TaxTMI 
TaxTMI 
2016 (12) TMI 1811
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....that goods sold by the appellant are covered in the definition of "Scrap" in the terms of the Explanation (b) to the section 206C of the I.T. Act, 1961 and its sale is liable for TCS not only at the 1st stage but also at each stage of sale as provided in section 206C of the I. T. Act, 1961. (iii) The Ld.CIT(A) is erred in deleting penalties 271CA r.w..s. 274 of the I.T. Act, 1961 ignoring that neither the assessee deduct the collected tax at source while selling old iron scrap neither collected form No. 27C from the buyer in the duplicate at the time of sale and deposited to the income tax Department on or before 7th day of next month in which sale of scrap was made. (iv) The Ld.CIT(A) is erred in deleting the penalty u/s 271CA for non-collection tax at source u/s 206C ignoring the fact that the assessee has committed default for non-collection of tax at source as required under the provisions of section 206 of the I.T. Act, 1961. (v) The Ld.CIT(A) is erred in deleting the penalty u/s 271CA ignoring that the assessee continuously denying from the start to the end that he had purchased scrap even in the auction sellers has classified the material as scrap. 3. The only gri....
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....Act.The assessee contended that the goods sold had not arisen out of manufacturing or mechanical work of material in hand and also that the items were re-usable and had been disposed of f as such, therefore they did not qualify as scrap for the purpose of tax collection at source on sale. 2. that since no demand was raised on the assessee, he was not an assessee in default for the purpose of sect ion 206C and, therefore no penalty was leviable under sect ion 271CA of the Act. 3. that the belief of the assessee, that the goods sold were not scrap, was a bonafide belief and constituted reasonable cause for not collecting tax at source. 4. that no loss had been caused to the Revenue since due taxes had been paid by the buyers as held in the order passed under sect ion 206C(1) of the Act in assessee's case. 6. The Ld. CIT (Appeals) rejected assessee's content ion that the goods sold did not qualify as scrap and that the assessee harbored a bonafide belief that the goods were not scrap and hence not exigible to TCS but at the same time the Ld. CIT (Appeals) agreed with the assessee's content ion that there was a reasonable cause for not levying penal ty. The Ld. CIT (Appeals)....
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....h the provisions of law. The order of the CIT(appeal) was therefore upheld by the ITAT. The relevant para of the ITAT order, deleting the levy of penal ty is as under: 5. After considering rival submissions, I am not inclined to inter f ere with the order of the ld. CIT(Appeals) in canceling the penalty. The ld. CIT(Appeals) has recorded specific finding of fact that assessee furnished complete details of sales of scrap made to various traders alongwith copies of their Income Tax returns of relevant assessment year proving that payment of due taxes have been made by the respective purchasers. It was also recorded that no demand on account of non-deduction of tax at source has been raised by the Assessing Officer and only interest has been charged. It is, therefore, clearly established that Revenue Department has not treated the assessee as assessee in default as far as TCS is concerned. The ld. CIT(Appeals) was, therefore, justified in following decision of Banglore Bench in the case of Wipro GE Medical Systems Ltd. in which the Tribunal has considered reasonable cause f or not levying the penalty when sufficient compliance was made because of the tax demand had already been pai....
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....ded specific finding of fact that the assessee had furnished complete details of sale of scrap made to various traders along with copies of the income tax returns of relevant assessment year proving that payment of due taxes had been made by the respective purchasers. It was also recorded that no demand on account of non-deduct ion of tax at source had been raised by the assessing officer and only interest had been charged therefore clearly the revenue had not treated the assessee as an assessee in default as far as TCS is concerned. Further in the present case also the assessee has been claiming that the goods sold by it did not qualify as scrap as defined in the Explanation to sect ion 206C of the Income Tax Act, 1961. The assessee has claimed that it had purchased goods being Aluminium cables, CSR conductor, Transformers, parts of the above-mentioned Transformers and electric or electronic meters which were meant for further use to the consumers, from M/s Punjab State Power Corporation limited and goods being Tract ion Generator Motors and copper parts of diesel generator motors which also were usable by the consumers from M/s Diesel Locomotive Modernisation Workshop both of whi....