IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : B : NEW DELHI BEFORE SHRI R.S. SYAL, AM AND SHRI C.M. GARG, JM ITA NO.6023/DEL/2013 ASSESSMENT YEAR : 2008-09 DIVISIONAL FOREST OFFICER, BAGESHWAR FOREST DIVISION, BAGESHWAR. PAN: MRTD01065B VS. ITO (TDS), HALDWANI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI V.P. GUPTA, ADVOCATE DEPARTMENT BY : SMT. PARWINDER KAUR, SR. DR DATE OF HEARING : 10.04.2015 DATE OF PRONOUNCEMENT : 13 .04.2015 ORDER PER R.S. SYAL, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER PASSED BY THE CIT(A) ON 12.08.2013 IN RELATION TO THE ASSESSM ENT YEAR 2008-09. THE SOLITARY ISSUE RAISED IN THIS APPEAL THROUGH VA RIOUS GROUNDS IS ITA NO.6023/DEL/2013 2 AGAINST THE SUSTENANCE OF DEMAND AGAINST THE ASSESS EE U/SS 206C(6) AND 206C(7) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER AL SO CALLED `THE ACT). 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE, A GOVERNMENT UNDERTAKING, SOLD LISA DURING THE FINAN CIAL YEAR 2007-08 TO BUYERS U/S 206C(1) OF THE ACT AMOUNTING TO RS.7,66, 82,453/-. THE INCOME-TAX OFFICER (TDS) OBSERVED THAT A SUM OF RS. 19,17,061/- WAS REQUIRED TO BE COLLECTED AT SOURCE, WHICH THE ASSES SEE DID NOT COLLECT. ON BEING CALLED UPON TO EXPLAIN AS TO WHY IT BE NOT DE EMED TO BE AN ASSESSEE IN DEFAULT FOR SUCH NON-COLLECTION OF TAX AT SOURCE IN TERMS OF SECTION 206C(6A), THE ASSESSEE STATED THAT ALL THE LISA PURCHASERS WERE MANUFACTURERS AND FORM NO. 27CS WERE OBTAINED FROM THEM. THE ASSESSEE FURNISHED SUCH FORMS, WHICH WERE ADMITTEDL Y NOT COLLECTED BY THE ASSESSEE FROM THE BUYERS AT THE TIME OF RECEIPT OF SALE CONSIDERATION OR DEBITING THEIR ACCOUNTS, WHICHEVER IS EARLIER. THE ITO (TDS) HELD THAT IN VIEW OF THE ASSESSEE NOT COLLECTING TAX AT SOURCE, IN THE ABSENCE OF RECEIPT OF SUCH FORMS FROM THE RESPECTIVE BUYERS, A T THE TIME OF SALE OF THE GOODS, IT COMMITTED DEFAULT AS PER SECTION 206C , FOR WHICH IT WAS ITA NO.6023/DEL/2013 3 LIABLE TO BE TREATED AS ASSESSEE IN DEFAULT. THE A MOUNT OF SHORT COLLECTION OF TAX AT SOURCE WAS DETERMINED AT RS.19,17,061/- A ND THE CONSEQUENTIAL INTEREST AT RS.11,50,236/-, THEREBY RAISING TOTAL D EMAND OF RS.30,67,297/- FOR THE YEAR UNDER CONSIDERATION. THE LD. CIT(A) U PHELD THE ORDER PASSED BY THE ITO (TDS). 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS AN ADMITTED POSITION TH AT THE ASSESSEE SOLD FOREST PRODUCE, NOT BEING TIMBER OR TENDU LEAVES, I N THE TERMS AS DESCRIBED IN CLAUSE (V) OF THE TABLE GIVEN IN SECTI ON 206C(1) OF THE ACT WITHOUT COLLECTING TAX AT SOURCE. SUB-SECTION (1) O F SECTION 206C PROVIDES THAT : ` EVERY PERSON, BEING A SELLER SHAL L, AT THE TIME OF DEBITING OF THE AMOUNT PAYABLE BY THE BUYER TO THE ACCOUNT O F THE BUYER OR AT THE TIME OF