Important Judgement: In case of TDS Return Revision with valid PAN

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Here I publish an Important judgment  where assessee failed to
mention correct PAN of few deductees in quarterly e-TDS return which in fact
were not available with it at relevant time but on being show-caused it
obtained correct PANs and filed revised return. 

 [2015] 58 taxmann.com 134 (Delhi
– Trib.)
IN THE ITAT DELHI BENCH ‘SMC’
Income-tax Officer (TDS), Rohtak
v.
Executive Engineer*
R.S. SYAL, ACCOUNTANT MEMBER
IT Appeal Nos. 492 to 495 (Delhi) of 2014
[ASSESSMENT YEAR 2010-11]
JUNE  15, 2015 
Section 139A, read with section 272B, of the Income-tax Act, 1961 –
Permanent Account Number – Assessment year 2010-11 – In quarterly TDS
statements filed by assessee in Form No. 26Q, PANs of certain tax deductees
were found to be incorrect – On being show-caused, assessee obtained relevant
PANs and filed revised statement of TDS – Assessing Officer levied penalty
under section 272B – Whether there was a reasonable cause in assessee not
mentioning correct PANs in respect of a few deductees at time of originally
filing e-TDS quarterly statement of deduction of tax in Form No. 26Q, which
were in fact, not available with assessee at material time and, therefore, no
penalty could be levied under section 272B on assessee – Held, yes [Para 7][In
favour of assessee]
FACTS
 


 
The assessee filed
quarterly e-TDS statement in Form No.26Q for the first quarter of the
financial year 2009-10.
 
On processing of the
aforesaid return, it was observed that PANs of certain tax-deductees were
invalid.
 
On being show caused, the
assessee filed correction returns duly stating PANs of a few tax deductees
which were not earlier available.
 
The Assessing Officer
invoked the provisions of section 139(5B) and imposed penalty under section
272B.
 
On appeal, the
Commissioner (Appeals) deleted the penalty.
 
On revenue’s appeal:

HELD
 

 
A careful perusal of
section 139A indicates that where an amount has been paid after deducting
tax, then, the person deducting tax is required to quote the Permanent
Account Number in the statements mentioned in the provision. Non-compliance
with the mandate of section 139A attracts penalty under section 272B. [Para
5]
 
The provisions of
sub-section (2) of section 272B are not attracted when there is a violation
of sub-section (5B) of section 139A. Such violation shall be covered under
the provisions of sub-section (1) which provides that in case of a failure
‘to comply with the provisions of section 139A, the Assessing Officer may
direct that such person shall pay, by way of penalty, a sum of ten thousand
rupees.’ In the instant case, the assessee originally did not have the
correct PANs of all the persons from whose payments, tax at source was
required to be deducted. Despite that, the assessee did deduct tax at source
and paid the amount to the exchequer well in time. The only fault of the
assessee was in not filling PANs of some of the deductees which were not
available at the time of filing e-returns. As soon as the Assessing Officer
issued notice for imposing penalty under section 272B, the assessee obtained
the relevant PANs and complied with the requirement by filing the revised
statement. [Para 6]
 
The provisions of
section 272B are subject to section 273B which provides that notwithstanding
anything contained in the provisions, inter alia, of section 272B, no
penalty shall be imposed for any failure referred to in the said provision if
it is proved that there was a reasonable cause for the said failure.
Considering the entirety of the facts and circumstances prevailing in the
instant case, there was a reasonable cause in the assessee for not mentioning
the correct PANs in respect of a few deductees at the time of originally
filing e-TDS quarterly statement of deduction of tax in Form No.26Q, which
were, in fact, not available with the assessee at the material time. As and
when the necessary information was obtained, the assessee corrected the lapse
and revised the statement by furnishing due particulars thereof. The
Commissioner (Appeals) was justified in deleting the penalty by relying on
the judgment of the Supreme Court in the case of Hindustan Steel Ltd.
v. State of Orissa [1972] 83 ITR 26, in which the
Supreme Court has laid down that penalty cannot be ordinarily imposed unless
the party obliged either acts deliberately in defiance of law or is guilty of
conduct contumacious or dishonest, or acts in conscious disregard of its
obligation. [Para 7]

CASE REVIEW
 Hindustan
Steel Ltd.

v. State of Orissa [1972] 83 ITR 26 (SC) (para 7) followed.

CASES REFERRED TO
 Hindustan Steel
Ltd.

v. State of Orissa [1972] 83 ITR 26 (SC) (para 7).

Amrit Lal, Jt. CIT  for the Appellant.

