I produced the buyers' Form 27C during the assessment, and later a Form 27BA from an accountant. The officer says both are too late. Is he right?
On this order, yes. The Chennai Tribunal read s.206C(1A) with s.206C(1B) and held that the seller must either collect TCS at the time of sale or obtain the Form 27C declaration and file a copy with the Commissioner by the seventh day of the month next following the month of receipt, so that a Form 27C produced for the first time during assessment proceedings is not within a reasonable time. It also rejected the alternative plea under the first proviso to s.206C(6A), holding that a Form 27BA obtained on 24 April 2021 — seven years after the end of the relevant assessment years — came too late for the immunity, and dismissed both appeals.
Decided by the ITAT (Shri V. Durga Rao, Judicial Member and Shri Manjunatha G, Accountant Member (ITAT 'C' Bench, Chennai)) on 2023-02-24, reported as ITA Nos. 43 and 44/Chny/2023, assessment years 2014-15 and 2015-16. It bears on section 206C, section 206C(1), section 206C(1A), section 206C(1B), section 206C(6A), section 139, section Rule 37J of the Income Tax Act 1961, in TDS Defaults, Evidence & Burden of Proof and Demand, Recovery & Stay matters.
This is the Revenue side of the Form 27C question, and any adviser who tells a client that 'there is no time limit for Form 27C' is only carrying half the line. The Tribunal accepted that the High Court decisions condoning a late Form 27C exist, but distinguished them on the footing that in those cases the declaration had been collected within a reasonable time even though not at the moment of sale. The order matters just as much for the second holding, which is the one that catches collectors who think Form 27BA is a safety net available whenever the demand surfaces: the Tribunal accepted that a certificate under the first proviso to s.206C(6A) read with Rule 37J prevents a collector from being treated as an assessee in default, but held that the exercise must be done within a reasonable time and that a certificate obtained after seven years does not qualify. Practitioners should hold this order against Manoj Kumar Jain (ITAT Jaipur, 19 December 2023), which condoned a belated Form 27C and distinguished, on the facts, a Chennai Bench decision it did not name but whose facts — Form 27C not obtained within a reasonable time, Form 27BA collected after a lapse of seven years — answer to this one; and against Girishkumar Ramnarayan Shah already in the library.
Binding on the AO and CIT(A) within the Tribunal's jurisdiction. Persuasive elsewhere.
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The assessee was engaged in the business of import and sale of timber. For assessment years 2014-15 and 2015-16 it neither collected TCS from the buyers on the specified goods at the time of sale or receipt of money, nor obtained a declaration in the specified form. It claimed to have filed Form 27C, as required under s.206C(1A), at the time of the assessment proceedings, arguing that no time limit is prescribed for filing that form and that where the form is filed before completion of assessment the Assessing Officer must consider it. The Commissioner (Appeals) rejected the claim and the additions towards short collection of TCS and interest were sustained. In a second round before the Commissioner (Appeals) the assessee took an alternative plea that it had collected a declaration in Form No. 27BA dated 24 April 2021 in terms of s.206C(6A) and Rule 37J of the Income-tax Rules 1962, in which an accountant certified that the purchasers had filed their returns of income.
Both appeals were dismissed. Reading s.206C(1A) with s.206C(1B), the person responsible for selling the specified goods must either collect TCS as prescribed or obtain the declaration in Form 27C and submit it to the Principal Chief Commissioner or Chief Commissioner on or before the seventh day of the month next following the month in which the declaration is furnished to him; even if the declaration is not collected on the date of sale or receipt of money, it must be obtained within a reasonable time and filed by that date. The claim that no time limit is prescribed for obtaining Form 27C is not correct. On the alternative plea, a certificate from an accountant under the first proviso to s.206C(6A) read with Rule 37J does prevent the collector from being treated as an assessee in default, but that exercise must be done within a reasonable time, and a Form 27BA obtained on 24 April 2021, seven years after the end of the relevant assessment years, does not attract the immunity.
The Tribunal traced the scheme: s.206C(1) casts the duty to collect at the time of debit or receipt; s.206C(1A) displaces it only on a declaration; and s.206C(1B) requires one copy of that declaration to be delivered to the Commissioner by the seventh day of the month next following the month in which it is furnished to the collector. From that it drew the conclusion that the declaration cannot be obtained and furnished at the assessee's convenience, and that the absence of an express time limit for obtaining it does not mean it may be obtained at any time (para 8). It distinguished the decisions relied on, including the Madras High Court in Adisankara Spinning Mills, on the ground that in those cases the declaration had been collected within a reasonable time although not at the moment of sale, so that the failure could be described as a technical breach; here the assessee had not even obtained the declaration within a reasonable time (para 8). On the alternative plea it accepted the effect of the first proviso to s.206C(6A) but held that the law provides immunity where the assessee has acted bona fide and within a reasonable time, which a certificate obtained after a gap of seven years does not satisfy (para 9).
