M/S TAHIR SCRAP TRADERS, KOTA V. INCOME TAX OFFICER (TDS), KOTA

ITA 61/JPR/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 9964 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 18-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJENDRA JHA CIT DHK
• Assessee Lawyers: SAURABH HARSH ADVS
• Keywords: Question of law; Non-deduction of tax; Reasonable cause; TDS
• Section: 201(1); 274

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH JES'K LH 'KEKZ] YS[KK LNL; DS LE{K BEFORE: SHRI RAMESH C SHARMA , ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 60 & 61/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2010-11 M/S TAHIR SCRAP TRADERS, BENGALI COLONY, CHHAWANI, KOTA. CUKE VS. I.T.O. (TDS), KOTA. TAN NO. JDHT01566F VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI SIDDARTH RANKA & SHRI SAURABH HARSH (ADVS) JKTLO DH VKSJ LS @ REVENUE BY : SHRI RAJENDRA JHA (ADDL.CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 26/11/2019 MN?KKS 'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 03/01/2020 VKNS'K@ ORDER PER: R.C. SHARMA, A.M. THESE ARE THE APPEALS FILED BY THE ASSESSEE AGAINST THE SEPARATE ORDERS OF LD.CIT(A), KOTA DATED 12/10/2017 AND 13/10/2017 RESPECTIVELY FOR THE A.Y. 2010-11 IN THE MATTER OF IMPOSITION OF PENALTY U/S 271CA R.W.S. 274 AND FOR TREATING THE ASSESSEE IN DEFAULT U/S 201(1)/201(1A) OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT). 2. THERE IS MARGINAL DELAY OF FOUR DAYS IN FILING THE APPEAL. AFTER GOING THROUGH THE CONTENTS OF THE CONDONATION PETITION, I AM SATISFIED ITA 60 & 61/JP/2018 M/S TAHIR SCRAP DEALERS VS ITO 2 THAT THERE WAS SUFFICIENT REASON FOR DELAY, ACCORDINGLY, THE DELAY IS CONDONED AND APPEALS ARE HEARD ON MERIT. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT THE ASSESSEE IS A SCRAP DEALER AND ENGAGED IN THE BUSINESS OF SCRAP. THE A.O. PASSED ORDER U/S 201(1) AND 201(1A) OF THE ACT WHEREIN HE OBSERVED THAT THE ASSESSEE WAS LIABLE TO DEDUCT TAX U/S 206C(1) IN RESPECT OF SCRAP SALE AFFECTED BY IT. AS PER THE A.O. THE ASSESSEE WAS LIABLE TO DEDUCT TAX AT SOURCE IN RESPECT OF SCRAP SOLD BY HIM UNDER THE PROVISIONS OF SECTION 206C(1) OF THE ACT AND HELD THAT THE ASSESSEE WAS IN DEFAULT FOR NON-DEDUCTION OF TAX, PASSED ORDER U/S 201(1)/201(1A) OF THE ACT. BY THE IMPUGNED ORDER, THE LD. CIT(A) CONFIRMED THE ACTION OF THE A.O., AGAINST WHICH THE ASSESSEE IS IN APPEALS BEFORE THE ITAT. 4. AT THE OUTSET, THE LD AR OF THE ASSESSEE PLACED ON RECORD THE ORDER OF THE ITAT AHMADABAD BENCH IN THE CASE OF SHRI AZIZBHAI A. LADA VS ITO IN ITA NO. 765/AHD/2015 ORDER DATED 10/01/2018 WHEREIN TRADING OF SCRAP WAS NOT HELD TO BE LIABLE TO DEDUCTION OF TAX U/S 206C(1) OF THE ACT. THE PRECISE OBSERVATION OF THE TRIBUNAL WAS AS UNDER: ITA 60 & 61/JP/2018 M/S TAHIR SCRAP DEALERS VS ITO 3 6. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE AUTHORITIES BELOW. THERE IS NO DISPUTE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING OF SCRAPS OBTAINED FROM SHIP BREAKING YARD. IN OUR CONSIDERED OPINION, PROVISIONS OF SECTION 206C DO NOT APPLY IN CASE OF SCRAP GENERATED IN THE COURSE OF SHIP BREAKING ACTIVITY. ITEMS GENERATED OUT OF SHIP BREAKING ACTIVITY MIGHT BE COMMERCIALLY KNOWN AS SCRAP SINCE SUCH ITEMS ARE NOT WASTE AND SCRAP. SINCE SUCH ITEMS ARE RE-USEABLE. ONCE SUCH ITEMS SOLD CANNOT BE TERMED AS SCRAP WOULD MAKE THE PROVISIONS OF SECTION 206C OF THE ACT IN APPLICABLE. FOR THIS PROPOSITION, WE DRAW SUPPORT FROM THE DECISION OF THE CO-ORDINATE BENCH IN THE CASE OF DHASAWALA TRADERS IN ITA NO. 979, 980 & 1535/AHD/2015. THE RELEVANT FINDINGS OF THE CO-ORDINATE BENCH READ AS UNDER:- 8. A PERUSAL OF THE PARAGRAPH-6 OF THE ABOVE JUDGMENT, WOULD INDICATE THAT CERTAIN ITEMS GENERATED OUT OF SHIP BREAKING ACTIVITY MIGHT BE KNOWN COMMERCIALLY AS 'SCRAP' BUT THEY ARE NOT WASTE AND SCRAP. THESE ITEMS ARE REUSABLE AS SUCH, AND THEREFORE, WOULD NOT FALL WITHIN THE DEFINITION OF 'SCRAP' AS ENVISAGED IN THE EXPLANATION TO SECTION 206C(1). THE ASSESSEE HAS ALSO CONTENDED THAT IT WAS ENGAGED IN THE SALE OF MS PIPE, IRON WHICH WERE OBTAINED FROM SHIP BREAKING INDUSTRIES. THE ASSESSEE HIMSELF HAS NOT GENERATED ANY SCRAP IN MANUFACTURING ACTIVITY, AS CONTEMPLATED IN THE EXPLANATION. HE WAS A TRADER. THEREFORE, THE ASSESSEE HAS NOT SOLD SCRAP AS SUCH. HE HAS SOLD THE PRODUCTS RESULTED FROM SHIP BREAKING ACTIVITY, WHICH ARE RE-USABLE. THUS, THE ASSESSEE WAS NOT SUPPOSED TO COLLECT TAX UNDER SECTION 206C OF THE ACT. THE ID.AO HAS ERRED IN RAISING THE DEMAND. I ALLOW ALL APPEALS AND DELETE ADDITIONS. 7. THE HONBLE JURISDICTIONAL HIGH COURT OF GUJARAT IN THE CASE OF PRIYA BLUE INDUSTRIES (P.) LTD. (SUPRA) WAS SEIZED WITH THE FOLLOWING SUBSTANTIAL QUESTIONS OF LAW:- '(A) WHETHER THE APPELLATE TRIBUNAL HAS SUBSTANTIALLY ERRED IN LAW IN INTERPRETING THE TERM SCRAP AS DEFINED IN CLAUSE (B) TO EXPLANATION TO SECTION 206C OF THE INCOME TAX ACT BY HOLDING THAT THE WORDS 'WASTE AND SCRAP' IS A SINGULAR ITEM AND NOT DISTINCT? B) WHETHER THE APPELLATE TRIBUNAL HAS SUBSTANTIALLY ERRED IN LAW IN PLACING RELIANCE UPON THE CASE OF NAVIN FLOURINE CHEMICALS DESPITE THE FACT THAT THE HON'BLE SPECIAL BENCH IN THE CASE OF BHARTI AUTO PRODUCTS HAD HELD THAT THE WORDS 'WASTE AND SCRAP' ARE TWO DIFFERENT AND DISTINCT WORDS? (C) WHETHER THE APPELLATE ITA 60 & 61/JP/2018 M/S TAHIR SCRAP DEALERS VS ITO 4 TRIBUNAL HAS SUBSTANTIALLY ERRED IN DELETING THE ORDER PASSED UNDER SECTION 201(1) OF THE INCOME TAX ACT OF RS. 40,16,418/- AND INTEREST CHARGED UNDER SECTION 201(1 A) OF THE ACT OF RS. 23,29,522?' 