ITO (TDS-1), Chandigarh V. Rakesh Kumar Bansal, Chandigarh

ITA 629/CHANDI/2015

• Counselvise Citation: 62921514 RSA 2015
• Duration Of Justice: 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 11-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJINDER KAUR
• Assessee Lawyers: TEJ MOHAN SINGH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI H.L.KARWA, VICE PRESIDENT AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NOS.629 TO 631/CHD/2015 (ASSESSMENT YEARS : 2010-11 TO 2012-13) THE INCOME TAX OFFICER(TDS-I), VS. RAKESH KUMAR BANSAL CHANDIGARH. PROP.M/S MADHAV TEXTILES, # 718, SECTOR 22-A, CHANDIGARH. PAN: ABVPB5461C ITA NOS.632 TO 634/CHD/2015 (ASSESSMENT YEARS : 2010-11 TO 2012-13) THE INCOME TAX OFFICER(TDS-I), VS. RAKESH KUMAR BANSAL CHANDIGARH. PROP.M/S MADHAV TEXTILES, # 718, SECTOR 22-A, CHANDIGARH. PAN: ABVPB5461C AND ITA NOS.635 TO 637/CHD/2015 (ASSESSMENT YEARS : 2010-11 TO 2012-13) THE INCOME TAX OFFICER(TDS-I), VS. RAKESH KUMAR BANSAL CHANDIGARH. PROP.M/S MADHAV TEXTILES, # 718, SECTOR 22-A, CHANDIGARH. PAN: ABVPB5461C (APPELLANT) (RESPONDENT) APPELLANT BY : SMT.RAJINDER KAUR, DR RESPONDENT BY : SHRI TEJ MOHAN SINGH DATE OF HEARING : 23.09.2015 DATE OF PRONOUNCEMENT : 29.09.2015 2 O R D E R PER RANO JAIN, A.M . : THE APPEALS FILED BY THE DEPARTMENT IN ITA NOS.629 TO 631/CHD/2015, ITA NOS.632 TO 634/CHD/201 5 AND ITA NOS.635 TO 637/CHD/2015 ARE DIRECTED AGAINS T THE SEPARATE ORDERS OF LEARNED COMMISSIONER OF INCOME T AX (APPEALS)-I, CHANDIGARH FOR ASSESSMENT YEARS 2010-1 1 TO 2012-13. ITA NO.629/CHD/2015 : 2. THE ONLY ISSUE IN THIS APPEAL IS WITH REGARD TO TREATING THE ASSESSEE AS ASSESSEE IN DEFAULT AND AGAINST CREATING DEMAND UNDER SECTIONS 206C(1) AND 206C(7) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT), FOR ASSESSMENT YEAR 2010-11. 3. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF COTTON WASTE BUT DID NOT COLLE CT TAX AT SOURCE ON THE SCRAP SALE OF COTTON WASTE. THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE WAS OBLIGED TO HAVE COLLECTED TAX AT SOURCE ON SALE OF COTTON WASTE, WHICH HE HAD FAILED TO DO. HENCE, A DEMAND UNDER SECTION 206C(1) OF THE ACT IN RESPECT OF TAX NOT CO LLECTED AND INTEREST UNDER SECTION 206C(7) OF THE ACT WAS C REATED THIS WAY. 3 4. BEFORE THE LEARNED CIT (APPEALS), THE ASSESSEE PLACED RELIANCE ON A JUDGMENT OF HON'BLE MADRAS HIG H COURT IN THE CASE OF M/S ADISANKARA SPINNING MILL (P) LTD. IN TAX CASE (A) NO.1194 OF 2010 DATED 9.4.2011 , WHEREBY IT HAD BEEN HELD THAT THE PROVISIONS OF TAX COLLECTION AT SOURCE ARE NOT APPLICABLE TO THE SALE OF COTTON WASTE AS THE SAME CANNOT BE TREATED AS SCRAP. THE LEARNED CIT (APPEALS) FOLLOWING THE VERDICT GIVEN B Y THE HON'BLE MADRAS HIGH COURT ALLOWED THE APPEAL OF THE ASSESSEE. 5. NOW THE DEPARTMENT HAS COME UP IN APPEAL BEFORE US AGAINST THE SAID ORDER. THE LEARNED D.R. WHILE ARGUING BEFORE US EMPHASIZED ON THE FACTS THAT THE ASSESSEE HAD MADE SALE OF COTTON WASTE SCRAP DURING THE YEAR ON WHICH THE PROVISIONS OF SECTION 206C(1) AND 206C(7) OF THE ACT ARE APPLICABLE, WHICH WERE NOT D ULY COMPLIED WITH BY HIM AND THEREFORE THE DEMAND RAISE D BY THE ASSESSING OFFICER IS JUSTIFIED. HE FURTHER SU BMITTED THAT THE ASSESSEE HIMSELF HAS GIVEN DETAILS BEFORE THE ASSESSING OFFICER WITH REGARD TO THE SALE OF COTTON WASTE AND THE RELIANCE ON THE JUDGMENT OF THE HON'BLE MAD RAS HIGH COURT WAS PLACED ONLY BEFORE THE LEARNED CIT (APPEALS). IN THIS WAY, IT WAS PRAYED THAT THE DEM AND SO CREATED BY THE ASSESSING OFFICER BE CONFIRMED. 6. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE LEARNED CIT (APPEAL S) AND PLACED RELIANCE AGAIN ON THE ORDER OF THE HON'B LE 4 MADRAS HIGH COURT IN THE CASE OF M/S ADISANKARA SPINNING MILL (P) LTD. (SUPRA). FURTHER RELIANCE WAS PLACED ON ANOTHER ORDER OF THE I.T.A.T. CHENNAI BEN CH IN THE CASE OF ACIT VS. EASTMAN EXPORTS GLOBAL CLOTHI NG (P) LTD. IN ITA NOS.1615, 1616 & 1617/MDS/2010 DATED 22.12.2010. 7. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHO RITIES BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECO RD. A PERUSAL OF THE ORDER OF THE LEARNED CIT (APPEALS) S HOWS THAT HE HAS FOLLOWED THE ORDER OF THE HON'BLE MADRA S HIGH COURT AND GIVEN A FINDING THAT SINCE DURING THE YEA R THE ASSESSEE HAS SOLD COTTON WASTE ON WHICH THE ASSESSI NG OFFICER HAD INVOKED PROVISIONS RELATING TO TAX COLL ECTION AT SOURCE, HOWEVER, THE SAID ACTIVITY HAS BEEN CONSIDE RED TO BE NOT COMING UNDER THE AMBIT OF THESE PROVISIONS B Y THE MADRAS HIGH COURT. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAD INDULGED IN THE ACTIVITY OF SELLING OF COTTON WASTE SCRAP DURING THE YEAR, WHICH FACT HAS NOT BEE N DENIED BY ANY OF THE AUTHORITIES BELOW AND EVEN THE LEARNED D.R. WHILE ARGUING BEFORE US DID NOT DENY T HE FACT. 8. THE HON'BLE MADRAS HIGH COURT AFTER ANALYZING THE PROVISIONS OF SECTION 206C OF THE ACT SPECIFICA LLY THE EXPLANATION (B) OF SECTION 206C OF THE ACT WHICH DE FINES THE TERM SCRAP USED IN THE SECTION HAS VERY CATE GORICALLY HELD THAT IN THE PROCESS OF MANUFACTURE OF COTTON Y ARN, COTTON WASTE COMES TO BE GENERATED AND THE USE OF THE 5 SAID WASTE BY ANOTHER MANUFACTURER SHOWS THAT IT WA S USED AS A RAW MATERIAL BY THE PURCHASER. THUS, THE COTTON WASTE DISPOSED OFF BY THE ASSESSEE WAS REUSED AS RA W MATERIAL FOR MANUFACTURE OF LOWER COUNT OF COTTON Y ARN AND IT DOES NOT COME UNDER THE DEFINITION OF SCRAP AS D EFINED IN EXPLANATION (B) OF THE ACT SECTION 206C OF THE A CT. THE LEARNED CIT (APPEALS) HAS GIVEN RELIEF TO THE ASSES SEE FOLLOWING THE JUDGMENT OF THE HON'BLE MADRAS HIGH C OURT. IN VIEW OF THIS, WE DO NOT FIND ANY INFIRMITY IN TH E ORDER OF THE LEARNED CIT (APPEALS) AND CONFIRM THE SAME. THE APPEAL OF THE REVENUE IS DISMISSED. ITA NOS.630 & 631/CHD/2015 : 9. THE ISSUE IN THESE APPEALS IS IN REGARD TO TREATING THE ASSESSEE AS ASSESSEE IN DEFAULT AND AGAINST CREATING DEMAND UNDER SECTIONS 206C(1) AND 206C(7) OF THE INCOME TAX ACT, FOR ASSESSMENT YEAR 2011-12 AND 2012-13 RESPECTIVELY. 10. SINCE THE ISSUE IS THE SAME AS HAS BEEN DISCUS SED IN ITA NO.629/CHD/2015, FOLLOWING THE SAME, WE UPHOLD THE FINDINGS OF THE LEARNED CIT (APPEALS) IN DISMISSING THE APPEALS OF THE REVENUE. ITA NOS.632 TO 634/CHD/2015 : 11. THESE APPEALS ARE AGAINST THE DELETION OF PENA LTY IMPOSED UNDER SECTION 272A(2)(J) OF THE ACT FOR ASS ESSMENT 6 YEARS 2010-11, 2011-12 AND 2012-13 RESPECTIVELY. S INCE IN ITA NOS.629 TO 631/CHD/2015, WE HAVE HELD THAT THE PROVISIONS OF TAX COLLECTION AT SOURCE ARE NOT APPL ICABLE TO THE ASSESSEE, THE PROVISIONS OF SECTION 272A(2)(J) OF T HE ACT ARE ALSO NOT APPLICABLE TO HIM. THE APPEALS OF THE REV ENUE ARE DISMISSED. ITA NOS.635 TO 637/CHD/2015 : 12. THESE APPEALS ARE AGAINST THE DELETION OF PENA LTY IMPOSED UNDER SECTION 271CA OF THE ACT. SINCE IN I TA NOS.629 TO 631/CHD/2015 FOR ASSESSMENT YEARS 2010-1 1, 2011-12 AND 2012-13 RESPECTIVELY, WE HAVE HELD THAT THE PROVISIONS OF TAX COLLECTION AT SOURCE ARE NOT APPL ICABLE TO THE ASSESSEE, THE PROVISIONS OF SECTION 271CA OF THE AC T ARE ALSO NOT APPLICABLE TO HIM. THE APPEALS OF THE REVENUE ARE DISMISSED. 13. IN THE RESULT, ALL THE APPEALS FILED BY THE RE VENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 29 TH DAY OF SEPTEMBER, 2015. SD/- SD/- (H.L.KARWA) (RANO JAIN) VICE PRESIDENT ACOUNTANT MEMBER DATED : 29 TH SEPTEMBER, 2015 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. ASSISTANT REGISTRAR, ITAT, CHANDIGARH 7