Case Law Details

Case Name : Commissioner of Income Tax (TDS), Chandigarh Vs Superintendent of Police (Punjan And Haryana High Court at Chandigarh)
Appeal Number : ITA No. 124 of 2012
Date of Judgement/Order : 07/08/2012
Related Assessment Year :
Courts : All High Courts (3633) Punjab and Haryana HC (198)

In the instant case, the ITO(TDS) while going through the quarterly return in Form No.26Q, filed by the assessee noted that it has omitted to quote PAN/had quoted invalid PAN in 196 cases. As regards the reasonable cause,it was pleaded on behalf of the assessee that TDS was deducted and deposited in time in government Treasury. The default is only with regard to the wrong quoting of PAN of 196 of the deductees, such deductees quoted wrong PAN. However, correct PAN was given as soon as default was brought to the notice of the assessee. In this case, the CIT(A) has categorically observed that the assessee deducted TDS correctly and revised PAN and filed the revised statement on form No.26G, hence there was sufficient compliance of the provisions of section 139A. There is no dispute that the assessee quoted invalid PAN for 196 deductees which was corrected on being pointed out by ITO(TDS). In the instant case, failure to quote right PAN has occurred as the concerned depositor had misquoted PAN. There is also no dispute that the PAN was corrected after ascertaining the same from the respective deductees.

It was further held that cumulative analysis of Section 139A and Rules 114B to 114D shows that an obligation to quote PAN/GIR number or to file Form No.60 is that of customer and not that of the bank. Considering the entire facts and circumstances of the present case, and also keeping in view the decision of ITAT, Ahmedabad “D” Bench in the case of Financial Cooperative Bank Limited v. ITO, Ward 2(3), Surat (supra), we hold that there was reasonable cause of the default,if any committed by the assessee and hence no penalty under section 273B of the Act is leviable.

HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

ITA No. 124 of 2012

Date of decision: 07.08.2012

Commissioner of Income Tax (TDS), Chandigarh

Appellant

Vs.

Superintendent of Police

Ajay Kumar Mittal, J.

1. This appeal has been preferred by the revenue under section 260A of the Income Tax Act, 1961 (in short, “the Act”) against the order dated 19.12.2011 passed by the Income Tax Appellate Tribunal, Chandigarh Bench ‘B’, Chandigarh (for brevity, “the Tribunal”) in ITA No.942/CHD/201 1 for the assessment year 2009-10, claiming following substantial questions of law:-

i) Whether on the facts and in the circumstances of the case the Hon’ble Tribunal was right in law for deleting the penalty levied under section 272B of the Income tax Act, 1961 amounting to Rs. 19,60,000/- for non quoting/wrong quoting of PANs in 196 cases in the TDS returns 24Q for the assessment year 2009-10?

ii) Whether on the facts and in the circumstances of the case, the Hon’ble Tribunal was right in deleting the penalty and giving relief to the assessee merely on the ground that the appellant deducted TDS correctly and revised PAN and filed the revised statement in Form  No.26Q. While penalty was levied for non-quoting of PANs of deductees in Form No.24Q. Thus accepting additional evidence in contravention to Rule 46A of the Income Tax Rules, 1962?

iii) Whether on the facts and in the circumstances of the case the learned ITAT is right in law in giving benefit of Section 273B of the income Tax Act, 1961 despite the failure on the part of the respondent to prove that there was a reasonable cause in not furnishing the valid PAN numbers?

iv) Whether on the facts and in the circumstances of the case, the findings recorded by the learned ITAT are perverse and contrary to record?

2. Briefly, the facts as narrated in the appeal may be noticed. The e-TDS quarterly statement of deduction of tax in Form No.24Q for the financial year 2008-09 as required under sub section (3) of section 200 of the Act was filed on 16.10.2009 by the assessee. During processing, it was noticed that PAN Nos. of as many as 196 Tax deductees were found to be invalid. Section 139A (5B) of the Act requires that PAN Nos. of all persons on behalf of whom tax is deducted should be quoted in the quarterly statement. Accordingly, a show cause notice was issued to the respondent-assessee as to why penalty under section 272B of the Act be not imposed. The assessee neither appeared nor filed any written submissions. Thereafter, the Income tax Officer, (TDS) Panchkula passed order dated 30.8.2010, Annexure A-1 imposing a penalty of Rs. 19,60,000/-. Aggrieved by the order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [CIT(A)] which was allowed vide order dated 12.8.2011, Annexure A-2 and penalty was deleted. Dissatisfied with  the order, the revenue filed an appeal before the Tribunal which was also dismissed vide order dated 19.12.2011, Annexure A-3. Hence this appeal by the revenue.

