Income Tax Appellate Tribunal - Chandigarh
Rakesh Kumar Bansal, Chandigarh vs Department Of Income Tax on 29 September, 2015
IN THE INCOME TAX APPELLATE TRIBUNAL
DIVISION BENCH, CHANDIGARH
BEFORE SHRI H.L.KARWA, VICE PRESIDENT
AND MS. RANO JAIN, ACCOUNTANT MEMBER
ITA Nos.629 to 631/Chd/2015
(Assessment Years : 2010-11 to 2012-13)
The Income Tax Officer(TDS-I), Vs. Rakesh Kumar Bansal
Chandigarh. Prop.M/s Madhav Textiles,
# 718, Sector 22-A,
Chandigarh.
PAN: ABVPB5461C
ITA Nos.632 to 634/Chd/2015
(Assessment Years : 2010-11 to 2012-13)
The Income Tax Officer(TDS-I), Vs. Rakesh Kumar Bansal
Chandigarh. Prop.M/s Madhav Textiles,
# 718, Sector 22-A,
Chandigarh.
PAN: ABVPB5461C
And
ITA Nos.635 to 637/Chd/2015
(Assessment Years : 2010-11 to 2012-13)
The Income Tax Officer(TDS-I), Vs. Rakesh Kumar Bansal
Chandigarh. Prop.M/s Madhav Textiles,
# 718, Sector 22-A,
Chandigarh.
PAN: ABVPB5461C
(Appellant) (Respondent)
Appellant by : Smt.Rajinder Kaur, DR
Respondent by : Shri Tej Mohan Singh
Date of Hearing : 23.09.2015
Date of Pronouncement : 29.09.2015
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O R D E R
PER RANO JAIN, A.M. :
The appeals filed by the Department in ITA Nos.629 to 631/Chd/2015, ITA Nos.632 to 634/Chd/2015 and ITA Nos.635 to 637/Chd/2015 are directed against the separate orders of learned Commissioner of Income Tax (Appeals)-I, Chandigarh for assessment years 2010-11 to 2012-13.
ITA No.629/Chd/2015 :
2. The only issue in this appeal is with regard to treating the assessee as 'assessee in default' and against creating demand under sections 206C(1) and 206C(7) of the Income Tax Act, 1961 (in short 'the Act'), for assessment year 2010-11.
3. The assessee is engaged in the business of purchase and sale of cotton waste but did not collect tax at source on the scrap sale of cotton waste. The Assessing Officer was of the view that the assessee was obliged to have collected tax at source on sale of cotton waste, which he had failed to do. Hence, a demand under section 206C(1) of the Act in respect of tax not collected and interest under section 206C(7) of the Act was created this way.
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4. Before the learned CIT (Appeals), the assessee placed reliance on a judgment of Hon'ble Madras High Court in the case of M/s Adisankara Spinning Mill (P) Ltd. in Tax Case (A) No.1194 of 2010 dated 9.4.2011, whereby it had been held that the provisions of tax collection at source are not applicable to the sale of cotton waste as the same cannot be treated as scrap. The learned CIT (Appeals) following the verdict given by the Hon'ble Madras High Court allowed the appeal of the assessee.
5. Now the Department has come up in appeal before us against the said order. The learned D.R. while arguing before us emphasized on the facts that the assessee had made sale of cotton waste scrap during the year on which the provisions of section 206C(1) and 206C(7) of the Act are applicable, which were not duly complied with by him and therefore the demand raised by the Assessing Officer is justified. He further submitted that the assessee himself has given details before the Assessing Officer with regard to the sale of cotton waste and the reliance on the judgment of the Hon'ble Madras High Court was placed only before the learned CIT (Appeals). In this way, it was prayed that the demand so created by the Assessing Officer be confirmed.
6. The learned counsel for the assessee reiterated the submissions made before the learned CIT (Appeals) and placed reliance again on the order of the Hon'ble 4 Madras High Court in the case of M/s Adisankara Spinning Mill (P) Ltd. (supra). Further reliance was placed on another order of the I.T.A.T. Chennai Bench in the case of ACIT Vs. Eastman Exports Global Clothing (P) Ltd. in ITA Nos.1615, 1616 & 1617/Mds/2010 dated 22.12.2010.
7. We have heard the learned representatives of both the parties, perused the findings of the authorities below and considered the material available on record. A perusal of the order of the learned CIT (Appeals) shows that he has followed the order of the Hon'ble Madras High Court and given a finding that since during the year the assessee has sold cotton waste on which the Assessing Officer had invoked provisions relating to tax collection at source, however, the said activity has been considered to be not coming under the ambit of these provisions by the Madras High Court. It is an undisputed fact that the assessee had indulged in the activity of selling of cotton waste scrap during the year, which fact has not been denied by any of the authorities below and even the learned D.R. while arguing before us did not deny the fact.
8. The Hon'ble Madras High Court after analyzing the provisions of section 206C of the Act specifically the Explanation (B) of section 206C of the Act which defines the term 'scrap' used in the section has very categorically held that in the process of manufacture of cotton yarn, cotton waste comes to be generated and the use of the 5 said waste by another manufacturer shows that it was used as a raw material by the purchaser. Thus, the cotton waste disposed off by the assessee was reused as raw material for manufacture of lower count of cotton yarn and it does not come under the definition of scrap as defined in Explanation (b) of the Act section 206C of the Act. The learned CIT (Appeals) has given relief to the assessee following the judgment of the Hon'ble Madras High Court. In view of this, we do not find any infirmity in the order of the learned CIT (Appeals) and confirm the same.
The appeal of the Revenue is dismissed.
ITA Nos.630 & 631/Chd/2015 :
9. The issue in these appeals is in regard to treating the assessee as 'assessee in default' and against creating demand under sections 206C(1) and 206C(7) of the Income Tax Act, for assessment year 2011-12 and 2012-13 respectively.
10. Since the issue is the same as has been discussed in ITA No.629/Chd/2015, following the same, we uphold the findings of the learned CIT (Appeals) in dismissing the appeals of the Revenue.
ITA Nos.632 to 634/Chd/2015 :
11. These appeals are against the deletion of penalty imposed under section 272A(2)(j) of the Act for assessment 6 years 2010-11, 2011-12 and 2012-13 respectively. Since in ITA Nos.629 to 631/Chd/2015, we have held that the provisions of tax collection at source are not applicable to the assessee, the provisions of section 272A(2)(j) of the Act are also not applicable to him. The appeals of the Revenue are dismissed.
ITA Nos.635 to 637/Chd/2015 :
12. These appeals are against the deletion of penalty imposed under section 271CA of the Act. Since in ITA Nos.629 to 631/Chd/2015 for assessment years 2010-11, 2011-12 and 2012-13 respectively, we have held that the provisions of tax collection at source are not applicable to the assessee, the provisions of section 271CA of the Act are also not applicable to him. The appeals of the Revenue are dismissed.
13. In the result, all the appeals filed by the Revenue are dismissed.
Order pronounced in the open court on this 29th day of September, 2015.
Sd/- Sd/-
(H.L.KARWA) (RANO JAIN)
VICE PRESIDENT ACOUNTANT MEMBER
Dated : 29 t h September, 2015
*Rati*
Copy to: The Appellant/The Respondent/The CIT(A)/The CIT/The DR.
Assistant Registrar, ITAT, Chandigarh 7