSDR QEZ JKTLFKKU] E/;IZNSK RFKK EGKJK'V JKT;KSA DS LKFK RSANQ IRRS DH FCH IJ MIJK SDR QEZ VH-LH-,L- DK LAXZG.K DJ LJDKJH [KKRSA ESA /KKJK 206LH 1 DS RGR 5 IZFRKR DH NJ LS TEK DJOKRH GS ;K UGHA MRJ& UGH GEUS RSANW IRRKSA DH FCH IJ DKSBZ VH-LH- ,L- LAXZGHR UGHA FD;K GSA ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 5 IZU&8 D`I;K VKI CRK,A FD RSANW IRRKSA DS O;KIKJ IJ VH-LH-,L DK LAXZG.K DJDS TEK UGHA DJKUS DH LI'VHDJ.K NSOSAA MRJ& RSANW IRRKSA DS LHKH [KJHNNKJ VSDLIS;J GS RFK K CHM+H FUEKZRK GS] MUGKSUSA VIUH VK;DJ FOOJ.KH ESA IRRS [KJHN JDE DKS CGH [KKRS ESA BUNZKT DJDS VK;DJ FJVUZ ISK DJ NH GS FTLESA IRRKSA LS CUH GQBZ CHM+H DS FO; DS YKHK DKS VK; ESA 'KKFEY DJDS VK;DJ TEK DJK FN;K X;K GS ;GKA DJ YXKUK NKSGJK DJ Y XKUK GKSXKA DKSBZ HKH LFKKUH; O;KIKJH RFKK JKTLFKKU ,OA VU; JKT;KSA DS O; KIKJH HKH BL RJG DK NKSGJK DJ VH-LH-,L- LAXZG.K UGHA DJ JGS GSA IZU&9 VKIDK MRJ UA-8 GS FD RSANQ IRRK DS LHKH [KJ HNNKJ VSDLIS;J GS RKS D`I;K CRK, FD VKIUS QKWEZ 27 TEK RFKK FMDYSJSKU LVHZFQDS KU VKWQ CK;J RULE-37C TEK DJK J[KK GSA ;K UGHA MRJ & FMDYSJSKU LVHZFQDSKU VKQ CK;J RULE 37C DS RGR QKWEZ 27 LH TEK UGH DJK;K GSA YSFDU GEUS QKWJSLV FOHKKX LS VSDL NSD J DPPS IRRS DKS IZKSLSL FD;K VKSJ MIJKSDR LFVZFQDSV U YSUS DH FLFKFR ESA FTU CK; JL DKS IRRK FO; FD;K GS MULS BL FO'K; DK LFVZFQDSV EAXOKUS DS FY;S FY[KK X; K GS VKSJ BL FO'K; ESA VKIDS DK;KZY; DKS E; CK;J DS IW.KZ IRS DS LWFPR DJ FN;K X ;K GS VKSJ ,SLH FLFKFR ESA FOFHKUU MPP U;K;KY; ESA ,OA MPPRE U;K;Y; DS FU.KZ; GSA VKI BL FCUNW IJ DK;ZOKGH EK= DQN FNU IGYS IZKJEHK DH XBZ GS VKSJ GE KJH VKSJ LS FNUKAD 10-03-2015 DKS FUOSNU FD;K GS FD LECFU/KR FU/KKZJ.K VF/KDKJH } KJ EKYWE DJK FY;K X;K GS FD MUGKSUSA IRRK [KJHN O FO; VFKOK CHM+H IJ DJ TEK DJ K FN;K VFKOK UGH VKSJ UK GH GEKJK DSL /KKJK 206 DH IFJ/KH ESA UGH VKRK GS FTLDK DKSBZ MRJ GES VKT RD UGHA FN;K X;K GS VKSJ BLH FO'K; ESA FNUKAD VKT 23-03-201 5 DKS I= IZLRQR FD;K GSA VKIDH BRUS O'KKSZ DH DOSJH DS FY, TCKC RS;KJ DJUS D S FY, CGQR DE LE; FN;K X;K GS D`I;K LE; VKSJ FN;K TK,A 4. THE ASSESSING OFFICER, RELYING ON THE AFORESAID SURVEY PROCEEDINGS AND STATEMENT OF THE PARTNER OF THE ASSESSEES FIRM SO RECORDED DURING THE COURSE OF SURVEY, OBSERVED THAT THE ASSESSEE FIRM HAS FAIL ED TO COLLECT TAX AT SOURCE FROM BUYERS OF TENDU LEAVES AND ALSO FAILED TO SUBM IT FORM NO. 27C IN THE PRESCRIBED FORM TO THE EFFECT THAT THE GOODS ARE TO BE UTILIZED FOR THE PURPOSE OF MANUFACTURING, PROCESSING OR PRODUCING ARTICLES OR THING AND NOT FOR TRADING PURPOSES AND ACCORDINGLY, A SHOW CAUSE NOTICE DATED 21.09.2015 WAS ISSUED TO THE ASSESSEE FIRM AS TO WHY THE ASSESSEE FIRM SH OULD NOT BE CONSIDERED AS AN ASSESSEE IN DEFAULT FOR NON COLLECTION OF TCS ON SALE OF TENDU LEAVES ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 6 AMOUNTING TO RS. 25,58,31,594/- AS THE AMOUNT RECEI VED FROM THE BUYERS ARE IN THE NATURE OF TRADING IN TENDU LEAVES. 5. THE ASSESSEE FIRM, IN RESPONSE TO THE SHOW-CAUSE NOTICE, SUBMITTED THAT ACTION ON THE PART OF THE ASSESSING OFFICER IS PRE- MATURE AND WITHOUT VALID JURISDICTION AS THE ASSESSING OFFICER, BEFORE INVOK ING THE PROVISIONS OF SECTION 206C(6) & 206C(7) HAS TO SATISFY HIMSELF THAT THE C ONCERNED BUYERS TO WHOM SUBJECTED SALES HAS BEEN MADE HAVE ALREADY CONSIDER ED THE SUBJECTED SALES AND PAID TAX THEREON OR NOT AND WITHOUT HAVING FULF ILLED THIS CONDITION OR WITHOUT HAVING MADE SUCH ENQUIRIES, THE PROCEEDINGS U/S 206C(7) AND 206C(7) OF THE ACT CANNOT BE INITIATED AND IN SUPPO RT, RELIANCE WAS PLACED ON THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN CASE OF SHREE MANJUNATHA WINES VS. CIT (2011) 202 TAXMAN 620 (KAR). 6. FURTHER, DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ASKED THE ASSESSEE FIRM TO RECONCILE THE FIGURES OF TURNO VER ALONG WITH SUPPORTING DOCUMENTARY EVIDENCE AND ASKED IT TO FURNISH FORM N O. 27BA/ITR, IF ANY, OF ALL THE PARTIES. IN RESPONSE, THE ASSESSEE FIRM VID E ITS SUBMISSION DATED 13.02.2017 SUBMITTED CERTIFICATE/FORM NO. 27BA FROM THE PARTIES/ACCOUNTANT AS PRESCRIBED IN FIRST PROVISO TO SECTION 206(C)(6A ) OF THE ACT. 7. THE ASSESSING OFFICER, THEREAFTER, REFERRING TO THE STATEMENT OF THE PARTNER OF THE ASSESSEE FIRM RECORDED DURING THE CO URSE OF SURVEY, HELD THAT NOWHERE IN THE STATEMENT, THE ASSESSEE HAS ACCEPTED THE DEFAULT. THEREAFTER, REFERRING TO THE PROVISIONS OF SECTION 206C, IT WAS HELD BY THE ASSESSING OFFICER THAT THE PRODUCTS SOLD BY THE ASSESSEE FALLS UNDER THE CATEGORY OF FOREST PRODUCE AND HENCE, THE ASSESSEE WAS REQUIRED TO CO LLECT TAX AT SOURCE AS PER THE PROVISIONS OF SECTION 206C OF THE ACT WHICH THE ASSESSEE HAS FAILED TO COLLECT. ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 7 8. FURTHER, REFERRING TO THE PROVISIONS OF SUB CLAU SES (1A) & (1B) OF SECTION 206C OF THE I.T. ACT, 1961, THE ASSESSING OFFICER H ELD THAT THE ASSESSEE FIRM FAILED TO OBTAIN THE REQUISITE FORMS IN FORM NO. 27 C FROM THE BUYERS AND SUBMIT THE SAME TO THE LD. CIT(TDS) WITHIN THE STIP ULATED TIME. REGARDING FILING OF FORM NO. 27BA AND SUBMISSION OF THE ASSES SEE FIRM THAT THE PARTIES WHO HAVE PURCHASED THE TENDU LEAVES HAVE DULY RECOR DED THE SAME IN THEIR RESPECTIVE BOOKS OF ACCOUNTS AND MAXIMUM NUMBER OF BUYERS HAVE FURNISHED THEIR RETURN OF INCOME U/S 139(1), IT WAS OBSERVED BY THE ASSESSING OFFICER THAT HE HAS GONE THROUGH THE DOCUMENTATION SO SUBMI TTED BY THE ASSESSEE FIRM AND ON PERUSAL THEREOF, IT IS NOTICED THAT COM PLETE INFORMATION IN THE FORM/CERTIFICATE HAVE NOT BEEN GIVEN BY THE ACCOUNT ANT/PARTY AS REQUIRED BY THE LEGISLATURE AND MOST OF THE COLUMNS ARE EITHER NOT FILLED UP AS REQUIRED OR SIMPLY MENTIONED AS PER DETAILS/ENCLOSURE. MOREOVER THE ACCOUNTANT HAS SIGNED THE FORMS WITH CONDITIONAL REMARKS AS CERTI FIED BY THE BUYER WHEREAS THE FORMS SHOULD HAVE BEEN FILLED UP AND CERTIFIED BY THE ACCOUNTANT ITSELF ON THE BASIS OF RECORDS. FURTHER, SOME OF THE PARTIES HAVE NOT FILED RETURN ON OR BEFORE DUE DATES PRESCRIBED U/S 139 OF THE I.T. ACT , 1961. IT WAS ACCORDINGLY HELD BY THE ASSESSING OFFICER THAT THE ASSESSEE FIR M HAS FAILED TO FULFILL THE CONDITION LAID DOWN AS PRESCRIBED IN THE FIRST PROV ISO TO SECTION 206C(6A) OF THE ACT AND THE ASSESSEE WAS HELD TO BE AN ASSESSEE IN DEFAULT AND DEMAND OF RS. 1,93,86,906/- WAS RAISED ON THE ASSESSEE CONSIS TING OF RS. 1,28,01,338/- TOWARDS TCS U/S 206C(6) AND RS. 65,85,568/- TOWARDS INTEREST PAYABLE U/S 206C(7) OF THE ACT. 9. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) AND THE SUBMISSIONS MADE BEFORE THE ASSESSIN G OFFICER WERE REITERATED. IT WAS FURTHER SUBMITTED INTERALIA AS UNDER:- 3. DIRECTLY COVERED BY THE DECISION OF CIT(A) IN A .Y. 2008-09: BEFORE PROCEEDING FURTHER, AT THE OUTSET IT IS SUBMITTED T HAT ALL THE CONTENTIONS ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 8 RAISED NOW WERE ALSO RAISED IN A. Y. 2008-09 WHEREF ROM THIS CONTROVERSY AROSE FROM THE FIRST TIME AND YOUR ID. PREDECESSOR HAD ACCEPTED THE CONTENTIONS AND GRANTED SUBSTANTIAL RE LIEF IN APPEAL NO. 46/2015-16 VIDE HER ORDER DATED 29.02.2016 (REFER P B 102-131 IN A.Y. 2010-11). THE FACTS AND CIRCUMSTANCES BEING EXACTLY IDENTICAL IN THIS YEAR ALSO, THE SAME DECISION HAS TO BE APPLIED. MORE PAR TICULARLY WHEN, THE DEPARTMENT NOT HAVING GONE IN FURTHER APPEAL, THE S AID ORDER HAD BECOME FINAL. 4. UNDER THIS BACKGROUND, THE ASSESSEE SPECIFICALL Y AGITATED BEFORE THE ITO, THE INVOKING OF SEC.206C OF THE ACT VIDE I TS LETTER DATED 25.01.2017 STATING THAT OUT OF 26 PARTIES, THE MAXI MUM NUMBER OF BUYERS ARE ALREADY (1) ASSESSED TO TAX, (II) HAVE A LREADY FURNISHED THEIR RETURN OF INCOME U/S 139(1) OF THE ACT (III) THEY H AVE ALREADY TAKEN INTO ACCOUNT THE COST OF THE PURCHASES OF TENDU LEAVES M ADE FROM THE ASSESSEE FIRM WHILE COMPUTING THE TOTAL INCOME FOR THE ABOVE RETURN OF INCOME AND (IV) HAVE ALREADY PAID THE INCOME TAX DU E ON THE INCOMES DECLARED IN THE SAID RETURN OF INCOME. IN MOST OF T HE CASES, PAN NUMBERS WERE ALSO SUBMITTED TO THE ITO VIDE THE LETTER OF T HE ASSESSEE FILED ON DATED 13.02.2017. IN SUPPORT OF THE ABOVE FACTS, SH OWING THREE CATEGORIES OF THE BUYER-PAYEES, WERE ALSO ADMITTEDL Y SUBMITTED. CATEGORY A: THE NAMES OF 14 BUYERS AND THE RESPECTI VE AMOUNT OF SALES MADE TO THEM TOTALING TO RS.25,57,81,536/- (WHO HAV E ALREADY FILED THEIR ROI AND PAID THE DUE TAX) ALONG WITH COPIES OF CERT IFICATES AS ADMITTED BY THE ID ITO AT PG-7 OF THE IMPUGNED ORDER. CATEGORY B: THE NAMES OF 11 BUYERS AND THE RESPECTI VE AMOUNT OF SALES MADE TO THEM TOTALING TO RS. 1,59,72,693/- ALONG WITH CO PIES OF CERTIFICATES (WITH PAN) AS ADMITTED BY THE ID ITO AT PG-7 OF THE IMPUG NED ORDER. CATEGORY C: FOR THE REMAINING AMOUNT OF THE SALES, THE ASSESSEE WAS AND IS STILL IN THE PROCESS OF COLLECTING THE REQUISITE DE TAILS AND CERTIFICATES ON THIS ASPECT BUT THEIR PAN WERE MADE AVAILABLE. ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 9 THE ITO DID NOT DENY FROM THESE FACTS BUT RATHER FA ILED TO REBUT THE SAME AND REJECTED MERELY ON SUSPICION ON THE GROUND THAT COP IES OF THE RESPECTIVE RETURNS FROM THOSE BUYER PARTIES WERE NOT SUBMITTED BEFORE HIM. THE ITO HOWEVER, DID NOT DENY THAT NO TAX REMAINED PAYABLE IN THE HANDS OF THE BUYERS. THE ITO HAVING NOT SATISFIED THIS PRE REQUI SITE BY MAKING NECESSARY ENQUIRY TO THIS EFFECT, LACKED JURISDICTION AND THE REFORE, THE IMPUGNED ORDER DESERVES TO BE QUASHED IN FULL. 5. COPY OF SAMMAN PATRA DATED 25.07.2002 ISSUED BY THE CIT, KOTA BEING THE HIGHEST TAXPAYER AWARD IN INCOME FROM BUS INESS CATEGORY FOR AY 1999-2000 IN ADDITIONAL CIT, SAWAI MADHOPUR RANG E. THIS SHOWS THAT THE ASSESSEE IS A LAW ABIDING RESPECTED CITIZEN AND ALSO A RESPECTED TAX PAYER WHOSE CONDUCT IS NOT CONTUMACIOUS WHICH ASPEC T, KINDLY BE TAKEN INTO CONSIDERATION WHILE DECIDING THE PRESENT APPEA L. 6. EVEN AFTER FILING SUFFICIENT AND VOLUMINIOUS EVI DENCES WHICH CLEARLY SERVED THE PURPOSE IN SUBSTANCE, THE ITO MADE VARIOUS ALLE GATIONS WHICH ARE MORE IN THE NATURE OF SUSPICION AND NOT SUBSTANTIAL, AS SUB MITTED HEREIN BELOW W.R.T EACH ALLEGATION: S. NO. ITOS COMMENTS ASSESSEE 1. COMPLETE INFORMATION IN THE FORMS / CERTIFICATES HAVE NOT BEE N GIVEN BY THE ACCOUNTANT/ PARTY, AS REQUIRED BY THE LEGISLATURE AND MOST OF THE COLUMNS ARE EITHER NOT FILED UP AS REQUIRED OR SIMPLY MENTIONED AS PER DETAILS/ENCLOSURE > IT IS A VAGUE ALLEGATION AND WITHOUT GIVING SPECIFIC DETAILS OF THE PARTICULAR FORM / CERTIFICATES LACKING DETAILS. THE ITO HAS NOT POINTED OUT SPECIFICALLY WHICH COLUMN, DETAILS WERE NOT FILLED IN. THERE MAY BE SOME BSR CODE W.R.T. THE PAYMENT OF TAX MADE BY THE BUYER (TAX PAYEE) AND OTHER SOME MINOR DETAILS BUT THE ID. ITO HAS CONVENIENTLY IGNORED THE CATEGORICAL CERTIFICATION GIVEN BY THE BUYER PAYEE READING AS UNDER: '1. THAT WE HAVE FURNISHED OUR RETURN OF INCOME U/S 139(1) OF THE ACT FOR THE ABOVE YEAR. 2. THAT WE HAVE TAKEN INTO ACCOUNT ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 10 THE COST OF PURCHASE OF TENDU LEAVES INCLUDING CST OF RS FROM M/S EID MOHAMMED NIZAMUDDIN TONK (RAJ.) FOR COMPUTING THE INCOME IN THE ABOVE RETURN. 3. THAT WE HAVE PAID INCOME TAX DUE ON THE INCOME DECLARED BY US IN THE RETURN.' > A BARE PERUSAL OF THE SAID CERTIFICATE MAKE IT CLEAR THAT THE ASSESSEE HAS FULLY COMPLIED WITH AND ESTABLISHED REQUIREMENT OF LAW IN SUBSTANCE. WHEN THE PAYEE HAS CATEGORICALLY CONFIRMED THE FACT OF INCLUSION OF THE PURCHASES MADE IN ITS ACCOUNT WHILE PREPARING ROI AND EVEN CONFIRMED HAVING PAID THE TAX THEREON THERE REMAINS NOTHING. THE AMENDMENT IN THE LAW AND THE RULE WERE PRESCRIBED KEEPING IN MIND THE RATIO LAID BY THE HON'BLE APEX COURT IN THE CASE OF HINDUSTAN COCA COLA (SUPRA). THE ITO HAS NOT AT ALL DENIED IN THE ENTIRE ORDER THAT THE APPELLANT HAS NOT COMPLIED WITH THE REQUIREMENT PRESCRIBED IN HINDUSTAN COCA COLA (SUPRA), ON THE FULFILLMENT OF WHICH, THE ASSESSEE DEDUCTER WAS FULLY ENTITLED TO GET THE BENEFIT OF THE PROVISO TO S.206C(6A). > EVEN THEN, IF THE ITO WAS STILL DOUBTFUL OF THE FACT OF THE BUYER- PAYEE MAKING THE TAX PAYMENT NOTHING PREVENTED HIM TO MAKE ENQUIRES DIRECTLY FROM HIS COUNTER PART, HAVING THE JURISDICTION OVER THAT PARTICULAR BUYER PAYEE TO BRING THE TRUTH ON SURFACE.'BUT WITHOUT EXERCISING THESE POWERS AND BY MERELY MAKING AND REPEATING ALLEGATIONS UPON THE ASSESSEE DEDUCTOR (AS IF EVERYTHING IS TO BE DONE BY THE ASSESSEE DEDUCTOR ONLY WHETHER HE IS CAPABLE OF GETTING ALL THE INFORMATIONS IN ABSENCE OF ANY LEGAL POWER CONFERRED UPON IT AND IN ABSENCE OF SUITABLE INFRASTRUCTURE). ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 11 2. ACCOUNTANT HAS SIGNED T HE FORMS WITH CONDITIONAL REMARKS 'AS CERTIFIED BY THE BUYER' WHEREAS THE FORMS SHOULD HAVE BEEN FILLED UP AND CERTIFIED BY THE ACCOUNTANT ITSELF ON THE BASIS OF RECORDS > IT WAS THE ID. CHARTERED ACCOUNTANT WHO SIGNED THE CERTIFICATE IS AN EXPERT UPON WHICH EVEN THE LEGISLATURE HAS REPOSED CONFIDENCE. IF THE EXPERT HAS CERTIFIED CERTAIN FACTS IN A PARTICULAR MANNER IT IS FOR HIM AND THE ASSESSEE HAS NO ROLE TO PLAY. > CAREFUL READING OF THE CERTIFICATE SHOW THAT THE CA WAS REQUIRED, ONLY TO CERTIFY THE BASIC REQUIREMENTS OF THE PROVISO. THE FURTHER DETAILS WERE TO BE MERE FILLED UP AS SUPPLIED TO HIM BUT WAS NOT REQUIRED TO BE CERTIFIED AS WRONGLY UNDERSTOOD. > ALLEGATION IS IGNORING THE FACT THAT A SUBSTANTIVE COMPLIANCE WAS FULLY AND DULY MADE BY THE ASSESSEE IN AS MUCH AS SUCH FORM WAS BASED ON THE CERTIFICATES GIVEN BY THE CONCERNED BUYER DULY SIGNED. > IF THE ITO WAS NOT SATISFIED HE COULD HAVE DIRECTLY ENQUIRED THE ID. CA TO GET A CONFIRMATION OF THE FACT CERTIFIED BY HIM. NEEDLESS TO SAY THAT THIS IS A CASE VERY SIMILAR TO A CASE WHERE THE ITO HAS MADE SOME DISALLOWANCE OR ADDITION WHICH IS TOTALLY CONTRARY TO THE PROVISION OF LAW, THE ONLY REMEDY LEFT WITH THE POOR ASSESSEE IS TO FILE AN APPEAL, BUT THE ASSESSEE COULD NOT HAVE STOPPED THE ITO FROM DOING HIS JOB WHETHER RIGHT OR WRONG. SIMILARLY, SO FAR AS THE ASSESSEE IS CONCERNED, HE DISCHARGED HIS DUTY BY PRESSING A CERTIFICATE OF AN EXPERT AND UNLESS CONTRARY EVIDENCE IS BROUGHT ON RECORD BY THE ITO AS REGARDS PROVING THE INCORRECTNESS OF THE FACT CERTIFIED BY THE EXPERT, THE ITO WAS BOUND TO HAVE ACCEPTED THE CERTIFICATE OF THE EXPERT. AS STATED, ITO CHOSE NOT TO MAKE ANY INQUIRY TO PROVE THE INCORRECTNESS IN THE CERTIFICATE OF THE EXPERT. HENCE HE IS NOT ENTITLED TO MAKE AN ALLEGATION OF THIS TYPE, WHICH IS PRAYED TO BE IGNORED ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 12 ALTOGETHER. THERE IS NOTHING TO SHOW THAT THE ACCOUNTANT HIMSELF HAS NOT FILED UP AND CERTIFIED SUCH CERTIFICATES. IN ABSENCE OF ANY CONTRARY EVIDENCE SUCH CERTIFICATE COULD NOT HAVE BEEN DOUBTED. 