The Income Tax Office, TDS-3, JAMNAGAR V. Shri Jatin B. Shah, Prop. M/s. Payal Metal Corporation, JAMNAGAR

ITA 91/RJT/2013

• Counselvise Citation: 9124914 RSA 2013
• Duration Of Justice: 8 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 11-04-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: DR J B JHAVERI
• Assessee Lawyers: WRITTEN SUBMISSIONS
• Keywords: Opportunity of being heard; Retrospective amendment
• Section: 260A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBULAL; RAJKOT BENCH, RAJKOT BEFORE SHRI T. K. SHARMA, JM AND SHRI B. R. JAIN, A M ITA NOS. 90 & 91/RJT/2013 / ASSESSMENT YEAR : 2010-11 & 2011-12 ITO, TDS-3, JAMNAGAR ( / APPELLANT) SHRI JATIN B. SHAH, PROP M/S. PAYAL METAL CORPORATION, 385/1A SHANKER TEKRI UDHYOGNAGAR JAMNAGAR PAN : AKOPS 0479 F / RESPONDENT ! '# / REVENUE BY DR. J. B. JHAVERI, DR $% ! '# / ASSESSEE BY WRITTEN SUBMISSIONS ' & ' %( / DATE OF HEARING 08.01.2014 ) %( / DATE OF PRONOUNCEMENT 09.01.2014 / ORDER .. , / T. K. SHARMA, J. M.: THESE TWO APPEALS BY THE REVENUE ARE AGAINST A COMMON ORDER DATED 22.01.2013 OF LD. CIT(A)-II, RAJKOT FOR THE ASSESSMENT YEARS 2010-11 AND 2011-12. BOTH THESE AP PEALS WERE HEARD ON THE SAME DATE; THEREFORE, THESE ARE DECIDED BY THIS COMMON O RDER FOR THE SAKE OF CONVENIENCE. 2. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS A TRADER IN SCRAP AND NOT A MANUFACTURER. ON THIS BASIS, FOR BOTH THE ASSESSME NT YEARS, THE ASSESSING OFFICER TOOK A VIEW THAT SECTION 206C(1) SQUARELY APPLIES TO THE ASSESSEE. DURING BOTH THE ASSESSMENT YEARS UNDER APPEAL, THE ASSESSEE HAD MAD E SALE OF SCRAP. THEREFORE, THE ASSESSING OFFICER TOOK A VIEW THAT THE ASSESSEE IS LIABLE TO PAY THE TCS OF RS.5,91,655/- AND RS.5,66,675/- FOR THE ASSESSMENT YEAR 2010-11 AND 2011-12 RESPECTIVELY. ON APPEAL, IN THE IMPUGNED ORDER, TH E LD. CIT(A), FOLLOWING THE DECISION OF ITAT RAJKOT BENCH IN THE CASES OF SHRI NATHULAL LAV TI & SHRI RAMGOPAL MAHESHWARI IN ITA NO. 1167 & 1168/RJT/2010 AND 1169 & 1170/RJT/20 10 RESPECTIVELY, HELD THAT ACTION OF THE ASSESSING OFFICER, JAMNAGAR IS NOT JUSTIFIED IN TREATING THE ASSESSEE TO BE IN DEFAULT U/S 206C(1) AND LIABLE FOR TCS. AGGRIEVED W ITH THE ORDER OF LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE THIS TRIBUNAL FOR BOTH THE ASSESSMENT YEARS, ON THE FOLLOWING GROUNDS:- 90 & 91-RJT-2013 - JATIN B. SHAH 2 1. THE LD. CIT(A) HAS ERRED ON FACTS AND AS WELL A S IN LAW IN DELETING THE ADDITIONS MADE U/S 206C(1) OF THE I.T. ACT ON ACCOU NT OF NON COLLECTION OF TCS OF RS.4,17,894/- ON SALE OF SCRAP AMOUNTING TO RS.4,17 ,89,413/- AND INTEREST CHARGED U/S 206C(7) OF RS.1,73,761/- FRO A.Y. 2010- 11, INSPITE OF THE FACT THAT THE ASSESSEE WAS A TRADER OF SCRAP AND THE PROVISIONS O F SECTION 206C(1) APPLY TO THE ASSESSEE. 