2023 (6) TMI 166 - AT - Income Tax

Short computation of TCS - Period of limitation for submission of Form 27C - HELD THAT - It is the duty of the seller to recover TCS at the time of sale or receipt of money or obtain declaration in Form 27C from the buyer of goods. The person responsible for selling specified goods should collect TCS as prescribed under the Act or obtain declaration in Form 27C and also submit said Form to the Principal Chief Commissioner or Chief Commissioner of Income-tax on or before the 7th day of the month next following the month in which the declaration is so furnished to him Even if declaration in Form 27C is not collected on the date of sale or receipt of money, but said Form should be obtained within the reasonable time and filed before the concerned authorities on or before 7th day of the month in which said Form is collected. Therefore, we are of the considered view that, the claim of the ld. Counsel for the assessee that there is no time limit prescribed for obtaining declaration Form 27C is not correct, and it cannot be obtained and furnished by the whimps and fancy of the assessee. In the present case, the assessee could not even obtain declaration in Form 27C within the reasonable time and claimed to have obtained said form at the time of assessment proceedings. Therefore, we are of the considered view, that there is no error in the reasons given by the AO and the CIT(A) to reject the claim of the assessee and made additions towards short collection of TCS and interest thereon. Alternate plea of assessee in the second round of proceedings before the CIT(A) and argued that the assessee is able to collect declaration in Form no. 27BA in terms of provisions of section 206C(6A) and rule 37J of I.T. Rules, 1962, where the Accountant has certified that the purchasers have filed the return of income - No doubt, if the buyer furnished a certificate from the accountant in terms of section 206C(6A) of the Act r.w.r. 37J(1) of the IT Rules, 1962, then the assessee shall not be treated as an assessee in default, but fact remains that said exercise should be done by the assessee within the reasonable time. In this case, the assessee claims to have obtained Form no 27BA on 24.04.2021, after seven years from the end of relevant assessment years in which default u/s. 206C(1) of the Act has been noticed. In our considered view, law can provide immunity to the assessee, in a case where it has acted in bonafied and within the reasonable time. Therefore, we are of the considered view that, there is no merit in alternate plea made by the ld. Counsel for the assessee, in light of Form 27BA obtained after a gap of seven years and thus, we reject alternate claim of the assessee. Assessee appeal dismissed.

Summary

Issues Involved:
1. Validity of the Commissioner of Income Tax (Appeals) order.
2. Liability for tax and interest under Section 206C read with Sections 201 and 201(1A) of the Income Tax Act.
3. Requirement for collecting Tax at Source (TCS) under Section 206C.
4. Consideration of Form 27C filed by the appellant.
5. Genuineness of Form 27C and sales documents.
6. Admission of evidence in the form of Form 27C.
7. Reflection of sales in accounts and examination of customers.
8. Time limit for obtaining and submitting Form 27C.
9. Assessee's status as a defaulter.

Detailed Analysis:

1. Validity of the Commissioner of Income Tax (Appeals) Order:
The appellant argued that the order of the Commissioner of Income Tax (Appeals) (CIT(A)) was against the facts, legal provisions, and principles of natural justice. The Tribunal found no merit in the appellant's arguments, affirming the CIT(A)'s decision to uphold the Assessing Officer's (AO) order.

2. Liability for Tax and Interest under Section 206C:
The appellant contended that they were not liable for tax and interest under Section 206C read with Sections 201 and 201(1A) of the Income Tax Act. The Tribunal upheld the AO's finding that the appellant failed to collect TCS as required, resulting in a tax payable of Rs. 93,748/- for AY 2014-15 and Rs. 2,69,687/- for AY 2015-16.

3. Requirement for Collecting TCS:
The appellant failed to collect TCS from buyers and did not obtain Form 27C at the time of sale, violating Section 206C(1) of the Act. The Tribunal agreed with the AO and CIT(A) that the appellant did not comply with the provisions, leading to the determination of short collection of TCS and relevant interest.

4. Consideration of Form 27C Filed by the Appellant:
The appellant argued that Form 27C was filed during assessment proceedings and should be considered. The Tribunal noted that as per Section 206C(1A), Form 27C must be obtained at the time of sale or within a reasonable time and submitted to authorities by the 7th day of the following month. The Tribunal found the appellant's claim incorrect as the forms were not obtained and submitted timely.

5. Genuineness of Form 27C and Sales Documents:
The CIT(A) had rejected the genuineness of Form 27C and sales documents. The Tribunal upheld this decision, noting that the appellant failed to obtain the forms within a reasonable time and only produced them during assessment proceedings.

6. Admission of Evidence in the Form of Form 27C:
The appellant's evidence in the form of Form 27C was not admitted by the CIT(A) due to doubts about its genuineness. The Tribunal supported this decision, emphasizing the importance of timely submission and verification of such forms.

7. Reflection of Sales in Accounts and Examination of Customers:
The appellant argued that sales were duly reflected in accounts and purchasers had accounted for them. The Tribunal found that the appellant did not provide sufficient evidence or examination of customers to support this claim, thus upholding the CIT(A)'s rejection of the evidence.

8. Time Limit for Obtaining and Submitting Form 27C:
The appellant claimed there was no time limit for obtaining Form 27C. The Tribunal clarified that while there is no explicit time limit for obtaining the form, it must be submitted to authorities by the 7th day of the following month. The appellant's failure to comply with this requirement led to the rejection of their claim.

9. Assessee's Status as a Defaulter:
The Tribunal concluded that the appellant was rightly treated as a defaulter for failing to collect TCS and not obtaining Form 27C within the prescribed time. The alternate plea regarding Form 27BA was also rejected as it was obtained seven years after the relevant assessment years.

Conclusion:
The Tribunal dismissed the appeals for both assessment years 2014-15 and 2015-16, upholding the orders of the AO and CIT(A) regarding the short collection of TCS and relevant interest. The appellant's arguments were found to lack merit, and the Tribunal emphasized the importance of compliance with the provisions of Section 206C.