8. AND THE RELEVANT FINDINGS OF THE HONBLE HIGH COURT READS AS UNDER:- 5. FROM THE FACTS AS NARRATED HEREINABOVE, IT IS APPARENT THAT THE RESPONDENT ASSESSEE HAD COLLECTED AND PAID TAX AT SOURCE (TCS) ON THE SEVEN ITEMS AS ENUMERATED IN THE ORDERS PASSED BY THE COMMISSIONER (APPEALS) AS WELL AS THE TRIBUNAL AND HAD NOT COLLECTED TAX AT SOURCE ON THE FOLLOWING FOUR ITEMS :- 1. OLD AND USED PLATES 2. NON-EXCISABLE (EXEMPTED) LIKE FURNITURE, WOOD, ETC. 3. TRADING OF SCRAP (MELTING) 4. HIGH SEAS SALE. 6. THE TRIBUNAL, AFTER CONSIDERING THE DEFINITION OF SCRAP UNDER CLAUSE (B) TO SECTION 206C OF THE ACT, HAS NOTED THAT THE ASSESSEE IS ENGAGED IN SHIP BREAKING ACTIVITY AND THE ITEMS IN QUESTION ARE FINISHED PRODUCTS OBTAINED FROM THE ACTIVITY AND CONSTITUTE SIZEABLE CHUNK OF PRODUCTION DONE BY SHIP BREAKERS. THOUGH SUCH PRODUCTS MAY BE COMMERCIALLY KNOWN AS 'SCRAP' THEY ARE NOT 'WASTE AND SCRAP', AS SUCH ITEMS ARE USABLE AS SUCH, AND, THEREFORE, DO NOT FALL WITHIN THE DEFINITION OF SCRAP AS ENVISAGED IN THE EXPLANATION TO SECTION 206C(L) OF THE ACT. 7. SECTION 206C OF THE ACT BEARS THE HEADING, 'PROFITS AND GAINS FROM THE BUSINESS OF TRADING IN ALCOHOLIC LIQUOR, FOREST PRODUCE, SCRAP ETC.' AND PROVIDES THAT EVERY PERSON, BEING A SELLER SHALL, AT THE TIME OF DEBITING OF THE AMOUNT PAYABLE BY THE BUYER TO THE ACCOUNT OF 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, WHICHEVER IS EARLIER, COLLECT FROM THE BUYER OF ANY GOODS OF THE NATURE SPECIFIED 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 INCOME TAX. THE NATURE OF GOODS SPECIFIED AT SERIAL NO.(VI) IS SCRAP, AND THE PERCENTAGE PROVIDED IS 1%. THE EXPRESSION OF SCRAP IS DEFINED UNDER CLAUSE (B) TO THE EXPLANATION ITA 60 & 61/JP/2018 M/S TAHIR SCRAP DEALERS VS ITO 5 TO SECTION 206 OF THE ACT, TO MEAN WASTE AND SCRAP FROM MANUFACTURE OR MECHANICAL WORKING OF MATERIALS WHICH IS DEFINITELY NOT USABLE AS SUCH BECAUSE OF BREAKAGE, CUTTING UP, WEAR AND OTHER REASONS. ON A PLAIN READING OF THE SAID EXPRESSION, IT IS EVIDENT THAT ANY MATERIAL WHICH IS USABLE AS SUCH WOULD NOT FALL WITHIN THE AMBIT OF THE EXPRESSION 'SCRAP' AS ENVISAGED UNDER CLAUSE (B) OF THE EXPLANATION TO SECTION 206C OF THE ACT. 8. THE TRIBUNAL, IN THE IMPUGNED ORDER, HAS RECORDED THAT THE ITEMS/PRODUCTS IN QUESTION OBTAINED FROM THE ACTIVITY OF SHIP BREAKING ARE USABLE AS SUCH AND, THEREFORE, DO NOT FALL WITHIN THE DEFINITION OF SCRAP. HOWEVER, SINCE THE ASSESSEE HAD NOT COLLECTED TAX AT SOURCE ON ITEMS OTHER THAN ITEMS OBTAINED OUT OF THE MANUFACTURING ACTIVITY IN