1 ITA Nos. 382 to 385/Nag/2016. & ITA Nos. 387 to 391/Nag/2016. IN INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. (S.M.C.) S.No. ITA No. Asstt. Year. 1. 382/Nag/2016 2010-11. 2. 383/Nag/2016 2011-12. 3. 384/Nag/2016 2012-13. 4. 385/Nag/2016 2013-14. Income-tax Officer, Shri Amarnath Bachiram Gupta, (TDS), Ward-1(1), Nagpur. Vs. Nagpur. PAN ABQPG8852R. Appellant. Respondent. S.No. ITA No. Asstt. Year. 1. 387/Nag/2016 2010-11. 2. 388/Nag/2016 2011-12. 3. 389/Nag/2016 2012-13. 4. 390/Nag/2016 2013-14. 5. 391/Nag/2016 2014-15. Shri Amarnath Bachiram Gupta, Income-tax Officer, Nagpur. Vs. (TDS), Ward-1(1), Nagpur. Appellant. Respondent. Department by : Shri A.R. Ninawe. Assessee by : None. Date of Hearing : 30-09-2016 Date of Pronouncement : 3rd Oct., 2016 O R D E R. These are cross appeals by assessee and Revenue emanating out of orders of learned CIT(Appeals) dated 22-03-2016 for concerned assessment years. 2 ITA Nos. 382 to 385/Nag/2016. & ITA Nos. 387 to 391/Nag/2016. 2. Revenue s Appeals: common grounds raised read as under : 1. learned CIT(Appeals)-II, Nagpur erred in deleting total demand of Rs.10,47,761/- raised u/s 206C(6A)/206C(7) of I.T. Act, 1961 for F.Y. 2009-10 (A.Y. 2010-11) to F.Y. 2012-13 (A.Y. 2013-14) upto 30-06-2012 (Tax effect for A.Y. 2010-2011 is Rs.2,53,493/-). 2. learned CIT(Appeals)-II, Nagpur erred in holding that decision of Hon bl ITAT, Agra Bench, Agra squarely applies to facts of case of appellant without appreciating that mere furnishing of PAN of assessee is not sufficient to verify whether taxes are paid by collectee (buyers) on disputed amount. 3. learned CIT(Appeals)-II, Nagpur has erred in not appreciating fact that onus lies on collector to prove that disputed amount has been included by collectee in return of income and tx has been paid on same and that said onus has not been discharged by collector. Assessee s Appeals: common grounds raised read as under : 1. That on facts and circumstances of case, order of learned Assessing Officer is bad in law. 2. That learned CIT(A)-II erred in rejecting Appellant s plea on merit that TCS is not applicable on sales of goods in question as they do not satisfy definition of M.S. Scrap as defined by Section 206(C) of Income Tax Act, 1961. 3. That learned CIT(A)-II erred in limiting applicability of judgement passed by Honourable ITAT, Agra upto 30.06.2012. 4. That Appellant prays to get opportunity to submit contact and PAN details of remaining buyers whose details could not be submitted due to paucity of time during course of first Appellate proceedings, so as to get relief on sales to such buyers on basis of judgement passed by Honourable ITAT, Agra. 3. Brief facts of case are as under : assessee is engaged in business of purchasing scrap from Indian Railways and is subsequently selling such scrap in market. spot 3 ITA Nos. 382 to 385/Nag/2016. & ITA Nos. 387 to 391/Nag/2016. verification was carried out at business premises of assessee on 28-02- 2014 and it was noted that while Indian Railways were making TCS while selling scrap to assessee, assessee was not making TCS while selling goods in market. assessee was accordingly required to explain reason for not making TCS. 4. assessee explained that it was covered by decision of Navine Fluorine International Vs. ACIT TDS wherein Hon ble ITAT, Ahmedabad had decided matter in its favour and also submitted that assessee is not dealing in scrap and that product sold by it is not result of any manufacturing or mechanical work. AO, however, did not agree with submissions of assessee and held assessee to be assessee in default for tax and interest amounting to Rs.13,86,432/-, Rs.15,04,272/-, Rs.10,07,602/-, Rs.10,24,091/- and Rs.8,03,861/- for assessment years 2010-11, 2011-12, 2012- 13, 2013-14 and 2014-15 respectively. 5. Upon assessee s appeal, learned CIT(Appeals) elaborately considered issue. He observed as under : I have considered facts of case and submissions of appellant. first argument of appellant is that it was never required to collect tax in respect of scrap sale in view of detailed findings given in case of Navine Fluorine International Ltd. vs. ACIT (supra) Such conclusion of appellant is erroneous as said case law is no longer good law in view of finding of Special Bench, ITAT, Rajkot in case of Bharatt Auto Products vs. CIT, Rajkot (supra) wherein it has been held that section 206C fastened liability on seller of scrap for collection of tax at source and that there is no requirement that such seller should himself generate scrap from manufacturing or mechanical working of material undertaken by him. In said order it was also held that in order to invoke provision to section 206C, mode of sale need not be by way of auction or tender but it could be by any other mode. Accordingly, learned CIT(Appeals) upheld AO s action for treating assessee as assessee in default. 4 ITA Nos. 382 to 385/Nag/2016. & ITA Nos. 387 to 391/Nag/2016. 6. Learned CIT(Appeals) further granted relief to assessee to extent Form No. 27BA was submitted. However, learned CIT(Appeals) did not accept assessee s contention that due to paucity of time Form No. 27BA all has not been submitted. Further learned CIT(Appeals) granted relief to assessee in terms of ITAT, Agra Bench decision in case of Allahabad Bank vs. ITO in ITA Nos. 448 to 454/Agra/2011 vide order dated 20-06-2014 and Hon ble Karnataka High Court decision in case of Shree Manjunath Wines in ITA No. 333/2007 vide order dated 13-09-2011. Learned CIT(Appeals) concluded as under : 8.4 On careful observation, it is clearly seen that ratio {aid down by Hon'ble ITAT, Agra Bench, Agra and Hon'ble Karnataka High Court squarely applies to facts in case of appellant. details of all persons from whom tax was required to be deducted at source are available on record and with Ld.AO. permanent account numbers (PANs) of such parties are also available before Id. AO. Respectfully following decision of Hon'ble ITAT, Agra Bench, Agra .as well as Hon'ble Karnataka High Court, relief has to be granted to appellant" and demands raised u/s. 206(6A) in respect of parties whose details were made available by appellant to Id. AO would have to be cancelled. 8.5 However, as discussed earlier, first proviso to section 206C(6A) was inserted from 01-07-2012 which required Form No. 27BA to be submitted by appellant before Ld. AO w.e.f. 01-07-2012 and in such circumstances assessee would not be treated to be assessee in default. In view of above amendment to I T Act, findings given in case of Allahabad Bank Vs. ITO (supra) and Manjunath Wines (supra) would not be good law after 01-07-2012. Consequently, benefit of above judgements would be limited to A.Y 2010-11,2011-12 and 2012-13 and up to 01-07-2012 in A.Y 2013-14. Thus said benefit would not be available for remaining portion of A.Y 2013-14 and for entire A.Y 2014-15. Ld. AO is therefore directed to accordingly give relief to appellant in respect of sales of Rs. 2,53,49,360/-, Rs. 3,77,18,524/- and Rs. 2,46,94,083/- for A.Yrs. 2010-11, 2011-12 and 2012-13 respectively. For A.Y 2013-14, Ld. AO is directed to bifurcate sale parties in respect of which details have been submitted and for period between 1st April, 2012 and 01-07-2012 and consider appellant not to be in default in respect of corresponding sales. Thus grounds of appeal of appellant are partly allowed. 7. Against above order assessee and Revenue are in cross appeals before ITAT. 5 ITA Nos. 382 to 385/Nag/2016. & ITA Nos. 387 to 391/Nag/2016. 8. I have heard learned D.R. None appeared on behalf of assessee. However, in my considered opinion issue can be disposed of by hearing learned D.R. and perusing records. 9. Upon careful consideration I find that learned CIT(Appeals) is correct in holding that assessee s plea that since assessee has not generated scrap is not liable for collection of tax at source is not sustainable in view of decision of Special Bench of ITAT, Rajkot in case of Bharati Auto Products vs. CIT in ITA Nos. 391 & 392/RJT/2011 dated 06-09-2013. Further more I find that ITAT Special Bench in case of Bharati Auto Products (supra) has held as under : "44. First Proviso inserted in sub-section (6A) of section 206C seeks to achieve three-fold objectives. One, it seeks to (1) ensure that there is ne loss to Revenue, i. e., (i) buyer has furnished his return of income u/s 139, (ii) buyer has taken into account such sum on which tax was required to be collected at source u/s 206C for computing income in such return of income, (iii) buyer has paid tax due on income declared by him in such return of income, (iv) payer, i. e., person responsible for collecting tax at source u/s 206C, has furnished certificate in Form No. 278A confirming aforesaid; (2) rationalize provisions relating to collection of tax at source; (3) provide relief to collector of tax at source from consequences of non/short deduction collection of tax at source and to that extent it is beneficial provision. In aforesaid background, issue that arises for consideration is whether first proviso to section 206C(6A) is applicable to pending matters also notwithstanding fact that it has been made effective from 1.7.2012. 