RECEIPT OF SUCH AMOUNT FROM THE SAID BUYER IN CASH OR BY THE ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE, WH ICHEVER IS EARLIER, COLLECT FROM THE BUYER OF ANY GOODS OF THE NATURE S PECIFIED IN COLUMN (2) OF THE TABLE BELOW, A SUM EQUAL TO THE PERCENTAGE, SPECIFIED IN THE CORRESPONDING ENTRY IN COLUMN (3) OF THE SAID TABLE , OF SUCH AMOUNT AS ITA NO.6023/DEL/2013 4 INCOME-TAX... GOING BY THE MANDATE OF SUB-SECTION (1), ANY SELLER OF THE FOREST PRODUCE IS REQUIRED TO COLLECT TAX AT SOURCE FROM THE BUYERS AT THE TIME OF DEBITING THE AMOUNT PAYABLE TO THEIR ACCOUN TS OR AT THE TIME OF RECEIPT OF SUCH AMOUNT, WHICHEVER IS EARLIER. THEN THERE IS SUB-SECTION (1A) OF SECTION 206C WHICH PROVIDES THAT : ` NOTWI THSTANDING ANYTHING CONTAINED IN SUB-SECTION (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 DECLARATIO N IN WRITING IN DUPLICATE IN THE PRESCRIBED 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 THE PURPOSES OF MANUFA CTURING, PROCESSING OR PRODUCING ARTICLES OR THINGS OR FOR THE PURPOSES O F GENERATION OF POWER AND NOT FOR TRADING PURPOSES. THE PRESCRIBED FORM OF THE SAID DECLARATION IS FORM NO. 27C. WHEN WE READ SUB-SECTI ON (1) IN CONJUNCTION WITH SUB-SECTION (1A), THE POSITION WH ICH BECOMES EVIDENT IS THAT THERE IS A REQUIREMENT ON THE SELLER TO COL LECT TAX AT SOURCE AT THE PRESCRIBED RATES ON THE PRESCRIBED GOODS SOLD BY HI M TO THE BUYER. SUCH COLLECTION IS TO BE MADE AT THE TIME OF DEBITING OF THE AMOUNT TO THE ITA NO.6023/DEL/2013 5 ACCOUNT OF THE BUYER OR AT THE TIME OF RECEIPT OF S UCH AMOUNT FROM THE BUYER, WHICHEVER IS EARLIER. HOWEVER, IF THE BUYER OF THE SPECIFIED GOODS FURNISHES TO THE SELLER A DECLARATION IN FORM NO. 2 7C IN DUPLICATE, THAT THE GOODS PURCHASED BY HIM ARE TO BE UTILIZED FOR THE P URPOSE OF MANUFACTURING, PROCESSING OR PRODUCING ARTICLES OR THINGS, ETC., AND NOT FOR TRADING, THEN, SUCH REQUIREMENT OF COLLECTION O F TAX AT SOURCE IS DISPENSED WITH. SUB-SECTION (1B) OF SECTION 206C F URTHER PROVIDES THAT THE PERSON RESPONSIBLE FOR COLLECTING TAX AT SOURCE SHALL DELIVER TO THE COMMISSIONER ONE COPY OF SUCH FORM NO. 27C ON OR BE FORE THE SEVENTH DAY OF THE MONTH NEXT FOLLOWING THE MONTH IN WHICH THE DECLARATION IS FURNISHED TO HIM. 4. THUS, SUB-SECTION (1A) OF SECTION 206C SAVES TH E SELLER FROM COLLECTING TAX AT SOURCE AT THE TIME OF RECEIVING T HE AMOUNT OR DEBITING THE ACCOUNT OF THE BUYER, WHICHEVER IS EARLIER, ON THE LATTER FURNISHING A DECLARATION IN FORM NO. 27C IN DUPLICATE, BEFORE OR AT THE TIME WHEN THE LIABILITY FOR COLLECTION OF TAX AT SOURCE HAS A RISEN. IT, THEREFORE, TRANSPIRES THAT THE LIABILITY OF THE SELLER TO COLL ECT TAX AT SOURCE IS WAIVED ITA NO.6023/DEL/2013 6 ONLY ON THE BUYER SUBMITTING FORM NO. 