3. THE ACCOUNTANT HAS ALSO IGNORED THE VITAL FACTS THAT SOME OF THE PARTIES HAVE NOT FILED RETURN ON OR BEFORE DUE DATES PRESCRIBED U/S 139 OF THE IT, ACT, 1961. IT IS ABSOLUTELY INCORRECT ALLEGATION THAT THE CA HAS IGNORED THE VITAL FACT OF NON-FILING OF THE ROI BY SOME OF THE PARTIES ON / BEFORE THE DUE DATE IN AS MUCH AS, IN ALL THE CERTIFICATES, THE FACT OF FILING OF ROI IN DUE TIME HAS BEEN STATED. THE ID. ITO HAS NOT AT ALL, ESPECIALLY POINTED OUT SUCH CASES. BUT EVEN OTHERWISE, THE SUBSTANTIVE FACT IS THAT THE BUYER PAYEE ASSESSEE HAVE FILED THEIR ROI AND PAID THE TAX THEREON. IF THERE IS A DELAY IN FILING ROI, THE AMOUNT OF INTEREST CHARGEABLE MAY INCREASE, BUTTHE BENEFIT CANNOT BE DENIED. > BUYERS PAN & TAN WAS ALSO MENTIONED IN FORM 27BA. NEEDLESS TO SAY THAT ALL SUCH DETAILS WERE ALREADY AVAILABLE ONLINE AND IT WAS WITHIN THE REACH OF THE ITO HIMSELF TO VERIFY THE DETAILS ONLINE. 4. THE ASSESSEE HAS CLAIMED EARLIER THAT THE PARTIES / PURCHASERS ARE SCATTERED AT DISTANT AND REMOTE PLACES OF RAJASTHAN, MP AND MAHARASHTRA, WHEREAS ALL FORMS 27BA HAS BEEN SIGNED BY SAME ACCOUNTANT ON A SINGLE DATE. HOW THE LD. CHARTERED ACCOUNTANT THAT IS THE EXPERT COULD SIGN THE CERTIFICATE ON A SINGLE DATE. FIRSTLY, DOES NOT REDUCES THE EVIDENTLY VALUE THEREOF WHICH IS BINDING EVEN UPON THE ITO AN D IF, THE ITO WAS HAVING THE SUSPICION, HE MUST HAVE BROUGHT CONTRARY FACTS ON RECORD TO NEGATE THE CLAIMED STATE OF AFFAIRS. ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 13 5. THE LEGISLATURE HAS INTRODUCED THE PROVISO TO END THE LITIGATION FOR NON COLLECTION OF TCS ON PAYMENT OF INTEREST AS PER PROVISO, WHEREAS THE DEDUCTOR HAS OPTED BOTH OPTION OF LITIGATION I.E. CHALLENGING THE LIABILITY OF INTEREST ON TCS ON THE SALE OF TENDU LEAVES BEFORE THE APPELLATE AUTHORITIES IN THE EARLIER YEARS AND OTHER WAY IT HAS CLAIMED BENEFIT FOR PROVISO WITHOUT PAYING OR AGREEING TO PAY THE INTEREST AS PER FIRST PROVISO TO SEC.206(C)(6A) OF THE IT, ACT, 1961 SUCH ALLEGATION IS BEYOND UNDERSTANDING. AN ASSESSEE HAS GOT ALL THE RIGHT TO CHALLENGE THE PROCEEDINGS FROM ALL ANGLES / ASPECTS AND TO AVAIL ALL THE REMEDIES A VAILABLE AND THERE CAN'T BY ANY PROHIBITION THEREON. 6 FURTHER THAT THE CERTIFICATES WERE SIGNED ON A SINGLE DAY. NOTHING MORE THAN A SUSPICION. IF IT WAS MANAGEABLE FOR THE CA TO HAVE DISCHARGE HIS JOB ON ONE DAY, WHICH IS QUITE POSSIBLE LOOKING TO THE N ATURE AND QUANTUM OF THE WORK, THERE WAS NOTHING WRONG. UNFORTUNATELY, THE ID. ITO INSTEAD OF ADMITTING THE SE CERTIFICATES WHICH ARE BINDING UPON HIM BEING FILED AS REQUIRED BY THE LAW AND FINDING THAT THERE WAS NO ESCAPE FROM ACCEPTING WHAT THE ASSESSEE HAS SAID AND GRANTING RELIEF IS TRYING TO RUN AWAY ON ONE PRETENSE OR THE OTHER, WH ICH WAS NOT FAIR ON HIS PART. THUS, THERE IS ABSOLUTELY NO SUBSTANCE IN THE ALLEG ATIONS OF THE OBSERVATIONS OF THE ITO (TDS)-3 AND DESERVES TO BE IGNORED. HE COMP LETELY FAILED TO DISPROVE THE VARIOUS FACTS, FIGURES EVIDENCES BROUGHT ON REC ORD PROVING THE COMPLIANCE OF THE LAW TO GET THE BENEFIT. 6.1 IT IS FURTHER PERTINENT TO NOTE THAT THE CERTIF ICATES AND DECLARATION ARE BEING FILED IN SIMILAR METHOD AND MANNER / SIMILAR TYPE R IGHT SINCE BEGINNING HOWEVER, NO SUCH OBJECTION WAS RAISED IN THE PAST. IN F. Y. 2007-08, WHEN ADDITIONAL ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 14 EVIDENCES FILED, THE ID. ITO IN THE REMAND REPORT D ID NOT RAISE ANY SUCH OBJECTION AND MATTER STOOD ACCEPTED BY THE ID. CIT( A) ALSO IN APPEAL NO. 46/JPR/ 15-16 DATED 29.02.2016 (A. Y. 2013-14)]. SI MILARLY IN F.Y. 2008-09 ALSO, THE CONCERNED ITO (TDS) ALSO ACCEPTED THE CER TIFICATE OF CHARTERED ACCOUNTANT WHICH WERE PREPARED IN THE SIMILAR MANNE R. KINDLY REFER ORDER DATED IN APPEAL NO. 46/2015-16 VIDE HER ORDER DATED 29.02 .2016 IN A.Y. 2010-11. BUT WHEN IN THE PAST DEPARTMENT IT-SELF HAS ACCEPTED, T HERE APPEAR NO REASONS AS TO WHY THEY SHOULD NOT ACCEPT THE CERTIFICATES IN T HIS YEAR IN ABSENCE OF ANY CHANGE IN THE FACTS AND CIRCUMSTANCES OF THE CASE. THUS, THE ALLEGATIONS OF THE ITO ARE NOTHING BUT MERE SUSPICION AND A PRETENCE N OT TO GIVE THE BENEFIT TO THE ASSESSEE TO WHICH, IT OTHERWISE DESERVED. 6.2 THE ITO (TDS) HAS COMPLETELY FAILED TO UNDERSTA ND THAT IN THE MATTER OF TDS AND TCS, IT IS TAX OF A THIRD PARTY AND NOT OF THE ASSESSEE. SO FAR AS ASSESSEE IS CONCERNED IT HAS DECLARED THE INCOME EA RNED BY IT AND PAID HUGE TAX AND IT CANNOT BE DENIED THAT THE ASSESSEE IS AM ONGST ONE OF THE HIGHEST TAX PAYER (WAS AWARDED EARLIER) ALSO. SIMPLY, MINOR DEF ECT/ DEFICIENCIES, IF ANY, AND THAT TOO WHILE DEDUCTING THE TCS (BEING THE TAX LIA BILITY OF THIRD PARTY) THE ASSESSEE CANNOT BE PENALIZED AND THIS BEHAVIOR OF T HE DEPARTMENT IS NOTHING SORT OF HARASSMENT OF AN HONEST TAXPAYER CITIZEN OF THE COUNTRY. WE HAVE ALREADY SUBMITTED THAT DESPITE REPEATED REQUEST THE PREDECESSOR ID. ITO HAD STARTED PROCEEDINGS OF ALL THE YEAR AND / PRESSED F OR THE SUBMISSIONS OF THE DETAILS, MAKING FOR THE ASSESSEE ALMOST DIFFICULT E VEN TO CARRY OUT ITS DAY TO DAY BUSINESS EVEN THOUGH SUCH PROCEEDINGS WERE NOT GETT ING TIME BARRED AND THERE WERE NO SAVING COMPULSION UPON THE OFFICER. 7. THE LD. ITO AT PG-6 HAS NARRATED THE FACT OF GRA NTING OPPORTUNITIES TO THE ASSESSEE HOWEVER, HE HAS CONVENIENTLY IGNORED THE R EQUEST OF THE ASSESSEE (THOUGH REPRODUCED IN THE IMPUGNED ORDER ITSELF AT PG-5) THAT THE ORDER OF THE LD. CIT(A) IN THE FIRST YEAR I.E. F. Y 200708 WAS P ENDING DECISION BEFORE THE LD. CIT(A) AND IT WAS PROPER TO WAIT FOR THE DECISION W HICH COULD BE TAKEN AS A ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 15 GUIDANCE FOR THE LATER YEARS. MOREOVER, DETAILS WER E TO BE OBTAINED FROM VARIOUS PARTIES / PURCHASERS SCATTERED AT DISTANT A ND REMOTE PLACES OF RAJASTHAN, MP AND MAHARASHTRA. IT CAN'T BE DENIED T HAT THE ASSESSEE WAS DEPENDENT UPON THOSE PARTIES WHO ARE HAVING THEIR U PPER HAND AND WERE NOT OBLIGED TO ACT UPON THE DIRECTION OF THE ASSESSEE. ON THE CONTRARY AND UNFORTUNATELY, IT WAS AN ATTEMPT ON THE PART OF THE ITO TO HARASS THE ASSESSEE BY DECIDING VARIOUS YEARS IN A HASTE AND THEN TO CR EATE HUGE DEMANDS WHICH WAS AVOIDABLE WITHOUT ANY LOSS TO THE REVENUE BECAU SE THOSE ORDERS WERE NOT GETTING BARRED BY LIMITATION. IT IS UNDER THIS BACK GROUND THE ASSESSEE HAD TO MAKE REQUEST SEEKING TIME BUT IN ANY CASE FINALLY, AS THE ITO HAS ALSO AGREED AT PG-7, THAT A LETTER DATED 25.01.2017. (PB-130) W AS FILED ON 13.02.2017 ALONG WITH THE VARIOUS CERTIFICATES / FORM 27BA AS PRESCR IBED IN FIRST PROVISO OF S.206C(6A). HENCE SUCH A DISCUSSION WAS IRRELEVANT AND IN ANY CASE WAS WITHOUT JUDICIOUSLY APPRECIATING THE FACTS. LASTLY, ALL SUCH CERTIFICATES WERE CERTIFIED IN SAM E MANNER AND METHOD AS WAS DONE IN THE F. Y. 2007-08 (A. Y. 2008-09) WHICH HAS ALREADY DECIDED BY THE ID. PREDECESSOR AS SUBMITTED IN PARA-3. THEREFORE, THER E IS NO SUBSTANCE IN THESE ALLEGATIONS AND HENCE HAVE TO BE IGNORED ALTOGETHER . 8. THE IMPUGNED ORDER WAS PASSED WITHOUT HAVING JUR ISDICTION: IT IS SUBMITTED THAT THE JURISDICTION OVER THE ASSESSEE UNDER TAN A S PER SECTION 124(1) RESTED WITH THE ITO TDS, KOTA WITH WHOM THE TDS RETURNED W ERE BEING REGULARLY FILED BY THE ASSESSEE. THIS FACT IS EVIDENT FROM TH E E-FILLING WEBSITE OF THE INCOME TAX DEPARTMENT WHICH ALSO SHOWS THE ITO(TDS) , KOTA HAVING TERRITORIAL JURISDICTION OVER TONK, DISTRICT WHEREIN THE ASSESS EE SITUATED. BUT SURPRISINGLY, THE IMPUGNED ORDERS FOR THE AY 20 09-10 TO AY 2015-16 WERE PASSED BY THE PRESENT ITO TDS-3, JAIPUR ON 22.12.20 16 AND 06.03.2017 IS LACKING JURISDICTION AND HENCE VOID AB INITIO AND L IABLE TO BE QUASHED. KINDLY REFER STATE OF GUJARAT V. RAJESH KUMAR CHIANLAL AIR 1996 P.2664 RAZA TEXTILES ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 16 LTD. V. ITO 87 ITR 539 (S.C.), CHOUBEYJAGDISH PRASA D V. GAYA PAL CHATURVEDI AIR 1959 492 P. DAS MUNI REDDY V. APPARI TO AIR 1974 208 SANT BABA MPHAN SINGH V. CIT 90 ITR 197 77 TAXMAN 265 - SITARAM RATHORE VS. CIT HENCE THE IMPUGNED DEMAND SO RAISED KINDLY BE QUASH ED IN FULL OR IN THE ALTERNATE THE BENEFIT OF THE PROVISO TO S.206C(6A) BE GIVEN. 6. THE LD. CIT(A) AFTER CONSIDERING THE FINDINGS OF THE ASSESSING OFFICER AND THE SUBMISSION SO FILED BY THE ASSESSEE AND OTHER M ATERIAL ON RECORD HAS RECORDED HIS FINDING WHICH ARE CONTAINED AT PARA 5. 3 OF HIS ORDER AND WE DEEM IT APPROPRIATE TO REPRODUCE THE SAME IN VERBATIM AS UNDER: 5.3 I HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS RAISED BY THE PARTIES. THE ITO CONTENDED THAT THE PROVISION OF TCS ARE NOT SIMILAR TO TDS PROVISIONS AND THEREFORE, THE DECISION IN HINDUSTAN COCA COLA (SUPRA) SHOULD NOT BE APPLIED IN THIS CASE. THOUGH HE AGREE D THAT THE OBJECT OF DEDUCTION/ COLLECTION OF TDS/ TCS IS THE SAME BUT T HE LIABILITY IMPOSED UPON THE ASSESSEE UNDER TCS PROVISIONS U/S 206C IS FAR D IFFERENT FROM THE LIABILITY IMPOSED UNDER THE TDS PROVISIONS U/S 201. IN HIS VI EW, UNDER TCS, THE ASSESSEE IS NOT DEEMED TO BE THE ASSESSEE IN DEFAUL T BUT IS MADE LIABLE TO PAY TCS AMOUNT AND THE ENTIRE LIABILITY IN RESPECT OF TCS IS FASTENED UPON HIM IRRESPECTIVE OF THE FACT WHETHER HE HAS COLLECT ED THE TCS OR NOT WHICH IS IN CONTRAST WITH THE PROVISIONS OF S.201(1). THE AO ADMITTED THAT THE VERY OBJECT OF THE PROVISI ONS RELATING TO TDS AND TCS ARE THE SAME. THESE PROVISIONS FALLS UNDER THE CHAPTER-XVII AND PROVIDE A METHOD OF COLLECTION AND RECOVERY OF TAX AT SOURCE. THE OBJECT BEHIND THE DEDUCTION/ COLLECTION OF TDS/ TCS IS THE SAME I.E. TO ENSURE THE ADVANCE RECOVERY OF THE TAXES FROM THE CONCERNED PA YER/SELLER TO BE CREDITED TO THE ACCOUNT OF THE CONCERNED RECIPIENT/ BUYER. THE NON- COMPLIANCE OF THE PROVISIONS I.E. NON-DEDUCTION/NON -COLLECTION, IN BOTH THE ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 17 CASES, MAKE THE PERSON RESPONSIBLE, LIABLE TO PAY T HE AMOUNT OF TDS/TCS IN ONE WAY OR THE OTHER. WHEREAS IN THE CAS E OF TCS, SUCH DEMAND IS CREATED U/S 206C(6), IN THE CASE OF TDS, SUCH DEMAND IS CREATED U/S 201(1) AND IS RECOVERED IN BOTH THE CASES FROM THE PERSON RESPONSIBLE UNLESS HE SATISFIES THE CONDITIONS OF EXEMPTIONS PR OVIDED THERE UNDER. SIMILARLY THE INTEREST FOR THE DELAYED COLLECTION A ND DEPOSIT OF TDS/TCS HAS ALSO BEEN PROVIDED U/S 201(1A) & 206C(7) OF THE ACT RESPECTIVELY. BOTH THE PROVISIONS LOSE THE RIGOR AND ALLOW EXEMPTION FROM THE COLLECTION AND DEPOSIT OF TDS/TCS IN AS MUCH AS THE FIRST PROVISO TO S.206C(6A) PROVIDES THAT BY FILING THE DECLARATIONS AND THE CERTIFICATI ON IN THE PRESCRIBED FORM 27BA. SIMILARLY, FIRST PROVISO TO S.201(1) PROVIDES SUCH IMMUNITY ON FILING OF DECLARATIONS AND CERTIFICATION IN PRESCRIBED FORM. FURTHER THE USE OF THE WORD 'SHALL' U/S 206C(6) IN CONTRAST OF S.201(1) DO ES NOT MAKE MUCH DIFFERENCE IN AS MUCH AS THE RESPONSIBILITY OF MAKI NG TDS/TCS IS MANDATORY UNDER BOTH THE PROVISIONS. ALSO FURTHER DIFFERENTIA TION SOUGHT BY THE AO THAT IN CASE OF TDS, THE SUBJECTED AMOUNT BECOMES THE RE CEIPT IN THE HANDS OF THE RECIPIENT WHEREAS IN THE CASE OF THE TCS, THE S UBJECT AMOUNT OF SALE BECOME THE EXPENDITURE IN THE HANDS OF THE BUYER, I S NOT A MATERIAL DIFFERENCE AS SUCH. THEREFORE, IT IS HELD THAT THER E IS NO SUBSTANTIVE DIFFERENCE AT ALL BETWEEN THE PROVISIONS RELATING T O TDS OR TCS AS CONTENTED BY THE AO FOR THE ABOVE REASONS. THEREFORE, HER FUR THER CONTENTIONS OF THE NON-APPLICABILITY OF DECISION OF HINDUSTAN COCA COL A (SUPRA) IS HEREBY REJECTED. HAVING HELD THAT THERE IS NO MATERIAL DIFFERENCE BE TWEEN THE PROVISION OF TCS AND TDS, I NOW PROCEED TO CONSIDERED THE FACTS OF THE CASE, SUBMISSION OF THE APPELLANT FILED TIME TO TIME, FIN DING RECORDED IN THE ORDER AND THE CONTENTIONS RAISED BY THE AO IN THE REMAND REPORT. BEFORE THAT, I MAY CLARIFY THAT THERE IS NO DISPUTE ON THE APPLICA TION OF S. 206C RELATING TO PROVISIONS OF TAX COLLECTION AT SOURCE, SO FAR AS T HE SALES MADE BY THE ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 18 ASSESSEE OF RS.26 CRORE (APPROX.) OF TENDU PATTA TO DIFFERENT BUYER, IS CONCERNED. THOUGH IN THE IMPUGNED ORDER T HE AO TDS HAS MENTIONED THE FIGURE OF THE SALES OF RS. 25,58,31,5 94/- HOWEVER, THE LD. AR POINTED OUT IN ITS SUBMISSION THAT THE CORRE CT FIGURE OTHERWISE IS RS. 27,19,31,589/- WHICH FACT, IS NOT DISPUTED B Y THE AO. BASED ON THE COPIES OF THE CERTIFICATES BY THE CHAR TERED ACCOUNTANT AND THE DECLARATIONS BY THE PARTNER OF THE APPELLAN T FIRM IN THE PRESCRIBED FORM 27BA COPIES OF THE ACKNOWLEDGEMENTS OF FILING OF RETURN OF INCOME/RETURN FILING DETAILS AS ALSO COPI ES TAKEN FROM THE OFFICIAL WEBSITE, THE FOLLOWING POSITION EMERGES: M/S. EID MOHAMMAD NIZAMUDDIN, TONK PAN : AAAFI4581L CHART OF YEAR-WISE SALES OF TENDU-LEAVES & DECLA RATION OF INCOME BY THE BUYERS S.N O. NAME OF BUYER PAN AMOUNT IN F.Y. 2012-13 REMARKS A CASES WHERE DECLARATION & CERTIFICATE IN FORM 27BA AND RE TURN OF INCOME FILED. 