Therefore, we are of the considered view that, the claim of the ld. Counsel for the assessee that there is no time limit prescribed for obtaining declaration Form 27C is not correct, and it cannot be obtained and furnished by the whimps and fancy of the assessee.
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Handle my notice → Ask a CA on WhatsAppOn this order, yes. The Chennai Tribunal read s.206C(1A) with s.206C(1B) and held that the seller must either collect TCS at the time of sale or obtain the Form 27C declaration and file a copy with the Commissioner by the seventh day of the month next following the month of receipt, so that a Form 27C produced for the first time during assessment proceedings is not within a reasonable time. It also rejected the alternative plea under the first proviso to s.206C(6A), holding that a Form 27BA obtained on 24 April 2021 — seven years after the end of the relevant assessment years — came too late for the immunity, and dismissed both appeals. This was decided by the ITAT (Shri V. Durga Rao, Judicial Member and Shri Manjunatha G, Accountant Member (ITAT 'C' Bench, Chennai)) and bears on section 206C, section 206C(1), section 206C(1A), section 206C(1B), section 206C(6A), section 139, section Rule 37J of the Income Tax Act 1961. It is reported as ITA Nos. 43 and 44/Chny/2023, assessment years 2014-15 and 2015-16. This is the Revenue side of the Form 27C question, and any adviser who tells a client that 'there is no time limit for Form 27C' is only carrying half the line. The Tribunal accepted that the High Court decisions condoning a late Form 27C exist, but distinguished them on the footing that in those cases the declaration had been collected within a reasonable time even though not at the moment of sale. The order matters just as much for the second holding, which is the one that catches collectors who think Form 27BA is a safety net available whenever the demand surfaces: the Tribunal accepted that a certificate under the first proviso to s.206C(6A) read with Rule 37J prevents a collector from being treated as an assessee in default, but held that the exercise must be done within a reasonable time and that a certificate obtained after seven years does not qualify. Practitioners should hold this order against Manoj Kumar Jain (ITAT Jaipur, 19 December 2023), which condoned a belated Form 27C and distinguished, on the facts, a Chennai Bench decision it did not name but whose facts — Form 27C not obtained within a reasonable time, Form 27BA collected after a lapse of seven years — answer to this one; and against Girishkumar Ramnarayan Shah already in the library. If it applies to you, the first step is this: Treat the seventh-day date in s.206C(1B) and Rule 37C(3) as a real deadline, not a formality — this order builds its whole reasoning on reading sub-section (1A) with sub-section (1B).
The assessee was engaged in the business of import and sale of timber. For assessment years 2014-15 and 2015-16 it neither collected TCS from the buyers on the specified goods at the time of sale or receipt of money, nor obtained a declaration in the specified form. It claimed to have filed Form 27C, as required under s.206C(1A), at the time of the assessment proceedings, arguing that no time limit is prescribed for filing that form and that where the form is filed before completion of assessment the Assessing Officer must consider it. The Commissioner (Appeals) rejected the claim and the additions towards short collection of TCS and interest were sustained. In a second round before the Commissioner (Appeals) the assessee took an alternative plea that it had collected a declaration in Form No. 27BA dated 24 April 2021 in terms of s.206C(6A) and Rule 37J of the Income-tax Rules 1962, in which an accountant certified that the purchasers had filed their returns of income. The matter was decided on 2023-02-24 by the ITAT (Shri V. Durga Rao, Judicial Member and Shri Manjunatha G, Accountant Member (ITAT 'C' Bench, Chennai)). On those facts the ITAT held as follows. Both appeals were dismissed. Reading s.206C(1A) with s.206C(1B), the person responsible for selling the specified goods must either collect TCS as prescribed or obtain the declaration in Form 27C and submit it to the Principal Chief Commissioner or Chief Commissioner on or before the seventh day of the month next following the month in which the declaration is furnished to him; even if the declaration is not collected on the date of sale or receipt of money, it must be obtained within a reasonable time and filed by that date. The claim that no time limit is prescribed for obtaining Form 27C is not correct. On the alternative plea, a certificate from an accountant under the first proviso to s.206C(6A) read with Rule 37J does prevent the collector from being treated as an assessee in default, but that exercise must be done within a reasonable time, and a Form 27BA obtained on 24 April 2021, seven years after the end of the relevant assessment years, does not attract the immunity.
