2025 (2) TMI 771 - HC - Income Tax

TCS u/s 206C - As per the Revenue verification of the declaration to be furnished by the purchaser is to be done by the seller (i.e. the assessee in the instant matter) - Whether it is duty and the responsibility of the assessee company to collect TCS @ 1% u/s 206C (1A) of the Act from all buyers on the sale of coal if it is not used for self-consumption or for the purpose for which it was intended to be used ? - whether assessee company is not responsible for verification of Form 27C if it is duly filed in and signed by the declarant? HELD THAT - The declarant in Form-27C is the purchaser and not the seller Quite clearly the phrase verified in the prescribed manner in the scheme of the Act and the Rules mean that the verification/ declaration is to be made by the purchaser who is providing the signed/ verified form to the seller and neither the Act nor the Rules in any manner lay down that any verification whatsoever is to be done by the seller as is being sought to be contended by the Revenue. There is no question of law much less any substantial question of law involved in the instant appeal as what is being contended by the Revenue is clearly de hors what is laid down in section 206C (1A) of the Act read with Rule 37C of the Rules and Form 27C. Hon ble Supreme Court in the case of CIT v. A.A. Estate (P) Ltd. 2019 (4) TMI 957 - SUPREME COURT has held that if the High Court is of the view that if an appeal does not involve any substantial question of law so as to attract the rigor of section 260-A of the Act for its admission the appeal ought to be dismissed in limine.

Summary

The issues presented and considered in the judgment are as follows:1. Whether the assessee company is responsible for collecting TCS under section 206C (1A) of the Income-tax Act from buyers on the sale of coal if not used for intended purposes?2. Whether the assessee company is responsible for verifying Form 27C if duly filed by the declarant?3. Whether the Tribunal erred in deleting the entire demand of TCS by holding the company as an "assessee in default"?4. Whether M/s Central Coalfields Limited was required to verify the genuineness of buyers submitting Form 27C?5. Whether the Tribunal erred in shifting the onus of verifying buyers to the seller?6. Whether the Tribunal erred in ignoring evidence regarding the misuse of Form 27C?7. Whether the Tribunal erred in deleting the demand based on technical grounds related to assessment years?The court analyzed the interpretation of section 206C of the Income-tax Act and relevant precedents. It emphasized that the verification of the declaration in Form 27C is the responsibility of the purchaser, not the seller. The court referenced the judgment in the case of M/s Atibir Industries Co. Ltd. vs. Central Coalfields Limited, highlighting that once Part I of Form 27C is filled and signed by the declarant and Part II is forwarded to revenue authorities by the seller, the seller's responsibility ends. The court concluded that there was no substantial question of law involved in the appeal, as the Revenue's contentions were contrary to the provisions of the Act, Rules, and Form 27C.The significant holdings of the judgment include the court's dismissal of the appeal, citing the Supreme Court's decision that appeals without substantial questions of law should be dismissed in limine. The court held that the Revenue's arguments were not supported by the legal framework and therefore the appeal failed.