27C TO HIM AT THE TIME OF DEBITING THE ACCOUNT OF BUYER OR THE RECEIPT OF PAY MENT, WHICHEVER IS EARLIER. THIS SHOWS THAT, FIRSTLY, THERE SHOULD BE SUBMISSION OF FORM NO. 27C BY THE BUYER AND SECONDLY, SUCH FORM SHOULD BE SUBMITTED AT THE EARLIEST OF THE OCCASION OF THE DEBITING OF HIS ACC OUNT BY THE SELLER OR THE RECEIPT OF PAYMENT. UNLESS THESE CONDITIONS ARE CUM ULATIVELY FULFILLED, THE SELLER IS OBLIGED TO COLLECT TAX AT SOURCE AT T HE RATES PRESCRIBED AND DEPOSIT THE SAME INTO THE EXCHEQUER AT THE MATERIAL TIME. THESE CONDITIONS MUST BE FULFILLED IN LETTER AND SPIRIT W ITHOUT ANY SORT OF DISTORTION OR DILUTION OR THEIR SUBSTITUTION WITH O THER ALIKE CONDITIONS AS PER THE CONVENIENCE OF THE PARTIES. 5. ADVERTING TO THE FACTS OF THE EXTANT CASE, WE FI ND THAT THE BUYERS DID NOT SUBMIT FORM NO. 27CS AT THE TIME OF DEBIT T O THEIR ACCOUNTS BY THE ASSESSEE OR ON THEIR MAKING PAYMENT TO THE ASSE SSEE, WHICHEVER IS EARLIER. THE SIMPLE FACT OF NON-RECEIPT OF FORM NO . 27CS BY THE ASSESSEE BEFORE THE ABOVE TIME FRAME MADE IT LIABLE FOR DEFA ULT IN NOT COLLECTING TAX AT SOURCE. THE CONTENTION OF THE LD. AR THAT A LL THE BUYERS WERE REGISTERED AS MANUFACTURERS OF THE RESIN PRODUCTS U NDER THE RELEVANT ACT ITA NO.6023/DEL/2013 7 AND THEIR FURNISHING OF SUCH REGISTRATION CERTIFICA TES TO THE ASSESSEE AT THE TIME OF PURCHASE OF THE GOODS SHOULD BE CONSTRU ED AS FULFILLMENT OF THE REQUIREMENT OF SUBMISSION OF FORM NO. 27CS, IS DEVOID OF MERIT. WHEN THE ACT CLEARLY STIPULATES FOR FURNISHING OF F ORM NO. 27C, THERE CAN BE NO QUESTION OF SUBSTITUTING SUCH REQUIREMENT WITH THE FURNISHING OF ANY OTHER DOCUMENT OR REGISTRATION CERTIFICATE I SSUED UNDER ANY OTHER ACT. THE OBLIGATION OF LAW CAN BE SAID TO HAVE BEE N PROPERLY COMPLIED WITH ONLY ON A BUYER TENDERING FORM NO. 27C IN DUPL ICATE TO THE SELLER AT THE RELEVANT TIME. 6.1. THE NEXT ARGUMENT OF THE LD. AR WAS THAT SI NCE FORM NO. 27CS WERE DULY FILED WITH THE ITO (TDS) DURING THE COURS E OF PROCEEDINGS BEFORE HIM, THE REQUIREMENT OF THE LAW IN FURNISHIN G SUCH DECLARATIONS SHOULD BE DEEMED TO BE COMPLIED WITH. HE HARPED ON THE FACTUM OF THE BUYERS TENDERING SUCH DECLARATIONS, ALBEIT BELATEDL Y. A VIEW WAS PUT FORTH FOR ACCEPTANCE THAT THE TIME LIMIT FOR THE FI LING OF FORM NO. 27C IS ONLY DIRECTORY AND NOT MANDATORY. ITA NO.6023/DEL/2013 8 6.2. IT IS AN UNDISPUTED FACT THAT THE BUYERS DI D NOT TENDER FORM NO. 27CS AT THE MATERIAL TIME. THE ASSESSEE COLLECTED T HE SAME FROM THE BUYERS AND SUBMITTED WHEN THE ITO (TDS) TOOK UP THE INSTANT PROCEEDINGS FOR TREATING IT AS ASSESSEE IN DEFAULT. WE ARE UNABLE TO CONCUR WITH THE VIEW CANVASSED BY THE LD. AR ABOUT THE REQUIREMENT OF RECEIVING FORM NO. 27C AS DECLARATORY. IT IS AXIOMA TIC FROM