THE COURSE OF SHIP BREAKING, THE TRIBUNAL HAS REMITTED THE MATTER TO THE ASSESSING OFFICER FOR THE PURPOSE GRANTING RELIEF TO THE ASSESSEE UNDER THE PROVISIONS OF SECTION 206C(1) OF THE ACT WITH REGARD TO ONLY SALE OF SCRAP ARISING OUT OF MANUFACTURING ACTIVITY IN THE COURSE OF SHIP BREAKING AFTER PROVIDING DUE OPPORTUNITY OF HEARING TO THE ASSESSEE. THUS, THE TRIBUNAL AFTER RECORDING A FINDING OF FACT TO THE EFFECT THAT THE PRODUCTS OBTAINED BY THE ASSESSEE IN THE COURSE OF SHIP BREAKING ACTIVITY ARE USABLE AS SUCH, AND, THEREFORE, DO NOT FALL WITHIN THE DEFINITION OF SCRAP HAS REMITTED THE MATTER TO THE ASSESSING OFFICER TO GRANT RELIEF ACCORDINGLY. ESSENTIALLY, THEREFORE, THE IMPUGNED ORDER OF THE TRIBUNAL IS BASED UPON A FINDING OF FACT WHICH DOES NOT GIVE RISE TO ANY QUESTION OF LAW. 9. INSOFAR AS THE COURSE OF ACTION ADOPTED BY THE TRIBUNAL IN REMITTING THE MATTER TO THE ASSESSING OFFICER TO DECIDE IN RELATION TO WHICH OF THE ITEMS THE ASSESSEE IS ENTITLED TO RELIEF UNDER THE PROVISIONS OF SECTION 206C(1) OF THE ACT IS CONCERNED, NO FAULT CAN BE FOUND IN THE APPROACH ADOPTED BY THE TRIBUNAL, INASMUCH AS, OUT OF THE FOUR ITEMS OF WHICH TAX WAS NOT COLLECTED AT SOURCE, THE MATTER HAS MERELY BEEN REFERRED TO THE ASSESSING OFFICER FOR THE PURPOSE OF EXAMINING AS TO WHAT EXTENT RELIEF IS REQUIRED TO BE GRANTED TO THE ASSESSEE UNDER THE PROVISIONS OF SECTION 206C(1) OF THE ACT HAVING REGARD TO THE FINDINGS OF FACT RENDERED BY IT. 10. IN THE OPINION OF THIS COURT, THE IMPUGNED ORDER PASSED BY THE TRIBUNAL DOES NOT SUFFER FROM ANY LEGAL INFIRMITY SO AS TO GIVE RISE TO ANY QUESTION OF LAW, MUCH LESS, A SUBSTANTIAL QUESTION OF LAW WARRANTING INTERFERENCE. THE APPEAL, THEREFORE, FAILS AND IS, ACCORDINGLY, DISMISSED. ITA 60 & 61/JP/2018 M/S TAHIR SCRAP DEALERS VS ITO 6 9. IF THE FACTS OF THE CASE IN HAND ARE CONSIDERED IN THE LIGHT OF THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT (SUPRA), WE FIND THAT THE ITEMS SOLD BY THE ASSESSEE DO NOT FIT INTO THE CATEGORY OF SCRAP AS EXPLAINED BY THE HONBLE HIGH COURT (SUPRA). THEREFORE, IN OUR CONSIDERED OPINION, THE ASSESSEE CANNOT BE TREATED AS AN ASSESSEE IN DEFAULT AND ON THE IMPUGNED SALES CANNOT BE TREATED AS SALE OF SCRAP THEREBY MAKING THE ASSESSEE OUT OF THE PURVIEW OF SECTION 206C OF THE ACT. AS PER THE LD.AR, THE APPLYING PROPOSITION OF LAW LAID DOWN IN THE ABOVE DECISION WHEREIN THE HONBLE GUJARAT HIGH COURT WAS ALSO RELIED TO THE FACTS OF INSTANT CASE, THEREFORE, I DO NOT FIND ANY MERIT IN THE ORDER OF THE A.O. TREATING THE ASSESSEE IN DEFAULT FOR NON-DEDUCTION OF TAX U/S 206C(1) OF THE ACT IN RESPECT OF SCRAP SALES AFFECTED BY HIM DURING THE YEAR UNDER CONSIDERATION. 