Belated filing of Form 27C constitutes technical breach that should be condoned under section 206C

The ITAT Jaipur ruled in favor of the assessee regarding TCS liability under sections 206C(6A) and 206C(7) where Form 27C was filed belatedly. The assessee sold scrap without collecting TCS but subsequently obtained and filed the required declarations. The tribunal held that belated filing of Form 27C constitutes only a technical breach that should be condoned, as the main purpose of section 206C(1A) is fulfilled when a genuine declaration in prescribed format is filed. The decision was supported by precedents from Madras HC, Gujarat HC, and ITAT Jaipur, distinguishing it from cases involving unreasonable delays of several years.

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Issues Involved:
1. Dismissal of appeal for AY 2016-17 due to alleged non-submission of written submission.
2. Determination of liability under section 206C r.w.s. 201(1)/201(1A) for AYs 2016-17, 2017-18, and 2018-19 despite submission of Form No. 27C.
3. Imposition of TDS liability and interest for non-deduction of tax at source on interest payments to M/s. Bajaj Finance Ltd. for AYs 2016-17 and 2017-18.

Summary:

Issue 1: Dismissal of Appeal for AY 2016-17
The CIT(A), NFAC dismissed the appeal for AY 2016-17 by stating that the assessee did not submit any reply in support of the grounds of appeal. The assessee contended that it had filed a written submission on 08.06.2023, which was not considered by the CIT(A). The Tribunal noted that the CIT(A) had decided the appeals for AYs 2017-18 and 2018-19 on the same date after considering the submissions. Therefore, in the interest of justice, the Tribunal decided to proceed with the appeal on merit.

Issue 2: Liability under Section 206C r.w.s. 201(1)/201(1A)
The CIT(A), NFAC upheld the AO's order determining the liability under section 206C r.w.s. 201(1)/201(1A) for AYs 2016-17, 2017-18, and 2018-19, despite the assessee furnishing declarations in Form No. 27C. The Tribunal found that the assessee had belatedly collected and filed the declarations, and cited various judicial precedents, including decisions by the Madras High Court, Gujarat High Court, and ITAT benches, which held that such procedural lapses should be condoned if the declarations are genuine. The Tribunal directed that the demand raised under section 206C(1)/206C(7) be deleted.

Issue 3: Imposition of TDS Liability and Interest
The CIT(A), NFAC upheld the AO's order imposing TDS liability and interest for non-deduction of tax at source on interest payments to M/s. Bajaj Finance Ltd. for AYs 2016-17 and 2017-18. The assessee argued that it had given advance cheques for installments, including interest, and thus had no occasion to deduct tax at source. The Tribunal noted that M/s. Bajaj Finance Ltd. is a regular income tax assessee and directed the ITO(TDS) to confirm this fact or allow the assessee to file a certificate from an accountant in Form 26A under the first proviso to section 201(1) of the Act. This ground was allowed for statistical purposes.

Conclusion:
The appeals were disposed of with directions to the revenue authorities to reconsider the issues based on the Tribunal's findings and judicial precedents. The order was pronounced in the open court on 19/12/2023.

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