2015 (10) TMI 1614 - AT - Income Tax

Penalty imposed u/s 272B - CIT(A) deleted the penalty levy - Held that - 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. In he present case 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 Hindustan Steel Ltd. Vs. State of Orissa (1969 (8) TMI 31 - SUPREME Court ), wherein 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. - Decided in favour of assessee.

Summary

Issues:
Appeals against deletion of penalty u/s 272B for financial year 2009-10.

Analysis:
The appeals by the Revenue were against the deletion of penalties imposed under section 272B of the Income-tax Act, 1961 for the financial year 2009-10. The penalties were imposed due to the assessee's failure to submit correct PANs of tax deductees in the e-TDS quarterly statements. The AO imposed penalties for each quarter, totaling significant amounts. The CIT(A) deleted the penalties for all four quarters, leading to the Revenue's appeal.

The relevant provision under scrutiny was section 139A(5B) which mandates quoting the Permanent Account Number (PAN) when deducting tax. Non-compliance attracts penalty under section 272B. The penalty amount specified for non-compliance is Rs. 10,000. However, the provision does not specify penalties for false PANs. The assessee had deducted tax but failed to provide correct PANs initially. Upon receiving notice for penalty, the assessee rectified the mistake by submitting corrected PANs.

The judgment highlighted the importance of section 273B, which exempts penalties if a reasonable cause for failure is proven. In this case, the assessee's failure to provide correct PANs initially was due to unavailability of information. The assessee rectified the error promptly upon obtaining the necessary details. The judgment referred to Hindustan Steel Ltd. Vs. State of Orissa (1972) 83 ITR 26 (SC), emphasizing that penalties should not be imposed unless there is deliberate defiance of the law or contumacious conduct. The judgment found the Supreme Court's ruling applicable to the current scenario, justifying the CIT(A)'s decision to delete the penalties for all quarters of the financial year 2009-10.

In conclusion, the Tribunal dismissed all four appeals by the Revenue, upholding the CIT(A)'s decision to delete the penalties imposed under section 272B for the financial year 2009-10. The judgment emphasized the importance of reasonable cause and prompt rectification of errors in tax compliance matters, in line with legal precedents.