1 M/S. MANGALORE GANESH BEEDI WORKS MYSORE (KARNATAKA) AAAAM1342G 68421238 ROI FILED ENCLOSED 2 M/S. GUJ ARATH TOBACCO COMPANY MYSORE (KARNATAKA) AFJPP1330G 1588890 ROI FILED ENCLOSED 3 M/S. PANNALAL PREMRAI KHATRI SAWAI MODHOPUR(RAJ.) AADFP3174F 4538765 ROI FILED ENCLOSED 4 M/S. ANAND TOBACCO PRODUCTS MANGALORE (KARNATAKA) AAFFA4744G 967200 ROI FILED ENCLOSED 5 M/S. PRAKASH BIDIES LIMITED MANGALORE (KARNATAKA) AABCP9885E 9503876 ROI FILED ENCLOSED 6 M/S. P& J TOBACCO PRODUCTS COMPANY GOPAL NAGAR DISTT. MURS AACFP2000R 3571350 ROI FILED ENCLOSED 7 M/S. SJ & SP FAMILY TRUST JAGTIAL DISTT. KARIMNAGAR (A.P.) AAATS5877R 44164013 ROI FILED ENCLOSED ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 19 8 M/S. JP TOBACCO PRODUCTS PVT. LTD. DAMOH (M.P.) AAACJ7141G 11591849 ROI FILED ENCLOSED 9 PARBHUDAS KISHORDAS TOBACCO PRODUCTS PVT. LTD. NIZAMABAD AABCP1495Q 10233471 ROI FILED ENCLOSED 10 PARBHUDAS KISHORDAS TOBACCO PRODUCTS PVT. LTD. DAMOH (MP,) AABCP1495Q 32213394 ROI FILED ENCLOSED 11 M/S. HYDERABAD BIDI MANUFACTURES HYDERABAD AABFH1252J 6050190 ROI FILED ENCLOSED 12 M/S. ARSHAD & COMPANY HYDERABAD AAFFA0570N 2355870 ROI FILED ENCLOSED 13 M/S SHAZ ENTERPRISES HYDERABAD AJBPK1293R 4448515 ROI FILED ENCLOSED 14 M/S. CHAR BHAI BIDI WORKS HYDERABAD AABFC0789P 56132915 ROI FILED ENCLOSED 15 M/S SHAHEEN TRADERS MYSORE (KARNATAKA) ADSPB5725E 920315 ROI FILED ENCLOSED 16 M/S. STAR TRADERS TANDA (U P ) ACCPS9843D 1562616 ROI FILED ENCLOSED TOTAL (A) RS. 25,82,64,467/ - B. DECLARATION IN FORM 27BA AVAILABLE BUT RETURN OF IN COME NOT FILED( ONLY AO DETAILS GIVEN. 17 M/S. M.P. TRADERS BANGALORE (KARNATAKA) AFLPP4547H 1194765 A CHART SHOWING ROI FILLING DETAILS & COPY OF WEBSITE FILED. ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 20 18 M/S. S.M. TRADERS TUMKUR (KARNATAKA) ABCPY5783B 914625 A CHART SHOWING ROI FILLING DETAILS & COPY OF WEBSITE FILED. 19 M/S. BABU BHAI RASHID BHAI KARAULI (RAJASTHAN) ACAPA0895P 2390012 A CHART SHOWING ROI FILLING DETAILS & OF WEBSITE FILED. 20 M/S SHIVAM TRADING COMPANY AMROHA (U.P.) CVKPK2262H 1115200 A CHART SHOWING ROI FILLING DETAILS & COPY OF WEBSITE FILED. 21 M/S MEHBOOB BIDI FACTORY AMROHA J.P. NAGAR(U.P.) AAWFM0254A 5665360 A CHART SHOWING ROI FILLING DETAILS & COPY OF WEBSITE FILED. 22 M/S HARIOM TRADERS BHIWANDI (MUMBAI) AGCPY4276C 162142 A CHART SHOWING ROI FILLING DETAILS & COPY OF WEBSITE 23 M/S. SHANKARA TRADERS AMROHA (U.P.) AGDPA5730H 622890 A CHART SHOWING ROI FILLING DETAILS & ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 21 24 M/S AFRIN TRADERS BEEDI MERCHANTS SIRA (KARNATAKA) ALIPM9963H 1078688 A CHART SHOWING ROI FILLING DETAILS & 25 J.G. & SONS KOURTLA ACGPL9235D 346080 A CHART SHOWING ROI FILLING DETAILS & COPY O F TOTAL B RS. 1,34,89,762 / - C CASES WHERE CERTIFICATE / RETURN OF INCOME NOT FILE D 26. RAMESH S/O NATHU MP 1,77,360 CERTIFICATE AVAILABLE BUT RETURN NOT FILED TOTAL C RS. 1,77,360/- GRAND TOTAL RS.27,19,31,589/- IT IS EVIDENT FROM THE TABLE ABOVE THAT THE ASSESSE E IN THE CASE LISTED AT 1 TO 16 HAS FILED ALL THE DETAILS LIKE DECLARATION, C ERTIFICATE AND RETURN OF INCOME. THEREFORE THIS BENEFIT AS PER THE RATIO LAI D DOWN IN HINDUSTAN COCA COLA (SUPRA) COULD BE GIVEN TO THE ASSESSEE. THUS T HE APPELLANT IS ENTITLED TO THE BENEFIT TO THE EXTENT OF RS. 25,82,64,467/- AND NO TCS CAN BE RECOVERED ON THIS AMOUNT. IN NINE CASES AT SERIAL NO. 17 TO 25 THE ASSESSEE H AS FILED THE CERTIFICATE IN FORM 27BA BUT RETURN OF INCOME WERE NOT FURNISHED. HOWEVER EVIDENCE OF FILING OF RETURN THROUGH WEBSITE WAS FILED. ACCORDINGLY THE AO IS DIRECTED TO ALLOW THE BENEF IT OF RS. 1,34,89,762/-AS PER THE RATIO LAID DOWN BY HON'BLE APEX COURT IN HINDUSTAN COCA COLA (SUPRA) ONLY AFTER MAKING VERIF ICATION OF THE RETURN OF ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 22 INCOME FILED BY THE RESPECTIVE PARTIES CASE THE APP ELLANT FAILED TO DO SO, THE LIABILITY OF TCS IS ON THE APPELLANT. FURTHER IN CASE OF PARTY AT SERIAL NO. 26 THE ASSES SEE NEITHER FILED ANY DECLARATION & CERTIFICATE NOR ANY RETURN OF INCOME. THEREFORE, THE ASSESSEE CANNOT BE ALLOWED THE BENEFIT OF THE DECISION HINDU STAN COCA COLA (SUPRA) IN THESE CASES. THE DEMAND OF TCS AND THE INTEREST THEREON, RAISED BY THE ITO TO THE EXTENT OF RS.1,77,360/- IS UPHELD BEING JUSTIFIED. SO FAR AS THE CHARGING OF INTEREST U/S 206C(7) IS C ONCERNED, THE AO IS DIRECTED TO CALCULATE THE INTEREST FOR PERIOD OF ST ARTING FROM THE DUE DATE OF DEPOSIT OF TCS AFTER COLLECTION TO THE DATE OF FILI NG OF THE RETURN BY RESPECTIVE PARTIES. ACCORDINGLY THIS GROUND IS PART LY ALLOWED. 7. AGAINST THE AFORESAID FINDINGS OF THE LD CIT(A), BOTH THE PARTIES ARE IN APPEAL BEFORE US. 8. FIRSTLY, WE TAKE UP THE GROUNDS OF ASSESSEES AP PEAL. IN GROUND NO. 1, THE ASSESSEE HAS CHALLENGED THE ORDER PASSED BY THE ASSESSING OFFICER FOR WANT OF REQUISITE JURISDICTION. 9. IN THIS REGARD, THE LD AR SUBMITTED THAT THE ASS ESSEE FIRM HAS BEEN ALLOTTED TAN NO. JDHI01315G AND THE SAID TAN COMES UNDER THE TERRITORIAL JURISDICTION OF ITO (TDS), KOTA BEARING CODE NO. RJ N-WT-850-3 AS PER SECTION 124(1) WITH WHOM THE TDS RETURNS WERE BEING REGULAR LY FILED. HOWEVER, THE IMPUGNED SURVEY U/S 133A(2A) WAS CONDUCTED ON 23.03 .2015 BY THE ITO, TDS-3, JAIPUR AND THEREAFTER IMPUGNED ORDER FOR THE AY 2013-14 WAS PASSED BY THE ITO TDS-3, JAIPUR WITHOUT HAVING VALID JURIS DICTION. 10. IT WAS SUBMITTED THAT THE SAID GROUND WAS ALSO TAKEN BEFORE THE LD CIT(A), HOWEVER, IT APPEARS THAT THIS GROUND HAS ES CAPED HIS ATTENTION AND REMAIN TO BE DECIDED AND THEREFORE, THIS ISSUE MAY BE RESTORED TO THE FILE OF LD CIT(A) TO BE DECIDED AFTER PROVIDING OPPORTUNITY TO THE ASSESSEE. FURTHER, THE ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 23 LD AR REITERATED THE SUBMISSIONS MADE BEFORE THE LD . CIT(A) WHICH READ AS UNDER: THE IMPUGNED ORDER WAS PASSED WITHOUT HAVING JURIS DICTION: IT IS SUBMITTED THAT THE JURISDICTION OVER THE ASSESSEE U NDER TAN AS PER SECTION 124(1) RESTED WITH THE ITO TDS, KOTA WI TH WHOM THE TDS RETURNED WERE BEING REGULARLY FILED BY THE ASSESSEE . THIS FACT IS EVIDENT FROM THE E-FILLING WEBSITE OF THE INCOME TAX DEPART MENT WHICH ALSO SHOWS THE ITO(TDS), KOTA HAVING TERRITORIAL JURISDICTION OVER TONK, DISTRICT WHEREIN THE ASSESSEE SITUATED. BUT SURPRISINGLY, THE IMPUGNED ORDERS FOR THE AY 20 09-10 TO AY 2015-16 WERE PASSED BY THE PRESENT ITO TDS-3, JAIPUR ON 22. 12.2016 AND 06.03.2017 IS LACKING JURISDICTION AND HENCE VOID A B INITIO AND LIABLE TO BE QUASHED. KINDLY REFER STATE OF GUJARAT V. RAJESH KU MAR CHIANLAL AIR 1996 P. 2664 RAZA TEXTILES LTD. V. ITO 87 ITR 539 ( S.C.), CHOUBEY JAGDISH PRASAD V. GAYA PAL CHATURVEDI AIR 1959 492 P. DAS MUNI REDDY V. APPARITO AIR 1974 208 SANT BABA MOHAN SINGH V. C IT 90 ITR 197 77 TAXMAN 265 SITARAM RATHORE VS. CIT HENCE THE IMPUGNED DEMAND SO RAISED KINDLY BE QUASH ED IN FULL OR IN THE ALTERNATE THE BENEFIT OF THE PROVISO TO S.206C (6A) BE GIVEN. 11. PER CONTRA, THE LD DR DRAWN OUR REFERENCE TO TH E ORDER OF THE LD CIT(A) AND SUBMITTED THAT THE GROUND OF APPEAL THOUGH TAKE N BY THE ASSESSEE FIRM BEFORE THE LD CIT(A), HOWEVER, SINCE THE SAME WAS N OT PRESSED DURING THE COURSE OF HEARING, THE GROUND WAS NOT ALLOWED AND D ISMISSED BY THE LD CIT(A). 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE HAS RAISED A G ROUND OF APPEAL (GROUND NO. 1) BEFORE THE LD CIT(A) AND CHALLENGED THE ORDE R PASSED U/S 206C(6) R/W 206C(7) DATED 6.03.2017 FOR WANT OF REQUISITE JURIS DICTION WITH ITO JAIPUR AND THEREAFTER, IN GROUND NO. 2, HAS CHALLENGED THE ORD ER SO PASSED BY THE ITO JAIPUR AS BARRED BY LIMITATION. THE LD CIT(A) WHIL E REFERRING TO BOTH THESE GROUNDS OF APPEAL HAS APPARENTLY READ AND UNDERSTOO D BOTH THESE GROUNDS AS RELATING TO LIMITATION AS APPARENT FROM READING OF PARA 4 OF HIS ORDER AND THEREAFTER, IN PARA 4.1, HAS HELD THAT THESE GROUND S WERE NOT PRESSED BY THE LD ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 24 AR OF THE APPELLANT AND THEREFORE, THESE GROUNDS AR E NOT ALLOWED. DURING THE COURSE OF HEARING, THE LD AR STATED AT THE BAR THAT ONLY GROUND RELATING TO LIMITATION WAS NOT PRESSED BEFORE THE LD CIT(A). WE THEREFORE FIND THAT THE GROUND RELATING TO CHALLENGING THE ORDER PASSED BY THE ASSESSING OFFICER FOR WANT OF JURISDICTION WAS TAKEN BEFORE THE LD CIT(A) , HOWEVER, IT APPEARS THAT THE LD CIT(A) HAS WRONGLY READ THE GROUND RELATING TO JURISDICTION AND LIMITATION TOGETHER AND HAS DISMISSED BOTH THESE GR OUNDS AS NOT PRESSED. GIVEN THAT THIS GROUND WAS TAKEN BY THE ASSESSEE BE FORE THE LD CIT(A) AND NOT ADJUDICATED UPON, THE MATTER DESERVE TO BE SET-ASID E TO THE FILE OF THE LD CIT(A) TO ADJUDICATE THE SAID GROUND OF APPEAL AFTE R PROVIDING REASONABLE OPPORTUNITY TO THE ASSESSEE. IN THE RESULT, THE GR OUND NO. 1 IS ALLOWED FOR STATISTICAL PURPOSES. 13. IN GROUND NO. 2, THE ASSESSEE HAS CHALLENGED TH E ORDER PASSED BY THE ASSESSING OFFICER AS BARRED BY LIMITATION. DURING THE COURSE OF HEARING, THE SAME WAS NOT PRESSED BY THE LD AR ON BEHALF OF THE ASSESSEE, HENCE, THE SAME IS DISMISSED AS NOT PRESSED. 14. IN GROUND NO. 3.1, THE ASSESSEE HAS CHALLENGED THE CONFIRMATION OF DEMAND TOWARDS TCS AMOUNTING TO RS. 1,77,360/-. 15. IN THIS REGARD, THE LD AR SUBMITTED THAT THE T OTAL AMOUNT OF SALE OF TENDU LEAVES WORTH RS.27,19,31,589/- CONSISTED OF DIFFERE NT CATEGORIES (A, B & C) OF BUYERS (CATEGORIZED BASED ON DOCUMENTATION ON RECOR D) WHICH HAVE BEEN EXAMINED BY THE CIT(A) AS STATED AT PG 14 TO 16 OF HIS ORDER AND ACCORDINGLY, FEELING SATISFIED WITH THE CONTENTIONS OF THE ASSES SEE AND SUBMISSIONS/DOCUMENTATION IN SUPPORT THEREOF, HELD THAT THE ASSESSEE WAS NOT IN DEFAULT TO THE EXTENT OF THE SALES TOTALING TO R S.25,82,64,467/- AND RS.1,34,89,762/- (AS PER LIST A & B). HOWEVER, WITH REGARD TO THE THIRD TYPE OF CATEGORIES (LIST C) FOR THE CASES LISTED FROM S.NO. 26, SHOWING SALES OF RS.1,77,360/-, THE LD. CIT(A) HELD THAT THE BENEFIT OF THE DECISION OF THE ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 25 HONBLE SUPREME COURT IN CASE OF HINDUSTAN COCA COL A COULD NOT BE APPLIED IN THIS CASE AND HELD AS UNDER: FURTHER IN CASE OF PARTY AT SERIAL NO. 26 THE ASSE SSEE NEITHER FILED ANY DECLARATION & CERTIFICATE NOR ANY RETURN OF INCOME. THEREFORE, THE ASSESSEE CANNOT BE ALLOWED THE BENEFIT OF THE DECIS ION HINDUSTAN COCA COLA (SUPRA) IN THESE CASES. THE DEMAND OF TCS AND THE INTEREST THEREON, RAISED BY THE ITO TO THE EXTENT OF RS.1,77,360/- IS UPHELD BEING JUSTIFIED. ACCORDINGLY, HE CONFIRMED THE ORDER OF THE LD. AO T O THAT EXTENT. HOWEVER, WHILE CONCLUDING, HE OBSERVED AS UNDER: .THE DEMAND OF TCS AND THE INTEREST THEREON, R AISED BY THE ITO TO THE EXTENT OF RS.1,77,360/- IS UPHELD BEING JUST IFIED. 16. IN THIS REGARD, IT WAS SUBMITTED BY THE LD AR T HAT THE DEMAND OF TCS U/S 206C(6) AND DEMAND OF CONSEQUENT INTEREST THEREON U /S 206C(7) CAN ONLY BE THE DEMAND OF TCS AND NOT OF THE ENTIRE SALE. IT AP PEARS THAT THE LD. CIT(A) HAS PERHAPS MISTAKENLY UNDERSTOOD THE TOTAL AMOUNT OF THE SALE OF RS.1,77,360/- TO BE THE AMOUNT OF THE TCS WHEREAS T HE AMOUNT OF TCS IS ONLY @ 5% WHICH COMES TO RS.10,047/- ONLY (I.E. @ 5.665% OF RS.1,77,360/-) AND NOT THE ENTIRE SALES AMOUNT. THOUGH THIS APPEARS ON LY TO BE A TYPOGRAPHICAL OR CLERICAL MISTAKE YET HOWEVER, SINCE THIS FORMED PAR T OF THE ORDER OF THE APPELLATE AUTHORITY WHICH HAS NOT BEEN RECTIFIED YE T, HENCE, THIS GROUND HAS BEEN TAKEN AND PRAYED FOR APPROPRIATE RELIEF. 17. THE LD DR IS HEARD WHO HAS RELIED ON THE ORDER OF THE LOWER AUTHORITIES AND SUBMITTED THAT THE LD CIT(A) HAS RIGHTLY UPHELD THE LEVY OF TCS IN ABSENCE OF ANY DOCUMENTATION, HOWEVER, AS FAR AS QUANTUM OF TCS IS CONCERNED, HE HAS NO OBJECTION WHERE THE MATTER IS SET-ASIDE FOR NECESSARY VERIFICATION. 18. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURSUED THE MATERIAL AVAILABLE ON RECORD. PRIMA FACIE, LOOKING AT THE OTHER ENTRI ES WHERE THE LD CIT(A) HAS ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 26 ALLOWED THE RELIEF TO THE ASSESSEE FIRM, WE FIND ME RIT IN THE CONTENTION OF THE LD AR THAT THE AMOUNT OF RS 1,77,360 REPRESENTS THE SALE AMOUNT ON WHICH THE TCS IS TO BE DETERMINED AND IT DOESNT REPRESEN T THE AMOUNT OF TCS AND THEREFORE, THE LIABILITY OF THE ASSESSEE IS ONLY TO THE EXTENT OF TCS ON SUCH SALES AND NOT ON THE WHOLE SALE AMOUNT. THE MATTER IS ACCORDINGLY SET-ASIDE TO THE FILE OF AO TO VERIFY THE SAME AND DETERMINE THE QUANTUM OF TCS AND CONSEQUENT INTEREST THEREON WHICH IS PAYABLE BY THE ASSESSEE IN RELATION TO THE IMPUGNED TRANSACTION. THE GROUND OF APPEAL IS T HUS ALLOWED FOR STATISTICAL PURPOSES. 19. IN GROUND NO. 3.2, THE ASSESSEE HAS CHALLENGED THE FINDINGS OF THE LD CIT(A) RELATING TO CHARGING OF INTEREST U/S 206C(7) OF THE ACT. 20. DURING THE COURSE OF HEARING, THE LD AR SUBMITT ED THAT THE ASSESSING OFFICER HAD CHARGED INTEREST U/S 206C(7) OF THE IT ACT, 1961 ON THE ENTIRE AMOUNT OF SHORT / NON COLLECTION OF TAX AT SOURCE U /S 206C(6) ALLEGING THAT ASSESSEE HAS COMMITTED A CLEAR DEFAULT OF NON-COLLE CTION OF TCS W.R.T. SALE AMOUNT OF RS.25,58,31,594/- (CORRECT SALE AMOUNT IS RS.27,19,31,589/-) AND IN THE FIRST APPEAL, THE LD. CIT(A) HAS DIRECTED TH E AO AS UNDER: SO FAR AS THE CHARGING OF INTEREST U/S 206C(7) IS CONCERNED, THE AO IS DIRECTED TO CALCULATE THE INTEREST FOR PERIOD OF ST ARTING FROM THE DUE DATE OF DEPOSIT OF TCS AFTER COLLECTION TO THE DATE OF F ILING OF THE RETURN BY RESPECTIVE PARTIES. ACCORDINGLY, THIS GROUND IS PAR TLY ALLOWED. 