Penalty u/s 272B cannot be imposed if there was reasonable cause of failure to quote valid PANs

Brief Facts of the case:

The assessee filed quarterly e-TDS Quarterly statement of deduction of tax in Form No.26Q for the first quarter of the financial year 2009-10. On processing of the aforesaid return, it was observed that PANs of as many as 56 tax-deductees were invalid and the assessee deductor did not submit correct PANs in respect thereof. A show cause notice was issued u/s 272B wherein it was alleged that the assessee has contravened the provisions of Sec 139(5B) by providing invalid PANs. Similar notices were issued for the second, third and fourth quarter of FY 2009-10. Thus, in aggregate a penalty of Rs. 31,16,000 was slapped on the assessee for the quarters in question. Aggrieved by the order of the AO, assessee preferred an appeal before the CIT(A) who deleted the above penalty by holding that the assessee during the course of adjudication proceedings has submitted correct PANs after receiving the PANs from the deductor.

 Contention of the Assessee:

The assessee’s learned counsel contended that the assessee has submitted returns with corrected PANs in reply to the SCN. The assessee could not furnish correct PANs in the original E-TDS returns as the same was not provided by the deductors. Since the assessee has not made contravention knowingly, thus, the penalty u/s 272B is not sustainable in law as for the failure of non-quoting of correct PANs assessee has shown reasonable cause.

 Contention of the Revenue:

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