INCOME TAX ACT, 1961

Section 201(1) Section 206(6A), Proviso

Tax collection at source - Assessee-in-default - Assessee pleaded ignorance of law -

Assessee; the District Land & Land Reforms Officer, was the tax collector since functioning as the administrative District Magistrate was TCS collector within the meaning of section 206C(1C) defining tax collection at source as recipient of minor royalty and licences fee from the mining companies.He failed to collect the TCS in the capacity of specified collector under the provision of the Act. Assessee pleaded ignorance of the TCS provision prescribed under Chapter-XVII of the Act envisaging TCS collection of recipient in case of the specified payments received from the payer/licencer holders. The AO rejected the said explanation in his order to conclude that assessee's failure in ensuring necessary compliance to provision of the Act could not be held to be justifiable. He, therefore, raised the impugned TCS as well as interest payable thereupon demands. CIT(A) had affirmed the AO's action.Held: There was hardly any dispute that legislature has prescribed TCS collection under section 206(1C) @ 2% regarding mining and quarry lincence or lease, etc., at the time of receipt of the specified sums. Therefore, the mere fact that the State Government had not issued any instructions to the field authorities regarding compliance of the impugned statutory provision section 206(1C) does not carry any merit since ignorance of law by either the government or its agency in exercising various statutory functions cannot be accepted as a justifiable reason. This Tribunal, therefore, concurred with the revenue's argument supporting the AO as well as CIT(A)'s action raising the impugned demands in assessee's case since he had not collected TCS from the mining companies.There was no substance in revenue's technical argument contesting retrospectively operation of the proviso to section 206(6A) inserted by the Finance Act, 2012 with effect from 1-7-2012. The legislature had inserted a similar proviso in section 201(1) by the very Finance Act, 2012 with effect from 1-7-2012 to be applicable in case of TDS deductor at the time of his assessment. The very line of reasoning also deserves to be adopted qua application of section 206A (first proviso) as well inserted by the Finance Act, 2012 with effect from 1-7-2012 to this effect as applicable in case of TCS collection than TDS deduction. This Bench, therefore, declined the Revenue's instant technical argument that the foregoing proviso to section 206C(6A) does not carry any retrospective operation and leave it open for the AO to verify all necessary facts about the assessee's payers to have been assessed qua the very income under the provision of the Act. The assessee was directed to place on record all necessary documents in consequential proceedings within three effective opportunities of hearing.

Followed:(2016) 279 CTR 384 (Del) : 2015 TaxPub(DT) 3482 (Del-HC), CIT v. Ansal Landmark Township and Pr. CIT v. Perfect Circle India Pvt. Ltd. TA No. 707 of 2016, dated 7-1-2019] : 2019 TaxPub(DT) 1226 (Bom-HC).

REFERRED :

FAVOUR : In assesse's favour (Partly)/Matter remanded.

A.Y. : 2010-11 to 2014-15

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