2023 (2) TMI 746 - AT - Income Tax

TCS on sale in terms of section 206C - trading of non-ferrous metal scrap - failure to submit the form 27C within the time prescribed - assessee contended that assessee was not liable to collect TCS for the reason that the items sold by the assessee was not scrap within the definition of clause (b) of Explanation to section 206C - HELD THAT - We observe that in the case of GK traders 2022 (7) TMI 1380 - ITAT RAJKOT has held that where assessee-company sold scrap to various companies and failed to submit a statement in Form 27C comprising of buyer's declaration to prescribed authority in time, since there was no limit provided in section 206C to make a declaration in Form 27C collected from buyers, delay in filing same would not be ground to deny benefit to assessee-company. As in the case of CIT (TDS) vs Siyaram Metal Udyog (P.) Ltd 2016 (7) TMI 68 - GUJARAT HIGH COURT has held that no time limit is provided in section 206C(1A) to make a declaration in Form 27C collected from buyers; mere minor delay in furnishing Form 27C would not make assessee liable for non-collection of TCS. Thus since the assessee had furnished Form 27C before CIT (TDS)-Jamnagar, though belatedly and had also sought to place the same on record during the course of TCS proceedings before the ITO (TDS), the same should have been considered by him at the time of passing of order. Accordingly, in the interests of justice, the matter is being restored to the file of ITO (TDS) take into consideration Form 27C furnished by the assessee and pass order in accordance with law. Accordingly, the appeal of the assessee is allowed for statistical purposes.

Summary

Issues involved: Appeal against tax liability determination and interest imposition under section 206C of the Income Tax Act, 1961 based on TCS non-compliance.

Analysis:

1. Tax Liability Determination: The appeal arose from the National Faceless Appeal Centre's order regarding the assessee's tax liability for A.Y. 2012-13 under section 250 of the Income Tax Act, 1961. The assessee was held liable for TCS on non-ferrous metal scrap sales but failed to collect TCS as per section 206C. The ITO determined the TCS liability and interest amount, leading to the appeal.

2. Grounds of Appeal: The assessee challenged the tax liability determination and interest imposition by the AO and CIT(A). The primary contention was that the items sold were not scrap as defined under section 206C, as they were usable and not a byproduct of manufacturing. Additionally, the assessee argued that Form 27C was submitted before the CIT(TDS) within the prescribed time, which was not considered by the authorities.

3. CIT(A) Decision: The CIT(A) rejected the assessee's arguments based on the decision in Bharti Auto Products, holding the assessee liable for TCS collection on scrap sales. The CIT(A) also dismissed the Form 27C submission as it was not filed within the specified time frame, as required by law.

4. Appellate Tribunal Decision: The Tribunal considered the submissions of the assessee, noting that Form 27C was obtained from buyers and submitted to the CIT(TDS) and ITO-TDS, albeit belatedly. Citing precedents like GK Traders vs. ITO and CIT (TDS) vs. Siyaram Metal Udyog, the Tribunal emphasized that minor delays in submitting Form 27C should not lead to non-compliance penalties. Therefore, the Tribunal restored the matter to the ITO (TDS) to consider the Form 27C and pass an order accordingly, allowing the appeal for statistical purposes.

5. Conclusion: The Tribunal's decision focused on the importance of considering Form 27C submissions, even if delayed, to avoid unjust penalties for non-compliance with TCS provisions. By referencing relevant case law and emphasizing procedural fairness, the Tribunal provided relief to the assessee, highlighting the need for a balanced approach in tax liability determinations.