21. IN THIS REGARD, IT WAS SUBMITTED BY THE LD AR T HAT NO INTEREST IS LEVIABLE AND PERMISSIBLE TO BE CHARGED IN A CASE WHERE BUYER S HAVE ALREADY PAID ADVANCE TAXES AND HAVING REFUND. IT WAS SUBMITTED THAT THERE MAY BE SITUATIONS WHERE THE AMOUNT OF PREPAID TAXES (I.E. BY WAY OF TDS/ TCS OR ADVANCE TAX) WERE PAID BY THE BUYER TOWARDS HIS INC OME TAX LIABILITY EVEN BEFORE THE DATE ON WHICH SUCH AMOUNT OF TCS BECAME COLLECTIBLE BY THE ASSESSEE SELLER, IN SUCH A CASE NO INTEREST CAN BE CHARGED BECAUSE THE AMOUNT ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 27 OF TAX ALREADY STANDS PAID IN THE EXCHEQUER BY THE BUYER HIMSELF. IN SOME OF THE CASES, SUCH PAYMENT OF PREPAID TAXES MAY BE BY WAY OF PREPAYMENT OF INSTALLMENTS OF ADVANCE TAX ON DIFFER ENT DATES DURING THE RELEVANT FINANCIAL YEAR. HENCE DEPENDING UPON THE D UE DATE OF THE COLLECTION OF TCS BY THE ASSESSEE SELLER VIS A VIS THE DIFFERE NT DATES OF PREPAYMENT OF TAXES (AS STATED ABOVE), INTEREST HAS TO BE COMPUTE D BUT IT IS NOT THAT THE INTEREST BECOMES CHARGEABLE ON THE ENTIRE AMOUNT FO R THE ENTIRE PERIOD BY TAKING A LITERAL INTERPRETATION OF THE PROVISO TO S ECTION 201(1A). HERE, IN VARIOUS CASES, THE BUYERS HAVE CLAIMED REFUND. 22. IN SUPPORT OF HIS CONTENTIONS, THE LD AR HAS PL ACED RELIANCE ON THE COORDINATE BENCH DECISION IN CASE OF CHANDMAL SANCH ETI, JAIPUR VS. ITO (2016) 181 TTJ 0906 (JP TRIB.). IT WAS SUBMITTED TH AT THE PRINCIPLE PROPOUNDED IN THIS DECISION HAS ATTAINED FINALITY F OR WANT OF FURTHER CHALLENGE BEFORE THE HONBLE RAJASTHAN HIGH COURT IN AS MUCH AS NO APPEAL HAS BEEN FILED BY THE REVENUE. FURTHER, RELIANCE WAS PLACED ON THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT (TDS) & ANR V/S BHARAT HOTELS LIMITED (2016) 288 CTR 0682 (KAR) AND SOLAR AUTOMOBILES PVT LTD VS DCIT (2011) 245 CTR 475 (KAR). 23. PER CONTRA, THE LD DR IS HEARD WHO DRAWN OUR RE FERENCE TO THE PROVISO TO SECTION 206C(7) INSERTED BY THE FINANCE ACT 2012 WI TH EFFECT FROM 1.07.2012 WHICH PROVIDES THAT THE INTEREST SHALL BE PAYABLE F ROM THE DATE ON WHICH SUCH TAX WAS COLLECTIBLE TO THE DATE OF FURNISHING OF RE TURN OF INCOME BY SUCH BUYER. HE ACCORDINGLY RELIED ON THE FINDINGS OF THE LD CIT (A) AND SUBMITTED THAT THERE IS NO INFIRMITY IN THE SAID FINDINGS AND THE SAME S HOULD BE CONFIRMED. 24. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURSUED THE MATERIAL AVAILABLE ON RECORD. THE RELEVANT PROVISIONS OF SECTION 206C(7) WHICH ARE UNDER CONSIDERATION READS AS UNDER: ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 28 (7) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SEC TION (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 P ART THEREOF ON THE AMOUNT OF SUCH TAX FROM THE DATE ON WHICH SUCH TAX WAS COLLEC TIBLE TO THE DATE ON WHICH THE TAX WAS ACTUALLY PAID AND SUCH INTEREST SHALL B E PAID BEFORE FURNISHING THE QUARTERLY STATEMENT FOR EACH QUARTER IN ACCORDANCE WITH THE PROVISIONS OF SUB- SECTION (3): PROVIDED THAT IN CASE ANY PERSON RESPONSIBLE FOR CO LLECTING TAX IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION, FAILS TO COLLE CT 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 LICEN SEE OR LESSEE BUT IS NOT DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER THE FIRST PROVISO OF SUB-SECTION (6A), THE INTEREST SHALL BE PAYABLE FROM THE DATE ON WHIC H SUCH TAX WAS COLLECTIBLE TO THE DATE OF FURNISHING OF RETURN OF INCOME BY SUCH BUYER OR LICENSEE OR LESSEE. 25. A BARE READING OF THE AFORESAID PROVISIONS PROV IDES THAT WHERE THE PERSON RESPONSIBLE FOR COLLECTING TAX DOES NOT COLLECT THE TAX OR AFTER COLLECTING THE TAX FAILS TO PAY IT, HE SHALL BE LIABLE TO PAY SIMPLE I NTEREST AT THE PRESCRIBED RATE FROM THE DATE ON WHICH SUCH TAX WAS COLLECTIBLE TO THE DATE ON WHICH THE TAX WAS ACTUALLY PAID. FURTHER, A PROVISO HAS BEEN INSE RTED BY THE FINANCE ACT, 2012 WITH EFFECT FROM 1.07.2012 WHICH PROVIDES THAT WHERE SUCH PERSON IS NOT DEEMED TO BE AN ASSESSEE IN DEFAULT UNDER THE FIRST PROVISO OF SUB-SECTION (6A), THE INTEREST SHALL BE PAYABLE FROM THE DATE O N WHICH SUCH TAX WAS COLLECTIBLE TO THE DATE OF FURNISHING OF RETURN OF INCOME BY SUCH BUYER. 26. THE FIRST PROVISO OF SUB-SECTION (6A) HAS SIMUL TANEOUSLY BEEN INTRODUCED IN THE STATUE BY THE FINANCE ACT 2012 WITH EFFECT F ROM 1.07.2012 WHICH READS AS UNDER: (6A) IF ANY PERSON RESPONSIBLE FOR COLLECTING TAX IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION DOES NOT COLLECT THE WHO LE OR ANY PART OF THE TAX OR AFTER COLLECTING, FAILS TO PAY THE TAX AS REQUIR ED BY OR UNDER THIS ACT, ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 29 HE SHALL, WITHOUT PREJUDICE TO ANY OTHER CONSEQUENCES WHICH HE MAY INCUR, BE DEEMED TO BE AN ASSESSEE IN DEFAULT IN RE SPECT OF THE TAX: PROVIDED THAT ANY PERSON RESPONSIBLE FOR COLLECTING TAX IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION, WHO FAILS TO C OLLECT 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 BUYE R OR LICENSEE OR LESSEE SHALL NOT BE DEEMED TO BE AN ASSESSEE IN DEF AULT 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 EFFE CT FROM AN ACCOUNTANT IN SUCH FORM AS MAY BE PRESCRIBED . 27. WE NOW REFER TO THE FINDINGS OF THE LD CIT(A) WHICH READ AS UNDER: IT IS EVIDENT FROM THE TABLE ABOVE THAT THE ASSESS EE IN THE CASE LISTED AT 1 TO 16 HAS FILED ALL THE DETAILS LIKE DECLARATION, C ERTIFICATE AND RETURN OF INCOME. THEREFORE THIS BENEFIT AS PER THE RATIO LAI D DOWN IN HINDUSTAN COCA COLA (SUPRA) COULD BE GIVEN TO THE ASSESSEE. THUS T HE APPELLANT IS ENTITLED TO THE BENEFIT TO THE EXTENT OF RS. 25,82,64,467/- AND NO TCS CAN BE RECOVERED ON THIS AMOUNT. IN NINE CASES AT SERIAL NO. 17 TO 25 THE ASSESSEE H AS FILED THE CERTIFICATE IN FORM 27BA BUT RETURN OF INCOME WERE NOT FURNISHED. HOWEV ER EVIDENCE OF FILING OF RETURN THROUGH WEBSITE WAS FILED. ACCORDINGLY THE AO IS DIRECTED TO ALLOW THE BENEF IT OF RS. 1,34,89,762/-AS PER THE RATIO LAID DOWN BY HON'BLE APEX COURT IN HINDUSTAN COCA COLA (SUPRA) ONLY AFTER MAKING VERIF ICATION OF THE RETURN OF INCOME FILED BY THE RESPECTIVE PARTIES CASE THE APP ELLANT FAILED TO DO SO, THE LIABILITY OF TCS IS ON THE APPELLANT. ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 30 FURTHER IN CASE OF PARTY AT SERIAL NO. 26 THE ASSES SEE NEITHER FILED ANY DECLARATION & CERTIFICATE NOR ANY RETURN OF INCOME. THEREFORE, THE ASSESSEE CANNOT BE ALLOWED THE BENEFIT OF THE DECISION HINDU STAN COCA COLA (SUPRA) IN THESE CASES. THE DEMAND OF TCS AND THE INTEREST THE REON, RAISED BY THE ITO TO THE EXTENT OF RS.1,77,360/- IS UPHELD BEING JUST IFIED. SO FAR AS THE CHARGING OF INTEREST U/S 206C(7) IS C ONCERNED, THE AO IS DIRECTED TO CALCULATE THE INTEREST FOR PERIOD OF ST ARTING FROM THE DUE DATE OF DEPOSIT OF TCS AFTER COLLECTION TO THE DATE OF FILI NG OF THE RETURN BY RESPECTIVE PARTIES. ACCORDINGLY THIS GROUND IS PARTLY ALLOWED. 28. WE THEREFORE FIND THAT THE ASSESSEE FIRM HAS B EEN ALLOWED THE BENEFIT TO THE EXTENT OF SALES OF RS 25,82,64,467/- IN RESPECT OF CASES LISTED AT 1 TO 16 WHERE THE BUYERS HAVE FILED THEIR RESPECTIVE RETURN OF INCOME WHEREIN IT HAS BEEN DIRECTED BY THE LD CIT(A) THAT NO TCS CAN BE R ECOVERED ON THIS AMOUNT FOLLOWING THE RATIO LAID DOWN IN HINDUSTAN COCA COL A. SIMILARLY, FOLLOWING THE SAID LEGAL PROPOSITION, IN RESPECT OF TRANSACTIONS LISTED AT ITEM NO. 17 TO 25, THE LD CIT(A) HAS DIRECTED THE AO TO ALLOW THE BENEFIT OF RS 1,34,89,762/- ONLY AFTER MAKING VERIFICATION OF THE RETURN OF INCOME F ILED BY THE RESPECTIVE BUYERS AS THE ASSESSEE HAS FILED THE CERTIFICATE IN FORM N O. 27BA BUT COPY OF RETURN OF INCOME WERE NOT FURNISHED BY THE ASSESSEE THOUGH EV IDENCE OF FILING OF RETURN THROUGH WEBSITE WAS FILED. HOWEVER, AS FAR AS CHAR GING OF INTEREST IS CONCERNED, IN RESPECT OF ALL THESE TRANSACTIONS LIS TED AT 1-25, THE LD CIT(A) HAS DIRECTED TO CALCULATE THE INTEREST FOR PERIOD START ING FROM THE DUE DATE OF DEPOSIT OF TCS AFTER COLLECTION TO THE DATE OF FILI NG OF THE RETURN BY RESPECTIVE PARTIES. WE THEREFORE FIND THAT THE SAID DIRECTION OF THE LD CIT(A) IS IN CONSONANCE WITH THE PROVISO TO SECTION 206C(7) WHER EIN IT HAS BEEN PROVIDED THAT THE INTEREST SHALL BE PAYABLE FROM THE DATE ON WHICH SUCH TAX WAS COLLECTIBLE TO THE DATE OF FURNISHING OF RETURN OF INCOME BY THE RESPECTIVE BUYERS. THE SAID PROVISO HAS HOWEVER NOT ENVISAGED THE SITUATION, AS CONTENDED BY THE LD AR, WHERE THE BUYERS HAVE ALREA DY PAID THE TAXES BY ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 31 ADVANCE TAX EVEN BEFORE THE DATE ON WHICH TCS BECOM ES COLLECTIBLE, INTEREST SHOULD NOT BE LEVIED. GIVEN THAT THE SAID PROVISO HAS BEEN INSERTED WITH EFFECT FROM 1.07.2012, THE INTEREST FOR THE PE RIOD PRIOR TO 1.07.2012 SHALL NOT BE LEVIABLE. THEREFORE, GOING BY THE PLAIN LANG UAGE AS SO PROVIDED IN THE PROVISO TO SECTION 206C(7) AS IT STOOD TODAY AND AP PLICABLE IN THE INSTANT CASE, THE ASSESSEE FIRM SHALL BE LIABLE TO PAY INTEREST F ROM THE DATE ON WHICH SUCH TAX WAS COLLECTIBLE TO THE DATE OF FURNISHING OF RE TURN OF INCOME BY THE RESPECTIVE BUYERS EXCLUDING THE PERIOD PRIOR TO 1.0 7.2012 IN RESPECT OF WHICH NO INTEREST SHALL BE LEVIABLE. THE DECISION OF THE COORDINATE BENCH IN CASE OF CHANDMAL SANCHETI (SUPRA), THE DECISION OF THE HON BLE KARNATAKA COURT IN CASE OF BHARAT HOTELS (SUPRA) AND SOLAR AUTOMOBILES (SUPRA) WERE RENDERED FOR THE PERIOD PRIOR TO THE AMENDMENT BROUGHT IN BY THE FINANCE ACT, 2012 WHEREBY PROVISO TO SECTION 206C(7) HAS BEEN INSERTE D WITH EFFECT FROM 1.7.2012, HAVE NOT CONSIDERED THE SAID PROVISIONS A S AMENDED AND ARE THEREFORE, DISTINGUISHABLE AND DOESNT SUPPORT THE CASE OF THE ASSESSEE FIRM. THEREFORE, THE FINDINGS OF THE LD CIT(A) WHICH ARE IN CONSONANCE WITH THE PROVISO TO SECTION 206C(7) ARE HEREBY CONFIRMED SUB JECT TO THE MODIFICATION THAT NO INTEREST SHALL BE LEVIABLE FOR THE PERIOD P RIOR TO 1.07.2012 AND TO THAT EXTENT, THE ASSESSEE SHALL BE ELIGIBLE FOR RELIEF. THE GROUND OF APPEAL IS THUS PARTLY ALLOWED. 29. IN GROUND NO. 4, THE ASSESSEE FIRM HAS CHALLENG ED THE ACTION OF LD CIT(A) IN NOT CONSIDERING THAT THE CASE FALL UNDER U/S 206 C(1A) R/W RULE 37C IN AS MUCH AS THE ENTIRE SUBJECTED SALES OF TENDU LEAVES WAS MADE TO THE ULTIMATE CONSUMERS FOR USE IN MANUFACTURING, PROCESSING OR P RODUCING OF BEEDIES AND HENCE THE PROVISION OF SECTION 206C WAS NOT APPLICA BLE AND HAVE BEEN WRONGLY INVOKED BY THE AO. 30. IN THIS REGARD, IT WAS SUBMITTED THAT THE PROVI SION CONTAINED U/S 206C (1A), IN A MANDATORY TERM, PROVIDES THAT THE ASSESS EE SELLER WILL BE UNDER NO OBLIGATION TO COLLECT TAX AT SOURCE OVERRIDING THE PROVISIONS OF S.206C(1). ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 32 THOUGH THE SUBSTANTIVE PROVISION OF LAW NOWHERE PRO VIDES ANY TIME LIMIT UP TO WHICH THE SELLER SHOULD HAVE COLLECTED THE DE CLARATION OR THE BUYER SHOULD HAVE FURNISHED THE SAME TO THE SELLER. HOWEV ER, NO COLLECTION OF TAX SHALL BE MADE IN THE CASE OF A BUYER WHERE THE GOOD S (SUBJECTED TO TCS) ARE TO BE UTILIZED FOR THE PURPOSES OF MANUFACTURING, P ROCESSING OR PRODUCING ARTICLES AND THINGS OR FOR THE PURPOSES OF GENERATI ON OF POWER AND NOT FOR TRADING PURPOSES. 31. IT WAS SUBMITTED THAT THE ASSESSEE FIRM HAS OBT AINED DECLARATIONS IN FORM 27C FURNISHED BY FEW BUYERS TO ESTABLISH THAT THE ASSESSEE SELLER IS NOT AT ALL LIABLE TO COLLECT TCS FROM THE CONCERNED BUY ER IN AS MUCH AS THE SUBJECTED SALES WAS MADE TO THE ULTIMATE CONSUMERS FOR USE IN MANUFACTURING, PROCESSING OR PRODUCING OF BEEDIES AND HENCE THE PR OVISION OF S.206C WAS NOT APPLICABLE. IT WAS SUBMITTED THAT THESE DECLARATION S IN FORM NO.27C WERE FURNISHED BY THE FEW BUYERS IN THE RECENT PAST ONLY AND HENCE, THE ASSESSEE FIRM HAS FURNISHED THE SAME ALONG WITH APPLICATION UNDER RULE 29 FILED ON 04.06.2018 THOUGH STRICTLY AND LEGALLY SPEAKING, SU CH DECLARATION ARE NOT ADDITIONAL EVIDENCE IN NATURE BEING THE LATER DEVEL OPMENTS. 32. FURTHER, OUR REFERENCE WAS DRAWN TO THE PROVISI ON OF SEC. 206C (1A) WHICH READS AS UNDER: (1A) NOTWITHSTANDING ANYTHING CONTAINED IN SUB-SEC TION (1), NO COLLECTION OF TAX SHALL BE MADE IN THE CASE OF A BU YER, WHO IS RESIDENT IN INDIA, IF SUCH BUYER FURNISHES TO THE P ERSON RESPONSIBLE FOR COLLECTING TAX, A DECLARATION IN WRITING IN DUP LICATE IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANN ER TO THE EFFECT THAT THE GOODS REFERRED TO IN COLUMN (2) OF THE AFO RESAID TABLE ARE TO BE UTILISED FOR THE PURPOSES OF MANUFACTURING, P ROCESSING OR PRODUCING ARTICLES OR THINGS OR FOR THE PURPOSES OF GENERATION OF POWER AND NOT FOR TRADING PURPOSES. ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 33 33. IT WAS FURTHER SUBMITTED THAT RULE 37C HOWEVER PROVIDES THAT SUCH DECLARATION IS TO BE FILED ON OR BEFORE 7 DAYS OF T HE NEXT FOLLOWING MONTH IN WHICH THE DECLARATION IS FURNISHED TO THE SELLER. I N THE CASES OF THE DELAYED FILING HOWEVER, NO CONSEQUENCE HAS BEEN PROVIDED NE ITHER UNDER SEC. 206C (1A) NOR UNDER THE RULE 37C. IT IS SUBMITTED THAT F ILING OF SUCH DECLARATION IS A MERE PROCEDURAL REQUIREMENT AND THEREFORE EVEN IF, SUCH DECLARATION ARE FURNISHED AT THE APPELLATE STAGE, THE SAME DESERVES ACCEPTANCE. THIS CONTENTION IS ALSO FOR THE REASON THAT THE APPEAL I S THE CONTINUATION OF THE ASSESSMENT PROCEEDINGS ONLY AND THEREFORE, EVEN IF A PLEA TAKEN BEFORE THE APPELLATE COURT OR THE DECLARATIONS ARE FILED, THE COURTS MAY ADMIT THE SAME IN THE LARGER INTEREST OF JUSTICE. 