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2011 (9) TMI 1102 - AT - Income TaxPenalty u/s 272B - default u/s 139A(5B) - Omitted to quote PAN/has quoted invalid PAN in 77 cases - Held that - In the instant case, it is apparent from the record that the assessee deducted TDS correctly and revised the PAN and filed revised statement in Form No. 26Q, hence there was sufficient compliance of the provisions of section 139A of the Act. Even otherwise the assessee did not derive any benefit whatsoever, by filing the wrong PANs and PAN was corrected after ascertaining the same from the respective deductees. In our view the assessee has proved that there was reasonable cause for alleged failure and hence no penalty is leviable. Even otherwise also no penalty is leviable when there is a technical or venial breach of the Act. Appeal filed by the Revenue is dismissed.
Issues involved:
1. Penalty imposed under section 272B of the Income-tax Act, 1961 for incorrect PAN quoting. 2. Applicability of penalty for default under section 139A(5B)(iv) of the Act. 3. Compliance with the provisions of section 139A of the Act. 4. Reasonable cause for the failure to quote the correct PAN. 5. Interpretation of section 273B of the Act regarding penalty imposition. 6. Judicial considerations for imposing penalties for statutory obligations. Detailed Analysis: 1. The appeal was filed by the Revenue against the cancellation of a penalty of Rs. 7,70,000 imposed under section 272B of the Income-tax Act, 1961 for Assessment Year 2009-10 due to incorrect PAN quoting by the assessee in 77 cases. 2. The ld. CIT(A) cancelled the penalty by emphasizing that the TDS was deducted and deposited on time, and the default was only related to the wrong quoting of PAN for the deductees. The penalty was levied for default under section 139A(5B)(iv), which requires correct PAN quoting in statements delivered to Income tax authorities. 3. The ld. CIT(A) observed that the assessee rectified the incorrect PANs as soon as the default was identified, demonstrating compliance with section 139A. The assessee provided correct details and revised statements, leading to the conclusion that no penalty was justifiable. 4. The Tribunal found that the failure to quote the correct PAN was due to the deductees themselves misquoting the PAN, and the assessee corrected the PAN after verifying with the deductees. This reasonable cause for the failure, along with the technical nature of the breach, led to the decision that no penalty was warranted. 5. Section 273B of the Act states that no penalty is applicable if there was a reasonable cause for the failure. The Tribunal cited a similar case where the failure to comply with PAN quoting was attributed to the customer, not the bank, leading to the decision that no penalty should be imposed on the assessee. 6. Referring to judicial precedents, including the Hindustan Steel Ltd case, the Tribunal highlighted that penalties for statutory obligations should be imposed judiciously, considering the circumstances. In this case, the technical or venial breach, coupled with the bona fide belief of the assessee, justified the cancellation of the penalty. In conclusion, the Tribunal upheld the decision of the ld. CIT(A) in canceling the penalty, emphasizing the compliance efforts of the assessee and the absence of deliberate defiance of the law or contumacious conduct.
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