Assessee gets relief on TCS collection under Section 206C despite delayed Form 27C submission

ITAT Ahmedabad ruled in favor of assessee regarding TCS collection under Section 206C. The assessee sold scrap without collecting 1% TCS and failed to submit Form 27C declarations from buyers. ITAT held that since no specific timeline is prescribed for receiving Form 27C declarations from purchasers, delay in filing cannot deny benefit to assessee if seller demonstrates no fault in furnishing declarations upon receipt. Following precedents from Gopallal Ramprasad Kabra and Chandmal Sancheti cases, matter was remanded to Assessing Officer for verification of Form 27C genuineness and granting appropriate relief if found valid.

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Issues:
The issues involved in this case are:
1. Whether the appellant is liable for the collection of TCS u/s 206C of the Income-tax Act, 1961.
2. Whether the appellant's business falls under the definition of "scrap" u/s 206C, making them an assessee in default.
3. Whether the demand raised under u/s 206C(1) and 206C(7) is valid.
4. Whether the appellant was given adequate opportunity to file certificates u/s 206C.
5. Time limit for submission of Form 27C and its acceptance.

Issue 1:
The appellant contested the imposition of TCS under Section 206C by the Assessing Officer, arguing that their business does not qualify as "scrap" as defined in the Act. The Ld. CIT(A) upheld the tax demand, citing the failure of the appellant to collect TCS on scrap sales. However, the appellant submitted Form 27C from 5 parties and Form 27BA from 17 parties to support their case.

Issue 2:
The Ld. CIT(A) found that the appellant had not collected TCS on the sale of scrap as required by Section 206C. The CIT(A) considered the late submission of Form 27C unacceptable for transactions from the previous financial year. The appellant's submission of Form 27BA for 17 parties was recognized, and the CIT(A) directed the AO to verify the claims and reduce the tax demand accordingly.

Issue 3:
The Ld. CIT(A) confirmed the tax demand under Section 206C(1) and 206C(7) but allowed relief for parties for which Form 27BA was submitted. The interest levied under Section 206C(7) was deemed mandatory. The appeal was partly allowed, with directions to the AO for further verification.

Issue 4:
The appellant raised concerns about the AO not implementing the CIT(A)'s directions for the 17 parties and argued that the submission of Form 27C should be accepted regardless of timing. Legal precedents were cited to support the procedural nature of filing Form 27C.

Issue 5:
The Tribunal observed that Section 206C(1B) does not specify a timeline for submitting Form 27C by purchasers to the seller. The Tribunal referred to legal precedents where delays in filing Form 27C did not make the assessee liable for TCS. The matter was remanded to the AO for verification of submitted forms and necessary relief.

In conclusion, the Tribunal allowed the appeal for statistical purposes and directed the AO to verify the submitted forms and provide relief accordingly.

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