2. THE LD. CIT(A) HAS ERRED ON FACTS AND AS WELL AS IN LAW IN DELETING THE ADDITIONS MADE U/S 206C (1) OF THE I.T. ACT ON ACCO UNT OF NON COLLECTION OF TCS OF RS.4,97,894/- ON SALE OF SCRAP AMOUNTING TO RS.2,30 ,42,441/- AND INTEREST CHARGED U/S 206C(7) OF RS.68,761/- FOR A.Y. 2011-12 , INSPITE OF THE FACT THAT THE ASSESSEE WAS A TRADER OF SCRAP AND THE PROVISIONS O F SECTION 206C(1) APPLY TO THE ASSESSEE. 3. THE LD. CIT(A) HAS ERRED ON FACTS AND AS WELL AS IN LAW IN OVERLOOKING THE HEAD NOTE OF SEC. 206C, WHICH CLEARLY SPEAKS THAT T HE TCS PROVISIONS U/S 206C ARE APPLICABLE NOT ONLY ON THE SCRAP GENERATED FROM THE ACTIVITY OF MANUFACTURING OR MECHANICAL WORKING OF MATERIALS BUT ALSO ON THE PROFITS AND GAINS FROM THE BUSINESS OF TRADE OF SCRAP. 4. THE LD. CIT(A) HAS ERRED ON FACTS AND AS WELL AS IN LAW IN DECIDING THE ABOVE ISSUES AGAINST THE DEPARTMENT AS THE HEAD NOT E DOES NOT PROVIDES THAT SUCH SCRAP SHOULD BE ARISEN FROM THE MANUFACTURE OR MECHANICAL WORKING OF THE ASSESSEE BUT PROVIDES THAT IT SHOULD BE ARISEN FROM BUSINESS OR TRADE. 5. THE LD. CIT(A) HAS ERRED ON FACTS AND AS WELL AS IN LAW IN NOT CONSIDERING THE CBDT CIRCULAR DATED 21.05.2012 WHEREIN IT HAS B EEN CLARIFIED THAT THERE IS NO REQUIREMENT THAT THE GOODS TO BE ELIGIBLE FOR SCRAP SHOULD BE PRODUCED/MANUFACTURED BY THE SELLER ITSELF (COPY EN CLOSED FOR KIND & READY REFERENCE). 6. THE LD. CIT(A) HAS ERRED ON FACTS AND AS WELL AS IN LAW IN NOT CONSIDERING THE DEFINITION OF BUYER AND SELLER WHEREFROM IT IS CLEAR THAT THE PROVISIONS OF SEC. 206C ARE ALSO APPLICABLE TO SCRAP TRADERS. 7. THE LD. CIT(A) HAS ERRED ON FACTS AND AS WELL AS IN LAW IN DELETING THE ADDITIONS RELYING ON THE DECISION IN THE CASE OF SHRI RAMGOPAL O. MAHESHWARI, (ITA NO.1169 & 1170/RJT/2010) AND HE HAS OVER LOOKE D THE FACT THAT THE DEPARTMENT HAS ALREADY PREFERRED AN APPEAL AGAINST THIS DECISION BEFORE HONBLE HIGH COURT U/S 260A OF THE IT ACT. 8. THE LD. CIT(A) HAS ERRED ON FACTS AND AS WELL AS IN LAW IN DELETING THE ADDITIONS RELYING ON THE DECISION IN THE CASE OF M/S SIYARAM METAL UDHYOG PVT. LTD. (CIT(A)-II/RJT/39/12-13, DATED 15/10/2012) AND HE H AS OVERLOOKED THE FACT THAT THE DEPARTMENT HAS ALREADY PREFERRED AN APPEAL AGAINST THIS DECISION BEFORE HONBLE I.T.A.T. RAJKOT. 3. AT THE TIME OF HEARING, NONE WAS PRESENT FROM TH E SIDE OF THE ASSESSEE. ONLY WRITTEN SUBMISSIONS WERE FILED. THE LD. DR POINTED OUT THAT ITAT, RAJKOT SPECIAL BENCH IN THE CASE OF BHARTI AUTO PRODUCTS V. CIT, REPORTE D IN [2013] 37 TAXMANN.COM 37 (RAJKOT TRIB.) (SB), HELD THAT THE ASSESSEE WHO I S EITHER MANUFACTURER WHO GENERATED THE SCRAP IN MANUFACTURING PROCESS OR TRADED IN S CRAP IS LIABLE TO PAY TDS U/S 206C OF INCOME-TAX ACT, 1961. HOWEVER, THE ITAT RAJKOT SPE CIAL BENCH IN THE CASE BHARTI AUTO 90 & 91-RJT-2013 - JATIN B. SHAH 3 PRODUCTS V. CIT (SUPRA) HELD THAT 1 ST PROVISO TO SECTION 206C(6A) INTRODUCED BY FINANCE ACT, 2012 W.E.F. 01.07.2012 HAS RETROSPECTIVE EFFEC T. 4. AFTER HEARING LD. DR, WE HAVE CAREFULLY GONE THR OUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE WRITTEN SUBMISSIONS FILED BY T HE ASSESSEE. IT IS PERTINENT TO NOTE THAT IN THE WRITTEN SUBMISSIONS, THE ASSESSEE NOWHE RE REFERRED THE DECISION OF ITAT, RAJKOT SPECIAL BENCH IN THE CASE OF BHARTI AUTO PRO DUCTS V. CIT (SUPRA). WE, THEREFORE, FOLLOWING THE DECISION OF ITAT, RAJKOT SPECIAL BENC H IN THE CASE OF BHARTI AUTO PRODUCTS V. CIT (SUPRA), HOLD THAT THE APPLICABILITY OF SECT ION 206C IS NOT RESTRICTED TO SALE OF SCRAP GENERATED FROM MANUFACTURING BUSINESS BUT COVERS SA LE OF SCRAP IN THE BUSINESS OF TRADING IN SCRAP ALSO. FURTHER, A 'SELLER' OF SCRAP IS NEITHER REQUIRED TO BE THE MANUFACTURER HIMSELF NOR THE SCOPE OF 'SCRAP' AS DE FINED IN EXPLANATION (B) RESTRICTED TO SCRAP GENERATED FROM THE MANUFACTURE OR MECHANICAL WORKING OF MATERIALS UNDERTAKEN BY THE SELLER HIMSELF. FOR THIS REASON, WE SET ASID E THE IMPUGNED ORDER OF LD. CIT(A) AND DIRECT THE ASSESSEE TO APPEAR BEFORE THE ASSESSING OFFICER ALONG WITH RELEVANT DOCUMENTS AS STIPULATED BY THE FIRST PROVISO TO SUB -SECTION (6A) OF SECTION 206C WITHIN TWO MONTHS OF THE DATE ON WHICH THIS ORDER IS PRONO UNCED UPON WHICH THE ASSESSING OFFICER SHALL EXAMINE THE CLAIM OF THE ASSESSEE IN THE LIGHT OF FIRST PROVISO TO SUB-SECTION (6A) OF SECTION 206C INTRODUCED BY FINANCE ACT, 201 2 W.E.F. 01.07.2012 WHICH HAS RETROSPECTIVE EFFECT AS HELD BY THE ITAT, RAJKOT SP ECIAL BENCH IN THE CASE OF BHARTI AUTO PRODUCTS V. CIT (SUPRA). TO SUM-UP, THE ASSESSING OFFICER SHALL PASS A FRESH ORDER ACCORDINGLY IN CONFORMITY WITH LAW AFTER GIVING REA SONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 5. IN THE RESULT, FOR STATISTICAL PURPOSES, BOTH TH E APPEALS OF THE REVENUE ARE TREATED AS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON THE DATE MEN TIONED HEREINABOVE. SD/- SD/- (B. R. JAIN) (T. K. SHARMA) #( '* / ACCOUNTANT MEMBER '* /JUDICIAL MEMBER *#+ ,*-/ ORDER DATE 09.01.2014 /RAJKOT *BT 90 & 91-RJT-2013 - JATIN B. SHAH 4 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT- ITO, TDS-3, JAMNAGAR 2. /RESPONDENT- SHRI JATIN B. SHAH, PROP M/S. PAYAL ME TAL CORPORATION, JAMNAGAR 3. '-2- % & 3% / CIT, TDS, RAJKOT 4. & 3%- / CIT (A)-II, RAJKOT 5 . 678 % , , / DR, ITAT, RAJKOT 6 . 89 :; / GUARD FILE. *#+ '# / BY ORDER , TRUE COPY PRIVATE SECRETARY, , INCOME TAX APPELLATE TRIBUNAL, RAJKOT.