I collected the Form 27C declarations late and filed them late with the TDS officer. Can the department still raise a TCS demand on me?
On this order, no. The Jaipur Tribunal held that where there is no dispute that the declarations were made in the prescribed format and no dispute about their genuineness, a mere delay in filing the declaration does not defeat the claim, the breach being technical and liable to be condoned. It expressly noted that the Commissioner (Appeals) had relied on a Chennai Bench decision where Form 27C was not obtained within a reasonable time and Form 27BA was collected after a lapse of seven years, and held that those were not the facts before it.
Decided by the ITAT (Shri Sandeep Gosain, Judicial Member and Shri Rathod Kamlesh Jayantbhai, Accountant Member (ITAT Jaipur Benches 'A', Jaipur)) on 2023-12-19, reported as ITA Nos. 591, 592 and 593/JP/2023, assessment years 2016-17, 2017-18 and 2018-19. It bears on section 206C, section 206C(1), section 206C(1A), section 201(1), section Rule 37C of the Income Tax Act 1961, in TDS Defaults, Evidence & Burden of Proof and Appeals matters.
This is the taxpayer side of the Form 27C question and the answer to a Commissioner (Appeals) who dismisses on the Chennai line. The reasoning turns on the purpose of s.206C(1A): the thrust of the sub-section is that a declaration be made as prescribed, upon which the duty to collect under sub-section (1) does not apply, so a failure in the mechanics of onward filing under Rule 37C is a breach of procedure and not of the charge. The two conditions the Tribunal treated as decisive are worth lifting out — that the declaration was in the prescribed format, and that its genuineness was not disputed. Where either is in doubt the order does not help. The same order is a reminder of the parallel machinery on the TDS side: on a separate ground it directed the officer to give the assessee an opportunity to file a certificate from an accountant in Form 26A under the first proviso to s.201(1) in respect of interest paid to a finance company.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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The assessee is a scrap dealer trading as M/s Balaji Re-Rolling Mills, Kota. Three appeals for assessment years 2016-17, 2017-18 and 2018-19 were filed against orders of the Commissioner (Appeals) dated 1 August 2023. For the first year the Tribunal recorded that a written submission filed on 8 June 2023 had not been considered by the Commissioner (Appeals), while appeals for the other two years had been decided on merits on the same date, so it proceeded to decide the common grounds for all three years on merits. The ITO (TDS) had held that the assessee sold scrap without collecting tax at source. It was not in dispute that the assessee had belatedly collected the declarations in Form No. 27C and had filed them before the ITO (TDS). The Commissioner (Appeals) relied on a Chennai Bench decision in which Form 27C had not been obtained within a reasonable time and Form 27BA had been collected after a lapse of seven years. A separate ground concerned interest on finance raised from a finance company, on which instalment cheques including interest had been given in advance.
The appeals were disposed of accordingly, the Form 27C ground being allowed for all three years. Where the declaration is in the prescribed format and its genuineness is not in dispute, a mere delay in obtaining it from the buyer and in filing it before the Chief Commissioner or Commissioner is a technical breach liable to be condoned, and does not defeat the claim; the main thrust of s.206C(1A) is that a declaration as prescribed be made, upon which the liability to collect under s.206C(1) does not apply. The Chennai Bench decision relied on by the Commissioner (Appeals) was distinguished on its facts. On the separate finance-interest ground, the matter was allowed for statistical purposes with a direction that the ITO (TDS) confirm the position with the finance company and allow the assessee an opportunity to file a certificate from an accountant in Form 26A under the first proviso to s.201(1).
The Tribunal framed the question as whether, where the declaration is not filed with the prescribed authority within the time in Rule 37C, the TCS liability can be fastened on the assessee, and treated the point as no longer res integra. It recorded that the Madras High Court, the Gujarat High Court and the Bangalore, Jaipur and Rajkot Benches of the Tribunal had held that a breach in not obtaining the declaration the moment the sale is effected, and in filing it before the Chief Commissioner or Commissioner, is to be considered only technical and liable to be condoned, inasmuch as the main thrust of s.206C(1A) is the making of a declaration as prescribed, upon which the collection duty under sub-section (1) does not apply. Given no dispute about the prescribed format or the genuineness of the declarations, delay alone could not defeat the claim, and the Chennai Bench decision on which the Commissioner (Appeals) relied rested on materially different facts (para 9).
When there was no dispute about such a declaration being filed in a prescribed format and there was no dispute about the genuineness of such declaration, mere delay in filing the said declaration would not defeat the very claim.
