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TMI Blog2016 (12) TMI 1804X X X X Extracts X X X X X X X X Extracts X X X X ..... e Ld.CIT(A) himself hold that goods sold by the appellant are covered in the definition of 'Scrap' in the terms of the Explanation (b) to the Section 206C of the I.T. Act, 1961 and its sale is liable for TCS not only at the first stage but also at each stage of sale as provided in section 206C of the I.T. Act, 1961. (iii) The Ld.CIT(A) is erred in deleting penalties u/s 271CA r.w.s.274 of the I.T. Act, 1961 ignoring that neither the assessee deductor collected tax at source while selling old iron scrap neither collected form No.27C from the buyer in the duplicate at the time of sale and deposited to the income tax Department on or before 7th day of next month in which sale of scrap was made. (iv) The Ld.CIT(A) is erred in deleting the penalty u/s 271CA for non-collection tax at source u/s 206C ignoring the fact that the assessee has committed default for non collection of tax at source as required under the provisions of section 206C of the I.T. Act, 1961. (v) The Ld. CIT(A) is erred in deleting the penalty u/s 271CA ignoring that the assessee continuously denying from the start to the end that he had purchased Scrap even in the auction sellers has classified the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p and that the assessee harbored a bonafide belief that the goods were not scrap and hence not exigible to TCS but at the same time the Ld. CIT (Appeals) agreed with the assessee's contention that there was a reasonable cause for not levying penalty. The Ld. CIT (Appeals) relied upon the judgment of the I.T.A.T., Bangalore Bench in the case of Wipro GE Medical System Ltd. (2005) 24 CCH 001 (Bang Trib.) and held that since taxes had been paid by the buyers no loss had been caused to the exchequer on account of assessee's default in not collecting TCS and this constituted reasonable cause for not levying penalty. Thus, the Ld. CIT (Appeals) deleted the penalty levied by the Assessing Officer. 6. Aggrieved by the same, the Revenue filed the present appeal before us. During the course of hearing before us, it was brought to the notice of the Bench that on identical set of facts the I.T.A.T., Chandigarh Bench in the case of ITO(TDS), Patiala Vs. Shri O.P. Gupta (HUF) in ITA Nos.341 & 342/Chd/2016 dated 20.6.2016 deleted the levy of penalty under section 271CA of the Act. 7. We have heard the learned representatives of both the parties, perused the findings of the authorities below ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, justified in following decision of Banglore Bench in the case of Wipro GE Medical Systems Ltd. in which the Tribunal has considered reasonable cause for not levying the penalty when sufficient compliance was made because of the tax demand had already been paid. Since taxes have already been paid by the buyers and there was no tax demand remained. Therefore, ld. CIT(Appeals) correctly held that there was reasonable cause for failure to comply with provisions of law. Further, the assessee since beginning has been claiming that assessee is not covered by the definition of "scrap" in terms of Section 206C of the Act. The explanation of the assessee was supported by order of ITAT Ahmedabad Bench in the case of Navine Flourine International Ltd. V ACIT (supra). Even though the ld. CIT(Appeals) did not accept this contention of the assessee on merit but the facts discussed above clearly constitute that there was a reasonable cause for failure to comply with provisions of law. Since, there is no demand arises against the assessee and all taxes have been paid and no loss to revenue have been caused, therefore, it is not a fit case for levy of penalty against the assessee. Hon'b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were meant for further use to the consumers, from M/s Punjab State Power Corporation limited and goods being Traction Generator Motors and copper parts of diesel generator motors which also were usable by the consumers from M/s Diesel Locomotive Modernisation Workshop both of which were not engaged in any manufacturing activity of the goods. The assessee stated that the description and details of the goods would show that they had not arisen out of any manufacturing activity or as a result of any mechanical working of any material in the hands of the sellers. Further the goods had been purchased from the above sellers and disposed of being of no use to them. The assessee stated that the goods were reusable as such and had been disposed of as such. Thereafter referring to the definition of scrap given in the Explanation to section 206C, the assessee stated that for the purposes of section 206C scrap meant waste and scrap obtained from manufacture or mechanical working of material which was not usable as such because of break age wear and tear and other reasons. The assessee stated that considering the facts of the goods purchased and sold by it and the definition of scrap given in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... electrical energy to the consumer), b)ACSR Conductor (meant for transmission of electrical energy from point of generation through various stages to the point of consumer), c)Transformers (meant for transmission of electrical energy by converting and stabilising the same from high voltage to lower level), d)Parts of the above mentioned Transformers, and e)Electric/Electronic Meters (meant for recording consumption of electrical energy to the consumers). It is well known that M/s. PSPCL is engaged in generation and distribution of electrical energy and to the knowledge of the assessee it is not engaged in any manufacturing activity of the goods. The perusal of the description and details of above mentioned goods shall reflect that these goods have not arisen out of any manufacturing activity or as a result of any mechanical working of any materials even in the hands of the above mentioned seller. These goods had certainly been purchased by the above seller as such and had been disposed of being no more of use to them. Pertinent to mention here is the fact that most of these goods like Alluminmm Cables, ACSR Conductors, Transformers and Transformer Parts, etc. were reusa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee in default and for arriving at such conclusion, the Ld. Officer has made the observation that the assessee deductor deals in purchase and sale of iron scrap and that the sellers had collected tax at source from the assessee while making sales of above goods to him. The observations have been made on wrong appreciation of facts, as explained in forgoing paragraphs. 10. Ongoing through the above we find that the belief harboured by the assessee, considering the facts narrated above constituted a reasonable belief which an ordinary person in the prevailing circumstances would have harboured. It is not the case that the assessee was found liable to collect tax at source on the goods sold by it since the goods were categorically found to qualify as scrap as such, as provided in the definition of the same in the Explanation to section 206C. In fact the assessee was found liable to collect tax at source since the assessee had accepted the same as scrap having paid taxes on the same while purchasing the goods and having not categorically established that the goods were not in the nature of scrap. In such circumstances, where as a matter of fact it has not been categorically establishe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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