The Rajkot bench of the Income Tax Appellate Tribunal (ITAT) has held that no limitation for filing a declaration claiming exemption from TCS under section 206C(1A) of the Income Tax Act,1961.
Shri Falgun N. Sheth, the assessee had sold scrap for Rs.2,19,55,691/- without making tax collection at source (TCS). As per the assessing officer (AO), the assessee was required to make TCS @ 1% of the scrap sold as per provisions of section 206C(1) of the Income Tax Act. The AO accordingly treated the assessee as ‘assessee-indefault’ for not making TCS and determined liability of the assessee for non-collection of TCS under section 206C(6) of Rs.2,19,556/- and interest liability for late collection under section 206C(7) of the Income Tax Act at Rs.1,58,080/-.
The CIT(A) held that the said declarations were like additional evidence and did not merit admission under Rule 46A of the IT Rules. Further upheld the order of the AO holding the assessee to be ‘assessee-in-default’ with respect to TCS liability amounting to Rs.2,19,556/- and interest liability amounting to Rs.1,58,080/- as per section 206C(6)/206C(7) of the Income Tax Act.
It was contended that the order passed was barred by limitation, having been passed five years after the end of the relevant financial year and that the assessee had filed the requisite declaration for exemption from tax collection at source.
It was evident that on the filing of necessary declaration from the buyers of scrap in the prescribed form declaring that scrap purchased by them is to be used for manufacturing purposes, the seller is exempt from the liability to collect TCS, which is not disputed.
A Coram comprising of Smt Annapurna Gupta, Accountant Member and Shri T R Senthil Kumar, Judicial Member observed that no limitation is prescribed in the Act for filing of declaration as required under section 206C(1A) of the Income Tax Act, and the assessee has filed a delayed declaration under a bona fide belief. Further viewed that these declarations, which have been acknowledged as received by the Department, ought to have been considered by the CIT(A) for adjudicating the issue.
The Tribunal viewed that the assessee has filed declarations relating to a substantial portion of the sale of scrap and the issue now has become very old with almost 15 years have been elapsed since the financial year to which the issue relates.
ITAT further viewed that the assessee is given the benefit of the declaration filed by it, and is not held as ‘assessee-indefault’ for the tax not collected at source. While allowing the appeal, the interest charged on the same, amounting to Rs.1,58,080/- was directed to be deleted.
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