2012 (10) TMI 887 - AT - Income Tax

Tribunal Upholds Tax Collection Rule for Parking Lots, Confirms Assessing Officer's Decision

The Tribunal upheld the applicability of Section 206C(1C) of the Income Tax Act for collecting Tax Collected at Source (TCS) on parking lots. It validated ... Failure to collect tax at source (TCS) u/s 206C - Proper notice - wrong mention of provision in the notice – Held that:- Details were called for from the assessee, but the assessee instead of giving complete details filed an evasive reply and adopted delaying tactics - In both the letters/notices referred to by the ld. counsel for the assessee, the AO proposed to take action against the assessee u/s. 206 C of the Act for not collecting the taxes as per the above provisions for the purpose of granting parking lots to various contractors - assessee attended the proceedings before the AO and was aware of the proceedings u/s. 206C being taken against him. Therefore, quoting wrong provision in the notice would be of no consequences and such contentions of the ld. counsel for the assessee have no merits and are liable to be rejected. Whether the assessee is liable for failure to collect tax at source – Held that:- Since the assessee failed to collect the taxes as per law, therefore, the assessee would be responsible to pay tax as per law along with interest - appeals of the assessee are dismissed Issues Involved:1. Applicability of Section 206C(1C) of the Income Tax Act for collecting Tax Collected at Source (TCS) on parking lots.2. Validity of the demand raised by the Assessing Officer (AO) for non-collection of TCS.3. Quoting of wrong provisions by the AO and its impact on the validity of the order.4. Issuance of proper notice before initiating proceedings under Section 206C.5. Liability of the assessee due to untraceable contractors.Detailed Analysis:1. Applicability of Section 206C(1C) of the Income Tax Act:The Tribunal noted that a survey u/s. 133A of the IT Act was conducted to check the correct applicability of TDS/TCS provisions. It was found that the assessee had allotted parking lots to different contractors without collecting TCS. The AO determined that the provisions of section 206C(1C) were applicable for the purpose of collecting TCS in respect of parking lots. The assessee did not dispute the applicability of these provisions before the CIT(A) or the Tribunal. The Tribunal upheld that the provisions of section 206C(1C) were indeed applicable as the assessee had granted contracts for parking lots, which required TCS to be collected.2. Validity of the Demand Raised by the AO:The AO raised a total demand of Rs. 4,62,841/- against the assessee for the financial years 2006-07, 2007-08, and 2008-09, which included TCS and interest. The CIT(A) confirmed the AO's order, and the Tribunal found no justification to interfere with the CIT(A)'s decision. The Tribunal emphasized that the assessee was responsible for collecting TCS and failed to do so, thus validating the demand raised by the AO.3. Quoting of Wrong Provisions by the AO:The assessee argued that the AO had wrongly mentioned provisions of section 206C(6A), which was inserted by Finance Act, 2006 w.e.f. 01.04.2007, and thus not applicable for the assessment year 2007-08. The Tribunal agreed with the CIT(A) that quoting the wrong provision does not invalidate the order. The Tribunal held that the assessee was still responsible for collecting and paying the tax to the credit of the Central Government as per the law.4. Issuance of Proper Notice:The assessee contended that no proper notice was issued before initiating proceedings under section 206C. The Tribunal disagreed, noting that during the survey, specific instances of non-collection of TCS were found, and the AO had issued letters calling for specific details as per section 206C. The Tribunal concluded that the AO had effectively put the assessee on notice about the proposed action, and thus, the proceedings were valid.5. Liability Due to Untraceable Contractors:The assessee argued that since the contractors were not traceable, the assessee should not be held liable to pay the tax. The Tribunal rejected this argument, stating that the issue at hand was the assessee's failure to collect TCS. The Tribunal emphasized that the assessee's responsibility to collect and pay TCS was independent of the traceability of the contractors.Conclusion:The Tribunal dismissed all the appeals of the assessee, confirming the CIT(A)'s order and upholding the AO's demand for TCS and interest. The Tribunal found that the assessee was liable for the failure to collect TCS as per section 206C(1C) and that procedural issues like quoting wrong provisions or the traceability of contractors did not absolve the assessee of this liability.