No penalty for non/wrong quoting of PAN of deductees in TDS return, if corrected afterwards in revised return

Chandigarh ITAT has held in an important case namely ITO(TDS), Panchkula Vs. Bharat Electronics Ltd.(2012) 47 I.T.Reps 167(ITAT-Chd)  that no penalty u/s 272B for wrong quoting of PAN shall be leviable on the deductor when such deductor had quoted invalid PAN in 64 cases out of 645 deductees, which default was corrected by the assessee on coming to know of it and filed revised return with correct PAN after verifying the same from the deductees.

Facts:In this case the ITO(TDS) while going through the quarterly return in Form No. 24Q filed by the assessee noted that it has omitted to quote PAN/has quoted invalid PAN in 64 cases. The ITO(TDS) has afforded number of opportunities to the assessee to explain his position and file the correct details in this regard. However, the assessee did not file any reply due to which the AO concluded that the assessee has committed a default u/s 139(5B) for which penalty u/s 272B(1) of the Act is leviable. The ITO(TDS) therefore, levied a penalty of Rs. 640000/-@ of Rs. 10000/- per default.

On appeal, CIT(A) cancelled the penalty observing that the TDS was deducted and deposited in time. The default was only with regard to wrong quoting of PAN of 64 deductees as the deductees quoted wrong PAN. Correct PAN was given as soon as the default was brought to to the notice of the assessee. CIT(A) also referred to section 273B of the ACT, which provides that no penalty is imposable for faliure u/s 272B of the ACT, if it is proved by the deductor that there was reasonable cause for such faliure. The ld. CIT(A) has categorically stated that the assessee has explained that the faliure to quote right PAN occured as the concerned depositor has mis-quoted the PAN. It was also observed by the ld. CIT(A) that PAN was corrected after ascertaining the same from the respective deductees.

On Appeal to the Tribunal it was held " 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 deductees. In our view the assessee has proved that there was reasonable cause for alleged faliure and hence no penalty is leviable. Even otherwise also no penalty is leviable when there is a technical or venial breach of the Act. The Hon'ble Supreme Court in the case of Hindustan Steel Ltd. V. State of Orrisa(1972) 83 ITR 26 (SC) has held as under:

"An order imposing penalty for faliure to carry out a statutory obligation is the result of a quasi-criminal proceedings, and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was a guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation. Penalty will not also be imposed for faliure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, where 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 statue."


Post a Comment