5 WITH REGARD TO LEVY OF PENALTY U/S 271CA OF THE ACT FOR DEFAULT IN COLLECTING TAX AT SOURCE U/S 206CA, IT WAS CONTENDED BY THE LD.AR THAT THERE IS CONSISTENT VIEW BY THE VARIOUS BENCHES OF THE TRIBUNAL THAT NO PENALTY IS IMPOSABLE IN THE CASE. THE ASSESSEE IS ENGAGED IN TRADING OF SCRAP AS PROVIDED IN EXPLANATION OF SECTION 206C OF THE ACT. THE CHANDIGARH BENCH OF THE ITAT IN THE CASE OF ITO(TDS) VS SH. TARSEM LAL IN ITA NO. 1311/CHD/2016 ORDER DATED 19/05/2017 HAS HELD AS UNDER: THE TRIBUNAL IN THE CASE OF ITO(TDS), PATIALA VS. SHRI OM PRAKASH GUPTA(HUF) IN ITA NOS.341 & 342/CHD/2016 DATED 20.6.2016 IS AS UNDER: ITA 60 & 61/JP/2018 M/S TAHIR SCRAP DEALERS VS ITO 7 11. WE FIND THAT THE BELIEF HARBOURED BY THE ASSESSEE, CONSIDERING THE F ACTS NARRATED ABOVE CONSTITUTED A REASONABLE BELIEF WHICH AN ORDINARY PERSON IN THE PREVAILING CIRCUMSTANCES WOULD HAVE HARBOURED. IT IS NOT THE CASE THAT THE ASSESSEE WAS FOUND LIABLE TO COLLECT TAX AT SOURCE ON THE GOODS SOLD BY IT SINCE THE GOODS WERE CATEGORICALLY FOUND TO QUALIFY AS SCRAP AS SUCH, AS PROVIDED IN THE DEFINITION OF THE SAME IN THE EXPLANATION TO SECTION 206C. IN F ACT THE 6 ASSESSEE WAS FOUND LIABLE TO COLLECT TAX AT SOURCE SINCE THE ASSESSEE HAD ACCEPTED THE SAME AS SCRAP HAVING PAID TAXES ON THE SAME WHILE PURCHASING THE GOODS AND HAVING NOT CATEGORICALLY ESTABLISHED THAT THE GOODS WERE NOT IN THE NATURE OF SCRAP. IN SUCH CIRCUMSTANCES, WHERE AS A MATTER OF F ACT IT HAS NOT BEEN CATEGORICALLY ESTABLISHED THAT THE GOODS WERE SCRAP AND WASTE AS SUCH WHICH COULD NOT BE USED FURTHER, THE F ACTS NARRATED BY THE ASSESSEE , WHICH WE FIND HAD NOT BEEN CONTROVERTED BY THE REVENUE, REVEAL THAT THE ASSESSEE HARBOURED AN HONEST BELIEF BASED ON REASONABLE GROUNDS THAT THE GOODS SOLD WERE NOT SCRAP. THE SAME CONSTITUTED REASONABLE CAUSE FOR NOT COLLECTING TAX AT SOURCE EVEN THOUGH THE LD. CIT(APPEAL) DID NOT ACCEPT THIS CONTENTION OF THE ASSESSEE ON MERIT. THE HONBLE DELHI HIGH COURT IN THE CASE OF WOODWARD GOVERNOR INDIA PRIVATE LIMITED VS CIT AND OTHERS 253 ITR 745 HAS DEFINED REASONABLE CAUSE AS FOLLOWS: 'REASONABLE CAUSE' AS APPLIED TO HUMAN ACTION IS THAT WHICH WOULD CONSTRAIN A PERSON OF AVERAGE INTELLIGENCE AND ORDINARY PRUDENCE. IT CAN BE DESCRIBED AS A PROBABLE CAUSE. IT MEANS AN HONEST BELIEF FOUNDED UPON REASONABLE GROUNDS, OF THE EXISTENCE OF A STATE OF CIRCUMSTANCES, WHICH ASSUMING THEM TO BE TRUE, WOULD REASONABLY LEAD ANY ORDINARILY PRUDENT AND CAUTIOUS MAN, PLACED IN THE POSITION OF THE PERSON CONCERNED, TO COME TO THE CONCLUSION THAT SAME WAS THE RIGHT THING TO DO. THE CAUSE SHOWN HAS TO BE CONSIDERED AND ONLY IF IT IS FOUND TO BE FRIVOLOUS, WITHOUT SUBSTANCE OR FOUNDATION, THE PRESCRIBED CONSEQUENCES FOLLOW. 