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TMI Blog2013 (8) TMI 599X X X X Extracts X X X X X X X X Extracts X X X X ..... aw laid down by the Hon'ble Supreme Court in the case of Hindustan Steels Ltd. Vs. State of Orissa [1969 (8) TMI 31 - SUPREME Court]. is applicable looking to the provisions of Section 272-B read with Section 273B of the Act – There is no revenue loss and mere technical breach, clearly satisfies the test of reasonable cause under section 273B of the Act – Decided against the Revenue. - Income Tax Appeal No. - 460 of 2009 - - - Dated:- 19-8-2013 - Hon'ble Sunil Ambwani And Hon'ble Surya Prakash Kesarwani,JJ. For the Appellant : A. N. Mahajan For the Respondent : Shubham Agrawal ORDER ( Delivered by Hon'ble Surya Prakash Kesarwani, J.) This appeal has been filed by the revenue under Section 260A of the Income Tax Act 1961 (hereinafter referred to as the 'Act' ) against the judgment and order dated 23.4.2009 passed by the Income Tax Appellate Tribunal, Agra Bench, Agra, deleting the penalty of Rs.34,30,000/- under Section 272-B of the Act pertaining to the assessment year 2003-04. The appellants have framed the following questions as Substantial Questions of law in the memorandum of appeal : (i) "Whether on the facts and in the circumstances of the case, the T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reme Court in the case of 'Hindustan Steels Ltd. Vs.State of Orrissa reported in [1972] 83 ITR 26', the penalty will not ordinarily be imposed unless the parties obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest or acted in conscious disregard of its obligation which circumstances do not exist in the present case and Section 272-B does not provide for penalty one default deducteewise under the Act. However, the Additional Commissioner rejected the explanations submitted by the respondent-assessee and imposed penalty. In the appeal filed by the respondent-assessee, the CIT (Appeals ), Agra upheld the levy of penalty on the ground that there was no reasonable cause for failure to obtain and quote PAN of the deductees. However, the matter was remanded to the A.O. to identify the defaults committed prior to the introduction of section 272B w.e.f. 1.6.2002 and reduce the penalty imposed in respect of such default. Being aggrieved by this order the respondent-assessee filed an appeal before the Income Tax Appellate Tribunal, which was allowed by the impugned order dated 23.4.2009. The appellants-department have filed the present a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that it is very difficult in the given circumstances to obtain PAN of the payees. Under section 272B(1) of the Act, it is the discretion of the AO to levy a penalty in case any person fails to comply with the provisions of section 139A of the Act. The use of word "may" in this section clearly suggest that the levy of penalty is not mandatory and admits reasonable excuse for its exoneration. It is true that in some of the cases where TDS certificates were issued prior to 01.06.02, the ld. CIT(A) has accepted the contention of the appellant and has reduced the penalty amount to Rs.34.30 lacs from Rs.35 lacs. There is no dispute that the appellant has violated the provisions of section 139A(5B) of the Act, but to our mind, the appellant has fully complied with all the other provisions of the Act, as stated above and there is no loss of Revenue to the department due to the conduct of the appellant as it has neither issued wrong certificates nor has mentioned any wrong particulars in TDS certificates. The conduct of the assessee in not providing PAN was not contumacious or fraudulent and the default in question was neither intentional nor willful. The default is purely a technical one. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person, on whom the penalty is proposed to be imposed, is given an opportunity of being heard in the matter. 139-A (5A) Every person receiving any sum or income or amount from which tax has been deducted under the provisions of Chapter XVIIB, shall intimate his permanent account number to the person responsible for deducting such tax under that Chapter : Provided further that a person referred to in this sub-section shall intimate the General Index Register Number till such time permanent account number is allotted to such person. 139-A (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 section192 ; 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee that certain contractors have not intimated their permanent account number and for that reason it could not be mentioned in Form-16A issued to such contractors. Section 139A(5B) makes it obligatory for every person deducting tax under Chapter XVII-B to quote the permanent account number of the person to whom such sum or income or amount has been paid by him. Thus, reading both the provisions together, namely, Section 139A(5A) and Section 139A (5B) it appears to us that the deductor may be at fault under section 139A (5B) if he does not quote the permanent account number of the persons to whom the amount has been paid, despite the intimation of permanent account number by such person to the deductor under section 139A(5A) of the Act. There is nothing on record to show that the contractors to whom certain amounts were paid by the respondent-assessee, had intimated their permanent account number to the respondent-assessee as required under section 139A(5A) of the Act. We are of the opinion that in the circumstances the respondent assessee successfully explained the reasonable cause to satisfy the provisions of Section 273B of the Act. Section 272-B has to be read along with Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s observed as under : " An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest or acted in conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. 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 bonafide belief that the offender is not liable to act in the manner prescribed by the statute." We find that the law laid down by the Hon'ble Supreme Court in the case of Hindustan Steels Ltd. Vs. State of Orissa reported in 1983 ITR 26(SC) is applicable looking to the provisions of Section 272-B read with Section 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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