Subhash Khushalchand Shah, Kolhapur V. Income-tax Officer, (TDS), Kolhapur

ITA 686/PUN/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 1726 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 2 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 01-07-2021
• Assessment Year: 2005-2006
• Appeal Filed On: 16-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUDHEDU DAS
• Keywords: TDS; Set aside
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH , B PUNE VIRTUAL COURT BEFORE SH RI R.S. SYAL, VICE PRESIDENT AND SH RI PARTHA SARATHI CHAUDHURY , J UDICIAL MEMBER . / ITA NO. 685 / PUN /201 8 / ASSESSMENT YEAR : 20 05 - 06 SHRI DILI P KHUSHALCHAND SHAH PROP. OF RAMSINA METAL CORPORATION, 1 - 401, C WARD, LAXMIPURI, KOLHAPUR - 416002 PAN: A EKPS0058L VS. ITO (TDS), KOLHAPUR APPELLANT RESPONDENT . / ITA NO. 686/PUN/2018 / ASSESSMENT YEAR : 20 05 - 06 SHRI SUBH ASH KHUSHALCHAND SHAH PROP. OF PRADIP METALS, SHOP NO.53, KOTITIRTH MARKET, KOLHAPUR - 416002 PAN: ADNPS2453B VS. ITO (TDS), KOLHAPUR APPELLANT RESPONDENT . / ITA NO. 687/PUN/2018 / ASSESSMENT YEAR : 20 05 - 06 SHRI PRADIP KH USHALCHAND SHAH PROP. OF M/S. SHA KHUSHALCHAND VANECHAND & SONS, 1399 - C, KOLHAPUR - 416002 PAN: ADNPS2457F VS. ITO (TDS), KOLHAPUR APPELLANT RESPONDENT ASSESSEE BY SHRI M.K. KULKARNI REVENUE BY SHRI SUDHEDU DAS DATE OF HEARING 01 - 0 7 - 2021 DATE O F PRONOUNCEMENT 02 - 0 7 - 2021 ITA NO S . 685 TO 687 /PUN/201 8 DILIP K. SHAH & TWO ORS 2 / ORDER PER R.S.SYAL, VP : TH ESE THREE APPEAL S BY THE RELATED BUT DIFFERENT ASSESSEE S ARISE FROM THE ORDERS PASSED BY THE LD. CIT(A) ON 15.01.2018 AND 16.01.2018 IN RELATION TO F INANCIAL Y EAR 2005 - 06 . SINCE A COMMON ISSUE IS RAISED IN THESE APPEAL S, WE ARE , THERE FORE, PROCEED ING TO DISPOSE THEM OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. THE RE IS DELAY OF 26 , 8 AND 8 DAYS IN PRESENTING TH E S E APPEALS BEFORE THE TRIBUNAL. N ECESSARY CONDONATION APPLICATIONS HAVE BEEN FILED. WE A RE SATISFIED WITH THE REASONS FOR THE DELAY. THE DELAY IS CONDONED AND THE APPEALS ARE ADMITTED FOR DISPOSAL ON MERITS . 3. THE ONLY ISSUE RAISED THROUGH ALL THE APPEALS IS AGAINST DETERMINING CERTAIN LIABILITY U/S 206C OF THE INCOME - TAX ACT, 1961 (HEREINAF TER REFERRED TO AS THE ACT). 4. THE FACTS RELATING TO ITA NO.685/PUN/2018 ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND PROPRIETOR OF M/S. RAMSINA METAL CORPORATION, ENGAGED IN THE BUSINESS OF TRADING IN FERROUS AND ON - FERROUS METAL AND SCRAP MATERIALS. A S URVEY ACTION U/S 133A WAS TAKEN ON THE BUSINESS PREMISES OF ASSESSEE. DURING THE COURSE OF ITA NO S . 685 TO 687 /PUN/201 8 DILIP K. SHAH & TWO ORS 3 ASSESSMENT PROCEEDINGS , THE AO OBSERVED THAT CERTAIN ` SPECIFIED GOODS WERE SOLD BY THE ASSESSEE DURING THE YEAR BUT NO COLLECTION OF TAX WAS MADE FROM THE BUYERS/ PURCHASERS IN TERMS OF SECTION 206C OF THE ACT . THE ASSESSEE AGREED THAT NO TAX AT SOURCE WAS COLLECTED. FROM THE DETAILS FILED BY THE ASSESSEE , THE AO WORKED OUT THE AMOUNT OF SALES MADE TO VARIOUS PARTIES WITHOUT COLLECTION OF TAX U/S 206C. RESULTANTL Y, A SUM OF RS.1,33,427 WAS DETERMINED AS AMOUNT OF TAX LIABLE FOR COLLECTION AT SOURCE U/S 206C OF THE ACT . AGGRIEVED THEREBY, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. FIRST APPELLATE AUTHORITY URGING