TaxTMI 
TaxTMI 
2016 (6) TMI 938
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....crap, tax was being collected by the parties from whom the assessee deductor had made purchases, yet the assessee deductor had not collected tax on further sales of this scrap i.e. neither he collected tax nor deposited the same into government account as required under section 206C(1) of the Income Tax Act. Therefore, penalty proceedings under section 271CA were initiated. The Assessing Officer held that assessee had defaulted on TCS amounting to Rs. 7,42,086/- on scrap sale of Rs. 7.42 Cr made by him to the traders. The Assessing Officer issued show cause notice why penalty for default under above provisions may not be imposed as the assessee had failed to collect tax at source on sale of scrap during the assessment year under appeals as ....
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....se of Vipro GE Medical Systems Ltd. (supra) in which it was held that, "where amount of tax has already been paid by the payee and Assessing Officer has raised 'nil' demand against the assessee, in such a case there is no reason for levy of penalty". 3(i) The assessee also relied upon decision in the case of Shri Manjunath Wines V CIT 202 Taxman 620 (Kar) in which the assessee has not collected the tax under section 206 from buyer, it was held that before proceeding against the assessee, it is necessary to find out whether buyers have paid tax in accordance with the provisions of Act and only when the buyer has not paid tax, then authorities can proceed against the assessee who was under obligation to collect tax and remit to the Government....
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....of scrap made to various traders along with copies of their income tax returns of the relevant assessment year evidencing the payment of due taxes on their income by the respective purchasers. On perusal of order dated 19.03.2013 passed by the Income Tax Officer (TDS), Patiala, it is observed that no demand on account of non collection of tax at source has been raised and she has charged interest on the tax not so collected till the filling of ITR by respective buyers relying on the judgment of HINDISTAN COCA COLA BEVERAGES PRIVATE LIMITED VS COMMISSIONER OF INCOME TAX 211 CTR (SC) 545 while holding that the buyers have paid the taxes on their respective income, her action clearly establishes that she has not treated the appellant as assess....
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....w, the view taken by the JCIT (TDS) is not acceptable. Clearly the Hon'ble ITAT is a final fact finding authority and unless any upper court has upset its judgment on the same issue, its decision will prevail and any officer operating under law cannot ignore it on this ground. Accordingly, this judgment has full binding force in the present case. Further, various courts have also settled the issue as in the case of Sree Manjunathan Wines vs CIT (2011) 202 Taxman (Karn) which held that in case appellant has not collected the tax u/s 206C from , it is held that to impose penalty for non collection of tax at source, it is necessary out whether buyer has paid tax in accordance with the provisions of the Act and only when the buyer has not p....
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....ailure 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 assesse....