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2021 (10) TMI 776 - AT - Income TaxPenalty levied u/s 271 CA - violation of provisions of section 206C - HELD THAT - As details in form 27BA certified by Chartered Accountant stating that the buyer or licensee or lessee has furnished the return of income u/s 139 of the Act, after taking into account such amount for computing income in such return of income and has paid the tax due on income declared by him in such return of income and once assessee fulfills this condition it will not be treated as the assessee is in default and thus would be precluded from the levy of penalty u/s 271CA of the Act. Though in the instant case the assessee has deposited TCS and interest thereon subsequently but even in cases where tax is not collected but the assessee furnishes the form 27BA of the Income Tax Rules, then also assessee is not held liable to have violated the provisions of section 206C. We find that the case of the assessee is on a much better footing as tax collected at source is deposited, interest levied thereon have also been deposited and form 27BA of the IT Rules certified by Chartered Accountant containing all the details as required in the proviso to section 206C(6A) of the Act have been fulfilled. We therefore find no justification in the action taken by the Ld. AO of levying penalty u/s 271CA of the Act by treating the assessee in default. Accordingly, the penalty levied are deleted. Effective grounds raised by the assessee on the issue of levy of penalty u/s 271CA of the Act are allowed.
Issues Involved:
1. Confirmation of penalty levied under Section 271CA of the Income Tax Act. 2. Compliance with conditions specified in proviso to Section 206C(6A). 3. Reasonable cause for non-collection of tax at source. 4. Limitation for passing the penalty order under Section 271CA. Detailed Analysis: 1. Confirmation of Penalty Levied under Section 271CA: The core issue revolves around the penalty levied under Section 271CA of the Income Tax Act for the Assessment Years 2011-12 and 2015-16. The Assessee failed to collect tax at source on the purchase of Iron and Steel scrap but later deposited the tax and interest. Despite providing Form 27BA certified by a Chartered Accountant, both lower authorities did not favor the Assessee's submissions, leading to the confirmation of the penalty by the Ld. CIT(A). 2. Compliance with Conditions Specified in Proviso to Section 206C(6A): The Assessee argued that they complied with the conditions specified in the proviso to Section 206C(6A), which states that a person responsible for collecting tax shall not be deemed in default if the buyer has furnished a return of income under Section 139, taken into account the amount for computing income, and paid the tax due. The Assessee provided Form 27BA and copies of income tax returns to support their compliance. The Tribunal noted that the proviso aims to ensure no loss to the Revenue and is a beneficial provision for the collector of tax at source, as also supported by the Special Bench of Rajkot Tribunal in Bharti Auto Products Vs. CIT. 3. Reasonable Cause for Non-Collection of Tax at Source: The Assessee contended that there was a reasonable cause for the non-collection of tax at source, and most payees had provided Form 27BA. The Tribunal found that the Assessee had deposited the tax collected at source and the interest thereon subsequently. The Tribunal emphasized that compliance with the conditions in Form 27BA, certified by a Chartered Accountant, should preclude the Assessee from being treated as in default, thus negating the need for penalty under Section 271CA. 4. Limitation for Passing the Penalty Order under Section 271CA: The Assessee argued that the penalty order passed under Section 271CA was barred by limitation. However, this argument was not further elaborated upon in the judgment, as the Tribunal's decision focused primarily on the compliance with Section 206C(6A) and the subsequent actions taken by the Assessee. Conclusion: The Tribunal concluded that the Assessee had fulfilled the conditions specified in the proviso to Section 206C(6A) by providing Form 27BA and copies of income tax returns, thereby ensuring no loss to the Revenue. Consequently, the Tribunal found no justification for the penalty levied under Section 271CA and allowed the appeals, deleting the penalties for both assessment years. The order was pronounced on 23.08.2021.
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