Bharat Electronics Ltd., Panchkula V. ITO (TDS), Panchkula

CO 67/CHANDI/2011

• Counselvise Citation: [2011] 122 COUNSELVISE.COM (IT) 6375 (ITAT-CHANDIGARH)
• Duration Of Justice: 27 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 20-09-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 20-09-2011
• Assessment Year: 2009-2010
• Appeal Filed On: 24-08-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: BHAVNA JOSHI
• Assessee Lawyers: N K SAINI
• Keywords: Reasonable cause; Revised return
• Section: 273B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH CH ANDIGARH BEFORE SHRI H.L. KARWA, HONBLE VICE PRESIDENT AND SHRI MEHAR SINGH, HONBLE ACCOUNTANT MEMBER ITA NO. 743/CHANDI/2011 ASSESSMENT YEAR: 2009-10 ITO (TDS) PANCHKULA V. BHARAT ELECTRONICS LTD. 405, IA PHASE III, PANCHKULA TAN: RTKBO 1838 E CROSS OBJECTIONS NO. 67/CHANDI/2011 ITA NO. 743/CHANDI/2011 ASSESSMENT YEAR: 2009-10 BHARAT ELECTRONICS LTD. 405, IA V. ITO (TDS), PAN CHKULA PHASE III, PANCHKULA TAN: RTKBO 1838 E DEPARTMENT BY: SHRI N K SAINI RESPONDENT BY: MS. BHAVNA JOSHI DATE OF HEARING: 20.9.2011 DATE OF PRONOUNCEMENT: 20 .9.2011 ORDER PER H.L. KARWA, V.P THE APPEAL BY THE REVENUE AND THE CROSS OBJECTIONS BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER PASSED BY THE LD. CIT(A) , PANCHKULA DATED 11.5.2011 RELATING TO ASSESSMENT YEAR 2009-2010. 2. IN APPEAL THE REVENUE HAS CHALLENGED THE ACTION OF THE LD. CIT(A) IN CANCELING THE PENALTY OF RS. 6,40,000/- IMPOSED U/S 272B OF INCOME-TAX ACT, 1961 (IN SHORT THE ACT) FOR ASSESSMENT YEAR 2009-10 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT TAX DEDUCTOR IS THE HOLDER OF TAX DEDUCTION AND COLLECTION ACCOUNT NUMBER RTKBO 1 838 E. THE TDS QUARTERLY STATEMENT OF DEDUCTION OF TAX IN FORM NO. 24Q FOR F INANCIAL YEAR 2008-09 RELEVANT TO ASSESSMENT YEAR 2009-10. AS REQUIRED UN DER SUB-SEC (3) OF SEC 200 OF THE ACT WAS FILED ON 22.7.2009. THE ITO (TDS) W HILE GOING THROUGH THE QUARTERLY RETURN IN FORM NO. 24Q FILED BY THE ASSES SEE 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 ITA NO. 743 & CO 67/CHANDI/2011 ITO (TDS) V,. BHARAT ELECTRONIC 2 2 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 139A(5B) FOR WHICH PENALTY U/S 272B(1) OF THE ACT IS LEVIABLE. THE ITO (TDS) THEREFORE, LEVIED A PENALTY OF RS. 6,40,000/- @ OF RS. 10,000/- PER DEF AULT VIDE HIS ORDER DATED 26.7.2010. 4. AGGRIEVED BY THE ORDER PASSED BY THE AO, THE AS SESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) AND TOOK THE FOLLOW ING LINE OF ARGUMENTS BEFORE THE LD. CIT(A): I) PENALTY U/S 272B HAS BEEN IMPOSED STATING PANS OF DEDUCTEES ARE INVALID IN AN MANY AS 64 CASES IN THE TDS RETURN 24Q FOR THE ASSESSMENT YEAR 2009-10. II) THE ASSESSEE HAS BEEN REPLYING TO ALL THE QUERI ES AND NOTICES RECEIVED FROM YOUR ESTEEMED INCOME TAX OFFICE ON TI ME AND FURTHER ATTENDING THE CONCERNED OFFICES AS AND WHEN REQUIRE D. III) IN RESPONSE TO THE NOTICE OF SHOW CAUSE FOR DE FAULT U/S 272B VIDE REFERENCE NO. 1923 DATED 16.8.2010, THE ATTENDED TH E OFFICE OF ITO (TDS) ON 24.8.2010 AND DISCUSSED THE ISSUE WITH THE AVAIL ABLE OFFICIALS IN THE OFFICE OF ITO (TDS) REGARDING THE FILING OF REVISED RETURN AND THE REASONS FOR NON AVAILABILITY OF PANS OF RELEVANT DEDUCTEES AS M ENTIONED IN THE SAID NOTICE AT THE TIME OF FILING TDS RETURN AND HENCE I T IS PRESUMED THAT DUE COMPLIANCE HAD BEEN MADE BY THE ASSESSEE. IV) CONSIDERING THE WORKING ENVIRONMENT AND CERTAIN UNAVOIDABLE CIRCUMSTANCES, THE ASSESSEE COULD NOT MENTION CORRE CT PANS OF 64 DEDUCTEE RECORDS OUT OF 645 DEDUCTEE RECORDS IN THE ORIGINAL TDS RETURN. V) REVISED RETURN HAS BEEN FIELD BY THE AE AFTER UP DATING ALL THE 64 PANS AS SAID VIDE RECEIPT NO. 070870100046281 DATED 27.9.2010. 