THE LANGUAGE OF SUB-SECTION (1A) THAT NO COLLECTION OF TAX AT SOURCE SHALL BE MADE IF THE BUYER FURNISHES TO THE SELLER A PRESCRI BED DECLARATION IN WRITING. WHEN WE ADVERT TO THE STAGE OF COLLECTION OF TAX AT SOURCE AS PER SUB-SECTION (1), IT BECOMES PALPABLE THAT THE SAME IS THE EARLIEST OF THE DEBITING THE ACCOUNT OF BUYER OR RECEIPT OF PAYMENT . THE LIABILITY OF THE PERSON RESPONSIBLE TO COLLECT OR NOT TO COLLECT TAX AT SOURCE IS WHOLLY AND SOLELY DEPENDENT ON THE AVAILABILITY OR OTHERWISE O F FORM NO. 27C AT THE TIME WHEN COLLECTION OF TAX AT SOURCE IS MANDATED. IF SUCH DECLARATION IS NOT AVAILABLE AT THE EARLIEST OF THE RECEIPT OF PAY MENT OR DEBITING THE ACCOUNT OF BUYER, THE RELEVANT PART OF THE PROVISIO NS OF SUB-SECTION (1) OF SECTION 206C BECOMES OPERATIVE, MAKING IT OBLIGATOR Y FOR THE PERSON RESPONSIBLE TO COLLECT TAX AT SOURCE SO AS TO AVOID IT FROM BEING TREATED AS ITA NO.6023/DEL/2013 9 AN ASSESSEE IN DEFAULT. IT IS VIVID THAT ONCE THE D ICTATE OF SUB-SECTION (1) HAS OPERATED AND TAX IS COLLECTED AT SOURCE DUE TO THE NON-AVAILABILITY OF FORM NO. 27C AT THE TIME AS AFORESAID, THE LATE FUR NISHING OF SUCH DECLARATION BY THE BUYER WILL NOT BRING THE ARMS OF THE CLOCK BACK, SO AS TO ENTITLE THE BUYER TO CLAIM THAT NO TAX OUGHT TO HAVE BEEN COLLECTED EARLIER AND RESULTANTLY, THE AMOUNT SO COLLECTED B E NOW REFUNDED ON HIS FURNISHING THE DECLARATION TO THE SELLER AFTER THE RELEVANT TIME. THUS, IT IS EVIDENT THAT BY NO STRETCH OF IMAGINATION, THE FURN ISHING OF FORM NO. 27C BY THE BUYER AT THE TIME WHEN COLLECTION OF TAX AT SOURCE IS CONTEMPLATED UNDER THE ACT, CAN BE CONSTRUED AS ANYTHING OTHER T HAN MANDATORY. THE ARGUMENT OF THE LD. AR TO INTERPRET THE REQUIREMENT OF SUBMISSION OF SUCH DECLARATION AT THE AFORESAID TIME AS DECLARATO RY, SO AS TO AVOID COLLECTION OF TAX AT SOURCE ON ITS LATE FURNISHING, EVIDENTLY DOES NOT HOLD WATER. THE SAME IS, THEREFORE, REPELLED. 7. ONE NEEDS TO APPRECIATE THE VITAL DIFFERENCE B ETWEEN SUBMITTING THE DECLARATION IN FORM NO. 27C BEFORE OR AT THE TIME O F THE ARISING OF THE LIABILITY TO COLLECT TAX AT SOURCE ON ONE HAND AND NOT SUBMITTING AT ALL OR ITA NO.6023/DEL/2013 10 LATE SUBMITTING SUCH DECLARATION AFTER THE LIABILIT Y HAS ALREADY ARISEN. WHEN WE READ SUB-SECTION (1) IN JUXTAPOSITION TO SU B-SECTION (1A) OF SECTION 206C, IT FOLLOWS THAT THE LIABILITY TO COLL ECT TAX AT SOURCE GETS CRYSTALLIZED AT THE TIME OF DEBITING THE ACCOUNT OF BUYER OR THE RECEIPT OF PAYMENT, WHICHEVER IS EARLIER, SAVE AND EXCEPT WHER E THE BUYER FURNISHES A DECLARATION IN FORM NO. 27C TO THE SELL ER AT THAT POINT OF TIME. RECEIPT OF SUCH DECLARATION AT THE MATERIAL TIME IM MUNES THE SELLER FROM COLLECTING TAX AT SOURCE. WHAT IS RELEVANT IS THE S TAGE