I sold scrap without collecting TCS and only got the buyers' Form 27C declarations years later. Has the officer any answer to that, and what about buyers who have already paid tax?
The Tribunal held that neither s.206C(1A) nor s.206C(1B) prescribes any date by which the buyer must give the seller the declaration in Form 27C, so a belated declaration cannot be shut out where the seller shows he filed it as soon as he received it and its genuineness is not doubted. It restored the whole matter to the Assessing Officer to verify the Forms 27C and, separately, to give effect to the first proviso to s.206C(6A) for the buyers from whom Form 27BA had been obtained.
Decided by the ITAT (Annapurna Gupta, Accountant Member and Siddhartha Nautiyal, Judicial Member) on 2024-04-30, reported as I.T.A. No. 340/Ahd/2020, assessment year 2012-13 (ITAT Ahmedabad 'C' Bench). It bears on section 206C, section 206C(1), section 206C(1A), section 206C(1B), section 206C(6A), section 206C(7), section Rule 37C of the Income Tax Act 1961, in TDS Defaults, Evidence & Burden of Proof and Demand, Recovery & Stay matters.
This is the TCS counterpart of the second proviso to s.40(a)(ia), and the library carries nothing else on it. Two distinct reliefs are in play and they must not be confused. Form 27C is the buyer's declaration that the goods are for manufacturing, processing or producing and not for trading, which takes the sale out of s.206C(1) altogether; Form 27BA is the accountant's certificate under the first proviso to s.206C(6A) that the buyer has returned the income and paid the tax, which stops the seller being treated as in default but leaves interest under s.206C(7) running. Note that the Commissioner (Appeals) here had rejected Forms 27C filed five years late, and the Tribunal did not hold that they must be accepted — only that they must be examined.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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The assessee traded in ferrous and non-ferrous metal scrap. In the year in question it sold scrap of Rs.3,07,68,942 without collecting tax at source at one per cent, and did not obtain declarations from the buyers. The Assessing Officer issued a show cause notice, received no reply, and raised a demand of Rs.5,53,840, being Rs.3,07,689 under s.206C(1) and Rs.2,46,151 under s.206C(7). Before the Commissioner (Appeals) the assessee produced Forms 27C from five parties covering sales of Rs.72,65,051 and Forms 27BA from seventeen parties. The Commissioner (Appeals) rejected the Forms 27C because the sales were in financial year 2011-12 and the forms were produced in January 2017, almost five years later, and held the assessee in default under s.206C(6A) to that extent; for the seventeen parties he directed the Assessing Officer to verify the Forms 27BA and reduce the demand under the proviso to s.206C(6A), relying on Hindustan Coca-Cola Beverages; and he held the s.206C(7) interest consequential, compensatory and mandatory. Before the Tribunal the assessee said the Assessing Officer had still not carried out that verification, and that no time limit is prescribed for Form 27C.
The appeal was allowed for statistical purposes and the entire matter was restored to the Assessing Officer. On the law, the Tribunal held that s.206C(1B) fixes only the date by which the person collecting tax must deliver the declaration to the Commissioner — the seventh day of the month following the month in which it is furnished to him — and that no time limit at all is prescribed for the buyer to furnish the declaration in Form 27C to the seller; it would be onerous to deny the seller the opportunity of furnishing Form 27C where he can show there was no lack on his part in filing it as soon as he received it (paragraph 8). The Assessing Officer was directed first to verify the genuineness of the Forms 27C and, if in order, to grant relief; and second to carry out the verification the Commissioner (Appeals) had already directed in respect of the seventeen parties for whom Form 27BA had been filed and who had returned the income (paragraph 9).
