2014 (2) TMI 867 - AT - Income Tax

Deletion of penalty u/s 272B of the Act - Failure to mention PAN Held that - Section 272B of the Act is to be read in conjunction with section 139A(5B) of the Act - CIT(A) has restricted penalty to the tune of Rs. 30,000/- in all the appeal following the clarification embodied in the CBDT letter dated 05.08.2008 - Since this fact is not disputed by the revenue that CBDT has issued a clarification whereby it has been clarified penalty u/s 272B of Rs. 10,000/- is linked to the person and not with the number of defaults thus, there is no infirmity in the orders of CIT(A) Decided against Revenue.

Summary

Issues:
Appeal against penalty levied under section 272B of the IT Act for missing PAN in TDS return.

Analysis:
The appeals were directed against the order of Ld. CIT(A)-XXX for the AYs 2005-06 to 2007-08, all arising from a common order with identical grounds. The revenue challenged the deletion of penalty and the direction to collect a reduced penalty per person per year under section 272B. The Assessing Officer imposed a substantial penalty for missing/incorrect PAN in TDS returns, leading to the appeals. The Ld. CIT(A) reduced the penalty to a nominal amount of Rs. 30,000 based on the explanation offered by the assessee.

The revenue contended that penalty under section 272B should be levied per default, emphasizing the conjunction of sections 272B and 139A(5B). On the other hand, the assessee argued that the penalty should not be per default but per person, highlighting the non-availability of PAN from deductees. The assessee also referenced a CBDT clarification and a decision by the ITAT, Banglore Bench, supporting their stance that the penalty is linked to the person and not the number of defaults.

After considering the submissions, the tribunal upheld the decision of the Ld. CIT(A) to reduce the penalty to Rs. 30,000 per person, per the CBDT clarification. The tribunal found no fault in the Ld. CIT(A)'s order and dismissed the revenue's appeals, as the CBDT clarification established the penalty as per person and not per default. The tribunal's decision was based on the fact that the penalty amount was linked to the person, as clarified by the CBDT, and not based on the number of defaults in the PAN mentioned in the TDS return.

In conclusion, the tribunal's judgment upheld the reduction of penalty to Rs. 30,000 per person in line with the CBDT clarification, rejecting the revenue's appeal and affirming that the penalty under section 272B is person-centric and not linked to the number of defaults in the PAN.