2018 (5) TMI 1093 - HC - Income Tax

Tax Appeal on TCS Collection Dismissed; Emphasis on Rule Compliance & Evidence

The Court dismissed the Tax Appeal filed by the Revenue, affirming the Tribunal's decision in favor of the assessee regarding the deletion of addition ... Addition made u/s 206C(1) - non collection of TCS on sale of scrap - interest charged under Section 206C[7] - the assessee was trader of scrap and the provision of Section 206[1] was applicable to the assessee - Tribunal deleted the addition - Held that:- Tribunal has come to the factual finding that there was no doubt about genuineness of the declarations and co-relation between the goods sold. There was no mismatch between the goods sold and those covered under such declarations. Revenue, however, submitted that in the case of inordinate time taken by the assessee in producing such declarations, it would be very difficult for the Revenue to make inquiries; if found necessary. In a given situation, this may give rise to a further probe or even total denial of the relief from the operation of sub-section [7] of Section 206C of the Act; if necessary facts are not on record. However, in the present case, no such element is brought on the record by the Revenue. - Decided against revenue Issues:Appeal against deletion of addition under Section 206C(1) of the Income Tax Act for non-collection of TCS on sale of scrap and interest charged under Section 206C(7).Analysis:The case involved an appeal by the Revenue against the judgment of the Income Tax Appellate Tribunal regarding the deletion of addition under Section 206C(1) of the Income Tax Act for non-collection of Tax Collected at Source (TCS) on the sale of scrap and interest charged under Section 206C(7). The respondent-assessee, a dealer in scrap, had sold scrap and was required to collect tax at source unless buyers provided necessary certificates. The Assessing Officer levied tax and interest as the certificates were not produced initially. The Commissioner upheld this decision, leading the assessee to approach the Tribunal.The Tribunal allowed the assessee's appeal, noting that there was no dispute regarding the genuineness or correlation between the sales and purchases covered by the certificates. The Revenue then filed the present appeal, arguing that the time taken by the assessee to produce the certificates could hinder necessary inquiries by the Revenue in the future. However, the Tribunal found no mismatch between the goods sold and those covered by the declarations, and the Revenue did not present any evidence to support further inquiries or denial of relief under Section 206C(7).The Court analyzed the provisions of Section 206C, emphasizing that sub-section (1) mandates the collection of tax at source unless the buyer furnishes a prescribed declaration under sub-section (1A). The Court highlighted the requirements of Rule 37C, which specifies the form and verification of such declarations, as well as the delivery of copies to the Commissioner within a prescribed time. The Court cited a previous case to support the view that minor delays in filing declarations should not defeat the claim if there is substantial compliance. In this case, the Tribunal found no issues with the genuineness of the declarations or the correlation between goods sold and covered by the certificates.Ultimately, the Court dismissed the Tax Appeal, affirming the Tribunal's decision in favor of the assessee.