ORDER
 

1. These four
appeals by the Revenue arise out of a common order passed by the CIT (A) on
6.12.2013 deleting the penalty imposed u/s 272B of the Income-tax Act, 1961
(hereinafter also called ‘the Act’) in relation to the financial year 2009-10.
2. Briefly
stated, the facts of the appeal no. 492/D/2014 are that the assessee filed
quarterly e-TDS Quarterly statement of deduction of tax in Form No.26Q for the
first quarter of the financial year 2009-10. On processing of the aforesaid
return, it was observed that PANs of as many as 56 tax-deductees were invalid
and the assessee deductor did not submit correct PANs in respect thereof. On
being show caused as to why penalty u/s 272B of the Act be not imposed, the
assessee furnished its reply dated 9.1.2012 submitting the copies of correction
returns duly stating PANs of a few tax deductees which were not earlier
available. The AO invoked the provisions of section 139(5B) and imposed penalty
@ Rs.10,000/- per breach amounting in total to Rs.5,60,000/- for the first
quarter of the year. Similar is the position for the remaining three quarters
for which the AO imposed penalty at Rs.9,40,000/-, Rs.8,16,000/- and Rs.8 lac.
The assessee preferred appeals against the orders passed by the AO u/s 272B of
the Act. The ld. CIT(A) concurred with the submissions advanced on behalf of
the assessee and ordered for the deletion of penalty imposed for four different
quarters of the financial year 2009-10. The Revenue is aggrieved against the
deletion of such penalty.
3. I have heard
the ld. DR and perused the relevant material available on record. There is no
appearance from the side of the assessee despite notice. As such, I am
proceeding to dispose of these appeals ex parte qua the assessee.
4. It is
observed that the AO imposed penalty u/s 272B for violation of the provisions
of section 139(5B), which read as under:—
“139A.
(5B) Where any sum or income or amount has been
paid after deducting tax under Chapter XVIIB, every person deducting tax under
that Chapter shall quote the permanent account number of the person to whom
such sum or income or amount has been paid by him—
(i)
 
in the statement furnished in accordance with the provisions of
sub-section (2C) of section 192;
(ii)
 
in all certificates furnished in accordance with the provisions of
section 203;
(iii)
 
in all returns prepared and delivered or caused to be delivered in
accordance with the provisions of section 206 to any income-tax authority;
(iv)
 
in all statements prepared and delivered or caused to be delivered in
accordance with the provisions of sub-section (3) of section 200:


5. A careful perusal
of this provision indicates that where an amount has been paid after deducting
tax, then, the person deducting tax is required to quote the Permanent Account
Number in the statements mentioned in the provision. Non-compliance with the
mandate of section 139A attracts penalty u/s 272B, the relevant part of which
reads as under:—

RECOMMENDED READ  Govt. TDS Deductors must quote AIN details in TDS Statements
272B. “Penalty for failure to comply
with the provisions of section 139A.
— (1) If a person fails to comply with
the provisions of section 139A, the Assessing Officer may direct that such
person shall pay, by way of penalty, a sum of ten thousand rupees.
(2) If a person who is required to quote his
permanent account number in any document referred to in clause (c) of
sub-section (5) of section 139A, or to intimate such number as required by
sub-section (5A) or sub-section (5C) of that section, quotes or intimates a
number which is false, and which he either knows or believes to be false or
does not believe to be true, the Assessing Officer may direct that such person
shall pay, by way of penalty, a sum of ten thousand rupees.
(3) No order under sub-section (1) or
sub-section (2) shall be passed unless the person, on whom the penalty is
proposed to be imposed, is given an opportunity of being heard in the
matter.”
6. It is
obvious that the provisions of sub-section (2) are not attracted when there is
a violation of sub-section (5B) of section 139A. Such violation shall be
covered under the provisions of sub-section (1) which provides that in case of
a failure `to comply with the provisions of section 139A, the Assessing Officer
may direct that such person shall pay, by way of penalty, a sum of ten thousand
rupees.’ I am confronted with a situation in which the assessee originally did
not have the correct PANs of all the persons from whose payments, tax at source
was required to be deducted. Despite that, the assessee did deduct tax at
source and paid the amount to the exchequer well in time. The only fault of the
assessee was in not filling PANs of some of the deductees which were not available
at the time of filing e-returns. As soon as the AO issued notice for imposing
penalty u/s 272B, the assessee obtained the relevant PANs and complied with the
requirement by filing the revised statement.
7. At this
juncture, it is pertinent to note that the provisions of section 272B are
subject to section 273B of the Act, which provides that notwithstanding
anything contained in the provisions, inter alia, of section 272B, no
penalty shall be imposed for any failure referred to in the said provision if
it is proved that there was a reasonable cause for the said failure.
Considering the entirety of the facts and circumstances prevailing in the
instant case, I find that there was a reasonable cause in the assessee not
mentioning the correct PANs in respect of a few deductees at the time of
originally filing e-TDS quarterly statement of deduction of tax in Form No.26Q,
which were in fact, not available with the assessee at the material time. As
and when the necessary information was obtained, the assessee corrected the
lapse and revised the statement by furnishing due particulars thereof. In my
considered opinion, the ld. CIT(A) was justified in deleting the penalty by
relying on the judgment of the Hon’ble Supreme Court in the case of Hindustan
Steel Ltd.
v. State of Orissa [1972] 83 ITR 26 , in which the
Hon’ble Supreme Court has laid down that penalty cannot be ordinarily imposed
unless the party obliged either acts deliberately in defiance of law or is
guilty of conduct contumacious or dishonest, or acts in conscious disregard of
its obligation. I find that the judgment of the Hon’ble Supreme Court is fully
applicable in the facts and circumstances as are instantly prevailing. As such,
I approve the view taken by the ld. CIT(A) in deleting the penalty for all the
four quarters of the financial year 2009-10.
*In favour of
assessee.

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