Case Law Details
Nisarahmed Abdulsattar Vs ITO (ITAT Ahmedabad)
Introduction: The Income Tax Appellate Tribunal (ITAT) in Ahmedabad ruled on the case of Nisarahmed Abdulsattar Vs. Income Tax Officer (ITO) concerning the failure to collect Tax Collected at Source (TCS) on the sale of metal scrap. The issue revolved around whether the Assessment Order passed by the AO was within the limitation period.
Analysis: The appellant, an individual, operated M/s. A.S. Didwani Scrap Traders, engaged in trading in scrap. For the Assessment Year 2012-13, the appellant sold metal scrap to various parties but failed to deduct TCS at 1% as required under Section 206C of the Income Tax Act. Consequently, proceedings were initiated, and a show cause notice was issued to the appellant.
The appellant contended that they were engaged in trading defective sheets, not scrap, and hence, TCS provisions did not apply to their trading activities. However, both the Assessing Officer and the Commissioner of Income Tax (Appeals) rejected the appellant’s explanation and demanded TCS and interest.
The ITAT’s decision to quash the Assessment Order hinged on the argument that the order was passed beyond the limitation period. The ITAT cited various case laws supporting the position that proceedings under Section 201/201(1A) of the IT Act must be initiated within four years from the end of the financial year. In this case, the order was passed on 26-07-2017, which exceeded the four-year limitation period, making it untenable.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
