2023 (7) TMI 984 - AT - Income Tax

Default u/s. 206C - assessee has not collected TCS on sale of scraps - late filing of Form 27C - HELD THAT - It is an admitted fact that the assessee filed Form 27C namely declaration as prescribed in Section 206C(1A) of the Act to be filed by a buyer before delivery of the goods namely scraps in this case, without collection of tax. The Assessing Officer has not accepted the late filing of the declaration, as the same is again Rule 37C of the Income Tax Rules and thereby charged tax at 1% and also levied interest u/s. 206C of the Act. However sub-section (1A) of section 206C does not provide for any time limit within which, such declaration is to be filed by the buyer. However time limit is prescribed in Rule 37C of the I.T. Rules. Hon ble Gujarat High Court in the case of CIT (TDS) Vs. Siyaram Metal Udyog Pvt. Ltd. 2016 (7) TMI 68 - GUJARAT HIGH COURT held that when there was no dispute about the declaration being filed in prescribed Form 27C and there was no dispute about the genuineness of such declaration, mere minor delay in filing the said declaration would not defeat the very claim made by the assessee and thereby dismissed the Revenue appeal. Thus we hereby set aside the orders passed by the Lower Authorities for the reason, the A.O. failed to verify the Form 27C though the assessee submitted belatedly and the Ld. A.O. declined to accept the same in view of Rule 37C of the I.T. Rules. Further there is no issue qua genuineness of these Forms. Appeal filed by the Assessee is allowed for statistical purpose.

Summary

Issues involved:
The issues in this case involve late filing of Form 27C by the assessee, the authority to whom the form should have been submitted, the levy of tax and interest under section 206C of the Income Tax Act, and the appeal against the order passed by the Commissioner of Income Tax (Appeals).

Late Filing of Form 27C:
The assessee, engaged in trading of brass scraps, sold scrap worth Rs. 4,28,43,222/- during the Financial Year 2011-12. The declaration in Form No. 27C was collected but filed belatedly on 01-09-2015 before the Commissioner of Income Tax, Jamnagar. The Assessing Officer issued a show cause notice stating that TCS worth Rs. 4,28,432/- was not collected for the relevant Assessment Year 2012-13. The assessee argued that the late filing was due to filing in the wrong office and requested not to be treated as a defaulter. However, the Assessing Officer considered the late filing as a default, leading to the levy of tax and interest.

Authority and Compliance:
The dispute arose as the Form 27C was filed before the Commissioner of Income Tax, Jamnagar, instead of CIT (TDS) at Ahmedabad, who was the prescribed authority. The Assessing Officer held that the late filing of Form 27C did not comply with Rule 37(3) of the Income Tax Rules, resulting in the assessee being treated as a defaulter and tax of Rs. 4,28,432/- and interest of Rs. 3,25,608/- being levied.

Appeal and Legal Arguments:
The assessee appealed before the National Faceless Appeal Centre against the order confirming the tax and interest under section 206C of the Act. The grounds of appeal included challenging the tax liability determination and the charging of interest. The assessee's counsel submitted a Paper Book containing the belatedly filed Form 27C and cited case laws to support the claim that the tax and interest should be deleted.

Judgment and Conclusion:
The ITAT Rajkot, after considering the submissions and relevant legal provisions, referred to a judgment by the Gujarat High Court emphasizing the importance of the declaration in Form 27C and the lack of a specified time limit in Section 206C(1A) for filing such declaration. The ITAT set aside the lower authorities' orders, noting the failure to verify the Form 27C despite its submission by the assessee. The appeal was partly allowed with a direction to the Assessing Officer to verify the Form 27C and proceed in accordance with the law. The appeal was allowed for statistical purposes.