Section 206C(7)

Section 206C(7) — the law in short

What the courts have decided on section 206C(7), in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Girishkumar Ramnarayan Shah v ITO (TDS) ITATCuts both waysNo later treatment found
  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.
• Ramdas Trading Company v ITO (TDS), Alwar ITATCuts both waysNo later treatment found
  I only trade in scrap — I do not manufacture anything, and I sell in retail. Can s.206C still be fastened on me, and is there any time limit on the TCS order?
  Yes, it can. The Tribunal held that the contentions that the assessee is a trader and not a manufacturer, that the scrap was not generated by his own manufacturing or mechanical working of materials, and that a purchaser in retail sale is not a 'buyer', are all squarely covered against the assessee by the Special Bench decision in Bharti Auto Products. But it also held that although s.206C prescribes no limitation, proceedings under it can reasonably be guided by the limitation in s.201(3), and it sent the matter back to the Commissioner (Appeals) to decide that question.
• ITO (TDS) v Rakesh Kumar ITATHelps taxpayerNo later treatment found
  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?
  Yes, where the belief is honest and founded on reasonable grounds. The Tribunal upheld the deletion of a penalty of Rs.12,80,988 under s.271CA, holding that a dealer who honestly believed the goods he sold were not 'scrap' within Explanation (b) to s.206C had reasonable cause, even though the Commissioner (Appeals) had rejected that belief on merits. It also weighed that the buyers had returned the income and paid the tax, so no demand for the tax itself had been raised and no loss was caused to the Revenue.
• Statutory position — s.206C(6A) first proviso, Form 27BA, and the two interest rates in s.206C(7) from 1 April 2025 CBDT Circulars & InstructionsCuts both ways
  I did not collect TCS but my buyer has filed his return and paid the tax. Am I still an assessee in default, and what interest do I owe?
  The first proviso to s.206C(6A) says a person responsible for collecting tax under sub-section (1) or sub-section (1C) who fails to collect is not to be deemed an assessee in default if the buyer or licensee or lessee has furnished his return of income under s.139, has taken the amount into account in computing income in that return, and has paid the tax due on the income declared — and the collector furnishes a certificate to that effect from an accountant in the prescribed form. Rule 37J prescribes that certificate as Form 27BA, to be furnished to the Director General of Income-tax (Systems) or his authorised person in the procedures, formats and standards that officer specifies.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.