The Tribunal traced the scheme: s.206C(1) casts the duty to collect at the time of debit or receipt; s.206C(1A) displaces it only on a declaration; and s.206C(1B) requires one copy of that declaration to be delivered to the Commissioner by the seventh day of the month next following the month in which it is furnished to the collector. From that it drew the conclusion that the declaration cannot be obtained and furnished at the assessee's convenience, and that the absence of an express time limit for obtaining it does not mean it may be obtained at any time (para 8). It distinguished the decisions relied on, including the Madras High Court in Adisankara Spinning Mills, on the ground that in those cases the declaration had been collected within a reasonable time although not at the moment of sale, so that the failure could be described as a technical breach; here the assessee had not even obtained the declaration within a reasonable time (para 8). On the alternative plea it accepted the effect of the first proviso to s.206C(6A) but held that the law provides immunity where the assessee has acted bona fide and within a reasonable time, which a certificate obtained after a gap of seven years does not satisfy (para 9). In the words reproduced by the source cited on this page: "Therefore, we are of the considered view that, the claim of the ld. Counsel for the assessee that there is no time limit prescribed for obtaining declaration Form 27C is not correct, and it cannot be obtained and furnished by the whimps and fancy of the assessee." The decision followed or applied CIT v. Adisankara Spinning Mills (P.) Ltd. (Madras High Court) — distinguished on the ground that the declaration there was collected within a reasonable time.
It was decided by the ITAT on 2023-02-24 and is reported as ITA Nos. 43 and 44/Chny/2023, assessment years 2014-15 and 2015-16. 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 139, section Rule 37J, 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 department, and it appears in this library for that reason — you need to know what the Assessing Officer will cite against you. Both appeals were dismissed. Reading s.206C(1A) with s.206C(1B), the person responsible for selling the specified goods must either collect TCS as prescribed or obtain the declaration in Form 27C and submit it to the Principal Chief Commissioner or Chief Commissioner on or before the seventh day of the month next following the month in which the declaration is furnished to him; even if the declaration is not collected on the date of sale or receipt of money, it must be obtained within a reasonable time and filed by that date. The claim that no time limit is prescribed for obtaining Form 27C is not correct. On the alternative plea, a certificate from an accountant under the first proviso to s.206C(6A) read with Rule 37J does prevent the collector from being treated as an assessee in default, but that exercise must be done within a reasonable time, and a Form 27BA obtained on 24 April 2021, seven years after the end of the relevant assessment years, does not attract the immunity. 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 139, section Rule 37J of the Income Tax Act 1961, and was decided by Shri V. Durga Rao, Judicial Member and Shri Manjunatha G, Accountant Member (ITAT 'C' Bench, Chennai). 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. If a declaration was collected late, put on record when it was collected and why, and show it was within a reasonable time of the sale; the High Court condonation line was distinguished on precisely that fact. Do not treat Form 27BA as a fallback to be produced when the demand arrives — obtain it as soon as the short collection is identified and record the date. Prove each condition of the s.206C(6A) first proviso for each buyer separately: return under s.139, the amount taken into account in computing income, and the tax on the declared income paid. If your bench is Chennai, or the Commissioner (Appeals) relies on this order, be ready to distinguish it on the length of the delay rather than on the proposition that no time limit exists.
Validity check could not be completed. Later treatment of this order was NOT checked this pass. It is however known to be contested at Tribunal level: the Jaipur Bench in Manoj Kumar Jain, Prop. M/s Balaji Re-Rolling Mills v. ITO (TDS), Kota, decided 19 December 2023 and read in full this pass, expressly refers to 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, distinguishes it on the facts, and follows the High Court and coordinate-bench line condoning a belated declaration. The library also carries Girishkumar Ramnarayan Shah (30 April 2024) holding there is no time limit under s.206C for Form 27C. The label 'high courts differ' is not available for a conflict between Tribunal benches, so this is recorded as unverified with the conflict set out here. 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.
Paragraph 9 of the order twice cites 'section 206C(1A)' where the conditions it describes — return furnished, amount taken into account, tax paid, accountant's certificate — are those of the first proviso to s.206C(6A); the same paragraph elsewhere cites s.206C(6A) and Rule 37J correctly, so the (1A) references read as slips. The transcription also carries OCR artefacts: '206C(1[A)', 'whimps' for 'whims', 'bonafied' for 'bona fide'. The key quote reproduces the text exactly as printed, including 'whimps'. The order's own paragraphs run 1 to 12 and were inventoried before any locator was used; paragraph 10 disposes of the appeal for assessment year 2014-15 and paragraph 12 disposes of both appeals. The High Court decisions the Tribunal distinguished, including CIT v. Adisankara Spinning Mills (P.) Ltd., were not separately retrieved this pass. 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.
Both appeals were dismissed. Reading s.206C(1A) with s.206C(1B), the person responsible for selling the specified goods must either collect TCS as prescribed or obtain the declaration in Form 27C and submit it to the Principal Chief Commissioner or Chief Commissioner on or before the seventh day of the month next following the month in which the declaration is furnished to him; even if the declaration is not collected on the date of sale or receipt of money, it must be obtained within a reasonable time and filed by that date. The claim that no time limit is prescribed for obtaining Form 27C is not correct. On the alternative plea, a certificate from an accountant under the first proviso to s.206C(6A) read with Rule 37J does prevent the collector from being treated as an assessee in default, but that exercise must be done within a reasonable time, and a Form 27BA obtained on 24 April 2021, seven years after the end of the relevant assessment years, does not attract the immunity.
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