2016 (3) TMI 1299 - AT - Income Tax

Penalty u/s.271CA - default u/s.206C - additions made u/s.206C(1) on account of non collection of TCS on sale of scrap - Held that - CIT(A) after relying upon the decision of M/s. Bharti Auto Products 2013 (9) TMI 274 - ITAT RAJKOT has held that the late submission of Form No.27C and 27BA does not make assessee in default. Since the assessee has not been treated as assessee in default u/s.206C(6) and 206C(7), the question of penalty does not arise. Before us, Revenue has not brought on record any contrary binding decision in its support. - Decided against revenue.

Summary

Issues involved:
1. Liability under section 206C of the Income Tax Act
2. Penalty under section 271CA of the Income Tax Act

Liability under section 206C:
The case involved the liability of the assessee under section 206C of the Income Tax Act for not collecting Tax at Source (TCS) on the sale of scrap. The Assessing Officer (A.O.) found that the assessee had not collected the required tax and levied a penalty under section 271CA. The assessee contended that tax was not collected due to misplaced Form No.27C from manufacturing entities and that sales to traders did not require tax collection. The Commissioner of Income Tax Appeals (CIT(A)) partly allowed the assessee's appeal, citing the decision in M/s. Bharti Auto case and held that late submission of forms does not default the assessee. The CIT(A) directed the A.O. to charge interest on the TCS from the due date of deduction to the date of filing the income tax return by the buyers. The Income Tax Appellate Tribunal (ITAT) upheld the CIT(A)'s decision, stating that late submission of forms did not make the assessee in default, leading to the dismissal of the Revenue's appeal.

Penalty under section 271CA:
Regarding the penalty under section 271CA, the CIT(A) canceled the penalty levied by the A.O. as the assessee was not treated as in default under section 206C(6) and 206C(7). The Revenue challenged this decision before the ITAT. The ITAT observed that the CIT(A) based the decision on the M/s. Bharti Auto case and found no contrary binding decision brought forth by the Revenue. Consequently, the ITAT dismissed the Revenue's appeal, upholding the CIT(A)'s order to cancel the penalty under section 271CA. The grounds of the Revenue in both appeals were dismissed, and both appeals of the Revenue were ultimately dismissed by the ITAT.

In conclusion, the ITAT upheld the CIT(A)'s decisions on both the liability under section 206C and the penalty under section 271CA, emphasizing that late submission of forms did not default the assessee and therefore no penalty was applicable.