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TMI Blog2011 (12) TMI 362X X X X Extracts X X X X X X X X Extracts X X X X ..... Decided in favor of the assessee - ITA No. 2028/D/2011; - - - Dated:- 23-12-2011 - Rajpal Yadav, A.N. Pahuja, JJ. P.J. Khanna, AR for the Appellant S. Mohanty, DR for the Respondent ORDER A.N. Pahuja, Accountant Member 1. This appeal filed on 25.04.2011 by the assessee against an order dated 24.01.2011 of the learned CIT(A), Faridabad, raises the following grounds:- "On the facts and circumstances of the case, the learned CIT(A) is unjustified, arbitrary and has erred under the law by not deleting the following additions made by the assessing authority. 1. By unjustified penalty of Rs.30,000/- imposed on the appellant u/s 272B of the Income-tax Act, 1961 and it is therefore, prayed that the unjustified and arbitrary additions to income be deleted and relief accordingly be granted to the assessee. 2. That the appellant craves for the permission to add delete or amend the grounds of appeal before or at the time of hearing." 2. Facts, in brief, as per relevant orders are that a perusal of the e-TDS quarterly statement of deduction of tax in form no.24Q for the financial year 2008-09 revealed that the assessee furnished incorrect Permanen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b) of sub-section (1) of ..... or section 272B or ...., no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the said provisions if he proves that there was reasonable cause for the said failure. The provisions of section 139A(5B) read as under: (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 subsection (3) of section 200: It is abundantly clear from the above provisions that a legal obligation has been cast upon every person (deductor) to quote PAN where:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... em. The errors in multiple cases cannot be considered to be in the nature of inadvertent mistake but a case of negligence. The subsequent filing of correction statement on 14.06.2010 can only set right the defects in the original quarterly return but not the default committed in terms of the provisions of section 139A(5B) which mandates quoting of PAN in respect of all the deductees to whom sums have been paid after deduction of tax at source. The contentions of the appellant that the AO has misunderstood the provisions of law and the penalty u/s 272B is not leviable for any default committed under section 139A(5B) of the Act are devoid of any merit and bereft of any rationality. Sub section (1) of section 272B empowers the AO to levy penalty. 0n both the 'deductor' and 'deductee' if there is contravention 139A of the Act. Sub section (2) of section. 272B provides for Imposition of penalty only on the deductees PAN required to be quoted in any document referred to in (c) of sub-section (5) of section 139A, or to be intimated as required by sub-section (5A) or sub-section (5C) of section 139A of the Act is found to be false. Therefore, the penal provisions under sub section (2) of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be filed as mentioned in sub section (5B) of section 139A of the Act. If the PAN of deductees is not quoted or wrongly quoted in the TDS returns required to be filed under section 200(3) of the Act, than the deductees shall not able to get the credit for tax deducted on their behalf by the deductor while processing of their returns of income. Therefore, the penal provisions of section 272B are brought on statute to ensure compliance of provisions of section 139A so that the whole scheme of the Government is not put to jeopardy. The CBDT in the circular No.9/200B in para 4.10 has emphasized as under: "4.10 Quarterly Statement of TDS - The person deducting the tax (employer in case of salary income), is required to file Quarterly Statements of TDS for the periods ending on 30th June, 30th September, 31st December and 31st March of each financial year, duly verified, to the Director General of Income-tax (Systems) or M/s. National Securities Depository Ltd. (NSDL). These statements are required to be filed on or before the 15th July, the 15th October, the 15th January in respect of the first three quarters of the financial year and on or before the 15th June following the last ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eturns in paper form will no longer be accepted from such tax deductors." Considering the above position and with due respect, it appears to me that my learned predecessor has not appreciated the position of law correctly in holding that the provisions of section 272B are not applicable to the default committed under section 139A(5B) of the Act. Sub section (5B) is an integral part of the provisions of section 139A of the Act and non compliance to the same is covered by the penal provisions of section 272B(1) of the Act as far as a tax deductor is concerned. 6.2. The relied upon case of Packraft Container India Pvt. Ltd. was also represented by the counsel for the present appeal in which reliance was placed on certain decisions in the cases of Mahavir Agency vs. ITA (58 ITD 386) [Ahd.] (tax deducted at source was duly paid in time but return in Form 26A was filed late), Mahendra Prakash Saraf vs. DCIT (64 ITD 382) (Del) (penalty was levied for delay in filing return in Form 26A) and Bansal Bros. vs. DCIT (64 ITD 129) (Del) where a penalty was levied under section 272A(g} on the ground of delay in issue of consolidated certificate at the end of the accounting period. Hence, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6) of section 139A and not on the provisions of section 139A(5B). Hence, the reliance on the same by my learned predecessor does not appear to be correct. The Hon'ble Rajasthan High Court in the case of Chhogmal Chiranji La1 vs. CIT (257 ITR 51) has held that if law provides for doing a thing in an particular manner, then it has to be done in that manner alone. In the case of Escorts Employees Ancillaries Ltd. vs. CIT, the Hon'ble ITAT, Delhi Bench 'B' (Third Member) (74 ITD 1), in a judgment delivered in the context of provisions of section 272A(2) read with section 197 A(2), has held that that the penalty is to be levied with reference to the default or delay in submitting copy of each declaration in Form No 15H, separately. On the same analogy and interpretation, the penalty of Rs.10,000/- under section 272B is required to be levied for not quoting or wrong quoting of each PAN. It is evident from the submissions of appellant that wrong PAN has been quoted in respect of three deductees but in five records. It may be reiterated that wrong quoting of PAN cannot be inferred to be a compliance as per the provisions of section 139A (5B) of the Act and consequently, the penal provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B) of the Act, the assessee did not appear nor pleaded any reasonable cause for their failure to quote correct PAN. On appeal, the assessee contended that though they mentioned PAN of the aforesaid three persons as per details given by these persons in form no.24Q after deducting tax at source from salary paid to them, on processing form no. 24 Q by the AO, it transpired that PAN of the aforesaid three persons was incorrect in five records. Though they submitted correct PAN to the concerned AO, he did not accept their submissions on the ground that the assessee itself should revise and upload the same, the AO having no power to rectify the defect. It was further submitted that that though the assessee tried to upload revised form, they could not do so due to mismatch of data and accordingly, it was rejected by the facilitation centre.. The assessee also enclosed a copy of revised return filed by it and the processing details as also copies PAN cards of the aforesaid three persons. The AO failed to provide a proper solution and instead imposed a penalty of 50,000/-, The Assessee Submitted. On Appeal, The Ld. Cit(A) Reduced The Penalty To 30,000/-, there being repetition of PAN in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for every venial and technical breach of procedural laws. In this connection, it may be apposite to draw attention to the decision of the Supreme Court in Hindustan Steel Ltd. v. State of Orissa [1972] 83 ITR 26; [1970] 25 STC 211, where it was laid down that even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute. In the instant case, the assessee attempted to correct their mistake on being pointed out but were unable to do so. There is no material on record that the assessee intended to quote false PAN. Considering the totality of facts and circumstances of the case, in our opinion, the aforesaid ratio in Hindustan Steel Ltd.'s case [1972] 83 ITR 26 (SC) case fully governs the facts of the present case and, therefore, the assessee was entitled to absolution from the liability to penalty under section 272B for quoting incorrect PAN of the aforesaid three persons in form no. 24Q. In view thereof, we have ..... X X X X Extracts X X X X X X X X Extracts X X X X
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