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TMI Blog2018 (10) TMI 602X X X X Extracts X X X X X X X X Extracts X X X X ..... disputed the applicability of Section 201(3) of the Act as apparent from the assessment order. Given that there is no specific finding of the AO or the ld CIT(A) on the aspect of limitation, the matter is set-aside to the file of the ld CIT(A) for the limited purposes of determination whether the present proceedings are barred by limitation as prescribed under section 201(3) of the Act in light of above discussions and the legal propositions so laid down in the decisions referred supra. X X X X Extracts X X X X X X X X Extracts X X X X ..... tail sale and not by way of auction, tender or similar mode and therefore, the goods sold by the assessee cannot be said to have been sold to a buyer for the purposes of Section 206C of the Act. Further the assessee referred to the provisions of Section 201(3) of the Act and the amendment which has been brought in by the Finance Act (No. 2), 2014, which has extended the time limit for passing the orders to seven years from end of the financial year in which payment or credit is made. It was submitted that the said amendment is w.e.f. 01/10/2014, therefore, it is applicable for F.Y. 2014-15 onwards and in the light of that, the notice issued by the assessee is void ab initio. 4. The submission so filed by the assessee was considered but not found acceptable to the Assessing Officer. As per the Assessing Officer, the assessee itself agreed that it purchased scraps from manufacturers and after sorting the items from them like iron, copper, PVC, plastics etc. sold the same to various parties. As the assessee is purchasing scrap from the various parties and sorted it under various categories of scrap, the same could not change the nature of goods and the same is always be categorized a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng such tax from such buyer. The Assessing Officer further placed reliance on the decision of Special Bench of the Tribunal in the case of Bharti Auto Products Vs. CIT-II, Rajkot in ITA No. 391 & 392/RJT/2011 order dated 06th Sept., 2013 reported in 37 taxmann.com 37. 5. Referring to the assessee's contention that the notice U/s 201 of the Act is void an initio, the Assessing Officer stated that the spot verification has been conducted on 19/03/2015, thereafter a notice U/s 201(1)/201(1A) and 206C(6)/206C(7) of the Act has been issued on 20/3/2015, which is well in time and as per the provisions of Section 201(3) of the Act as amended by the Finance Act, 2014 w.e.f. 01/10/2014. 6. It was accordingly held by the Assessing officer that the assessee was liable to collect TCS on its entire scrap sales of ₹ 79,55,013/- for the financial year 2007-08 but he fails to collect the same. Accordingly, the TCS leviable @ 1% was determined at ₹ 79,551/- and interest @ 1% U/s 206C(7) was determined at ₹ 76,368/- thereby raising a total demand of ₹ 1,55,920/- on the assessee vide order U/s 201(1)/201(1A) and 206C(6)/206C(7) of the Act passed on 25/3/2015. 7. Being aggri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from end of the financial year in which payment or credit is made. It was submitted that the said amendment is w.e.f. 01/10/2014, therefore, it is applicable for F.Y. 2014-15 onwards and in the light of that, the notice issued by the assessee is void ab initio. 11. It was further submitted by the ld AR that the provisions of Section 206C would be attracted only when scrap was sold to a buyer and in the instant case, sale of goods by the assessee to a buyer in retail sale of such goods cannot be construed as sale to a buyer as such sale was not by way of auction or tender or any other mode. It was further submitted that the assessee's case does not fall within the definition of "scrap" as per explanation (b) of Section 206C of the Act as the assessee is not a manufacturer and the items in which they deal in is not a scrap because it was usable as such. In support of this, reliance was placed on the decision of Hon'ble Ahmedabad Bench of ITAT in the case of Navine Fluorine International Vs. ACIT, TDS in ITA No. 1213, 1214/Ahd/2010 order dated 15/02/2011 and the decision of ITAT, Rajkot Bench in the case of Ramgopal O Maheshwari Vs. ITO in ITA No. 1169 & 1170/Rajkot/2010 order dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... substance, the proceedings which have been initiated and completed are in context of TCS and not TDS. Further, it is not a case that the show-cause has been issued under section 201(1) and the final assessment order has been passed under section 201(1)/201(IA) of the Act. Rather, the AO has inadvertently made a mention of 201(1)/201(IA) in addition to section 