OF THE CRYSTALLIZATION OF LIABILITY FOR COLLECTING TAX AT SOURCE. ONCE THAT STAGE CROSSES WITHOUT COLLECTION OF TAX AT SOURCE, THE CO NSEQUENCES OF NON- COLLECTION FOLLOW NOTWITHSTANDING THE RECEIPT OF DE CLARATION AFTER THE RELEVANT TIME. IN FACT, THERE IS NO MATERIAL DIFFER ENCE IN THE CONSEQUENCES OF TWO SITUATIONS, VIZ., IN WHICH EITHER FORM NO. 2 7C IS NOT AT ALL RECEIVED OR IS RECEIVED BELATEDLY AFTER THE PASSING OF THE TIME OF DEBITING THE ACCOUNT OF BUYER OR RECEIPT OF PAYMENT, WHICHEV ER IS EARLIER. BOTH THESE SITUATIONS MAKE THE SELLER LIABLE FOR DEFAULT OF NON-COLLECTION OF TAX AT SOURCE. INSTANTLY, WE ARE CONFRONTED WITH A CASE OF LATE SUBMISSION OF FORM NO. 27CS, WHICH FOR ALL PRACTICAL PURPOSES, I S AKIN TO NON- ITA NO.6023/DEL/2013 11 SUBMISSION OF SUCH DECLARATION FOR THIS PURPOSE, TH EREBY INVITING CONSEQUENCES OF NON-COLLECTION OF TAX AT SOURCE. 8. ONE MORE FACT NEEDS TO BE HIGHLIGHTED. THE REQUIREMENT UNDER THE PROVISION IS TO FURNISH FORM NO. 27C BY THE BUYER T O THE SELLER IN DUPLICATE AND, THEN, THE SELLER IS OBLIGED TO DELIV ER ONE COPY OF SUCH DECLARATION TO THE COMMISSIONER ON OR BEFORE THE SE VENTH DAY OF THE MONTH NEXT FOLLOWING THE MONTH IN WHICH THE DECLARA TION IS FURNISHED TO HIM. THIS REQUIREMENT OF FURNISHING A COPY OF THE DECLARATION TO THE COMMISSIONER BY THE SELLER CANNOT BE SATISFIED BY M ERELY GIVING IT TO THE ITO (TDS). THE ASSESSEE IN THE INSTANT CASE SUBMITT ED COPIES OF FORM NO. 27CS ONLY TO THE ITO (TDS) AND, THAT TOO, DURIN G THE COURSE OF CURRENT PROCEEDINGS BEFORE HIM WITHOUT SUBMITTING T HE SAME TO THE COMMISSIONER. 9. SINCE THE ASSESSEE FAILED TO COLLECT TAX AT SO URCE FROM THE BUYERS WITHOUT RECEIPT OF FORM NO. 27CS AT THE TIME OF DEB ITING THEIR ACCOUNTS OR RECEIVING THE AMOUNTS, WHICHEVER IS EARLIER, THE RE CAN BE NO ESCAPE FROM THE CONSEQUENCES FLOWING FROM SUCH DEFAULT. ITA NO.6023/DEL/2013 12 10. THE NEXT LINE OF THE ARGUMENT OF LD. AR WAS THA T ALL THE BUYERS WERE ASSESSED TO TAX AND THE INCOME FROM THE PURCHA SE OF LISA AND THE SALE OF THE MANUFACTURED GOODS WITH THE USE OF SUCH MATERIAL WAS PROPERLY OFFERED FOR TAXATION. IN THE BACKDROP OF THIS FACT, IT WAS PUT FORTH THAT THE COLLECTION OF TAX AT SOURCE AT THIS STAGE FROM THE ASSESSEE WOULD AMOUNT TO DOUBLE COLLECTION OF TAX ON THE SAM E AMOUNT OF INCOME, WHICH IS IMPERMISSIBLE. ON THE OTHER HAND, THE LD. DR OPPOSED THE SAID CONTENTION. 11. SECTION 206C IS NOT A CHARGING PROVISION BUT A PROVISION FOR COLLECTION OF TAX. ANY TAX COLLECTED UNDER THIS PRO VISION IS ALLOWED CREDIT AGAINST THE TAX LIABILITY OF THE PERSON ON WHOSE BE HALF SUCH TAX AT SOURCE WAS COLLECTED. IN OTHER WORDS, THE AMOUNT OF TAX CO LLECTED AT SOURCE HAS TO BE ADJUSTED AGAINST THE TAX LIABILITY OF THE BUY ER. SUB-SECTION (4) OF SECTION 206C RECOGNIZES THIS POSITION, INASMUCH AS IT STATES THAT : ` ANY AMOUNT COLLECTED IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION AND PAID TO THE CREDIT OF THE CENTRAL GOVERNMENT SHALL BE DEEMED TO BE A PAYMENT OF TAX ON BEHALF OF THE PERSON FROM WHOM TH E AMOUNT HAS BEEN ITA NO.6023/DEL/2013 13 COLLECTED AND CREDIT SHALL BE GIVEN TO SUCH PERSON FOR THE AMOUNT SO COLLECTED IN A PARTICULAR ASSESSMENT YEAR IN ACCORD ANCE WITH THE RULES AS MAY BE PRESCRIBED BY THE BOARD FROM TIME TO TIME. IF DUE TO ONE REASON OR THE OTHER, THE BUYER HAS NO LIABILITY TO PAY TA X OR HIS TAX LIABILITY IS LESS THAN THE AMOUNT SO COLLECTED, THEN SUCH AMOUNT OF TAX COLLECTED AT SOURCE OR THE EXCESS, AS THE CASE MAY BE, IS REFUND ED TO THE BUYER AFTER HIS ASSESSMENT. IF HOWEVER, THE BUYER HAS PAID THE TAX ON HIS TOTAL INCOME INCLUDING THE INCOME FROM THE TRANSACTION WH ICH NECESSITATED THE COLLECTION OF TAX AT SOURCE AND THE SELLER FAILED T O COLLECT TAX AT SOURCE, THE AMOUNT OF TAX COLLECTED LATER ON BY TREATING TH E SELLER AS ASSESSEE IN DEFAULT, WILL NOT GET ADJUSTMENT ANYWHERE BECAUSE O F THE DISCHARGE OF TOTAL TAX LIABILITY BY THE BUYER. IT IS AXIOMATIC T HAT THE AMOUNT OF TAX COLLECTED AT SOURCE CANNOT REMAIN IN LIMBO. IN SUCH CIRCUMSTANCES, THERE CAN BE NO RATIONALE IN COLLECTION OF TAX AT SOURCE FROM THE SELLER BY TREATING HIM AS AN ASSESSEE IN DEFAULT, KNOWING FUL LY WELL THAT THE AMOUNT OF TAX SO COLLECTED WILL NOT GET ADJUSTMENT EITHER IN THE HANDS OF THE BUYER OR THE SELLER. ITA NO.6023/DEL/2013 14 12. THE HONBLE SUPREME COURT IN THE CASE HINDUSTAN COCA COLA BEVERAGE (P) LTD. VS. CIT (2007) 293 ITR 226 (SC) HAS HELD THAT WHERE THE PAYEE HAS ALREADY PAID TAX ON THE INCOME ON WHI CH THERE WAS A SHORT DEDUCTION OF TAX AT SOURCE, THEN NO RECOVERY OF TAX SHOULD BE MADE ONCE AGAIN FROM THE TAX DEDUCTOR. THE HONBLE JURISDICTI ONAL HIGH COURT IN CIT VS. MAJESTIC HOTEL LTD. (2007) 293 ITR 18 HAS ALSO LAID DOWN TO THE SAME EFFECT. THE ESSENCE OF THESE JUDGMENTS IS THA T WHEN THE DEDUCTEE HAS INCLUDED THE TRANSACTION REQUIRING THE DEDUCTOR TO DEDUCT/COLLECT TAX AT SOURCE, IN HIS TOTAL INCOME AND HAS PAID THE TAX THEREON, THEN, THERE IS NO LOGIC IN ONCE AGAIN COLLECTING TAX AT SOURCE FRO M THE DEDUCTOR INASMUCH AS SAID AMOUNT, IF NOW COLLECTED, WOULD RE MAIN UNADJUSTED BECAUSE THE DEDUCTEE WOULD NOT BE ABLE TO AVAIL THE BENEFIT OF SUCH TAX AGAINST HIS INCOME, WHICH HAS ALREADY BEEN ASSESSED TO TAX. A PERSON RESPONSIBLE BECOMES ASSESSEE IN DEFAULT IN CASE OF TDS PROVISIONS, WHEN HE MAKES THE PAYMENT WITHOUT DEDUCTION OF TAX AT SO URCE AT THE POINT OF MAKING PAYMENT OR CREDITING THE ACCOUNT OF THE PAYE E, AS THE CASE MAY BE UNDER THE RELEVANT PROVISION; AND IN CASE OF T CS PROVISIONS, WHEN HE RECEIVES THE PAYMENT WITHOUT COLLECTING TAX AT SOURCE AT THE POINT OF ITA NO.6023/DEL/2013 15 RECEIVING THE PAYMENT OR DEBITING THE ACCOUNT OF T HE PAYER, WHICHEVER IS EARLIER. ERGO, THE PROVISIONS FOR TREATING THE A SSESSEE IN DEFAULT IN VIEW OF THE NON-DEDUCTION OF TAX AT SOURCE ARE ANALOGOUS ON THIS ASPECT TO THE PROVISIONS OF NON-COLLECTION OF TAX AT SOURCE. THE ABOVE DECISIONS RENDERED IN THE CONTEXT OF TDS PROVISIONS APPLY WIT H FULL FORCE TO THE TCS PROVISIONS AS WELL. 13. AT THIS JUNCTURE, IT IS RELEVANT TO MENTION THAT CONSIDERING THE RATIO DECIDENDI OF THE JUDGMENT OF THE HONBLE SUPREME COURT IN TH E CASE OF HINDUSTAN COCA COLA BEVERAGE (P) LTD. (SUPRA) AND OTHER JUDGMENTS RENDERED BY VARIOUS HONBLE HIGH COURTS UNIFORMLY I N NOT TREATING THE PERSON RESPONSIBLE AS ASSESSEE IN DEFAULT WHEN THE OTHER PERSON HAS PAID DUE TAX ON HIS TOTAL INCOME BY INCLUDING INCOME FR OM SUCH TRANSACTIONS, THE LEGISLATURE HAS STEPPED IN BY INSERTING FIRST P ROVISO TO SECTION 206C (6A) BY THE FINANCE ACT, 2012 W.E.F. 1.7.2012, READ ING 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 REQUIRED BY OR UNDER THIS ACT, HE SHALL, WITHOUT PREJUDICE TO ANY OTHER CONSEQUENCES WHICH H E MAY INCUR, BE DEEMED TO BE AN ASSESSEE IN DEFAULT IN RESPECT OF THE TAX: ITA NO.6023/DEL/2013 16 PROVIDED THAT ANY PERSON, OTHER THAN A PERSON REFER RED TO IN SUB-SECTION (1D), RESPONSIBLE FOR COLLECTING TAX IN ACCORDANCE WITH T HE PROVISIONS OF THIS SECTION, WHO FAILS TO COLLECT THE WHOLE OR ANY PART OF THE TAX ON THE AMOUNT RECEIVED FROM A BUYER OR LICENSEE OR LESSEE OR ON T HE AMOUNT DEBITED TO THE ACCOUNT OF THE BUYER OR LICENSEE OR LESSEE SHALL NO T BE DEEMED TO BE AN ASSESSEE IN DEFAULT IN RESPECT OF SUCH TAX IF SUCH BUYER OR LICENSEE OR LESSEE (I) HAS FURNISHED HIS RETURN OF INCOME UNDER SECTION 139 ; (II) HAS TAKEN INTO ACCOUNT SUCH AMOUNT FOR COMPUT ING INCOME IN SUCH RETURN OF INCOME; AND ( III ) HAS PAID THE TAX DUE ON THE INCOME DECLARED BY HI M 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: 14. A CIRCUMSPECT PERUSAL OF SUB-SECTION (6) TRANSP IRES THAT IF ANY PERSON RESPONSIBLE FOR COLLECTING TAX IN ACCORDANCE WITH THE PROVISIONS OF THIS SECTION FAILS TO COLLECT THE WHOLE OR ANY P ART OF THE TAX OR AFTER COLLECTING, FAILS TO PAY THE TAX AS REQUIRED BY OR UNDER THIS ACT, HE SHALL, BE DEEMED TO BE AN ASSESSEE IN DEFAULT IN RESPECT O F THE TAX. HOWEVER, THE FIRST PROVISO IN CASE OF FAILURE TO COLLECT TAX AT SOURCE AT THE MATERIAL TIME, ERASES THE TAG OF ASSESSEE IN DEFAULT, I F THE BUYER HAS FURNISHED HIS RETURN OF INCOME U/S 139(1) BY TAKING INTO ACCO UNT THE TRANSACTION COVERED UNDER THIS PROVISION AND PAYING THE TAX DUE ON THE INCOME ITA