THAT THE PROVISIONS OF SECTION 206C WERE NOT AP PLICABLE IN HIS CASE . THE ASSESSEE RELIED ON THE DEFINITION OF THE TERM `SCRAP AS GIVEN IN THE EXPLANATION TO SECTION 206C F O R CONTEND ING THAT HIS CASE DOES NOT FALL WITHIN THE AMBIT OF THIS SECTION AS IT WAS ENGAGED IN TRADING AND NO SCRAP WAS GENERATED FROM THE MANUFACTURE OF MATERIALS. THE LD. CIT(A) REJECTED THE ASSESSEES CONTENTION ON THE GROUND THAT HE FAILED TO PROVE THAT THE SCRAP WAS NOT GENERATED OUT OF MANUFACTURING ACTIVITY. AGGRIEVED THEREBY, THE ASSESSEE HA S COME UP IN APPEAL BEFORE THE TRI BUNAL. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS THROUGH THE VIRTUAL COURT AND GONE THROUGH THE RELEVANT MATERIAL ON RECORD. THE AO TOOK THE ACTION U/S 206C OF THE ACT BY OPINING THAT THE ASSESSEE SOLD SCRAP ITA NO S . 685 TO 687 /PUN/201 8 DILIP K. SHAH & TWO ORS 4 AND DID NOT COLLECT TAX AT SOURCE. ON THE OTHER HAN D, THE CASE OF THE ASSESSEE IS THAT IT WAS ENGAGED ONLY IN THE TRADING BUSINESS AND THE SCRAP , AS REFERRED TO IN SECTION 206C , MUST BE GENERATED FROM THE MANUFACTURE SO AS TO MAGNETIZE THE COLLECTION OF TAX AT SOURCE. EXPLANATION TO SECTION 206C, INTER ALI A, CONTAINS THE DEFINITION OF THE TERM `SCRAP TO MEAN: ` WASTE AND SCRAP FROM THE MANUFACTURE OR MECHANICAL WORKING OF MATERIALS WHICH IS DEFINITELY NOT USABLE AS SUCH BECAUSE OF BREAKAGE, CUT TING UP, WEAR AND OTHER REASONS . FROM THE ABOVE DEFINITION, IT IS MANIFEST THAT THE TERM `SCRAP REFERRED TO HEREIN MEANS SCRAP FROM MANUFACTURE OF MATERIALS. IF THE ASSESSEE DID NOT CARRY OUT ANY MANUFACTURING ACTIVITY, OBVIOUSLY, HE WILL NOT FALL WITHIN THE AMBIT OF THIS PROVISION. 6 . I T IS OBSERVED THAT NO CON TENTION AS TO THE NON - APPLICABILITY OF SECTION 206C OF THE ACT WAS RAISED BEFORE THE AO . THE LD. AR FAIRLY ADMITTED THAT THE MATTER BE SENT BACK TO THE AO FOR EXAMINING THE ASSESSEES CONTENTION AFRESH AND THEN DECIDE THE ISSUE AS PER LAW. THE LD. DR ALS O DID NOT RAISE ANY OBJECTION TO THE SAME. IN VIEW OF THE RIVAL, BUT COMMON SUBMISSION, WE SET ASIDE THE IMPUGNED ORDER AND REMIT THE MATTER TO THE FILE OF THE AO FOR DECIDING THIS ISSUE AFRESH AS PER LAW AFTER PROVIDING REASONABLE OPPORTUNITY OF HEARING T O THE ASSESSEE. ITA NO S . 685 TO 687 /PUN/201 8 DILIP K. SHAH & TWO ORS 5 7 . BOTH THE SIDES ARE IN AGREEMENT THAT THE FACTS AND CIRCUMSTANCES OF THE OTHER TWO APPEALS ARE MUTATIS MUTANDIS SIMILAR. F OLLOWING THE VIEW TAKEN HEREINABOVE, WE SET ASIDE THE IMPUGNED ORDERS PASSED IN THESE TWO APPEALS AS WELL AND REMIT THE MATTER TO THE FILE OF AO FOR FRESH DECISION IN THE TERMS STATED ABOVE. 8 . IN THE RESULT, THE APPEAL S ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 2 ND JU LY , 2021. SD/ - SD/ - ( PARTHA SARATHI CHAUDHURY ) (R.S.SYAL) JUDICIAL MEMBER VICE PRESIDENT PUNE ; DATED : 2 ND JULY , 2021 GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT (A) - 1 , KOLHAPUR 4. 5. 6. THE PR. CIT - 1 , KOLHAPUR DR, ITAT, B BENCH, PUNE / GUARD FILE . / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE ITA NO S . 685 TO 687 /PUN/201 8 DILIP K. SHAH & TWO ORS 6 DATE 1. DRAFT DICTATED ON 01 - 0 7 - 2021 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 02 - 0 7 - 2021 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SE COND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *