IN THE INCOME TAX APPELLATE TRIBUNAL
CHANDIGARH BENCHES `A' CHANDIGARH
BEFORE SHRI H.L.KARWA, HON'BLE, VICE PRESIDENT
AND SHRI T.R.SOOD, ACCOUNTANT MEMBER
ITA No. 471/Chd/2012
Financial Year : 2008-09
The Head Master, Vs The ITO (TDS),
Govt. High School, Panchkula
Tundla, Distt. Ambala
PAN No. AM PRP8841R
(Appellant) (Respondent)
Appellant By : Shri Pankaj Aggarwal
Respondent By : Shri A.K. Gupta
Date of hearing : 06.06.2012
Date of Pronouncement : 07.06.2012
ORDER
PER H.L.KARWA, VP
This appeal filed by the assessee is directed against the order of
CIT(A), Rohtak dated 13.02.2012 in confirming the penalty of Rs. 50,000/-
imposed u/s 272B of the Income Tax Act, 1961 (in short 'the Act') for
financial year 2008-09.
2. Briefly stated the facts of the case are that the assessee (Tax Deductor)
is the holder of Tax Deduction and Collection Account No. RTKG05125B.
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
I.T. Act, 1961 was filed on 3.6.2009. The ITO (TDS), Panchkula while going
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through the quarterly statement filed by the assessee noted that the Tax
Deductor has quoted invalid PAN in five cases. After affording an
opportunity of being heard to the assessee, the ITO (TDS), Panchkula held
that the assessee has committed default u/s 139A (5B) of the Act for which
penalty u/s 272B was leviable. The ITO (TDS) Panchkula, therefore, levied a
penalty of Rs. 50,000/- for the failure on the part of the assessee (Tax
Deductor) to make appropriate compliance of provisions of s ection 139 A of
the Act.
3. On appeal, the Ld. CIT(A) confirmed the impugned penalty.
4. We have heard Shri Pankaj Aggarwal, C.A. Ld. Counsel for the
assessee and Shri A.K. Gupta, Ld. Departmental Representative at length.
We find that the issue is squarely covered in favour of the assessee and
against the Revenue by the decision of this Bench of the Tribunal dated
19.9.2011 in the case of ITO(TDS) Panchkula v. Oriental Bank of Commerce,
Naraingarh, Distt. Ambala in ITA No. 773/Chd/2011 relevant to AY 2009-10.
In the above case, the ITO(TDS) levied a penalty of Rs. 7,70,000/- @ Rs.
10,000 per default vide his order dated 28.7. 2010. On appeal, the ld. CIT(A)
cancelled the penalty and the Revenue filed appeal before this Tribunal
against the order of the ld. CIT(A). This Bench of the Tribunal vide order
dated 19.9.2011 dismissed the appeal of the Revenue observing as under:-
" 5. We have heard Shri N.K. Saini, DR for the revenue at length and
have also perused the materials available on record. In this case the
assessee quoted wrong PANs for 77 deductees which was corrected on
being pointed out by the ITO(TDS). Section 273B of the Act provides
that no penalty is imposable for a failure u/s 272B, if it is proved by
the deductees that there was reasonable cause for the said failure. In
this case the assessee has explained that failure to quote right PAN
was occurred as the concerned depositor has himself mis-quoted PAN.
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It is also the case of the assessee that the PAN was corrected after
ascertaining the same from respective deductees. In the case of the
Financial Co-operative Bank Ltd v. ITO (supra) the Ahmedabad Bench
has held as under:-
"We are, therefore of the opinion that since the furnishing
of incomplete declaration by the customer was a mistake
committed by the Customer and not by the Bank, the failure
to comply with the provisions of section 139A as envisaged in
sub-sec (1) of Sec 272B of the Act was of the customer and
not of the Bank; meaning thereby that the penalty under sec
272B(1) of the Act, if any, is to be imposed, it is to be
imposed on the customer and not on the Bank. Bank can be
penalized if it fails to comply with the provisions of section
139A(6) or rule 114D(2) is for failure to ensure that PAN or
GIR Number is quoted by the customer and for failure in
forwarding the copies of Form No. 60, but not for any other
default. "
5.1 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 s ufficient 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 respective
deductees. In our view the assessee has proved that there was
reasonable cause for alleged failure 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 Orissa (1972) 83 ITR 26 (S.C) has held
as under:-
"An or der imposing penalty for failure 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 or conduct contumacious
or dis hones t, 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
bona fide belief that the offender is not liable to act in
the manner prescribed by the statute."
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5.2 Considering the entire facts and circumstances of the case, we
hold that no penalty can be validly levied on facts and circumstances of
the present case. We, therefore uphold the order of ld. CIT(A) in
canceling the penalty."
6. In the instant case, it is an undisputed fact that the amount of tax
deducted at source by the assessee was deposited within time allowed under
the relevant provisions of the Act. There was no revenue los s to the Income
Tax department. It is also an admitted position that the assessee also
submitted revised statement in Form No. 24Q on 19.10.2010. The assessee
did not derive any benefit whatsoever by filing invalid PAN and PAN was
corrected after ascertaining the same from the respective deductees. Even
otherwise also, no penalty is leviable when there is a technical or venial
breach of the Act.
7. Respectfully following the order of the Tribunal in the case of ITO vs
Oriental Bank of Commerce (supra), we are of the considered opinion that no
penalty can be validly levied on the facts and circumstances of the present
case. We, therefore, cancel the penalty of Rs. 50,000/- imposed by the ITO
(TDS), Panchkula and confirmed by the CIT(A).
In the result, appeal is allowed.
8. Order Pronounced in the Open Court on this 7 t h day of June, 2012
Sd/- Sd/-
(T. R. SOOD) (H.L.KARWA)
ACCOUNTANT MEMBER VI CE PRESIDENT
Dated : 7 t h June, 2012
Rkk
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Copy to:
1. The Appellant
2. The Respondent
3. The CIT
4. The CIT(A)
5. The DR
True Copy
By Order
Assistant Registrar
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