The Tribunal set out s.206C(1), s.206C(1A) and s.206C(1B) and read them together. Sub-section (1A) removes the collection obligation where the resident buyer furnishes a declaration in the prescribed form that the goods are to be used for manufacturing, processing or producing articles or things or for generation of power and not for trading. Sub-section (1B) times only the collector's onward delivery of that declaration to the Commissioner. From the plain language the Tribunal found that no obligation as to time is cast on the buyer, so a declaration cannot be rejected merely for lateness where the seller acted promptly on receipt and genuineness is not in dispute (paragraph 8). It listed decisions to the same effect, including the Gujarat High Court in Siyaram Metal Udyog (P.) Ltd, holding that where there is no dispute that the declaration was filed in the prescribed format and no dispute about its genuineness, delay does not make the assessee liable for non-collection, and the Gujarat High Court in Chhaganbhai K Sanghani, where certificates produced before the appellate authorities led to the s.206C(7) order being set aside (paragraph 8). On the second limb the Tribunal recorded that the appellate direction on the Forms 27BA had simply not been acted upon and restored that too (paragraph 9).
it would be onerous on person collecting TCS (seller) to be denied the opportunity of furnishing Form 27C, provided the seller is able to demonstrate that there was no lack on his part in furnishing Form 27C as soon as it was received by him from the purchaser to whom scrap had been sold.
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Handle my notice → Ask a CA on WhatsAppThe Tribunal held that neither s.206C(1A) nor s.206C(1B) prescribes any date by which the buyer must give the seller the declaration in Form 27C, so a belated declaration cannot be shut out where the seller shows he filed it as soon as he received it and its genuineness is not doubted. It restored the whole matter to the Assessing Officer to verify the Forms 27C and, separately, to give effect to the first proviso to s.206C(6A) for the buyers from whom Form 27BA had been obtained. This was decided by the ITAT (Annapurna Gupta, Accountant Member and Siddhartha Nautiyal, Judicial Member) and bears on section 206C, section 206C(1), section 206C(1A), section 206C(1B), section 206C(6A), section 206C(7), section Rule 37C of the Income Tax Act 1961. It is reported as I.T.A. No. 340/Ahd/2020, assessment year 2012-13 (ITAT Ahmedabad 'C' Bench). This is the TCS counterpart of the second proviso to s.40(a)(ia), and the library carries nothing else on it. Two distinct reliefs are in play and they must not be confused. Form 27C is the buyer's declaration that the goods are for manufacturing, processing or producing and not for trading, which takes the sale out of s.206C(1) altogether; Form 27BA is the accountant's certificate under the first proviso to s.206C(6A) that the buyer has returned the income and paid the tax, which stops the seller being treated as in default but leaves interest under s.206C(7) running. Note that the Commissioner (Appeals) here had rejected Forms 27C filed five years late, and the Tribunal did not hold that they must be accepted — only that they must be examined. If it applies to you, the first step is this: Separate the two remedies in your reply: Form 27C for buyers who bought for manufacturing, processing or production, and Form 27BA under the first proviso to s.206C(6A) for buyers who have returned the income and paid the tax.
The assessee traded in ferrous and non-ferrous metal scrap. In the year in question it sold scrap of Rs.3,07,68,942 without collecting tax at source at one per cent, and did not obtain declarations from the buyers. The Assessing Officer issued a show cause notice, received no reply, and raised a demand of Rs.5,53,840, being Rs.3,07,689 under s.206C(1) and Rs.2,46,151 under s.206C(7). Before the Commissioner (Appeals) the assessee produced Forms 27C from five parties covering sales of Rs.72,65,051 and Forms 27BA from seventeen parties. The Commissioner (Appeals) rejected the Forms 27C because the sales were in financial year 2011-12 and the forms were produced in January 2017, almost five years later, and held the assessee in default under s.206C(6A) to that extent; for the seventeen parties he directed the Assessing Officer to verify the Forms 27BA and reduce the demand under the proviso to s.206C(6A), relying on Hindustan Coca-Cola Beverages; and he held the s.206C(7) interest consequential, compensatory and mandatory. Before the Tribunal the assessee said the Assessing Officer had still not carried out that verification, and that no time limit is prescribed for Form 27C. The matter was decided on 2024-04-30 by the ITAT (Annapurna Gupta, Accountant Member and Siddhartha Nautiyal, Judicial Member). On those facts the ITAT held as follows. The appeal was allowed for statistical purposes and the entire matter was restored to the Assessing Officer. On the law, the Tribunal held that s.206C(1B) fixes only the date by which the person collecting tax must deliver the declaration to the Commissioner — the seventh day of the month following the month in which it is furnished to him — and that no time limit at all is prescribed for the buyer to furnish the declaration in Form 27C to the seller; it would be onerous to deny the seller the opportunity of furnishing Form 27C where he can show there was no lack on his part in filing it as soon as he received it (paragraph 8). The Assessing Officer was directed first to verify the genuineness of the Forms 27C and, if in order, to grant relief; and second to carry out the verification the Commissioner (Appeals) had already directed in respect of the seventeen parties for whom Form 27BA had been filed and who had returned the income (paragraph 9).