45. In CIT v. ChandulalVenichand [1994J 209 ITR 7/73 Taxman 349 (Guj.), issue before Hon'ble jurisdictional High Court was whether first proviso inserted in section 438 with effect from 1.4.1988, which was intended to be beneficial provision, would apply retrospectively. Hon 'ble High Court has held: "Once it is held that proviso is inserted as remedial and curative measure for removing difficulties faced by taxpayers because of inadvertent mistake or omission which has crept in in drafting section 438, it would be just and proper to hold that it would relate back to date when section 438 was introduced. " aforesaid judgment of Hon 'ble jurisdictional High Court has been approved by Hon 'bie Supreme Court in Allied Motors (P.) Ltd. v. CIT [1997J 224 ITR 677/91 TaX-m-an 205. Keeping in view fact that first proviso to sub-section (6AT of section 206C not only seeks to rationalize provisions relating to co7lection of tax at source but is also beneficial in nature in that it seeks to - .. provide relief to collectors of tax at source from consequences 6 ITA Nos. 382 to 385/Nag/2016. & ITA Nos. 387 to 391/Nag/2016. flowing from non/short collection of tax at source after ensuring that interest of Revenue is well protected, we have no hesitation to hold that said proviso would apply retrospectively and therefore to both . essessment years under appeal. We therefore direct assessee to appear before Assessing Officer along with relevant documents as stipulated by first proviso to sub-section (6A) of section 206C within two months of date on which this order is pronounced upon which AO shall examine claim of assessee in light of said provisions and pass appropriate order accordingly in conformity with law after giving reasonable opportunity of hearing to assessee. Thus issue raised in additional ground no. 3 stands restored to file of AO with aforesaid observations. 46. In view of foregoing, both appeals filed by assessee are partly allowed. 11 10. I find that in present case also assessee has claimed that from some of parties form No. 27BA was not obtained due to paucity of time. I find that interest of justice demands that such plea of assessee be accepted. Further I also consider that learned CIT(Appeals) order need to be modified to extent that benefits directed by learned CIT(Appeals) in his aforesaid order can be availed by assessee only after documents claiming benefit are produced before AO. Hence I remit this issue to file of AO. AO shall consider relief that assessee is entitled in terms of first proviso to section 6A of section 206C. AO shall also consider assessee s plea of considering form No. 27BA which were not obtained earlier. Accordingly in background of aforesaid discussion I hold that assessee is liable for tax collection at source on scrap sale made by assessee. However, assessee shall be entitled to relief in terms of ITAT, Agra Bench decision (supra) till introduction of first proviso of section 206C(6A) from 01-07-2012 and thereafter assessee shall be granted necessary relief only on submission of form No. 27BA. Accordingly issue is remitted to file of AO to proceed same in light of discussion and directions as above. 7 ITA Nos. 382 to 385/Nag/2016. & ITA Nos. 387 to 391/Nag/2016. 11. In result all these appeals are allowed for statistical purposes. Order pronounced in Open Court on this 3rd day of Oct., 2016. Sd/- ( SHAMIM YAHYA) ACCOUNTANT MEMBER. Nagpur, Dated: 3rd Oct. , 2016. Copy forwarded to : 1. Shri Amarnath Bachairam Gupta, Prop. M/s Gupta Steel Traders, 524, Near Gram Panchayat at Kapsi Khurd, Bhandara Road, Nagpur-440008. 2. I.T.O., (TDS), Ward-1(1), Nagpur. 3. C.I.T.- (TDS), Nagpur. 4. CIT(Appeals), -II, Nagpur. 5. D.R., ITAT, Nagpur. 6. Guard File True Copy By Order Assistant Registrar, Income Tax Appellate Tribunal, Nagpur Bench, Nagpur. Wakode. Income-tax Officer, (TDS), Ward-1(1), Nagpur v. Amarnath Bachiram Gupta