206C(6)/206C(7) of the Act in the show-cause as well as the final order. In our view, so long as the show-cause as well as the final order states clearly the applicable provisions i.e, 206C(6)/206C(7) of the Act, merely the fact that in addition to relevant provisions, it makes a mention of additional provisions 201(1)/201(IA), the same will not make the proceedings invalid and reference can be drawn to provisions of section 292B which reads as under: "292B. No return of income, assessment, notice, summons or other proceeding14, furnished or made or issued or taken or purported to have been furnished or made or issued or taken in pursuance of any of the provisions of this Act shall be invalid or shall be deemed to be invalid merely by reason of any mistake, defect or omission in such return of income, assessment, notice, sum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shows that the provisions of section 206C are applicable to business of trading, inter alia, in scrap. The use of the words 'business of trading' in the said head note makes it clear that the applicability of section 206C is not restricted to sale of scrap generated from the business of manufacturing undertaken by the assessee himself but covers sale of scrap in the business of trading in scrap also. Two, sub-section (1) of section 206C requires the 'seller' to collect tax at source. The term 'seller' is defined in Explanation (c) to section 206C according to which the term 'seller' means 'the Central Government, a State Government or any local authority or corporation or authority established by or under a Central, State or Provincial Act, or any company or firm or co-operative society and also includes an individual or a Hindu undivided family whose total sales, gross receipts or turnover from the business or profession carried on by him' exceed the monetary limit as specified therein. Explanation (c) to section 206C does not require that a seller of scrap must himself generate scrap from the manufacture or mechanical working of mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ap, discarded packing materials, etc., would also fall in the category of "scrap" as defined in Explanation (b) as all of them are items, which are no longer useful as such, and therefore fall in the category of waste and scrap from the manufacture or mechanical working of materials, which is definitely not usable as such. Resultantly, this ground taken by the assessee is dismissed. [Para 35] It was also submitted on behalf of the assessee that the Assessing Officer has fastened the liability on the assessee under section 206C without bringing any material on record to show that the assessee has sold scrap within the meaning of Explanation (b) to section 206C. The aforesaid submission cannot be accepted for two principal reasons. One, it is the assessee himself who had declared that the materials sold by him was imported by him as scrap. The Assessing Officer is not required to prove facts admitted by the assessee himself. Once the assessee makes a declaration to that effect before the Government and the Government also acts upon that declaration, he is precluded from pleading otherwise before the Government. Section 115 of the Evidence Act is quite apposite. Both t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to auction or tender and, therefore, it was not required to collect tax at source from them under section 206C as such purchasers in retail trade were not buyers within the meaning of Explanation (aa)(i) to section 206C. [Para 38] The principle underlying the doctrine of 'noscitur a sociis' is that he who cannot be known from himself may be known from his associates. Under the said doctrine, the meaning of questionable or doubtful words or phrases in a statute may be ascertained by reference to the meaning of other words or phrases associated with it. Under "ejusdem generis" canon of statutory construction, where general words follow the enumeration of particular classes of things, the general words will be construed as applying only to things of the same general class as those enumerated. The aforesaid principle however does not necessarily require that the general provision be limited in its scope to the identical things specially named. Nor does it apply when the context manifests a contrary intention. For the ejusdem generis rule to apply, the specific words must constitute a category, class or genus, then only things which belong to that category, clas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eding words, namely, auction or tender. Hence, far from using those words (i.e., 'any other mode') ejusdem generis with the preceding words of the Explanation (aa)(i), the legislature has used those words in an all inclusive sense. No decided case of any court holding that the words 'or any other mode' have ever been used in the sense contended on behalf of the assessee. In the context of the object sought to be achieved, mischief sought to be avoided, the language used in Explanation (aa)(i) of section 206C, and the clarity with which the legislative intent has been expressed, there is no room to construe the words "or any other mode" ejusdem generis the preceding words in Explanation (aa)(i). Therefore it is held that a person who obtains specified goods in retail sale or by any other mode of sale would also be a buyer within the meaning of Explanation (aa)(i) as such sale would fall in the category of sale by "any other mode". In this view of the matter, all the submissions made in this behalf by the assessee are rejected. [Para 41] 17. Now coming to the contention of the ld AR regarding the limitation for issuance of notice U/s 201 of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specific rules which have been provided in the Income tax Rules in respect of credit of TCS in such situations on the lines of Rule 37BA, in our view, doesn't disentitle the assessee to claim credit of TCS in whose hands the income is finally assessed to tax. The reason for the same is that the nature of TCS is nothing but tax which has been statutorily recognised in the Income tax Act, and the Rules are enabling and procedural in nature and absence thereof cannot result in denial of credit of TCS. This issue also find supports from the decision of the Coordinate Bench in case of ACIT, Circle-2, Udaipur vs. Shri Krishnalal Meel & party (supra)." 20. An identical matter has come up in the case of M/s Id. Mohd. Nizamuddin vs ITO (ITA No. 394/JP/2016 dated 27/10/2016) wherein the Coordinate Bench (consisting of one of us) had an occasion to examine the issue relevant to limitation for taking action U/s 206C of the Act. Referring to the decision of Hon'ble Delhi High Court in case of Vodafone Essar Mobile Services reported in 385 ITR 436, decision of the Hon'ble Gujarat High Court in the case of Tata Teleservices Vs. UOI & Anr reported in 385 ITR 497 and various other decisions, it w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Supreme court and also the judgment rendered in the case of CU vs. NHK Japan Broadcasting Corporation, (2008) 305 UR 137 (Delhi) held that the aforementioned decisions settled the position whether to declare an assessee to be an assessee in default under section 201 of the Act could be initiated for a period earlier than four years prior to March 31, 2011. Reliance is also placed by the assessee on the judgment of the Hon'ble Delhi High Court rendered in the case of Tata Teleservices vs. UOI & Anr. (2016) 385 UR 497 (Del.). We find that Id. CIT (A) also has decided the issue in para 4.3 of his order by observing as under" " 4.3. I have carefully considered the submissions of the appellant and the case laws cited. The provisions contained u/s 206C of the Act do not prescribe any time-limit for the initiation of the proceedings or for passing any order there under. The case law cited by the Id. AR, have been rendered under different context and acts and hence the same are not found applicable on the facts of the present case. Therefore, the grounds of appeal raised by the appellant is not acceptable and the same is dismissed." From the above finding of the Id. CIT (A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovided while amending section 201(3) (ii) of the Act as was amended by Finance Act, 2012 with retrospective effect from 1/4/2010, it is to be held that section 201(3), as amended by Finance Act No.2 of 2014 shall not be applicable retrospectively and therefore, no order under section 201(i) of the Act can be passed for which limitation had already expired prior to amended section 201(3) as amended by Finance Act No.2 of 2014. Under the circumstances, the impugned notices / summonses cannot be sustained and the same deserve to be quashed and set aside and writ of prohibition, as prayed for, deserves to be granted." 22. In light of above legal proposition, even though there are no specific limitation provisions prescribed in Section 206C of the Act, however, the present proceedings under section 206C can be reasonably guided by the limitation provisions as contained in Section 201(3) of the Act. Admittedly, the Revenue has also not disputed the applicability of Section 201(3) of the Act as apparent from the assessment order. Given that there is no specific finding of the AO or the ld CIT(A) on the aspect of limitation, the matter is set-aside to the file of the ld CIT(A) for the lim ..... X X X X Extracts X X X X X X X X Extracts X X X X
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