The Tribunal set out s.206C(1), s.206C(1A) and s.206C(1B) and read them together. Sub-section (1A) removes the collection obligation where the resident buyer furnishes a declaration in the prescribed form that the goods are to be used for manufacturing, processing or producing articles or things or for generation of power and not for trading. Sub-section (1B) times only the collector's onward delivery of that declaration to the Commissioner. From the plain language the Tribunal found that no obligation as to time is cast on the buyer, so a declaration cannot be rejected merely for lateness where the seller acted promptly on receipt and genuineness is not in dispute (paragraph 8). It listed decisions to the same effect, including the Gujarat High Court in Siyaram Metal Udyog (P.) Ltd, holding that where there is no dispute that the declaration was filed in the prescribed format and no dispute about its genuineness, delay does not make the assessee liable for non-collection, and the Gujarat High Court in Chhaganbhai K Sanghani, where certificates produced before the appellate authorities led to the s.206C(7) order being set aside (paragraph 8). On the second limb the Tribunal recorded that the appellate direction on the Forms 27BA had simply not been acted upon and restored that too (paragraph 9). In the words reproduced by the source cited on this page: "it would be onerous on person collecting TCS (seller) to be denied the opportunity of furnishing Form 27C, provided the seller is able to demonstrate that there was no lack on his part in furnishing Form 27C as soon as it was received by him from the purchaser to whom scrap had been sold." The decision followed or applied Siyaram Metal Udyog (P.) Ltd (Gujarat High Court) — followed; Chhaganbhai K Sanghani (Gujarat High Court) — followed; Gopallal Ramprasad Kabra (ITAT Rajkot) — followed; G.K. Traders (ITAT Rajkot) — followed; Chandmal Sancheti (ITAT Jaipur) — followed.
It was decided by the ITAT on 2024-04-30 and is reported as I.T.A. No. 340/Ahd/2020, assessment year 2012-13 (ITAT Ahmedabad 'C' Bench). Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere. A Tribunal decision binds the assessing officer and the Commissioner (Appeals) within that Tribunal's jurisdiction, and is persuasive before other benches. It is not binding on a High Court, and a contrary co-ordinate bench decision will be argued against you, so check whether the point has been taken the other way before you build a reply around it. On section 206C, section 206C(1), section 206C(1A), section 206C(1B), section 206C(6A), section 206C(7), section Rule 37C, the practical question is whether the facts of your own notice match the facts of this case closely enough for the same rule to apply.
It cuts both ways and is cited by both sides. The appeal was allowed for statistical purposes and the entire matter was restored to the Assessing Officer. On the law, the Tribunal held that s.206C(1B) fixes only the date by which the person collecting tax must deliver the declaration to the Commissioner — the seventh day of the month following the month in which it is furnished to him — and that no time limit at all is prescribed for the buyer to furnish the declaration in Form 27C to the seller; it would be onerous to deny the seller the opportunity of furnishing Form 27C where he can show there was no lack on his part in filing it as soon as he received it (paragraph 8). The Assessing Officer was directed first to verify the genuineness of the Forms 27C and, if in order, to grant relief; and second to carry out the verification the Commissioner (Appeals) had already directed in respect of the seventeen parties for whom Form 27BA had been filed and who had returned the income (paragraph 9). It arises in TDS Defaults, Evidence & Burden of Proof and Demand, Recovery & Stay matters, on section 206C, section 206C(1), section 206C(1A), section 206C(1B), section 206C(6A), section 206C(7), section Rule 37C of the Income Tax Act 1961, and was decided by Annapurna Gupta, Accountant Member and Siddhartha Nautiyal, Judicial Member. Before relying on it, read the source linked on this page and check whether it has since been distinguished, overruled or overtaken by an amendment to the Income Tax Act. In practice the steps that follow from it are these. Collect Form 27C from each buyer, in duplicate and verified, and deliver a copy to the Commissioner by the seventh day of the month following the month in which the buyer gives it to you — s.206C(1B) times your act, not the buyer's. If the declarations are late, build the record the Tribunal treated as decisive: when you received each declaration, that you filed it at once, and that the Department has not questioned its genuineness. Do not expect the s.206C(7) interest to disappear with the tax; the Commissioner (Appeals) here held it consequential, compensatory and mandatory, and that finding was not disturbed. If the Assessing Officer has not given effect to an earlier appellate direction to verify Forms 27BA, say so — that was one of the two grounds on which the whole matter was sent back.
