The Ahmedabad Bench of the Income Tax Appellate Tribunal ( ITAT ) ruled, tax liability under section 206C of the Income Tax Act,1961 would come, the taxpayer has unable to file Form 27C and Tax Collect at Source (TCS) exempted on the scrap sale.
The petitioner was represented via Shri Jinesh Shah and the respondent was represented by Shri Dr Mukesh Jain.
Umeshkuamr Harilal Shah, the taxpayer has been involved in the business of supply of Iron Bara, MS Steel, Building Materials, MS Plate, and Ferrous and Nonferrous Metals. The taxpayer furnished the income return which was finalized under Section 143(3) of the Income Tax Act on 30.03.2015 defining total income at Rs. 6,71,263.
A show-cause notice furnished to the taxpayer dated 04.01.2018 and 23.01.2018 questioning to show cause why an order under Section 206C(1)/206C(7) of the Income Tax Act, 1961 must not be passed referred to non-collection of TCS on the sales of scrap income beneath the income head via operation amounting to Rs. 2,68,24,875, and penalty under Section 271CA must not be charged for the said default.
The taxpayer answered, for the scrap sale the TCS does not subject to be applied since the same would not be an outcome because of any manufacturing activity. As a trader, the taxpayer acted and opposes that TCS is not applicable to scrap trading. The assessing officer ruled the taxpayer would have the tax liability of 206C(1) and interest under Section 206C(7). The taxpayer’s petition has been refused by CIT(A).
Under section 206C of the income tax act, the individual would be obligated to collect the tax at source to convey the individual merely when in the last year his accounts would get audited under section 44AB in the preceding fiscal year where the goods would get sold.
Since the taxpayer does not obligate for the audit in any additional former years, the taxpayer’s audit report would be stated in detail for the before year. Taxpayers stated that the petitioner would get denied by the CIT(A) on the basis of the audit report point 11 does not specify any amendment in the way of accounting. Point 11 of the audit report displays a disclosure where the taxpayer revises the function from the mercantile system of cash.
According to Circular No. 18 dated 21.05.2012, upon the scrap traders, the TCS applicability would be stated, and when the purchases specified via filing form 27C to the seller the same would receive these goods manufacturer/processing/producing articles and does not for the purpose of trading, the seller would be exempted from collecting tax from the purchaser.
According to the circular No. 18 dated 21.05.2012 the TCS applicability on the scrap traders are classified, when the purchaser mentioned via filing Form 27C to the seller the same would take these goods manufacturer/processing/producing articles and not trading intent then the seller would be exempted from collecting tax from purchasers.
The ITAT bench, Ms. Suchitra Kamble, a judicial member sees that the taxpayer does not file prescribed Form 27C hence exempting the seller to collect tax under Section 206C of the Income Tax Act stated that “the Assessing Officer, as well as CIT(A), has rightly made tax liability including interest under Section 206C of the Act.” The appeal of the assessee was dismissed.
| Case Title | Umeshkuamr Harilal Shah |
| Citation | I.T.A. No.08/Ahd/2020 |
| Date | 02.11.2022 |
| Appellant | Shri Jinesh Shah, A.R. |
| Respondent | Shri Dr. Mukesh Jain, Sr. D.R. |
| Calcutta High Court | Read Order |