34. IT WAS SUBMITTED THAT UNDER SIMILAR CIRCUMSTANC ES, THE TRIBUNAL IN THE CASE OF CHANDMAL SANCHETI VS. ITO ,TDS-2, JAIPUR [2 016] 181 TTJ 0906 HAVE REMITTED THE MATTER BACK TO THE ITO TO CONSIDER THE DECLARATION FILED IN FORM 27C BELATEDLY BY THE ASSESSEE. RELIANCE WAS ALSO P LACED ON THE TRIBUNAL DECISION IN CASE OF KARNATAKA FOREST DEVELOPMENT CO RPORATION LTD. VS. ITO, TDS (2015) ITL 1007 (BANG.) (TRIB.) WHEREIN THE TRI BUNAL HAS REMANDED THE MATTER BACK TO THE AO FOR PROPER VERIFICATION AND T HEREAFTER RE-ADJUDICATION OF THE ISSUES INVOLVED IN ACCORDANCE WITH LAW. FURTHER , RELIANCE WAS PLACED ON THE HONBLE GUJARAT HIGH COURT DECISION IN CASE OF CIT (TDS) VS. SIYARAM METAL UDYOG (P.) LTD. 2016 ITL 4028 (GUJ.) AND HONBLE MA DRAS HIGH COURT DECISION IN CASE OF CIT VS. ADISANKARA SPINNING MILLS (P.) L TD. 226 TAXMAN 44 (MAD.) 35. IT WAS FURTHER SUBMITTED THAT IN THE INSTANT CA SE, ALTHOUGH A GROUND WAS TAKEN BEFORE THE LD. CIT (A) HOWEVER DECLARATIONS C OULD NOT BE FILED FOR THE GENUINE DIFFICULTIES AND THE EXISTENCE OF SUFFICIEN T CAUSE HAS BEEN EXPLAINED IN THE APPLICATION FILED BY THE ASSESSEE UNDER RULE 29 . IT WAS SUBMITTED THAT THE TRIBUNAL WHICH IS MEANT TO PROVIDE SUBSTANTIAL JUST ICE SHOULD NOT INDULGE IN TECHNICALITY OF LAW AND THE PROCEDURES AND IT SHOUL D ENTERTAIN AN ISSUE NOT AGITATED BEFORE AO OR CIT (A), IF IT IS A QUESTION OF LAW OR IF FACTS ARE ALREADY ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 34 ON RECORDS. IN CASE THE FACTS NEED ASCERTAINMENT, T HE TRIBUNAL SHOULD NOT HESITATE IN REMANDING TO THE LOWER AUTHO RITIES TO DECIDE IN ACCORDANCE WITH LAW AND AFTER OPPORTUNITY TO THE OT HER SIDE. IN INDO JAVA & CO. VS. IAC (1989) 30 ITD 161 (DELHI)(SB), THE SPEC IAL BENCH HAS HELD THAT POINT WHICH CAN BE AGITATED IN APPEAL BEFORE TRIBUN AL BY AN APPELLANT MAY ALSO INCLUDE POINTS IMPINGE ON COMPUTATION OF INCOM E AS SHOWN BY THE ASSESSEE HIMSELF BY MISTAKE OR OTHERWISE AND EVEN A GITATED BEFORE ITO OR ACC. IN SUPPORT, RELIANCE WAS ALSO PLACED ON THE DE CISION OF HONBLE MADHYA PRADESH HIGH COURT IN CASE OF CIT VS. KUM. SATYA SE TIA (1983) 143 ITR 0486 (MP) WHEREIN IT WAS HELD AS UNDER: RULE 29 IS IN PARI MATERIA WITH ORDER 41, R. 27 OF THE CPC. IT IS WITHIN THE DISCRETION OF THE APPELLATE AUTHORITY TO ALLOW PROD UCTION OF ADDITIONAL EVIDENCE IF THE SAID AUTHORITY REQUIRES ANY DOCUMEN T TO ENABLE IT TO PASS ORDERS OR FOR ANY OTHER SUBSTANTIAL CAUSE. THEREFOR E, EVEN IF THE ASSESSEE HAD FAILED TO FILE THE AGREEMENT BEFORE THE ITO AND THE AAC, THE TRIBUNAL HAD THE JURISDICTION IN THE INTEREST OF JUSTICE TO ALLOW PRODUCTION OF A CRUCIAL DOCUMENT. THE TRIBUNAL IS THE FINAL FACT- F INDING BODY UNDER THE SCHEME OF THE IT ACT. POWERS, THEREFORE, HAVE NECES SARILY TO BE EXERCISED BY IT FOR DECIDING THE QUESTIONS OF FACT AND WHILE EXERCISING ITS POWERS, IF THE TRIBUNAL IS OF OPINION THAT ADDITIONAL EVIDENCE IS MATERIAL IN THE INTEREST OF JUSTICE FOR DECIDING THE PARTICULAR ISS UE, ITS DISCRETION CANNOT BE INTERFERED WITH UNLESS IT HAS BEEN EXERCISED ON NON -EXISTING OR IMAGINARY GROUNDS. THEREFORE, THE TRIBUNAL WAS CORRECT IN LAW IN ADMITTING FRESH EVIDENCE IN THE FORM OF THE SUBSEQUENT AGREEMENT EV EN THOUGH THIS DOCUMENT WAS NOT PRODUCED BEFORE THE LOWER AUTHORIT IES AND IN FURTHER HOLDING THAT IT DID NOT APPEAR TO BE A FABRICATED D OCUMENT. KALI CHARAN RAM CHANDER VS. CIT (1978) 112 ITR 405 (CAL) : TC8R .1090 RELIED ON; RAM PRASAD SHARMA VS. CIT (1979) 119 ITR 867 (ALL) : TC8R.1096 DISTINGUISHED. (PARAS 6 TO 9) ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 35 36. FURTHER, RELIANCE WAS PLACED ON THE TRIBUNAL DE CISION IN CASE OF RAJMOTI INDUSTRIES VS. ITO (1995) 52 ITD 0286 (AHD) WHEREIN IT WAS HELD AS UNDER: THE TRIBUNAL, UNDER THE SCHEME OF THE IT ACT, 1961 , IS A FINAL FACT- FINDING AUTHORITY AND IN ORDER TO ENABLE IT TO DECI DE DISPUTES BROUGHT BEFORE IT BY WAY OF SECOND APPEAL IN A LAWFUL, FAIR AND JUDICIOUS MANNER IT HAS NECESSARILY TO LOOK INTO AND CONSIDER SUCH EVID ENCE AND OTHER MATERIAL HAVING A NEXUS AND BEARING ON THE SUBJECT- MATTER OF THE APPEAL VIZ., THE DISPUTE INVOLVED. EVEN ACCORDING TO THE P ROVISIONS OF R. 29 OF THE ITAT RULES, THE TRIBUNAL IS EMPOWERED TO RECEIVE AN D ADMIT ADDITIONAL EVIDENCE FOR ANY OTHER SUBSTANTIAL CAUSE. IT IS AMP LY SETTLED AND CLEAR THAT THIS TRIBUNAL CAN ADMIT ADDITIONAL EVIDENCE IN TERMS OF R. 29 IF THE RECEIPT OR ADMISSION OF ADDITIONAL EVIDENCE IS VITA L AND ESSENTIAL FOR THE PURPOSE OF CONSIDERATION OF THE SUBJECT-MATTER OF T HE APPEAL AND ARRIVE AT A FINAL AND ULTIMATE DECISION. THE TRIBUNAL, THEREF ORE, HAS ALSO POWER TO ADMIT ADDITIONAL EVIDENCE IN THE INTEREST OF JUSTIC E OR IF THERE EXISTS SUBSTANTIAL CAUSE. THE ASSESSEE HAVING LOST IN FIRS T APPEAL AND IN ORDER TO GET A FAIR DEAL AND SUBSTANTIAL JUSTICE FROM THIS T RIBUNAL FOR DELETION OF THE ADDITION MADE BY THE ASSESSING OFFICER IN RESPECT O F THE LOANS AND INTEREST THEREON HAS MUSTERED RELEVANT ADDITIONAL E VIDENCE AND COMPILED IT INTO TWO PAPER BOOKS. IN ORDER TO DO SUBSTANTIAL JUSTICE TO THE APPELLANT-ASSESSEE THE ADDITIONAL EVIDENCE AS COMPI LED IN THE PAPER BOOKS HAS TO BE ADMITTED IN TERMS OF R. 29 OF THE I TAT RULES AND, THEREFORE, IT IS ADMITTED.PARI MANGALDAS GIRDHARDA S VS. CIT 1977 CTR (GUJ) 647 FOLLOWED; K. VENKATA RAMAIAH VS. A. SITAR AMA REDDY AIR 1963 (SC) 1526, KALI CHARAN RAM CHANDER VS. CIT (1978) 1 12 ITR 405 (CAL), CIT VS. KUM. SATYA SETHIA (1983) 37 CTR (MP) 66 : ( 1983) 143 ITR 486 (MP), R.S.S. SHANMUGHAM PILLAI & SONS VS. CIT (1974 ) 95 ITR 101 (MAD) ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 36 AND ANAIKAR TRADES & ESTATES (P) LTD. VS. CIT (1990 ) 82 CTR (MAD) 110 : (1990) 186 ITR 313 (MAD) RELIED ON. (PARAS 12, 15 & 18). 37. IT WAS FURTHER SUBMITTED THAT IN THE LATTER YEA RS AS AND WHEN, DECLARATION IN FORM 27C BY THE ULTIMATE CONSUMER MANUFACTURER WAS OBTAINED, THE SAME WAS FILED IN FORM 27C R/W RULE 37C R.W.S. 206C(1A) PROVISO WHICH THE DEPARTMENT HAS ACCEPTED AND NO DEMAND HAS BEEN RAIS ED. IN SUPPORT OF THE SAID CONTENTION, IT WAS SUBMITTED THAT AS DESIRED A ND DIRECTED BY THE BENCH DURING THE COURSE OF HEARING TO SUBMIT THE COPIES O F DECLARATIONS FILED IN SOME OF THE PARTIES WHO ARE COMMON WITH THESE YEARS, COP Y OF LETTERS ADDRESSED TO THE LD CIT(TDS), JAIPUR FOR F.Y. 2015-16, 2017-18 & 2018-19 (A.Y.2016-17, 2018-19 TO 2019-20) ALONG WITH DECLARATIONS IN FORM 27C ARE FILED AND PLACED ON RECORD. IT WAS SUBMITTED THAT NO DEMAND W.R.T. T HESE PARTIES HAS BEEN RAISED BY THE DEPARTMENT AND THESE ARE SAME PARTIES WITH WHOM THE TRANSACTIONS WERE UNDERTAKEN DURING THE IMPUGNED AS SESSMENT YEARS. 38. IT WAS FURTHER SUBMITTED THAT EVEN FOR EARLIER ASSESSMENT YEARS I.E, IN A.Y. 2010-11 TO 2012-13, SIMILAR FACT PATTERN EXIST AND THE TRANSACTIONS WERE MADE WITH THE SAME PARTIES AND THE ASSESSEE HAD RAI SED SIMILAR GROUND OF APPEAL CLAIMING THE BENEFIT OF SEC. 206C(1A) R/W RU LE 37C AND DECLARATIONS IN FORM 27C FROM THE VARIOUS BUYERS WERE SUBMITTED. H OWEVER, GIVEN THAT THE LD CIT(A) HAD QUASHED THE ORDERS PASSED U/S 206C(6) /(7) ON GROUND OF LIMITATION, HE DID NOT DECIDE THE SAID GROUND OF AP PEAL. 39. IT WAS FURTHER SUBMITTED THAT IT IS A CONSISTEN T FACTUAL POSITION AND SUBMISSION OF THE ASSESSEE RIGHT FROM THE BEGINNING WHEN THE STATEMENT OF THE PARTNER OF THE ASSESSEES FIRM WAS RECORDED DUR ING THE TDS SURVEY ON 23.03.2015 AND REPRODUCED IN THE ASSESSMENT ORDERS PASSED U/S 206C(6)/(7) FOR ALL THESE YEARS THAT SALE OF TENDU LEAVES HAVE BEEN MADE TO THE MANUFACTURERS OF BEEDIES AND ALTHOUGH NO DECLARATIO N U/R 37C IN FORM 27C WAS RECEIVED FROM SUCH BUYERS, HOWEVER, THE ASSESSE E HAD WRITTEN/ REQUESTED ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 37 TO THE CONCERNED BUYERS TO SEND THE DECLARATION/CER TIFICATES AND THE OFFICE OF THE ITO WAS ALSO BEEN DULY INFORMED ON TH IS SUBJECT ALONG WITH THE ADDRESS OF SUCH BUYERS. IT WAS ACCORDINGLY SUBMITTE D THAT THE PROVISIONS OF S. 206C (1A) ARE CLEARLY ATTRACTED, DECLARATIONS IN FO RM 27C MAY BE ADMITTED AS PRAYED IN APPLICATION FILED UNDER RULE 29 AND THE A SSESSEE FIRM MAY BE GRANTED THE NECESSARY RELIEF AND THE MATTER MAY BE REMANDED TO THE FILE OF THE AO FOR NECESSARY VERIFICATION. 40. THE LD DR IS HEARD WHO HAS SUBMITTED THAT THE P ROVISIONS OF SECTION 206C(1A) CAN BE INVOKED ONLY IN A SCENARIO WHERE TH E DECLARATIONS FROM THE BUYERS HAVE BEEN SUBMITTED IN THE PRESCRIBED FORM A ND VERIFIED IN THE PRESCRIBED MANNER TO THE EFFECT THAT THE GOODS ARE TO BE UTILISED FOR THE PURPOSES OF MANUFACTURING, PROCESSING OR PRODUCING ARTICLES OR THINGS OR FOR THE PURPOSES OF GENERATION OF POWER AND NOT FOR TRA DING PURPOSES. DRAWING OUR REFERENCE TO THE FINDINGS OF THE AO, IT WAS SUB MITTED BY THE LD DR THAT THE ASSESSING OFFICER HAS CLEARLY HELD THAT THE ASSESSE E FIRM HAD FAILED TO OBTAIN THE REQUISITE FORMS IN FORM NO. 27C FROM THE BUYERS AND SUBMIT THE SAME TO THE LD. CIT(TDS) WITHIN THE STIPULATED TIME. IT WA S SUBMITTED THAT GIVEN THAT THE ASSESSEE HAS NOT SUBMITTED THE DECLARATIONS IN FORM 27C EITHER BEFORE THE AO OR EVEN BEFORE THE LD CIT(A), THERE IS NO INFIRM ITY IN THE ORDER OF THE AO AND LD CIT(A) IN DENYING THE SAME CLAIM TO THE ASSE SSEE. IT WAS FURTHER SUBMITTED THAT THE ASSESSEES PRAYER UNDER RULE 29 TO ADMIT SUCH DECLARATIONS IN FORM 27C THEREFORE CANNOT BE ACCEPTED AT THIS ST AGE AS THE SAME ARE IN NATURE OF ADDITIONAL EVIDENCE AND THE ASSESSEE HAS FAILED TO SHOW ANY REASONABLE CAUSE WHICH PREVENTED HIM FROM OBTAINING SUCH DECLARATIONS IN FORM 27C FOR THE INSTANT YEAR WHEN THE SAME WERE DU LY OBTAINED FOR THE EARLIER YEARS AS SO CLAIMED BY IT. 41. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURSUED THE MATERIAL AVAILABLE ON RECORD. THE PROVISIONS OF SECTION 206C(IA) WHICH A RE UNDER CONSIDERATION READS AS UNDER: ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 38 (1A) NOTWITHSTANDING ANYTHING CONTAINED IN SUB-SEC TION (1), NO COLLECTION OF TAX SHALL BE MADE IN THE CASE OF A BU YER, WHO IS RESIDENT IN INDIA, IF SUCH BUYER FURNISHES TO THE PERSON RESPON SIBLE FOR COLLECTING TAX, A DECLARATION IN WRITING IN DUPLICATE IN THE PRESCR IBED FORM AND VERIFIED IN THE PRESCRIBED MANNER TO THE EFFECT THAT THE GOODS REFERRED TO IN COLUMN (2) OF THE AFORESAID TABLE ARE TO BE UTILISED FOR T HE PURPOSES OF MANUFACTURING, PROCESSING OR PRODUCING ARTICLES OR THINGS OR FOR THE PURPOSES OF GENERATION OF POWER AND NOT FOR TRADING PURPOSES. 42. THE HONBLE GUJARAT HIGH COURT HAD AN OCCASION TO EXAMINE THE AFORESAID PROVISIONS IN CASE OF COMMISSIONER OF INCOME-TAX (T DS) VS SIYARAM METAL UDYOG (P.) LTD (SUPRA). IN THAT CASE, THE ASSESSIN G OFFICER HAD MADE ADDITIONS ON THE GROUND THAT THE RESPONDENT ASSESSE E HAD BREACHED SECTION 206C OF THE INCOME TAX ACT, 1961 IN CASE OF SALE OF SCRAP, ON THE GROUND THAT THE ASSESSEE HAD NOT SUBMITTED FORM-27C COMPRISING OF THE BUYER'S DECLARATION TO THE COMMISSIONER OF INCOME-TAX IN TI ME. THE ASSESSEE ON THE OTHER HAND HAD CONTENDED THAT HE WAS NOT A TRADER O F SCRAP AND THEREFORE, THE PROVISIONS OF SECTION 206C DID NOT APPLY AT ALL . THE ASSESSING OFFICER TURNED DOWN HIS CONTENTION AND PROCEED TO MAKE THE ADDITIONS. EVENTUALLY, WHEN THE ISSUE REACHED THE TRIBUNAL, THE TRIBUNAL R ELYING ON EARLIER DECISION IN CASE OF BHARTI METALS HELD THAT THE ITEMS IN QUESTI ON WERE SCRAP. HOWEVER, IN VIEW OF THE FACT THAT THE ASSESSEE HAD ADMITTEDLY F ILED A DECLARATION IN FORM 27-C COLLECTED FROM THE BUYERS AND GIVEN THAT THERE WAS NO DISPUTE ABOUT THE GENUINENESS OF THE CONTENTS THEREOF RULED IN FAVOUR OF THE ASSESSEE. IN THAT FACTUAL BACKGROUND, THE HONBLE HIGH COURT HAS HELD AS UNDER: 6. SECTION 206C OF THE ACT PERTAINS TO PROFITS AND GAINS FROM THE BUSINESS OF TRADING IN ALCOHOLIC LIQUOR, FOREST PRO DUCE, SCRAP ETC. SUB- SECTION 1 OF SECTION 206C PROVIDES THAT EVERY PERSO N BEING A SELLER SHALL AT THE TIME OF DEBITING OF THE AMOUNT PAYABLE BY TH E BUYER COLLECT FROM THE BUYER OF ANY OF THE GOODS SPECIFIED IN COLUMN ( 2) OF THE TABLE, A SUM ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 39 EQUAL TO THE PERCENTAGE SPECIFIED IN THE CORRESPOND ING ENTRY OF THE TABLE AS INCOME TAX. CLAUSE (AA) OF THE EXPLANATION TO SECTION 206C, INTER ALIA, PROVIDES THAT BUYER WITH RESPECT TO SUB-SECTI ON (1) MEANS A PERSON WHO OBTAINS IN SALE BY WAY OF AUCTION, TENDER OR AN Y OTHER MODE, GOODS OF THE NATURE SPECIFIED IN THE TABLE OR THE RIGHT T O RECEIVE ANY SUCH GOODS BUT DOES NOT INCLUDE A BUYER IN THE RETAIL SALE OF SUCH GOODS PURCHASED BY HIM FOR PERSONAL CONSUMPTION. 7. IN THE CONTEXT OF THIS EXCLUSION CLAUSE CONTAINE D IN EXPLANATION OF THE TERM 'BUYER', SUB-SECTION (1A) OF SECTION 206C PROV IDES AS UNDER: '(1A) NOTWITHSTANDING ANYTHING CONTAINED IN SUB SEC TION (1), NO COLLECTION OF TAX SHALL BE MADE IN THE CASE OF A BUYER, WHO IS RESIDENT IN INDIA, IF SUCH BUYER FURNISHES TO THE PERSON RESPONSIBLE FOR COLLECTING TAX, A DECLARATION IN WRITING IN DUPLICATE IN THE PRESCRIB ED FORM AND VERIFIED IN THE PRESCRIBED MANNER TO THE EFFECT THAT THE GOODS REFERRED TO IN COLUMN (2) OF THE AFORESAID TABLE ARE TO BE UTILISED FOR T HE PURPOSES OF MANUFACTURING, PROCESSING OR PRODUCING ARTICLES OR THINGS OR FOR THE PURPOSES OF GENERATION OF POWER AND NOT FOR TRADING PURPOSES.' 8. THUS, IN TERMS OF THE EXPLANATION CLAUSE (AA) AN Y PERSON WHO PURCHASES THE GOODS IN RETAIL SALE FOR PERSONAL CON SUMPTION WOULD NOT BE INCLUDED WITHIN THE DEFINITION OF TERM 'BUYER'. IT IS THEREFORE, THAT UNDER SUB SECTION (1A) OF SECTION 206C, CALCULATION OF TA X UNDER SUB-SECTION 1 WOULD NOT BE MADE, IF THE BUYER FURNISHES TO THE PE RSON RESPONSIBLE FOR THE TAX A DECLARATION IN WRITING IN PRESCRIBED FORM DECLARING THAT THE GOODS IN QUESTION ARE TO BE UTILIZED FOR THE PURPOS ES OF MANUFACTURING PROCESS OR PRODUCING ARTICLES OR THINGS OR FOR THE PURPOSE OF GENERATION OF POWER AND NOT FOR TRADING PURPOSES. THE DECLARATION TO BE MADE IN SUB- SECTION (1A) OF SECTION 206C THUS WOULD ENABLE THE REVENUE AUTHORITIES TO, AS AND WHEN THE NEED SO ARISES MAKE PROPER VERI FICATIONS. THIS SUB- ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 40 SECTION ITSELF DOES NOT PROVIDE FOR ANY TIME LIMIT WITHIN WHICH, SUCH DECLARATION IS TO BE MADE. THE TIME LIMIT, OF COURS E, WOULD BE FOUND IN RULE 37C OF INCOME TAX RULES, 1962. THE MAIN THRUST OF SUB-SECTION 1A OF SECTION 206C THUS IS TO MAKE A DECLARATION AS PR ESCRIBED, UPON WHICH, THE LIABILITY TO COLLECT TAX AT SOURCE UNDER SUB-SE CTION (1) WOULD NOT APPLY. WHEN THERE WAS NO DISPUTE ABOUT SUCH A DECLARATION BEING FILED IN A PRESCRIBED FORMAT AND THERE WAS NO DISPUTE ABOUT TH E GENUINENESS OF SUCH DECLARATION, MERE MINOR DELAY IN FILING THE SA ID DECLARATION WOULD NOT DEFEAT THE VERY CLAIM. THE TRIBUNAL THEREFORE, VIEW ED SUCH DELAY LIBERALLY AND IN ESSENCE HELD THAT THERE WAS SUBSTANTIAL COMP LIANCE WITH THE REQUIREMENT OF FILING THE DECLARATION. 