3. The issue in this appeal relates to whether there was justifiable cause within the meaning of Section 273B of the Act on the basis of which it could be said that sufficient cause had been shown by the respondent-Superintendent of Police in wrongly quoting PAN in respect of 196 employees of the department. The CIT(A) had recorded as under:-

“In the instant case as already observed the appellant deducted TDS correctly and revised PAN and filed the revised statement on Form No.26Q, hence there is sufficient compliance of the provisions of section 139A. In view of the aforesaid discussion, it is held that the ITO (TDS) was not justified to levy the penalty of Rs.19,60,000/- @ Rs.10,000/- per default. The penalty levied by the ITO (TDS) under section 272B(1) is deleted.”

4. The Tribunal had come to the conclusion that there was sufficient cause on the part of the respondent while quoting PAN of the deductees and as such no penalty was leviable. The tax was deducted and deposited in time in the Government Treasury. The error was due to wrong quoting of PAN by the deductees to the assessee. The assessee had rectified the mistake by furnishing the correct PAN as soon as it came to its notice. The revised PAN and the revised statement were accordingly filed. Following findings recorded by the Tribunal may be read:-

“6. In the instant case, the only question before us is whether there was reasonable cause for alleged failure on  the part of the assessee. In the instant case, the ITO(TDS) while going through the quarterly return in Form No. 26Q, filed by the assessee noted that it has omitted to quote PAN/had quoted invalid PAN in 196 cases. As regards the reasonable cause,it was pleaded on behalf of the assessee that TDS was deducted and deposited in time in government Treasury. The default is only with regard to the wrong quoting of PAN of 196 of the deductees, such deductees quoted wrong PAN. However, correct PAN was given as soon as default was brought to the notice of the assessee. In this case, the CIT(A) has categorically observed that the assessee deducted TDS correctly and revised PAN and filed the revised statement on form No.26G, hence there was sufficient compliance of the provisions of section 139A. There is no dispute that the assessee quoted invalid PAN for 196 deductees which was corrected on being pointed out by ITO(TDS). In the instant case, failure to quote right PAN has occurred as the concerned depositor had misquoted PAN. There is also no dispute that the PAN was corrected after ascertaining the same from the respective deductees.”

5. The finding of the CIT(A) was upheld by the Tribunal with the following observations:-

“7. In the above case, the Tribunal held that cumulative analysis of Section 139A and Rules 114B to 114D shows that an obligation to quote PAN/GIR number or to file Form No.60 is that of customer and not that of the bank. Considering the entire facts and circumstances of the present case, and also keeping in view the decision of ITAT, Ahmedabad “D” Bench in the case of Financial Cooperative Bank Limited v. ITO, Ward 2(3), Surat (supra), we hold that there was reasonable cause of the default,if any committed by the assessee and hence no penalty under section 273B of the Act is leviable. In our view the learned CIT(A) has correctly appreciated the facts of the present case as well as settled legal position and therefore, we do not find any valid ground in interfering with the order of CIT(A). Consequently, appeal filed by the revenue is devoid of any merit and deserves to be dismissed.”

6. Learned counsel for the appellant was unable to show that the findings recorded by the CIT(A) as well as the Tribunal are erroneous in any manner. It was urged that there was no reasonable cause on the part of the assessee to furnish inaccurate PAN in Form 24Q.

7. On appreciation of the entire matter, CIT(A) and the Tribunal examined the explanation of the assessee and came to the conclusion that there was sufficient cause shown which would be a question of fact in the given facts and circumstances. Once that was so, there is no substance in the argument raised by the learned counsel for the appellant.

8. Finding no merit in the appeal, the same is dismissed.

August 07, 2012

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