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Issues involved: Appeal against penalty u/s 272B of the IT Act, 1961 for failure to quote PANs of deductees.
Summary: The appellant challenged the penalty of Rs. 10,000 imposed under section 272B of the IT Act, 1961, for not quoting PANs of deductees in the TDS return. The appellant, a partnership firm engaged in the wholesale business of grocery items, had deducted tax but failed to provide PANs of five deductees. The AO initiated penalty proceedings based on this non-compliance. The appellant contended that it had deposited the tax in time, filed the TDS return, and made efforts to obtain PANs from the deductees by writing letters to them. However, the AO upheld the penalty. The CIT(A) also ruled against the appellant. The appellant argued that there was a reasonable cause for not providing PANs and cited a Tribunal's order stating that the Act did not empower deductors to compel deductees to provide PANs. The appellant maintained that if any penalty was warranted, it should be on the deductees for not providing PANs. After considering the contentions and records, it was observed that the appellant had made efforts to comply with the provisions by requesting PANs from the deductees. Sections 272B and 273B of the Act provide discretion to the AO not to impose a penalty if a reasonable cause is demonstrated. In this case, the appellant's efforts to obtain PANs were deemed reasonable, and it was concluded that the penalty should not have been imposed. Consequently, the penalty imposed by the AO was deleted, and the appeal of the appellant was allowed.
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