2024 (5) TMI 104 - AT - Income Tax

TCS u/s 206C - assessee fault as neither collecting tax at source@1% and neither submitting declaration in Form-27 BA from the buyers of the scrap - HELD THAT - We observe that from plain language of the Statute, since no specific timeline has been prescribed on the date when such declaration is to be received by the person collecting TCS from the purchaser i.e. no specific time obligation has been cast upon the purchaser of goods to furnish Form 27C to the seller. It would be onerous on person collecting TCS (seller) to be denied the opportunity of furnishing Form 27C, provided the seller is able to demonstrate that there was no lack on his part in furnishing Form 27C as soon as it was received by him from the purchaser to whom scrap had been sold. In the case of Gopallal Ramprasad Kabra 2023 (2) TMI 746 - ITAT RAJKOT ITAT held that where assessee-company sold scrap without collecting TCS, since, Form no. 27C was submitted by assessee although belatedly before Commissioner (TDS) and as there was no time-limit provided in Section 206C(1A) to furnish declaration in Form no. 27C by buyers, delay in filing said declaration to prescribed authority would not be ground to deny benefit to assessee. In the case of Chandmal Sancheti 2017 (8) TMI 1182 - ITAT JAIPUR ITAT held that since no time limit is provided in Section 206C(1A) to make a declaration in Form 27 collected from buyers; hence delay in filing declaration shall not be ground to deny benefit of declaration to assessee. Looking into the instant facts, in the interest of justice, the entire matter is restored to the file of Assessing Officer to firstly, verify the veracity/genuineness of Form 27C submitted by the assessee with respect to the aforesaid parties, and if the same is found to be in order, to grant necessary relief, accordance with law. Secondly, the AO is also directed to carry out the necessary verification in terms of the directions given by Ld. CIT(A) with respect to the balance 17 parties, in respect of whom the assessee has already furnished Form 27BA - Appeal of the assessee is allowed for statistical purposes.

Summary

Issues:
The issues involved in this case are:
1. Whether the appellant is liable for the collection of TCS u/s 206C of the Income-tax Act, 1961.
2. Whether the appellant's business falls under the definition of "scrap" u/s 206C, making them an assessee in default.
3. Whether the demand raised under u/s 206C(1) and 206C(7) is valid.
4. Whether the appellant was given adequate opportunity to file certificates u/s 206C.
5. Time limit for submission of Form 27C and its acceptance.

Issue 1:
The appellant contested the imposition of TCS under Section 206C by the Assessing Officer, arguing that their business does not qualify as "scrap" as defined in the Act. The Ld. CIT(A) upheld the tax demand, citing the failure of the appellant to collect TCS on scrap sales. However, the appellant submitted Form 27C from 5 parties and Form 27BA from 17 parties to support their case.

Issue 2:
The Ld. CIT(A) found that the appellant had not collected TCS on the sale of scrap as required by Section 206C. The CIT(A) considered the late submission of Form 27C unacceptable for transactions from the previous financial year. The appellant's submission of Form 27BA for 17 parties was recognized, and the CIT(A) directed the AO to verify the claims and reduce the tax demand accordingly.

Issue 3:
The Ld. CIT(A) confirmed the tax demand under Section 206C(1) and 206C(7) but allowed relief for parties for which Form 27BA was submitted. The interest levied under Section 206C(7) was deemed mandatory. The appeal was partly allowed, with directions to the AO for further verification.

Issue 4:
The appellant raised concerns about the AO not implementing the CIT(A)'s directions for the 17 parties and argued that the submission of Form 27C should be accepted regardless of timing. Legal precedents were cited to support the procedural nature of filing Form 27C.

Issue 5:
The Tribunal observed that Section 206C(1B) does not specify a timeline for submitting Form 27C by purchasers to the seller. The Tribunal referred to legal precedents where delays in filing Form 27C did not make the assessee liable for TCS. The matter was remanded to the AO for verification of submitted forms and necessary relief.

In conclusion, the Tribunal allowed the appeal for statistical purposes and directed the AO to verify the submitted forms and provide relief accordingly.