Validity check could not be completed. Validity check could not be completed. I did not search for any appeal from this order or later Tribunal or High Court treatment of it. The reader should note that the disposal is a remand for verification, not a final adjudication that the belated Forms 27C must be accepted. No source could be cited for that finding. Checking whether an authority still stands matters as much as knowing what it held: a decision may be overruled on one point and survive on another, or the provision it interprets may have been amended since. Read the source and the editor's note on this page before relying on it in a reply to an Assessing Officer or in an appeal.
The order was read in full from the plain indiankanoon /doc/ URL: it runs from an unnumbered opening paragraph through paragraphs 2 to 10, ending with the disposal at paragraph 10. There is a discrepancy in the report that is left as it stands: the appellant is named as an individual, Girishkumar Ramnarayan Shah, but paragraph 3 records that 'the assessee is a partnership firm'. Paragraph 8 also prints 'Section 206(1A) and 1(B)' and 'Rule 37C(3)' where s.206C(1A), s.206C(1B) and Rule 37C are meant. A first attempt to corroborate the sentence in paragraph 8 beginning 'no specific time obligation has been cast upon the purchaser of goods' through /docfragment/ returned that sentence with the case name and assessment year spliced into the middle of it — a running header intruding into the text — so that sentence has not been used as a quote; the sentence that is quoted here was re-fetched and matched word for word. Paragraph 8 cites several decisions by their Taxmann citation strings; those strings are reproduced as printed in the order and no Taxmann material was consulted. This library shows the verification state of every entry openly. This entry has not yet been read in full by a chartered accountant. The summary reflects the sources listed on this page. Read the source before you rely on it in a reply to an Assessing Officer or in an appeal before the Commissioner (Appeals) or the Income Tax Appellate Tribunal.
The appeal was allowed for statistical purposes and the entire matter was restored to the Assessing Officer. On the law, the Tribunal held that s.206C(1B) fixes only the date by which the person collecting tax must deliver the declaration to the Commissioner — the seventh day of the month following the month in which it is furnished to him — and that no time limit at all is prescribed for the buyer to furnish the declaration in Form 27C to the seller; it would be onerous to deny the seller the opportunity of furnishing Form 27C where he can show there was no lack on his part in filing it as soon as he received it (paragraph 8). The Assessing Officer was directed first to verify the genuineness of the Forms 27C and, if in order, to grant relief; and second to carry out the verification the Commissioner (Appeals) had already directed in respect of the seventeen parties for whom Form 27BA had been filed and who had returned the income (paragraph 9).
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Tax has been collected from me at source on my purchase price as though a fixed percentage of it were my profit. Am I stuck with that figure, or can I still be assessed on my real income?
I did not collect TCS because I did not think what I sold was 'scrap'. The officer has levied penalty at a hundred per cent. Is a wrong but honest view a defence?
My bank has collected TCS on the money I sent abroad for my daughter's university fees, and my travel agent has collected on the tour package. What does s.206C(1G) actually require, and at what rate and threshold?
I sell cars. When must I collect one per cent under s.206C(1F), and does it now catch anything besides motor vehicles?