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Handle my notice → Ask a CA on WhatsAppOn this order, no. The Jaipur Tribunal held that where there is no dispute that the declarations were made in the prescribed format and no dispute about their genuineness, a mere delay in filing the declaration does not defeat the claim, the breach being technical and liable to be condoned. It expressly noted that the Commissioner (Appeals) had relied on a Chennai Bench decision where Form 27C was not obtained within a reasonable time and Form 27BA was collected after a lapse of seven years, and held that those were not the facts before it. This was decided by the ITAT (Shri Sandeep Gosain, Judicial Member and Shri Rathod Kamlesh Jayantbhai, Accountant Member (ITAT Jaipur Benches 'A', Jaipur)) and bears on section 206C, section 206C(1), section 206C(1A), section 201(1), section Rule 37C of the Income Tax Act 1961. It is reported as ITA Nos. 591, 592 and 593/JP/2023, assessment years 2016-17, 2017-18 and 2018-19. This is the taxpayer side of the Form 27C question and the answer to a Commissioner (Appeals) who dismisses on the Chennai line. The reasoning turns on the purpose of s.206C(1A): the thrust of the sub-section is that a declaration be made as prescribed, upon which the duty to collect under sub-section (1) does not apply, so a failure in the mechanics of onward filing under Rule 37C is a breach of procedure and not of the charge. The two conditions the Tribunal treated as decisive are worth lifting out — that the declaration was in the prescribed format, and that its genuineness was not disputed. Where either is in doubt the order does not help. The same order is a reminder of the parallel machinery on the TDS side: on a separate ground it directed the officer to give the assessee an opportunity to file a certificate from an accountant in Form 26A under the first proviso to s.201(1) in respect of interest paid to a finance company. If it applies to you, the first step is this: Put the two facts the Tribunal relied on at the front of your submission: the declarations are in the prescribed format, and their genuineness is not disputed by the Assessing Officer.
The assessee is a scrap dealer trading as M/s Balaji Re-Rolling Mills, Kota. Three appeals for assessment years 2016-17, 2017-18 and 2018-19 were filed against orders of the Commissioner (Appeals) dated 1 August 2023. For the first year the Tribunal recorded that a written submission filed on 8 June 2023 had not been considered by the Commissioner (Appeals), while appeals for the other two years had been decided on merits on the same date, so it proceeded to decide the common grounds for all three years on merits. The ITO (TDS) had held that the assessee sold scrap without collecting tax at source. It was not in dispute that the assessee had belatedly collected the declarations in Form No. 27C and had filed them before the ITO (TDS). The Commissioner (Appeals) relied on a Chennai Bench decision in which Form 27C had not been obtained within a reasonable time and Form 27BA had been collected after a lapse of seven years. A separate ground concerned interest on finance raised from a finance company, on which instalment cheques including interest had been given in advance. The matter was decided on 2023-12-19 by the ITAT (Shri Sandeep Gosain, Judicial Member and Shri Rathod Kamlesh Jayantbhai, Accountant Member (ITAT Jaipur Benches 'A', Jaipur)). On those facts the ITAT held as follows. The appeals were disposed of accordingly, the Form 27C ground being allowed for all three years. Where the declaration is in the prescribed format and its genuineness is not in dispute, a mere delay in obtaining it from the buyer and in filing it before the Chief Commissioner or Commissioner is a technical breach liable to be condoned, and does not defeat the claim; the main thrust of s.206C(1A) is that a declaration as prescribed be made, upon which the liability to collect under s.206C(1) does not apply. The Chennai Bench decision relied on by the Commissioner (Appeals) was distinguished on its facts. On the separate finance-interest ground, the matter was allowed for statistical purposes with a direction that the ITO (TDS) confirm the position with the finance company and allow the assessee an opportunity to file a certificate from an accountant in Form 26A under the first proviso to s.201(1).
The Tribunal framed the question as whether, where the declaration is not filed with the prescribed authority within the time in Rule 37C, the TCS liability can be fastened on the assessee, and treated the point as no longer res integra. It recorded that the Madras High Court, the Gujarat High Court and the Bangalore, Jaipur and Rajkot Benches of the Tribunal had held that a breach in not obtaining the declaration the moment the sale is effected, and in filing it before the Chief Commissioner or Commissioner, is to be considered only technical and liable to be condoned, inasmuch as the main thrust of s.206C(1A) is the making of a declaration as prescribed, upon which the collection duty under sub-section (1) does not apply. Given no dispute about the prescribed format or the genuineness of the declarations, delay alone could not defeat the claim, and the Chennai Bench decision on which the Commissioner (Appeals) relied rested on materially different facts (para 9). In the words reproduced by the source cited on this page: "When there was no dispute about such a declaration being filed in a prescribed format and there was no dispute about the genuineness of such declaration, mere delay in filing the said declaration would not defeat the very claim."