12. IN VIEW OF THE SAME WE AGREE WITH THE LD.CIT(A) THAT THE ASSESSEE HAD REASONABLE CAUSE FOR NOT COLLECTING TAX AT SOURCE ,THE ABSENCE OF WHICH IS ESSENTIAL FOR LEVYING PENALTY AS HELD BY THE DELHI HIGH COURT IN THE CASE OF WOODWARD GOVERNOR (SUPRA).WE THEREFORE UPHOLD THE ORDER OF THE LD. CIT(APPEALS) DELETING THE LEVY OF PENALTY UNDER SECTION 271CA OF THE ACT. 7 THE APPEAL OF THE REVENUE IS ACCORDINGLY DISMISSED. 6. AS PER LD.AR, SIMILAR VIEW HAS BEEN TAKEN BY THE ITAT NAGPUR BENCH IN THE CASE OF ITO (TDS) VS M/S RAMANI TIMBERS MART ORDER ITA 60 & 61/JP/2018 M/S TAHIR SCRAP DEALERS VS ITO 8 DATED 11/05/2018 AND THE CHANDIGARH BENCH OF THE TRIBUNAL IN THE CASE OF ITO(TDS) VS SH. RAKESH KUMAR (SUPRA) AND IN THE CASE OF ITO(TDS) VS SHRI RAVI JINDAL ORDER DATED 21/06/2016. 7. RELIANCE WAS ALSO PLACED BY THE LD.AR ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF WOODWARD GOVERNOR INDIA PVT. LTD. VS. CIT 253 ITR 745 HAS HELD AS UNDER: LEVY OF PENALTY UNDER SECTION 271C OF THE INCOME TAX ACT, 1961, FOR FAILURE TO DEDUCT TAX AT SOURCE, IS NOT AUTOMATIC. IN ORDER TO BRING IN APPLICATION OF SECTION 271C, IN THE BACKDROP OF THE OVERRIDING NON OBSTANTE CLAUSE IN SECTION 273B, ABSENCE OF REASONABLE CAUSE, EXISTENCE OF WHICH HAS TO BE ESTABLISHED, IS A SINE QUA NON. BEFORE LEVYING PENALTY, THE CONCERNED OFFICER IS REQUIRED TO FIND OUT THAT EVEN IF THERE WAS ANY FAILURE TO DEDUCT TAX AT SOURCE, THE SAME WAS WITHOUT REASONABLE CAUSE. THE INITIAL BURDEN IS ON THE ASSESSEE TO SHOW THAT THERE EXISTS REASONABLE CAUSE WHICH WAS THE REASON FOR THE FAILURE. THERE- AFTER, THE OFFICER HAS TO CONSIDER WHETHER THE EXPLANATION OFFERED BY THE ASSESSEE OR OTHER PERSON AS REGARDS THE REASON FOR FAILURE, WAS ON ACCOUNT OF REASONABLE CAUSE. 8. AS PER LD.AR , IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, THERE IS NO MERIT IN THE PENALTY SO IMPOSED U/S 271CA OF THE ACT. ITA 60 & 61/JP/2018 M/S TAHIR SCRAP DEALERS VS ITO 9 9. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDERS OF THE LOWER AUTHORITIES AND CONTENDED THAT THE ASSESSEE WAS ONLY DEALER OF SCRAP AND HAS NOT OBTAINED ANY CERTIFICATE FROM THE BUYER FOR UTILIZATION OF SUCH SCRAP FOR THE PURPOSE OF MANUFACTURING/ PROCESSING OR PRODUCING ARTICLES OR THINGS AND NOT FOR TRADING PURPOSE IN TERMS OF SECTION 206C (1A) OF THE ACT. 10 I HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES. I HAD ALSO DELIBERATED ON THE JUDICIAL PRONOUNCEMENTS REFERRED BY THE LD.AR DURING THE COURSE OF HEARING BEFORE ME. FROM THE RECORD, I FOUND THAT THE ASSESSEE IS A SCRAP DEALER AND IS ENGAGED IN THE BUSINESS OF TRADING OF SCRAP. DURING THE COURSE OF PROCEEDING U/S 201(1) AND 201(1A), THE