NO.6023/DEL/2013 17 DECLARED AND NECESSARY CERTIFICATE IN THE PRESCRIBE D FORM IS ISSUED. THOUGH THIS PROVISO HAS BEEN INSERTED BY THE FINANC E ACT, 2012 FROM 1.7.2012, BUT, IT IS NOTHING, BUT REITERATION OF TH E LAW LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF HINDUSTAN COCA COLA BEVERAGE (P) LTD. (SUPRA ). THERE IS HARDLY ANY NEED TO ACCENTUATE THAT THE HONBLE COURTS DO NOT LEGISLATE, BUT DECLARE THE LAW, WHICH DECLARATION IS CONSIDERED TO BE EFFECTIVE FROM THE DATE ON WHICH T HE RELEVANT PROVISION WAS BROUGHT ON THE STATUTE. SINCE THE PROVISO TO S ECTION 206C(6A) IS AN ECHO OF THE LAW PROPOUNDED BY THE HONBLE SUPREME C OURT AND THE OTHER HONBLE HIGH COURTS AS DISCUSSED ABOVE, IT HAS TO B E CONSIDERED AS RETROSPECTIVE. 15. ADVERTING TO THE FACTS OF THE INSTANT CASE, THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT ALL THE BUYERS HAD TAKEN IN TO ACCOUNT THE PURCHASES MADE FROM THE ASSESSEE FOR COMPUTING INCO ME IN THEIR RESPECTIVE RETURNS FILED U/S 139 OF THE ACT AFTER P AYING TAX DUE THEREON. HOWEVER, HE WAS UNABLE TO ADDUCE NECESSARY MATERIAL BEFORE US IN THIS REGARD. THE ASSERTION SO MADE CANNOT BE INFERRED I N THE ABSENCE OF ANY ITA NO.6023/DEL/2013 18 POSITIVE MATERIAL TO PROVE IT. THERE CAN BE NO PRE SUMPTION ABOUT THE BUYERS HAVING PAID TAX ON THE INCOME BY INCLUDING T HE TRANSACTIONS OF PURCHASES COVERED U/S 206C. THIS POSITION NEEDS TO BE SPECIFICALLY DEMONSTRATED BY THE ASSESSEE. UNDER SUCH CIRCUMSTA NCES, WE ARE OF THE CONSIDERED OPINION THAT THE ENDS OF JUSTICE WOULD M EET ADEQUATELY IF THE IMPUGNED ORDER IS SET ASIDE AND THE MATTER IS RESTO RED TO THE FILE OF ITO (TDS) FOR CONSIDERING THE DETAILS, WHICH THE ASSESS EE SEEKS TO FILE FOR DIVULGING THAT THE BUYERS HAD INCLUDED THE INCOME F ROM THE INSTANT PURCHASE TRANSACTIONS IN THEIR TOTAL INCOME AND FIL ED RETURNS U/S 139 OF THE ACT AFTER PAYING TAX DUE THEREON. WE WANT TO M AKE IT CLEAR THAT IF THE ASSESSEE FAILS TO SPECIFICALLY PROVE THIS POSITION, THEN, THE OFFICER WOULD BE FULLY ENTITLED TO TREAT IT AS ASSESSEE IN DEFAUL T IN TERMS OF SECTION 206C. FURTHER, THE LIABILITY OF INTEREST U/S 206C(7) WOUL D BE FASTENED ON THE ASSESSEE FROM THE DATE ON WHICH THE ASSESSEE WAS RE QUIRED TO COLLECT TAX AT SOURCE UP TO THE DATE ON WHICH THE AMOUNT OF TAX WAS PAID BY THE BUYERS. NEEDLESS TO SAY, THE ASSESSEE WILL BE ALLO WED A REASONABLE OPPORTUNITY OF BEING HEARD IN SUCH PROCEEDINGS. ITA NO.6023/DEL/2013 19 16. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIS TICAL PURPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT ON 13.04.201 5. SD/- SD/- [C.M. GARG] [R.S. SYAL] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED, 13 TH APRIL, 2015. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.