It was decided by the ITAT on 2023-12-19 and is reported as ITA Nos. 591, 592 and 593/JP/2023, assessment years 2016-17, 2017-18 and 2018-19. 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 201(1), 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 helps the taxpayer. The appeals were disposed of accordingly, the Form 27C ground being allowed for all three years. Where the declaration is in the prescribed format and its genuineness is not in dispute, a mere delay in obtaining it from the buyer and in filing it before the Chief Commissioner or Commissioner is a technical breach liable to be condoned, and does not defeat the claim; the main thrust of s.206C(1A) is that a declaration as prescribed be made, upon which the liability to collect under s.206C(1) does not apply. The Chennai Bench decision relied on by the Commissioner (Appeals) was distinguished on its facts. On the separate finance-interest ground, the matter was allowed for statistical purposes with a direction that the ITO (TDS) confirm the position with the finance company and allow the assessee an opportunity to file a certificate from an accountant in Form 26A under the first proviso to s.201(1). It arises in TDS Defaults, Evidence & Burden of Proof and Appeals matters, on section 206C, section 206C(1), section 206C(1A), section 201(1), section Rule 37C of the Income Tax Act 1961, and was decided by Shri Sandeep Gosain, Judicial Member and Shri Rathod Kamlesh Jayantbhai, Accountant Member (ITAT Jaipur Benches 'A', Jaipur). 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. File the declarations with the TDS officer even if late, and produce the acknowledgment — the Tribunal proceeded on the footing that they had in fact been filed before the ITO (TDS). Distinguish the Chennai line on the length and explanation of the delay, not on the proposition that time never matters — that is precisely the distinction this order drew. Where a Commissioner (Appeals) has not dealt with a written submission actually filed, take that as a separate ground; here the Tribunal recorded that a submission dated 8 June 2023 had not been considered and proceeded to decide the merits itself. On any parallel TDS ground, ask for the opportunity to file Form 26A under the first proviso to s.201(1), and be prepared to have the officer verify the payee's return directly with the payee.
Validity check could not be completed. Later treatment was NOT checked this pass. The position is contested at Tribunal level: the Chennai Bench in M/s Sri Jayabharath Timber Depot (24 February 2023), read in full this pass and separately entered in this batch, held that Form 27C must be obtained within a reasonable time and rejected a Form 27BA obtained seven years later. 'High courts differ' is not the right label for a conflict between Tribunal benches, so this is recorded as unverified with the conflict set out. The High Court decisions the Tribunal relied on were referred to collectively and were not retrieved this pass. 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's own paragraphs run 1 to 14 and were inventoried before any locator was used; the order deals with three separate grounds and therefore carries three sets of 'brief facts' paragraphs (2, 6 and 10), with the operative Form 27C finding at paragraph 9. Paragraph 9 refers to the supporting decisions collectively — 'Hon'ble Madras High Court, Hon'ble Gujarat High Court and ITAT Bangalore Bench, Jaipur Bench and Rajkot Bench' — without naming them in that paragraph, so no individual authority is attributed to it here beyond that description. The Chennai Bench decision the Tribunal distinguishes is not named in paragraph 9, but the facts it recites (Form 27C not obtained within a reasonable time; Form 27BA collected after a lapse of seven years) match M/s Sri Jayabharath Timber Depot v. ITO (TDS), ITA Nos. 43 and 44/Chny/2023, decided 24 February 2023, which is separately entered in this batch and was read in full this pass; the identification is stated as a match of facts, not as a citation the order itself gives. The transcription carries OCR artefacts ('M/. Bajaj Finance Ltd.', 'disposed off'). The appellant's trading name is "M/s. Balaji Re-Rolling Mills", taken from the order's own header and confirmed in its body ("Prop. M/s. Balaji Re-Rolling Mills, C/o Kalani & Company"). Note for anyone searching: indiankanoon's index title for this document renders it "Manoj Kumar Jain Prop. Ms Bajaj Re ...", which is wrong; the "Bajaj" that does appear in this order is Bajaj Finance Ltd., the finance company on the separate interest ground at paragraphs 10 to 13. 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 appeals were disposed of accordingly, the Form 27C ground being allowed for all three years. Where the declaration is in the prescribed format and its genuineness is not in dispute, a mere delay in obtaining it from the buyer and in filing it before the Chief Commissioner or Commissioner is a technical breach liable to be condoned, and does not defeat the claim; the main thrust of s.206C(1A) is that a declaration as prescribed be made, upon which the liability to collect under s.206C(1) does not apply. The Chennai Bench decision relied on by the Commissioner (Appeals) was distinguished on its facts. On the separate finance-interest ground, the matter was allowed for statistical purposes with a direction that the ITO (TDS) confirm the position with the finance company and allow the assessee an opportunity to file a certificate from an accountant in Form 26A under the first proviso to s.201(1).
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