AO OBSERVED AT PARA 6 THAT A SHOW CAUSE NOTICE FOR NOT COLLECTING TCS U/S 206C(1) ON SALE OF SCRAP WAS ISSUED TO THE DEDUCTOR VIDE OFFICE ORDER LETTER DATED 18-03-2015 FIXING THE DATE OF HEARING ON 18-03-2015 WHICH WAS DULY SERVED UPON THE ASSESSEE ON 13-03-2014. IN COMPLIANCE OF THE ABOVE NOTICE, NEITHER THE ASSESSEE HAS FILED ANY EXPLANATION WITH REGARD TO ITS LIABILITY FOR DEDUCTION OF TAX NOR ATTENDED THE PROCEEDINGS. ACCORDINGLY, THE AO CONCLUDED THAT ASSESSEE HAS ACCEPTED THE PROPOSED TCS LIABILITY ON SALE OF SCRAP. BY IMPUGNED ORDER THE LD. CIT(A) CONFIRMED THE ACTION OF THE ITA 60 & 61/JP/2018 M/S TAHIR SCRAP DEALERS VS ITO 10 AO BY OBSERVING AT PAGE 24 OF HIS ORDER THAT THE ASSESSEE FAILED TO COLLECT REQUISITE DECLARATION FROM THE BUYER AND DELIVERED THE COPY THEREOF TO THE CHIEF COMMISSIONER OR COMMISSIONER IN TERMS OF THE PROVISIONS OF SUB-SECTION (1A) AND (1B) OF SECTION 206C. ACCORDINGLY, THE DEFAULT IN DOING SO AND NON-FILING OF FORM NO. 27 MADE HIM LIABLE FOR TCS AND INTEREST AS CALCULATED BY THE AO. FROM THE ABOVE OBSERVATIONS OF LOWER AUTHORITIES, IT IS CLEAR THAT THE ASSESSEE HAS NOWHERE SUBSTANTIATED ITS CLAIM FOR NOT LIABLE TO DEDUCT THE TAX ON THE PLEA OF SALE OF SUCH SCRAP TO THE MANUFACTURER/ PROCESSOR OF ARTICLES OR THINGS FOR THE PURPOSE OF GENERATION OF POWER AND NOT FOR TRADING PURPOSES. FURTHER THE ASSESSEE HAS NOT FILED FORM NO. 27 TO THE CHIEF COMMISSIONER OR COMMISSIONER IN TERMS OF SECTION 201(1)/201(1A) OF SECTION 206C OF THE ACT. IT WAS NOT THE CASE OF THE ASSESSEE THAT HE WAS SELLING THE SCRAP GENERATED OUT OF SHIP TRADING. THUS THE NATURE OF SCRAP BUSINESS WAS NOT FULLY SUBSTANTIATED BY THE ASSESSEE SO AS TO BRING IT OUT OF MISCHIEF OF SECTION 206C(1) OF THE ACT. IN THE SUBSTANTIAL INTEREST OF JUSTICE, I RESTORE THE MATTER BACK TO THE FILE OF THE AO FOR DECIDING THE ISSUE AFRESH IN THE LIGHT OF JUDICIAL PRONOUNCEMENT DISCUSSED HEREINABOVE AND ALSO ASSESSEE IS REQUIRED TO FILE THE NATURE OF SCRAP SOLD BY HIM WHETHER IT IS TO BE UTILIZED BY MANUFACTURER OR PRODUCER OF ARTICLES AND NOT FOR ITA 60 & 61/JP/2018 M/S TAHIR SCRAP DEALERS VS ITO 11 TRADING PURPOSES. I DIRECT ACCORDINGLY. THUS, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 11. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 03 RD JANUARY, 2020. SD/- JES'K LH 'KEKZ ( RAMESH C SHARMA ) YS[KK LNL; @ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 03/01/ 2020 *MISHRA VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- M/S TAHIR SCRAP TRADERS, KOTA. 2. IZR;FKHZ @ THE RESPONDENT- THE I.T.O. (TDS), KOTA. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 60 & 61/JP/2018) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR