TMI Blog2022 (11) TMI 418X X X X Extracts X X X X X X X X Extracts X X X X ..... scrap means wasted which is definitely not usable as it is. Scrap might have been bought and sold. Scrap might have arisen due to manufacturing activity which is sold. Whatever it may be, it is a fact that the assessee had the scrap for sale. In the present assessee s appeal the assessee has taken reliance on the Circular 18 dated 21.05.2012 was not considered by the Special Bench of the Tribunal. But from the perusal of the said Circular which later issued by the CBDT it is stated that there is no requirement that the goods to be eligible for scrap should be produced/manufacture by the seller itself. In present assessee s case the assessee has not filed prescribed Form 27C thereby exempting the seller to collect tax under Section 206C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als. The assessee filed return of income which was finalized under Section 143(3) of the Income Tax Act on 30.03.2015 determining total income at Rs. 6,71,263/-. A show-cause notice was issued to the assessee on 04.01.2018 and 23.01.2018 thereby asking the assessee to show-cause why an order under Section 206C(1)/206C(7) of the Income Tax Act, 1961 should not be passed in respect of non-collection of TCS on the sales of scrap income under the head of income from operation amounting to Rs. 2,68,24,875/-, and penalty under Section 271CA should not be levied for the said default. The assessee submitted its reply on 15.02.2018 stating therein that TCS is not applicable on the sale of scrap as it is not resulted due to any manufacturing activity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... source the person is liable to collect tax at source to inform person only if last year his accounts are audited under Section 44AB in the immediately preceding financial year in which goods are sold. The Ld. A.R. submitted that the assessee started the business in the name of Kirti Enterprise. The Audit Report of the assessee has not mentioned in details for the preceding year as the assessee is not liable for the audit in any other previous years. The assessee submitted the copy of Audit Report before the CIT(A) as additional evidence under the Rule 46A of the Income Tax Rules 1962. The Ld. A.R. submitted that during the appellate proceedings, the CIT(A) has rejected the appeal merely on the ground that the Audit Report Point 11 has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able on record. It is undisputed fact that the assessee is not a manufacturer and the scrap which was sold by the assessee was not from the manufacturing activity. The decision of the Special Bench in case of Bharti Auto Product (supra) was observed that scrap means wasted which is definitely not usable as it is. Scrap might have been bought and sold. Scrap might have arisen due to manufacturing activity which is sold. Whatever it may be, it is a fact that the assessee had the scrap for sale. In the present assessee s appeal the assessee has taken reliance on the Circular 18 dated 21.05.2012 was not considered by the Special Bench of the Tribunal. But from the perusal of the said Circular which later issued by the CBDT it is stated that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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