43. SUBSEQUENTLY, THE HONBLE GUJARAT HIGH COURT HA D AN OCCASION TO EXAMINE THE AFORESAID PROVISIONS AGAIN IN CASE OF C OMMISSIONER OF INCOME-TAX (TDS) VS CHHAGANBHAI K SANGHANI [2018] 94 TAXMANN.C OM 459 (GUJ). IN THAT CASE, THE RESPONDENT-ASSESSEE WAS A DEALER IN SCRAP . DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR 2011-12, HE HAD SOL D SCRAP OF RS. 12.72 CRORES ON WHICH HE WAS REQUIRED TO COLLECT TAX AT S OURCE IN TERMS OF SECTION 206C(1) OF THE INCOME-TAX ACT, 1961 UNLESS THE BUYE RS HAD PROVIDED HIM NECESSARY CERTIFICATES REFERRED TO IN SUB-SECTION ( 1A) THEREOF. BEFORE ASSESSING OFFICER, THE ASSESSEE PRODUCED NO SUCH CERTIFICATES . THE ASSESSING OFFICER THEREFORE, IN TERMS OF SUB-SECTION (7) OF SECTION 2 06C, LEVIED TAX AND INTEREST. IN APPEAL BEFORE THE COMMISSIONER, ASSESSEE PRODUCE D NECESSARY CERTIFICATES ISSUED BY THE BUYERS. THE COMMISSIONER, HOWEVER, IG NORED SUCH CERTIFICATES AND CONFIRMED THE ORDER OF ASSESSING OFFICER, UPON WHICH, ASSESSEE APPROACHED THE TRIBUNAL. THE TRIBUNAL ALLOWED ASSES SEE'S APPEAL OBSERVING THAT THE REVENUE HAD NO DISPUTE WITH RESPECT TO GEN UINENESS OR CO-RELATION BETWEEN THE SALE AND PURCHASES COVERED UNDER SUCH C ERTIFICATES. IN THAT FACTUAL BACKGROUND, THE HONBLE HIGH COURT HAS HELD AS UNDER: ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 41 4. HAVING HEARD LEARNED ADVOCATES FOR THE REVENUE, WE NOTICED THAT IN TERMS OF SUB-SECTION [1] SECTION 206C OF THE ACT , EVERY SELLER WOULD HAVE TO COLLECT TAX AT SOURCE AT THE TIME OF SALE O F GOODS AT THE PRESCRIBED PERCENTAGE AND DEPOSIT THE SAME WITH THE GOVERNMENT REVENUE UNLESS IN TERMS OF SUB-SECTION [1A] THEREOF, THE BUYER HAS FU RNISHED TO SUCH SELLER, DECLARATION IN WRITING IN A PRESCRIBED FORM AND FUL FILLED IN PRESCRIBED MANNER THAT THE GOODS ARE TO BE UTILIZED FOR THE PU RPOSE OF MANUFACTURING, PROCESSING OR PRODUCING ARTICLES OR THINGS, OR FOR THE PURPOSE OF GENERATION OF POWER AND NOT FOR TRADING PURPOSE. SUB-SECTION [1] OF SECTION 206C IS THUS A SUBSTANTIVE REQUIREME NT OF COLLECTION OF TAX AT SOURCE AND DEPOSITING OF THE SAME WITH THE REVEN UE. SUB-SECTION [1A] REFERS TO A SITUATION UNDER WHICH COLLECTION UNDER SUB-SECTION [1] WOULD NOT HAVE TO BE MADE. THESE ARE SUBSTANTIVE PROVISIO NS. REQUIREMENTS OF SUB-SECTION [1A] ARE THAT THE BUYERS SHOULD PROVIDE TO THE SELLER, A DECLARATION IN PRESCRIBED FORM, VERIFIED IN THE PRE SCRIBED MANNER. SUCH PRESCRIPTIONS ARE TO BE FOUND IN RULE 37C OF THE IN COME-TAX RULES, 1962. SUB-SECTION (1) THEREOF PROVIDES THAT DECLARATION U NDER SUB-SECTION 206C SHALL BE IN FORM 27C AND SHALL BE VERIFIED IN THE M ANNER INDICATED THEREIN. SUB-RULE [2] OF RULE 37C REQUIRES THAT THE DECLARAT ION REFERRED TO IN SUB- SECTION (1) SHALL BE FURNISHED IN DUPLICATE TO THE PERSON RESPONSIBLE FOR COLLECTING TAX. UNDER SUB-RULE (3), SUCH PERSON WOU LD DELIVER TO THE CHIEF COMMISSIONER OR THE COMMISSIONER, ONE COPY OF SUCH DECLARATION ON OR BEFORE THE SEVENTH DAY OF THE MONTH, NEXT FOLLOWING THE MONTH IN EACH DECLARATION IS ISSUED. 5. THUS, RULE 37C IN ADDITION TO PRESCRIBING THE FO RM FOR GRANT OF DECLARATION AND THE MANNER THE SAME SHOULD BE VERIF IED, IMPOSE TWO ADDITIONAL REQUIREMENTS VIZ., [I] THAT SUCH DECLARA TION SHALL BE FURNISHED IN DUPLICATE TO THE PERSON RESPONSIBLE FOR COLLECTING THE TAX AND THAT SUCH PERSON WOULD DELIVER A COPY THEREOF TO THE COMMISSI ONER WITHIN THE TIME ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 42 PRESCRIBED. SUB-SECTION [1] OF SECTION 206C DOES NO T REFER TO ANY SUCH TIME LIMIT. CLEARLY THEREFORE, THE LEGISLATIVE INTE NT WAS NOT TO MAKE THIS TIME LIMIT MANDATORY OR A PRE-CONDITION FOR AVAILIN G THE BENEFIT OF NOT DEDUCTING TAX AT THE TIME OF SALE OF GOODS AIMED FO R SPECIFIED PURPOSE. THIS COURT IN CASE OF CIT [TDS] V. SIYARAM METAL UD YOG (P.) LTD. [2016] 71 TAXMANN.COM 204/240 TAXMAN 578 [GUJARAT] HAD DEA LT WITH SOMEWHAT SIMILAR SITUATION, WHEREIN FOLLOWING OBSER VATIONS HAVE BEEN MADE .. 44. THE LEGAL POSITION WHICH IS THUS LAID DOWN BY T HE COURTS AS PER THE AFORESAID DECISIONS IS THAT SUB-SECTION (1) OF SECT ION 206C IS A SUBSTANTIVE PROVISION FOR COLLECTION OF TAX AT SOURCE AND DEPOS ITING OF THE SAME WITH THE REVENUE. SUB-SECTION (1A) IS AGAIN A SUBSTANTIVE PR OVISION WHICH REFERS TO A SITUATION UNDER WHICH COLLECTION UNDER SUB-SECTION (1) WOULD NOT HAVE TO BE MADE AT FIRST PLACE. THE REQUIREMENTS OF SUB-SECTIO N (1A) ARE THAT THE BUYERS SHOULD PROVIDE TO THE SELLER, A DECLARATION IN PRES CRIBED FORM, VERIFIED IN THE PRESCRIBED MANNER. THE MAIN THRUST OF SUB-SECTION ( 1A) OF SECTION 206C IS THUS TO MAKE A DECLARATION AS PRESCRIBED, UPON WHIC H, THE LIABILITY TO COLLECT TAX AT SOURCE UNDER SUB-SECTION (1) WOULD NOT APPLY . SUB-SECTION (1A) OF SECTION 206C DOES NOT REFER TO ANY TIME LIMITS FOR FURNISHING SUCH DECLARATIONS AND THEREFORE, THE LEGISLATIVE INTENT WAS NOT TO MA KE THE TIME LIMIT MANDATORY OR A PRE-CONDITION FOR AVAILING THE BENEFIT OF NOT COLLECTING TAX AT THE TIME OF SALE OF GOODS AIMED FOR SPECIFIED PURPOSES. WHEN TH ERE WAS NO DISPUTE ABOUT SUCH A DECLARATION BEING FILED IN A PRESCRIBED FORM AT AND THERE WAS NO DISPUTE ABOUT THE GENUINENESS OF SUCH DECLARATION AND CO-RE LATION BETWEEN THE GOODS SOLD, THE DELAY IN FILING SUCH DECLARATION SHOULD B E CONSTRUED LIBERALLY AND WOULD NOT DEFEAT THE VERY CLAIM WHERE THERE IS A SU BSTANTIAL COMPLIANCE WITH THE REQUIREMENT OF FILING THE DECLARATION. 45. IN THE PRESENT CASE, WE FIND THAT THE ASSESSEE FIRM HAS MADE THE SAID CLAIM UNDER SECTION 206C(IA) RIGHT AT THE TIME OF S URVEY PROCEEDINGS WHERE ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 43 THE STATEMENT OF ONE OF ITS PARTNERS WAS RECORDED O N 23.03.2015 AND AGAIN DURING THE COURSE OF ASSESSMENT PROCEEDINGS S TATING THAT THE SALE OF TENDU LEAVES HAVE BEEN MADE TO THE PERSONS/ENTITIES WHICH ARE EXISTING TAX PAYERS AND WHO ARE ENGAGED IN MANUFACTURE OF BEEDIE S (REFER RESPONSE TO QUESTION NO. 8) THOUGH IT WAS ALSO SUBMITTED THAT T HE DECLARATIONS IN FORM 27C HAVE NOT BEEN SUBMITTED BUT AT THE SAME TIME, THE A SSESSEE HAS WRITTEN AND REQUESTED THE BUYERS TO WHOM THE TENDU LEAVES HAVE BEEN SOLD TO SEND THE DECLARATION IN FORM 27C AND THE OFFICE OF THE ITO A LSO BEEN DULY INFORMED ON THIS SUBJECT ALONG WITH THE ADDRESS OF SUCH BUYERS (REFER RESPONSE TO QUESTION NO. 9). IT IS ALSO A FACT THAT THESE DECLARATIONS I N FORM 27C COULD NOT BE SUBMITTED EITHER BEFORE THE AO OR DURING THE APPELL ATE PROCEEDINGS BEFORE THE LD CIT(A) AND HAVE NOW BEEN SUBMITTED BY THE ASSESS EE FIRM BEFORE US IN RESPECT OF 7 PARTIES TO WHOM THE TENDU LEAVES HAVE BEEN SOLD DURING THE YEAR AS PER PARTICULARS BELOW: S.NO. PARTICULARS AMOUNT (RS.) PB 1. S.J. & S.P. FAMILY TRUST, KARIMNAGAR (MP) RS.4,41,64,013/- 1-2 2. JP TOBACCO PRODUCTS PVT. LTD., DAMOH (MP) RS.1,15,91,849/- 3-4 3. P & J TOBACCO PRODUCTS COMPANY, MURSHIDABAD (W.B.) RS.35,71,350/- 5-6 4. PRABHUDAS KISHOREDAS TOBACCO PRODUCTS PVT. LTD., NIZAMABAD (A.P.) RS.1,02,33,471/- 7-8 5. PRABHUDAS KISHOREDAS TOBACCO PRODUCTS PVT. LTD.,DAMOH (M.P.) RS.3,22,13,394/- 9-10 ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 44 6. STAR TRADERS, TANDA(U.P.) RS.15,62,616/- 11 7. MANGALORE GANESH BEEDI WORKS, MYSORE(KAR) RS.6,84,21,238/- 12-13 ON A PRIMA FACIE PERUSAL OF THESE CERTIFICATES, WE FIND THAT ALL THESE PARTIES ARE INVOLVED IN MANUFACTURING OF BEEDIES AND USES TENDU LEAVES FOR MANUFACTURING SUCH BEEDIES. THE SALES AMOUNT MENTIO NED IN THESE CERTIFICATES MATCHES WITH THE SALES AMOUNT AS REFLECTED AND EXAM INED BY THE LD CIT(A) AS APPARENT FROM FINDINGS IN HIS ORDER (PARA 5.3, PAGE 14-15): S.N O. NAME OF BUYER PAN AMOUNT IN F.Y. 2012-13 A CASES WHERE DECLARATION & CERTIFICATE IN FORM 27BA AND RETURN OF INCOME FILED. 1 M/S. MANGALORE GANESH BEEDI WORKS MYSORE (KARNATAKA) AAAAM1342G 68421238 ROI FILED ENCLOSED 2 M/S. GUJARATH TOBACCO COMPANY MYSORE (KARNATAKA) AFJPP1330G 1588890 ROI FILED ENCLOSED 3 M/S. PANNALAL PREMRAI KHATRI SAWAI MODHOPUR(RAJ.) AADFP3174F 4538765 ROI FILED ENCLOSED 4 M/S. ANAND TOBACCO PRODUCTS MANGALORE (KARNATAKA) AAFFA4744G 967200 ROI FILED ENCLOSED 5 M/S. PRAKASH BIDIES LIMITED MANGALORE (KARNATAKA) AABCP9885E 9503876 ROI FILED ENCLOSED 6 M/S. P& J TOBACCO PRODUCTS COMPANY GOPAL NAGAR DISTT. MURS AACFP2000R 3571350 ROI FILED ENCLOSED 7 M/S. SJ & SP FAMILY TRUST JAGTIAL DISTT. KARIMNAGAR (A.P.) AAATS5877R 44164013 ROI FILED ENCLOSED 8 M/S. JP TOBACCO PRODUCTS PVT. LTD. DAMOH (M.P.) AAACJ7141G 11591849 ROI FILED ENCLOSED 9 PARBHUDAS KISHORDAS TOBACCO PRODUCTS PVT. LTD. NIZAMABAD AABCP1495Q 10233471 ROI FILED ENCLOSED ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 45 10 PARBHUDAS KISHORDAS TOBACCO PRODUCTS PVT. LTD. DAMOH (MP,) AABCP1495Q 2213394 ROI FILED ENCLOSED 11 M/S. HYDERABAD BIDI MANUFACTURES HYDERABAD AABFH1252J 6050190 ROI FILED ENCLOSED 12 M/S. ARSHAD & COMPANY HYDERABAD AAFFA0570N 2355870 ROI FILED ENCLOSED 13 M/S SHAZ ENTERPRISES HYDERABAD AJBPK1293R 4448515 ROI FILED ENCLOSED 14 M/S. CHAR BHAI BIDI WORKS HYDERABAD AABFC0789P 56132915 ROI FILED ENCLOSED 15 M/S SHAHEEN TRADERS MYSORE (KARNATAKA) ADSPB5725E 920315 ROI FILED ENCLOSED 16 M/S. STAR TRADERS TANDA (U P ) ACCPS9843D 1562616 ROI FILED ENCLOSED TOT AL (A) RS. 25,82,64,467/ - THESE ARE THEREFORE EXISTING INCOME TAX ASSESSEES W HO HAVE FILED THEIR RESPECTIVE RETURN OF INCOME AND HAVE ALSO FILED THE IR DECLARATION IN FORM 27BA. THE ASSESSEE HAS ALSO SUBMITTED THAT SIMILAR DECLAR ATIONS IN FORM 27C HAVE BEEN OBTAINED FROM THE SAME PARTIES FOR THE FINANCI AL YEARS 2015-16, 2017-18 AND 2018-19 AND SUBMITTED BEFORE THE LD CIT(TDS) AN D WHICH HAVE BEEN ACCEPTED AND NO DEMAND HAS BEEN RAISED BY THE REVEN UE. THEREFORE, IN THE INSTANT CASE, WE FIND THAT WHERE SIMILAR DECLARATIO NS HAVE BEEN OBTAINED FROM THE SAME SET OF BUYERS, WHO ARE ENGAGED IN MANUFACT URING OF BEEDIES FROM THE TENDU LEAVES SO SOLD BY THE ASSESSEE, IN THE PR ESCRIBED FORMAT AND CO- RELATION BETWEEN THE GOODS SOLD AND REFLECTED IN SU CH CERTIFICATES HAVING BEEN ESTABLISHED, THE GENUINENESS OF SUCH CERTIFICATES P RIMA FACIE DOESNT SEEMS TO BE IN DISPUTE. IN OUR VIEW, THESE CERTIFICATES ARE VITAL AND ESSENTIAL FOR THE ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 46 CONSIDERATION OF THE SUBJECT MATTER OF APPEAL AS TH ESE CERTIFICATES SUPPORT THE CONTENTION OF THE ASSESSEE THAT THE TEN DU LEAVES HAVE BEEN SOLD TO THE MANUFACTURERS OF BEEDIES AND THE CASE OF THE ASSESSEE FALLS UNDER SECTION 206C(1A) AND NOT UNDER SECTION 206C(1). AT THE SAME TIME, GIVEN THAT THESE CERTIFICATES HAVE BEEN FILED FOR THE FIRST TI ME DURING THE PRESENT PROCEEDINGS, IN THE INTEREST OF JUSTICE AND FAIR PL AY, THESE CERTIFICATES NEEDS TO BE VERIFIED BY THE ASSESSING OFFICER AND WHERE ON S UCH VERIFICATION, THE ASSESSING OFFICER IS SATISFIED ABOUT THE GENUINENES S OF SUCH CERTIFICATES, NECESSARY RELIEF U/S 206C(IA) CAN BE GRANTED AND BE STOWED ON THE ASSESSEE FIRM. 46. HAVING SAID THAT, THE FACT REMAINS THAT THERE H AS BEEN A DELAY IN OBTAINING SUCH CERTIFICATES WHICH HAVE NOW BEING FI LED FOR THE FIRST TIME BY WAY OF ADDITIONAL EVIDENCE UNDER RULE 29. THE QUESTION THEREFORE IS WHETHER THERE IS A REASONABLE CAUSE FOR SUCH DELAY IN FURNISHING SUCH CERTIFICATES AND THE DELAY CAN BE CONDONED AND SUCH CERTIFICATES CAN BE TAKEN ON RECORD AND ADMITTED UNDER RULE 29. IN ITS APPLICATION FILED U NDER RULE 29, THE ASSESSEE HAS SUBMITTED THAT ITS TAX AFFAIRS WERE HANDLED BY SHRI SITARAM AGARWAL, ADVOCATE WHO WAS AN AGED PERSON AND WAS SUFFERING F ROM VARIOUS AILMENTS AT THE RELEVANT POINT IN TIME AND SUBSEQUENTLY, HE HAD EXPIRED. THE ASSESSEE FIRM ACTED ON HIS ADVICE AND ASSISTANCE FROM TIME T O TIME. LATE SHRI SITARAM AGARWAL WAS OF THE BELIEF AND UNDERSTANDING THAT CO LLECTION OF TAX FROM THE BUYERS WOULD AMOUNT TO DOUBLE TAXATION AS THE ASSES SEE FIRM HAS ALREADY PAID THE TAXES TO THE FOREST DEPARTMENT WHILE PURCHASING THE TENDU LEAVES. SIMILARLY, HE WAS ALSO OF THE BELIEF AND UNDERSTAND ING THAT WHERE THE BUYERS HAVE FILED THEIR RESPECTIVE RETURN OF INCOME AND PA ID TAXES, FOLLOWING THE PROPOSITION LAID DOWN BY THE HONBLE SUPREME COURT IN CASE OF HINDUSTAN COCA COLA BEVERAGE (P) LTD VS CIT (2007) 293 ITR 226, TH ERE REMAINS NOTHING TO BE RECOVERED BY WAY OF TCS. THE ASSESSEE ACCORDINGLY C ARRIED THE SAME BELIEF AND UNDERSTANDING AND ACTED IGNORANTLY BECAUSE OF L ACK OF PROPER GUIDANCE BY ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 47 HIS ADVOCATE. SUBSEQUENTLY, WHEN THE ASSESSING OFF ICER TOOK UP THE MATTER FOR SCRUTINY FOR A.Y 2008-09 AND PASSED THE ORDER IN MONTH OF MARCH 2015, THE ASSESSEE REALIZED ITS MISTAKE AND STARTED MAKING EFFORTS BY WAY OF REACHING OUT TO THESE BUYERS SO THAT NECESSARY DECL ARATIONS CAN BE OBTAINED AND FURNISHED BEFORE THE LD CIT(TDS). HOWEVER, THE ASSESSEE AGAIN FACED RESISTANCE FROM SUCH BUYERS AS THEY HAVE ALREADY MA DE THE PAYMENT AND DOESNT WANT TO BE BOTHERED WITH ADDITIONAL PAPERWO RK ESPECIALLY WHERE NO OTHER SUPPLIER WAS ASKING FOR SUCH DECLARATION. HO WEVER, WITH GREAT EFFORTS AND PERSISTENCE, THESE BUYERS HAVE AGREED TO FILE T HEIR RESPECTIVE DECLARATIONS AND WHICH HAVE NOT BEING FILED BEFORE US. WE THEREF ORE FIND THAT THE ASSESSEE HAS ALL ALONG ACTED DILIGENTLY AND TAKEN ACTION BAS IS THE ADVICE AND ASSISTANCE SOUGHT FROM ITS LEGAL COUNSEL. IT WAS INITIALLY ADV ISED NOT TO COLLECT TCS AS TAXES WERE ALREADY PAID WHILE PROCURING THE TENDU L EAVES FROM THE FOREST DEPARTMENT AND SECONDLY, THE BUYERS WOULD BE FILING THEIR RETURN OF INCOME WHEREIN THEY WILL BE PAYING TAXES AND HENCE, THERE WAS NO ACTION REQUIRED AT ITS END. HOWEVER, DUE TO SUBSEQUENT DEVELOPMENTS WH EREIN THE MATTER WAS TAKEN UP BY THE REVENUE FOR THE FIRST TIME IN THE M ONTH OF MARCH 2015 AND IT CAME TO KNOW THAT SUCH DECLARATIONS ARE REQUIRED TO BE OBTAINED AND FILED WITH THE REVENUE AUTHORITIES TO ABSOLVE IT FROM ITS TCS OBLIGATION, IT STARTED CHASING THESE BUYERS AND WITH LOT OF EFFORTS, SOME OF THESE BUYERS HAVE FINALLY SUBMITTED THEIR DECLARATIONS IN THE MONTH OF NOVEMB ER 2017. WE THEREFORE FIND THERE IS NO CULPABLE NEGLIGENCE OR MALAFIDE ON THE PART OF THE ASSESSEE IN NOT OBTAINING THESE DECLARATIONS AND THE ASSESSEE C ANNOT BE PENALIZED WHERE ALL ALONG IT ACTED DILIGENTLY BASED ON ADVICE OF HI S COUNSEL AND SUBSEQUENTLY, WHEN THE REVENUE MADE IT AWARE OF ITS OBLIGATION TO OBTAIN SUCH DECLARATIONS, IT MADE NECESSARY EFFORTS AND FINALLY GOT THESE DEC LARATIONS. AS HELD BY THE COURTS, WHERE SUBSTANTIAL JUSTICE AND TECHNICAL CON SIDERATIONS ARE PITTED AGAINST EACH OTHER, THE CAUSE OF SUBSTANTIAL JUSTIC E DESERVES TO BE PREFERRED FOR THE OTHER SIDE CANNOT CLAIM TO HAVE VESTED RIGH T IN INJUSTICE BEING DONE BECAUSE OF A NON-DELIBERATE DELAY. THE DELAY IN FIL ING SUCH DECLARATIONS BEING ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 48 A TECHNICAL BREACH IS THUS CONDONED AND THE SAME AR E BEING ADMITTED AS THERE IS SUBSTANTIAL COMPLIANCE WITH THE REQUIREMEN T OF FILING THE DECLARATIONS. WE FIND THAT SIMILAR VIEW HAS BEEN TAKEN BY THE COO RDINATE BENCH IN CASE OF CHANDMAL SANCHETI VS ITO (SUPRA) WHERE IT WAS HELD AS UNDER: 10. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH TH E PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN OUR VIEW, THE APPEAL IS CONTINUATION OF THE ASSESSMENT PROCEEDINGS AND EVEN IF THE DECLARATION IS FILED BY THE ASSESSEE AT THE APPELLATE STAGE IN THE PRESCRIBED FORMAT BY DISCLOSING ALL INFORMATION AS CONTEMPLATED UNDER FO RM 27 READ WITH RULE 37 OF THE RULES, THE BENEFIT OF DECLARATION SHOULD BE GIVEN TO THE ASSESSEE. THE LD. ASSESSING OFFICER/CIT (A) SHOULD EXTEND THE BENEFIT OF DECLARATION TO THE ASSESSEE. RULE 27 THOUGH IS COUC HED IN THE MANDATORY LANGUAGE BY USING THE WORD 'SHALL' BUT THE RULE 37 HAS NOT GIVEN THE CONSEQUENCES OF NOT FILING THE DECLARATION WITHIN T IME. IN OUR VIEW, THE CONSEQUENCES OF FAILURE TO FILE THE DECLARATION IN THE REQUISITE FORMAT AS MENTIONED IN THE RULES SHOULD BE PROVIDED BY THE IT ACT AND NOT BY THE RULES. THE RULES, IN OUR OPINION, CANNOT EXTEND OR RESTRICT THE PROVISIONS OF THE PARENT ACT. THE RULES ARE FRAMED BY THE LEGI SLATURE BY EXERCISING ITS POWER UNDER THE ACT AND THEREFORE, IF ANY PENAL TY PROVISION BY WAY OF THE EXCLUSION OF DECLARATION BENEFIT AND SUBMISSION OF THE DECLARATION BELATEDLY SHOULD BE PROVIDED BY THE ACT AND THE RUL ES. THE PROVISION OF SUB-SECTION (1A) OF SECTION 206C, IN OUR VIEW, DO N OT PROVIDE THE CONSEQUENCES OF THE DELAYED FILING OF THE DECLARATI ON. THOUGH, IT PROVIDES THAT IT IS TO BE FILED ON OR BEFORE THE 7TH DAY OF THE NEXT FOLLOWING MONTH IN WHICH DECLARATION IS FURNISHED TO HIM. THEREFORE , THOUGH THERE IS DELAY IN ISSUING THE DECLARATION BY THE BUYER, THE ASSESS EE CANNOT BE PENALIZED OR DEPRIVED FROM THE BENEFIT OF THE DECLARATION GIV EN BY THE BUYER. THE ONLY DUTY CAST UPON THE SELLER TO SUBMIT DECLARATIO N IN THE FOLLOWING MONTH IN WHICH THE DECLARATION RECEIVED. NO TIME LI MIT HAS BEEN PROVIDED ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 49 BY THE STATUTE ON THE BUYER TO SUBMIT THE DECLARATI ON IN FORM 27. IN VIEW THEREOF, THE GROUND IS REQUIRED TO BE ALLOWED. IN THE LIGHT OF ABOVE, WE DEEM IT APPROPRIATE TO REMAND THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER WITH DIRECTION TO VERIFY WHETHER THE DECLARATION HAS BEEN FILED BY THE ASSESSEE IN THE REQUISITE FORM AN D WHAT WILL THE EFFECT OF FILING OF THIS DECLARATION ON THE CALCULATION OF THE TCS U/S. 206 OF THE ACT. IT IS, HOWEVER, AGAIN CLARIFIED THAT THE DELAY IN FILING THE DECLARATION SHALL NOT BE A GROUND TO THE ASSESSING OFFICER TO D ENY THE BENEFIT OF THE DECLARATION TO THE ASSESSEE. IN VIEW THEREOF, THE G ROUND NO. 2 OF THE APPEAL IS ALLOWED FOR THE STATISTICAL PURPOSES ONLY . 47. SIMILARLY, IN CASE OF KARNATAKA FOREST DEVELOPM ENT CORPORATION LTD. VS. ITO, (SUPRA), THE COORDINATE BENCH HAS HELD AS UNDE R: 15. WE FIND THAT SECTION 206C (1A) READS AS UNDER: 'NOTWITHSTANDING ANYTHING CONTAINED IN SUB-SECTION (1), NO COLLECTION OF TAX SHALL BE MADE IN THE CASE OF A BUYER, WHO IS RE SIDENT IN INDIA, IF SUCH BUYER FURNISHES TO THE PERSON RESPONSIBLE FOR COLLE CTING TAX, A DECLARATION IN WRITING IN DUPLICATE IN THE PRESCRIBED FORM AND VERIFIED IN THE PRESCRIBED MANNER TO THE EFFECT THAT THE GOODS REFE RRED TO IN COLUMN (2) OF THE AFORESAID TABLE ARE TO BE UTILIZED FOR THE P URPOSES OF MANUFACTURING, PROCESSING OR PRODUCING ARTICLES OR THINGS [OR FOR THE PURPOSES OF GENERATION OF POWER] AND NOT FOR TRADIN G PURPOSES.' A PERUSAL OF THE AFORESAID PROVISION SHOWS THAT THE ASSESSEE IS NOT LEGALLY OBLIGED TO COLLECT THE TCS FROM A BUYER WHO FURNISH ES A DECLARATION TO THE ASSESSEE TO THE EFFECT THAT THE PURCHASES MADE BY S UCH BUYER ARE TO BE UTILIZED FOR THE PURPOSES OF MANUFACTURING, PROCESS ING OR PRODUCING ARTICLES OR THINGS OR FOR PURPOSES OR GENERATION OF POWER AND NOT FOR TRADING PURPOSES. THUS, IN A CASE WHERE SUCH A DECL ARATION IS FURNISHED BY THE BUYER TO THE SELLER, THE SELLER IS NOT OBLIG ED TO COLLECT TCS FROM ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 50 SUCH BUYER AND CONSEQUENTLY THE SELLER ASSESSEE CAN NOT BE TREATED AS AN ASSESSEE IN DEFAULT IN RESPECT OF NOT COLLECT ING TCS FROM SUCH BUYER. WE FIND THAT THE COMMISSIONER OF INCOME TAX (APPEALS) UPHELD THE TREATMENT OF ASSESSEE AS ASSESSEE IN DEFAULT IN RESPECT OF THOSE PARTIES FROM WHOM THE ASSESSEE ALREADY RECEIVED DEC LARATION IN FORM 27C ON THE GROUND THAT SUCH DECLARATION WAS NOT FURNISH ED BY THE ASSESSEE TO THE CHIEF COMMISSIONER OR COMMISSIONER AS REQUIRED BY THE PROVISIONS OF SECTION 206C (1B) OF THE ACT. 16. WE FIND FORCE IN THE CONTENTION OF THE ASSESSEE THAT ONCE THE DECLARATION REFERRED TO IN SECTION 206C (1A) WAS RE CEIVED BY THE ASSESSEE, THEN THEREAFTER THE ASSESSEE COULD NOT LE GALLY COLLECT THE TCS FROM SUCH BUYERS AND CONSEQUENTLY THE ASSESSEE CANN OT BE TREATED AS AN ASSESSEE IN DEFAULT FOR NOT COLLECTING TCS FROM SUC H BUYERS. THE ABOVE VIEW FINDS SUPPORT FROM THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. VALIBHAI KHANBHAI MANKAD (2013) 261 CTR 538 (GUJ.) WHEREIN IT HAS BEEN HELD THAT, 'ONCE THE CONDITIONS OF SECTION 194C (3) WERE SATISFIED, THE LIABILITY OF THE PAYER TO DEDUC T TAX AT SOURCE WOULD CEASE. THE REQUIREMENT OF SUCH PAYER TO FURNISH DET AILS TO THE INCOME TAX AUTHORITY IN THE PRESCRIBED FORM WITHIN PRESCRIBED TIME WOULD ARISE LATER AND ANY INFRACTION IN SUCH A REQUIREMENT WOULD NOT MAKE THE REQUIREMENT OF DEDUCTION AT SOURCE APPLICABLE.' OUR VIEW ALSO FINDS SUPPORT FROM THE DECISION OF MU MBAI BENCH OF THE TRIBUNAL IN THE CASE OF KARWAT STEEL TRADERS VS. IT O (2013) 37 TAXMANN.COM 190(MUM.) WHEREIN IT WAS HELD THAT, 'WH ERE DECLARATION IN FORM 15G/15H WERE RECEIVED BY THE PERSON RESPONSIBL E TO DEDUCT TAX, THERE WAS NO LIABILITY ON HIM TO DEDUCT TDS. SINCE SEPARATE PROVISIONS WERE PRESCRIBED ON DEFAULT FOR NON-FILING OR DELAYE D FILING OF FORM 15G/15H TO COMMISSIONER, NON-FILING OF SUCH FORM WO ULD NOT INVOKE DISALLOWANCE U/S. 40(A)(IA) OF THE ACT.' ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 51 WE ALSO FIND SUPPORT FROM THE DECISION OF THE MUMBA I BENCH OF THE TRIBUNAL IN THE CASE OF VIPIN P. MEHTA VS. ITO (2011) 46 SOT 71 (MUM.) WHEREIN IT WAS HELD THAT, 'SUB-SECTION (1A) OF SECTION 197A OF THE ACT MERELY REQUIRES THE DECLARATION TO BE FILED BY PAYEE OF INTEREST AND ONCE IT IS FILED, THE PAYER OF INTEREST HAS NO CHOI CE EXCEPT TO DESIST FROM DEDUCTING TAX ON INTEREST.' 17. IN OUR CONSIDERED VIEW, THE ASSESSEE CANNOT BE TREATED AS ASSESSEE IN DEFAULT FOR NOT COLLECTING TCS FROM SUCH BUYERS FROM WHOM THE ASSESSEE RECEIVED DECLARATION AS PER PROVISIONS OF SECTION 206C(1A) OF THE ACT. 18. WE FIND THAT IN THE INSTANT CASE, THE ASSESSEE HAS NOT FILED COPY OF DECLARATION RECEIVED BY IT U/S. 206C (1A) OF THE AC T BEFORE THE ASSESSING OFFICER FOR HIS VERIFICATION. THEREFORE, IN OUR CON SIDERED VIEW, IT SHALL BE JUST AND FAIR TO RESTORE THIS PART OF THE GROUND OF APPEAL BACK TO THE FILE OF ASSESSING OFFICER FOR PROPER VERIFICATION AND THERE AFTER READJUDICATION OF THE ISSUE AS PER LAW IN THE LIGHT OF THE DISCUSSION MADE HEREINABOVE AFTER ALLOWING THE ASSESSEE A REASONABLE OPPORTUNITY OF H EARING. 48. IN LIGHT OF AFORESAID DISCUSSIONS, IN THE ENTIR ETY OF FACTS AND CIRCUMSTANCES OF THE CASE AND RESPECTFULLY FOLLOWIN G THE DECISIONS OF HONBLE GUJARAT HIGH COURT (SUPRA) AS WELL AS OF THE COORDI NATE BENCHES (SUPRA), THE MATTER IS SET-ASIDE TO THE FILE OF THE ASSESSING OF FICER FOR VERIFICATION OF DECLARATIONS SO FILED BY THE ASSESSEE IN FORM 27C A ND EXAMINATION OF CLAIM OF THE ASSESSEE U/S 206C(IA) AFRESH IN ACCORDANCE WITH LAW. THE GROUND OF APPEAL IS THUS ALLOWED FOR STATISTICAL PURPOSES. 49. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SPOSED OFF IN LIGHT OF AFORESAID DIRECTIONS. ITA NO. 778/JP/2018 ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 52 50. WE NOW REFER TO THE REVENUES APPEAL. IN GROUND NO. 1, THE REVENUE HAS CHALLENGED THE ACTION OF LD. CIT(A) IN ALLOWING RELIEF TO THE ASSESSEE FIRM ON THE BASIS OF ADDITIONAL EVIDENCE W ITHOUT CALLING FOR REMAND REPORT UNDER RULE 46A AND ENQUIRY UNDER SEC 250(4) OF THE INCOME TAX ACT, 1961. 51. IN THIS REGARD, THE LD DR REFERRED TO THE ORDER OF THE LD CIT(A) AND SUBMITTED THAT DURING THE COURSE OF APPELLATE PROCE EDINGS, THE ASSESSEE HAS SUBMITTED ADDITIONAL EVIDENCES IN TERMS OF CERTIFIC ATES/DECLARATIONS IN FORM 27BA AND THE SAME HAVE BEEN ADMITTED BY THE LD CIT( A) WITHOUT CALLING FOR A REMAND REPORT FROM THE AO. 52. PER CONTRA, THE LD AR AT THE OUTSET RAISED A PR ELIMINARY OBJECTION AND SUBMITTED THAT THE PRESENT APPEAL FILED BY THE DEPA RTMENT IS NOT MAINTAINABLE IN AS MUCH AS ON EXACTLY IDENTICAL FACTS AND CIRCUM STANCES IN THE CASE OF THE SAME ASSESSEE I.E. IN A.Y. 2008-09 ALSO (AS ADMITTE D BY THE ITO IN FACTS OF THE CASE), THE ASSESSEE WAS HELD LIABLE TO TCS BUT THE LD. CIT(A) CLASSIFIED THE SALE TRANSACTIONS OF TENDU PATTA/LEAVES IN THREE CA TEGORIES AND PREPARED THREE TABLES NAMELY A,B & C AND ACCORDINGLY, COMPLETE REL IEF WITH RESPECT TO THE SALE MADE UNDER TABLE A AND B WAS GRANTED AND IN FEW CAS ES, THE FURTHER RELIEF WAS GRANTED SUBJECT TO VERIFICATION BY THE AO. THERE AL SO, IN THIRD CATEGORY I.E. TABLE C, THE DEMAND OF TCS AND INTEREST THEREON WAS CONFIRMED VIDE HER ORDER DATED 29.02.2016 IN APPEAL NO. 46/JPR/15-16. THE R EVENUE HOWEVER DID NOT CHALLENGE THE SAID ORDER IN FURTHER APPEAL AND THER EFORE, THE FINDING OF THE CIT(A) HAS BECOME FINAL. IT CANT BE DENIED THAT TH E ASSESSEE SUBMITTED THE CERTIFICATES AND DECLARATIONS IN FORM 27BA EXACTLY IN THE SAME MANNER BUT THE DEPARTMENT DID NOT FEEL AGGRIEVED IN THAT YEAR. THE REFORE, NOW FILING THE APPEAL ON THE SAME ISSUE WHEN THE LEGAL AND FACTUAL POSITION IS ADMITTEDLY THE SAME AND WITHOUT BRINGING OUT ANY MATERIAL CHANGE I N THE FACTS OF THE LEGAL POSITION, THE DEPARTMENT CANNOT BE PERMITTED TO AGI TATE THE SAME ISSUE IN LATER YEAR. THIS CONTENTION IS FULLY SUPPORTED BY T HE VARIOUS DECISIONS OF THE ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 53 HONBLE SUPREME COURT AND PARTICULARLY IN THE CASE OF BERGER PAINTS INDIA LTD. V/S CIT (2004) 266 ITR 09 (SC). 53. ON MERITS, THE LD AR SUBMITTED THAT SUCH A GROU ND TAKEN BY THE REVENUE APPEARS TO BE MISCONCEIVED BASED ON INCORRECT FACT IN AS MUCH AS, BEFORE THE LD. CIT(A) ALSO, ALL THOSE DOCUMENTS, WHICH WERE FI LED BEFORE THE ITO(TDS), JAIPUR WERE ONLY FILED. NO ADDITIONAL EVIDENCE WAS FILED BEFORE THE LD. CIT(A) NOR SO POINTED OUT BY THE REVENUE. ALL THE PAPERS O R THE INFORMATION CONTAINED THEREIN WERE ALREADY AVAILABLE BEFORE THE ITO, WHICH FACT IS NOTABLY ADMITTED BY ITO HIMSELF AT PG 7, 11 & 12 OF THE ASS ESSMENT ORDER. FURTHER, EVIDENTLY, THE LD. CIT(A) HAS MADE HIS OWN ENQUIRY FROM THE WEBSITE OF THE DEPARTMENT FOR HIS SATISFACTION, WHICH HE IS EMPOWE RED TO MAKE U/S 250(4) R.W. RULE 46(A)(4) WITHOUT EVEN CONFRONTING THE ITO . RELIANCE WAS PLACED ON THE DECISION IN CASE OF DDIT V/S THORESEN CHARTERIN G SINGAPORE (PTE) LTD. (2008) 15 DTR 0395 (MUM) WHEREIN IT WAS HELD THAT WHERE ASSESSEE UNDER DIRECTION OF COMMISSIONER (APPEALS) FILES ADDITIONA L EVIDENCE BEFORE HIM, THERE IS NO REQUIREMENT FOR CONFRONTING ASSESSING OFFICER DOCUMENTS/EVIDENCE ENTERTAINED BY COMMISSIONER (APPEALS) AT FIRST APPE LLATE STAGE UNDER RULE 46(A) (4). THUS THERE WAS NO REQUIREMENT U/R 46A. IT WAS FURTHER SUBMITTED THAT IT ONLY APPEARS BECAUSE OF A TYPOGRAPHICAL INA DVERTENT MISTAKE OF THE LD. CIT(A)-III THAT THE WORD REMAND REPORT WAS MENTIO NED IN HIS ORDER. THEREFORE, THE LD. CIT(A)-III HAS RECENTLY PASSED A CORRIGENDUM ORDER (PG 13 LINE 27), COPY OF WHICH HAS ALREADY BEEN FILED WITH THE REGISTRY AND WITH THE LD. D/R VIDE LETTER DATED 05.09.2018, WHEREIN THE A PPELLATE ORDER LINE NO. 27G NOW READS IMPUGNED ORDER IN PLACE OF REMAND REPO RT. IN VIEW OF THIS CORRIGENDUM ORDER, THE GROUND TAKEN BY THE REVENUE HAS BECOME INFRUCTUOUS AND DESERVES TO BE DISMISSED AS SUCH AND ALSO ON ME RITS. 54. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURSUE D THE MATERIAL AVAILABLE ON RECORD AND FIND THAT THE CERTIFICATES IN FORM 27 BA FROM THE CHARTERED ACCOUNTANT AND RELATED DECLARATIONS FROM THE BUYERS WERE FILED BEFORE THE ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 54 ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT P ROCEEDINGS AS PER SUBMISSIONS DATED 13.02.2017 AND THE SAME HAVE BEEN TAKEN ON RECORD AND EXAMINED BY THE ASSESSING OFFICER. IT WAS OBSERVED BY THE ASSESSING OFFICER THAT HE HAS GONE THROUGH THE DOCUMENTATION SO SUBMI TTED BY THE ASSESSEE FIRM AND ON PERUSAL THEREOF, HE NOTICED THAT COMPLE TE INFORMATION IN THE FORM/CERTIFICATE HAVE NOT BEEN GIVEN BY THE ACCOUNT ANT/PARTY AS REQUIRED BY THE LEGISLATURE AND MOST OF THE COLUMNS ARE EITHER NOT FILLED UP AS REQUIRED OR SIMPLY MENTIONED AS PER DETAILS/ENCLOSURE. MOREOVER THE ACCOUNTANT HAS SIGNED THE FORMS WITH CONDITIONAL REMARKS AS CERTI FIED BY THE BUYER WHEREAS THE FORMS SHOULD HAVE BEEN FILLED UP AND CERTIFIED BY THE ACCOUNTANT ITSELF ON THE BASIS OF RECORDS. FURTHER, SOME OF THE PARTIES HAVE NOT FILED RETURN ON OR BEFORE DUE DATES PRESCRIBED U/S 139 OF THE I.T. ACT , 1961. FURTHER, ON APPEAL, WE FIND THAT THESE CERTIFICATES IN FORM 27BA FROM T HE CHARTERED ACCOUNTANT AND RELATED DECLARATIONS FROM THE BUYERS HAVE AGAIN BEEN CONSIDERED AND EXAMINED BY THE LD CIT(A) AND THE OBSERVATIONS OF T HE AO REGARDING THESE CERTIFICATES WERE NOT FOUND TENABLE BY THE LD CIT(A ) AND BASIS HIS INDEPENDENT REVIEW AND EXAMINATION, THE RELIEF HAS BEEN PROVIDE D TO THE ASSESSEE FIRM AS PER HIS FINDINGS IN PARA 5.3 OF HIS ORDER WHICH WE HAVE REPRODUCED SUPRA. THE REVENUE HAS NOT POINTED OUT WHAT FURTHER EVIDENCE B Y WAY OF ADDITIONAL EVIDENCE HAS BEEN FILED BY THE ASSESSEE DURING THE APPELLATE PROCEEDINGS BEFORE THE LD CIT(A). THEREFORE, THE GROUND SO TAKE N BY THE REVENUE IS HEREBY DISMISSED. 55. IN GROUND NO. 2, THE REVENUE HAS CHALLENGED THE ACTION OF THE LD CIT(A) IN DELETING THE DEMAND RAISED BY THE AO WITHOUT APP RECIATING THE FACT THAT THE ASSESSEE DEDUCTOR HAS FAILED TO MAKE PAYMENT OF INT EREST U/S 206C(7) AND NOT MENTIONING DETAILS OF CHALLANS IN THE PRESCRIBED FO RM 27BA BEFORE SUBMISSION WITH CLAIM OF RELIEF IN VIEW OF PROVISO TO SEC. 206 C READ WITH NOTIFICATION NO.12/2016 DATED 08.12.2016. ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 55 56. THE LD DR IS HEARD WHO HAS TAKEN US THROUGH THE CERTIFICATES IN FORM 27BA FILED BY THE ASSESSEE AND SUBMITTED THAT WHILE FILI NG SUCH CERTIFICATES, THE ASSESSEE HAS NOT PAID INTEREST U/S SECTION 206C(7) AND HAS NOT PROVIDED THE CHALLAN DETAILS AND WHICH HAS NOT BEEN APPRECIATED BY THE LD CIT(A) AND THE RELIEF HAS WRONGLY BEEN ALLOWED TO THE ASSESSEE. 57. PER CONTRA, THE LD AR SUBMITTED THAT THE REVENU ES GROUND APPEARS TO BE MISCONCEIVED SO FAR AS IT ALLEGES THE DEFICIENCY IN FORM 27BA IN AS MUCH AS TO AVAIL THE BENEFIT OF THE PROVISO TO S.206C(6A), THE RE IS NO MANDATORY PRECONDITION TO MAKE THE PAYMENT OF INTEREST U/S 20 6C(7) AND HENCE THE BENEFIT CANNOT BE DENIED. MOREOVER, GIVING THE DETA ILS OF INTEREST AND DETAILS OF CHALLANS IN FORM 27BA IS OPTIONAL. THUS, WHERE T HE ASSESSEE HAS PAID THE INTEREST, THE RELEVANT DETAILS MAY BE FILLED IN FOR M 27BA, BUT NOT REQUIRED OTHERWISE. WHAT ALL IS REQUIRED IS THAT THE ASSESSE E SHOULD FURNISH A CERTIFICATE FROM THE CA IN THE PRESCRIBED FORM TO THE EFFECT TH AT THEY ARE (I) ASSESSED TO TAX, (II) HAVE ALREADY FURNISHED THEIR RETURN OF IN COME U/S 139(1) OF THE ACT FOR THE RELEVANT YEAR I.E. AY 2009-10 (III) HAVE ALREAD Y TAKEN INTO ACCOUNT THE COST OF THE PURCHASES OF TENDU LEAVES MADE FROM THE ASSE SSEE FIRM WHILE COMPUTING THE TOTAL INCOME FOR THE ABOVE RETURN OF INCOME AND (IV) HAVE ALREADY PAID THE INCOME TAX DUE ON THE INCOMES DECL ARED IN THE RESPECTIVE RETURNS OF INCOME, WHICH COMPLIANCE THE ASSESSEE HA S ALREADY MADE IN THIS CASE AS ADMITTED BY THE ITO HIMSELF IN PRINCIPLE AN D THE LD. CIT(A) THEREFORE RIGHTLY GRANTED RELIEF. IT WAS FURTHER SUBMITTED TH AT IN VIEW OF THE DECISION IN THE CASE OF HINDUSTAN COCA COLA BEVERAGE (P) LTD. V /S CIT (2007) 293 ITR 226 (SC), THE ASSESSEE WAS REQUIRED TO ESTABLISH THAT T HE PAYEES (BUYERS) HAVE ALREADY TAKEN INTO ACCOUNT THE SUBJECTED TRANSACTIO NS WHILE COMPUTING THE TOTAL INCOME AND HAVE ALREADY PAID THE TAX DUE ON T HE INCOMES SO DECLARED. IT ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 56 IS NOT DISPUTED THAT THE SUBSTANTIVE COMPLIANCE TO THIS EFFECT WAS ALREADY MADE BY THE ASSESSEE. THEREFORE, THE ASSESS EE CANNOT BE BURDENED WITH DETAILED MINUTE TECHNICAL REQUIREMENT WHILE FI LLING FORM 27BA AND THE ITO COULD NOT HAVE FOUND FAULT ON THIS ASPECT. THOU GH, NOTABLY IN THIS CASE THERE IS NO SUCH ALLEGED DEFICIENCY EITHER IN THE D ECLARATION OR IN THE CA CERTIFICATE. 58. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURSUED THE MATERIAL AVAILABLE ON RECORD. THE LIMITED ISSUE UNDER CONSIDERATION IS WH ETHER AT THE TIME OF SUBMITTING THE CERTIFICATES IN FORM 27BA AS REQUIRE D UNDER PROVISO TO SECTION 206C(6A), THE ASSESSEE IS REQUIRED TO DEPOSIT INTER EST AND GIVE DETAILS OF SUCH INTEREST DEPOSIT IN SUCH CERTIFICATES. FIRSTLY, ON READING OF PROVISIONS OF PROVISO TO SECTION 206C(6A), WE FIND THAT THERE IS NO REQUI REMENT AS SUCH WHICH HAS BEEN SPECIFIED IN THE STATUE. ALL IT REQUIRES IS T HAT THE ACCOUNTANT SHOULD CERTIFY AS TO WHETHER THE BUYER HAS FURNISHED HIS R ETURN OF INCOME, HAS TAKEN INTO ACCOUNT SUCH AMOUNT FOR COMPUTING INCOME IN SU CH RETURN OF INCOME AND HAS PAID TAXES DUE ON THE INCOME DECLARED BY HIM IN SUCH RETURN OF INCOME OR NOT. FURTHER, ON PERUSAL OF FORM 27BA, WE FIND THAT BESIDES SUCH CERTIFICATION, IT CONTAINS A STATEMENT WHETHER THE ASSESSEE HAS TO SPECIFY WHETHER IT HAS PAID ANY INTEREST U/S 206C(7) OR NOT FOR NON-COLLEC TION OR SHORT COLLECTION OF TAXES. THUS, THERE IS NO MANDATORY REQUIREMENT TO PAY ANY INTEREST U/S 206C(7) AS PART OF CERTIFICATION IN FORM 27BA AND W HERE THE ASSESSEE HAS ALREADY PAID, HE HAS TO SPECIFY THAT HE HAS PAID AN D WHERE HE HAS NOT PAID, HE HAS TO SPECIFY ACCORDINGLY. IT IS ONLY AN INFORMAT ION SEEKING REQUIREMENT AND NOT A REQUIREMENT IN ABSENCE THEREOF WHICH WILL MAK ES THE CERTIFICATION IN FORM 27BA INVALID WHERE THERE IS SUBSTANTIAL COMPLI ANCE AS TO THE MANDATORY REQUIREMENTS OF CERTIFICATION. IN THE RESULT, THE G ROUND SO TAKEN BY THE REVENUE IS DISMISSED. ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 57 59. IN GROUND NO. 3, THE REVENUE HAS CHALLENGED TH E ACTION OF THE LD CIT(A) WHERE HE HAS SET ASIDE THE ISSUE TO THE AO FOR VERI FICATION AND DIRECTED TO ALLOW RELIEF ON VERIFICATION U/S 250(1) AS PER THE RATIO OF JUDGMENT IN THE CASE OF M/S HINDUSTAN COCA COLA (P) LTD. WHERE THE WORDS HE MAY SET ASIDE HAVE BEEN OMITTED AFTER AMENDMENT W.E.F. 01.06.2001. 60. THE LD DR REFERRED TO THE FINDINGS OF THE LD CI T(A) AT PAGE 17 OF HIS ORDER WHERE HE HAS DIRECTED THE AO TO ALLOW THE BENEFIT A FTER MAKING VERIFICATION OF RETURN OF INCOME FILED BY THE RESPECTIVE ASSESSEES AND SUBMITTED THAT THE LD CIT(A) HAS ERRED BY SETTING ASIDE THE MATTER TO THE AO WHERE HE HAS SO SUCH POWERS TO SET-ASIDE THE MATTER TO THE AO. 61. PER CONTRA, THE LD AR SUBMITTED THAT THERE APPE ARS TO BE A COMPLETE MISREADING OF THE ORDER OF THE LD. CIT(A) IN AS MUC H AS HE MERELY DIRECTED THE AO TO VERIFY THE FACT OF FILING OF ROI. HE DID NOT SET ASIDE THE MATTER TO BE ADJUDICATED AFRESH BY THE AO. THEREFORE, THERE WAS NO SETTING ASIDE BY THE CIT(A) TO THE AO AS WRONGLY CONTENTED. OTHERWISE AL SO, THE ISSUE INVOLVED IS DIRECTLY COVERED IN AS MUCH AS IN AY 2008-09, THE C IT(A) SIMILARLY DIRECTED THE ITO TO VERIFY THE FACT OF ROI FILING, AGAINST WHICH THE DEPARTMENT NOT HAVING GONE IN APPEAL, SUCH AN ISSUE HAS ALREADY BECOME FI NAL. NOTABLY, THEREAFTER THE ITO HAS GIVEN EFFECT TO THE CIT(A)S ORDER VIDE HIS ORDER DATED 22.03.2019 U/S 206C/250. HENCE, THIS GROUND OF APPEAL DESERVE S TO BE DISMISSED. 62. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURSUED THE MATERIAL AVAILABLE ON RECORD. THE RELEVANT FINDINGS OF THE LD CIT(A) WHICH ARE UNDER DISPUTE READS AS UNDER: ACCORDINGLY THE AO IS DIRECTED TO ALLOW THE BENEFIT OF RS. 1,34,89,762/-AS PER THE RATIO LAID DOWN BY HON'BLE APEX COURT IN ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 58 HINDUSTAN COCA COLA (SUPRA) ONLY AFTER MAKING VERIF ICATION OF THE RETURN OF INCOME FILED BY THE RESPECTIVE PARTIES CA SE THE APPELLANT FAILED TO DO SO, THE LIABILITY OF TCS IS ON THE APP ELLANT. 63. ON PERUSAL OF THE AFORESAID FINDINGS, WE FIND T HAT THE LD CIT(A) HAS CLEARLY HELD AND DIRECTED THE AO TO ALLOW THE BENEF IT TO THE ASSESSEE IN LIGHT OF HONBLE SUPREME COURT DECISION IN CASE OF HINDUSTAN COCA COLA WHICH HE HAS DISCUSSED AT LENGTH IN THE EARLIER PART OF THE ORDE R AND HELD THAT RATIO OF THE SAID DECISION CLEARLY APPLIES IN THE INSTANT CASE A S THERE IS NO SUBSTANTIVE DIFFERENCE IN PROVISIONS RELATING TO TDS AND TCS. HOWEVER, SUCH DIRECTION WAS SUBJECT TO VERIFICATION BY THE AO AS TO THE FILING OF THE RETURN OF INCOME BY THE RESPECTIVE BUYERS AND WHERE IT WAS FOUND BY THE AO THAT RETURN OF INCOME HAS BEEN FILED, RELIEF WAS DIRECTED TO BE ALLOWED TO TH E ASSESSEE AND WHERE SUCH RETURN OF INCOME HAS NOT BEEN FILED, NO RELIEF WAS DIRECTED TO BE ALLOWED. WE FIND THAT SUCH DIRECTION BY THE LD CIT(A) IS WELL W ITHIN HIS POWERS AND JURISDICTION U/S 250(1) AND DOESNT RESULT IN SETTI NG ASIDE THE MATTER TO THE FILE OF THE AO FOR MAKING A FRESH ASSESSMENT AND ADJUDIC ATION AFRESH. IN THE RESULT, THE GROUND OF APPEAL SO TAKEN BY THE REVENU E IS DISMISSED. 64. IN GROUND NO. 4, THE REVENUE HAS CHALLENGED TH E FINDINGS OF THE LD CIT(A) WHERE HE HAS HELD THAT THERE IS NO MATERIAL DIFFERENCE IN THE PROVISIONS OF TAX DEDUCTION AT SOURCE (TDS) UNDER CHAPTER-XVII B AND TAX COLLECTION AT SOURCE (TCS) UNDER CHAPTER-XVIIBB OF THE INCOME TAX ACT, 1961 AND THE FACTS & THE JUDGMENT HELD IN ASSESSMENT PROCEEDINGS U/S 201(1)/201(1A) FOR DEFAULT IN THE CASE OF M/S HINDUSTAN COCA COLA (P) LTD ARE SQUARELY APPLICABLE IN THE CASE OF THE ASSESSEE FOR ASSESSMENT PROCEEDI NGS U/S 206C(6)/206C(7) OF THE ACT FOR TCS DEFAULTS. 65. THE LD DR RELIED ON THE FINDINGS OF THE ASSESSI NG OFFICER AND SUBMITTED THAT THERE ARE SPECIFIC PROVISIONS CONTAINED IN SEC TION 206C IN RESPECT OF TAX ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 59 COLLECTION AT SOURCE AND THE LIABILITY OF ASSESSEE SHOULD THEREFORE BE GOVERNED BY SUCH PROVISIONS AND NOT IN TERMS OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF M/S HINDUSTAN COCA COL A (P) LTD. RENDERED IN CONTEXT OF TAX DEDUCTION AT SOURCE. 66. PER CONTRA, THE LD AR SUPPORTED THE FINDINGS OF THE LD CIT(A) AND SUBMITTED THAT THE ISSUE INVOLVED IS DIRECTLY COVER ED IN AS MUCH AS IN A.Y. 2008-09 AND ONWARDS TILL A.Y. 2012-13, THE CIT(A) H AD ALREADY HELD THAT TDS AND TCS PROVISION ARE PRINCIPALLY THE SAME AND AGAI NST WHICH THE DEPARTMENT NOT HAVING GONE IN APPEAL, SUCH AN ISSUE HAS ALREAD Y BECOME FINAL. EVEN THE TRIBUNAL IN ITA NO. 316/JP/2018 VIDE ITS ORDER DATE D 29.08.2018 FOR A.Y. 2009-10 AND AGAIN IN ITA NO. 394/JP/2016 VIDE ITS O RDER DATED 28.09.2018 FOR A.Y 2008-09 HAS HELD THAT THERE IS NO MATERIAL DIFF ERENCE BETWEEN THE PROVISIONS OF THE TDS AND TCS AND THEY ARE PRINCIPA LLY THE SAME. HENCE, THIS GROUND OF APPEAL ALSO DESERVES TO BE DISMISSED. 67. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURSUED THE MATERIAL AVAILABLE ON RECORD. IN ASSESSEES APPEAL FOR A.Y 2009-10, THE COORDINATE BENCH HAS HELD THAT THE PROVISIONS OF SECTION 206C ARE ANALOGOUS A ND A MEASURE FOR COMPLIANCE OF COLLECTION OF TAX AT SOURCE AS A SIMI LAR MEASURE FOR COMPLIANCE OF DEDUCTION OF TAX AT SOURCE IS PROVIDED UNDER SEC TION 201 OF THE ACT. REGARDING DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF M/S HINDUSTAN COCA COLA (P) LTD., WE FIND THAT THE RATIO SO LAID DOWN THEREIN HAS BEEN SUBSEQUENTLY BROUGHT ON THE STATUE BOOKS BY WAY OF PROVISO TO SUB-SECTION (6A) TO SECTION 206C OF THE ACT. THEREFORE, WHERE T HE SPECIFIC AMENDMENT HAS BEEN BROUGHT IN BY THE LEGISLATURE ACCEPTING TH E RATIO SO LAID DOWN BY THE ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 60 HONBLE SUPREME COURT, WE SEE NO INFIRMITY IN THE F INDINGS OF THE LD CIT(A) WHERE HE HAS HELD THAT THE RATIO SO LAID DOW N CONTINUES TO APPLY IN CONTEXT OF COLLECTION OF TAXES AT SOURCE. IN THE RE SULT, THE GROUND SO TAKEN BY THE REVENUE IS HEREBY DISMISSED. 68. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. 69. NOW, COMING TO CROSS APPEALS IN ITA NO. 423/JP/ 2018 & 776/JP/2018 FOR A.Y 2014-15 AND ITA NO. 424/JP/2018 & 777/JP/2018 F OR A.Y 2014-15, BOTH THE PARTIES FAIRLY SUBMITTED THAT THE FACTS AND CIR CUMSTANCES OF THE CASE ARE EXACTLY IDENTICAL AS IN ITA NO. 422/JP/2018 AND 778 /JP/2018 FOR A.Y 2013-14 AND SIMILAR CONTENTIONS HAVE BEEN ADVANCED BY BOTH THE PARTIES, THEREFORE, OUR FINDINGS AND DIRECTIONS CONTAINED IN ITA NO. 42 2/JP/2018 AND 778/JP/2018 SHALL APPLY MUTATIS MUTANDIS TO THESE CROSS APPEALS. 70. IN THE RESULT, ALL THE CROSS APPEALS FILED BY T HE ASSESSEE AND REVENUE FOR RESPECTIVE ASSESSMENT YEARS ARE DISPOSED OFF IN LIG HT OF AFORESAID DIRECTIONS. ORDER PRONOUNCED IN THE OPEN COURT ON 15/04/2020. SD/- SD/- ( SANDEEP GOSAIN ) (VIKRAM SINGH YADAV) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR DATED:- 15/04/2020. *GANESH KR. COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- M/S EID MOHAMMAD NIZAMUDDIN, TONK 2. THE RESPONDENT- ITO (TDS-3), JAIPUR 3. CIT 4. CIT(A) 5. DR, ITAT, JAIPUR. 6. GUARD FILE { ITA. NO. 422, 423,424, 778, 776 & 777/JP/2018} BY ORDER, ITA. NO. 422-424 & 776-778/JP/2018 M/S EID MOHAMMAD NIZAMUDDIN VS. ITO TDS, JAIPUR 61 ASST. REGISTRAR