5. THE LD. CIT(A) CANCELLED THE PENALTY OBSERVING T HAT THE TDS WAS DEDUCTED AND DEPOSITED IN TIME. THE DEFAULT WAS ONLY WITH R EGARD TO WRONG QUOTING OF PAN OF 64 OF THE DEDUCTEES AS THE DEDUCTEES QUOTED WRON G PAN. CORRECT PAN WAS GIVEN AS SOON AS THE DEFAULT WAS BROUGHT TO THE NOT ICE OF THE ASSESSEE. THE LD. ITA NO. 743 & CO 67/CHANDI/2011 ITO (TDS) V,. BHARAT ELECTRONIC 3 3 CIT(A) CATEGORICALLY OBSERVED THAT TAX WAS DEDUCTED CORRECTLY REVISED COPY OF RECEIPT WAS ALSO SUBMITTED. THE LD. CIT(A) OBSERVE D THAT THE PENALTY IS LEVIED IF THE DEFAULT COMMITTED U/S 139A. IN THE INSTANT CAS E, THE PENALTY HAS BEEN LEVIED FOR DEFAULT UNDER SECTION 139A(5B)(IV) AS PER WHICH A PERSON WHO IS RESPONSIBLE FOR DEDUCTING TAX UNDER CHAPTER XVII-B SHALL QUOTE THE PAN OF THE PERSON TO WHOM SUCH INCOME/SUM HAS BEEN PAID IN ALL THE STATEMENTS PREPARED AND DELIVERED IN ACCORDANCE WITH THE PROVISIONS OF SEC 200(3) OF THE ACT TO INCOME TAX AUTHORITIES. ACCORDING TO THE LD. CIT(A), THE ASSESSEE QUOTED IN VALID PAN FOR 64 DEDUCTEES WHICH WAS CORRECTED BY THE ITO(TDS). THE LD. CIT(A) ALSO REFERRED TO SEC 273B OF THE ACT WHICH PROVIDES THAT NO PENALTY IS IMPOSABLE FOR FAILURE U/S 272B OF THE ACT, IF IT IS PROVED BY THE DEDUCTOR THAT THERE WAS REAS ONABLE CAUSE FOR SUCH FAILURE. THE LD. CIT(A) HAS CATEGORICALLY STATED THAT THE AS SESSEE HAS EXPLAINED THAT THE FAILURE TO QUOTE RIGHT PAN OCCURRED AS THE CONCERNE D 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 . IN THAT VIEW OF THE MATTER, THE LD. CIT(A) CANCELLED THE PENALTY. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE PER USED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT A SIMILAR CASE I .E. ITA NO. 773/CHANDI/2011 FOR ASSESSMENT YEAR 2009-10 IN THE CASE OF ITO (TDS), P ANCHKULA V. ORIENTAL BANK OF COMMERCE, NARAINGARH CAME UP FOR CONSIDERATION BEFORE THIS BENCH OF THE TRIBUNAL. WHILE DECIDING A SIMILAR ISSUE, WE HAVE CONFIRMED THE ORDER OF LD. CIT(A) IN CANCELING THE PENALTY OF RS. 7,70,000/- VIDE ORD ER DATED 19.9.11 OBSERVING AS UNDER:- 5. WE HAVE HEARD SHRI N.K. SAINI, DR FOR THE REVENU E AT LENGTH AND HAVE ALSO PERUSED THE MATERIALS AVAILABLE ON RE CORD. IN THIS CASE THE ASSESSEE QUOTED WRONG PANS FOR 77 DEDUCTEES WHI CH WAS CORRECTED ON BEING POINTED OUT BY THE ITO(TDS). SEC TION 273B OF THE ACT PROVIDES THAT NO PENALTY IS IMPOSABLE FOR A FAI LURE U/S 272B, IF IT IS PROVED BY THE DEDUCTEES THAT THERE WAS REASONABLE C AUSE FOR THE SAID FAILURE. IN THIS CASE THE ASSESSEE HAS EXPLAINED T HAT FAILURE TO QUOTE RIGHT PAN WAS OCCURRED AS THE CONCERNED DEPOSITOR HAS HIMSELF MIS- QUOTED PAN. IT IS ALSO THE CASE OF THE ASSESSEE T HAT THE PAN WAS CORRECTED AFTER ASCERTAINING THE SAME FROM RESPECTI VE 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 F URNISHING OF INCOMPLETE DECLARATION BY THE CUSTOMER WAS A MISTAK E ITA NO. 743 & CO 67/CHANDI/2011 ITO (TDS) V,. BHARAT ELECTRONIC 4 4 COMMITTED BY THE CUSTOMER AND NOT BY THE BANK, THE FAILURE TO COMPLY WITH THE PROVISIONS OF SECTION 139A AS ENVIS AGED IN SUB-SEC (1) OF SEC 272B OF THE ACT WAS OF THE CUSTO MER AND NOT OF THE BANK; MEANING THEREBY THAT THE PENALTY U NDER 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 P ENALIZED IF IT FAILS TO COMPLY WITH THE PROVISIONS OF SECTIO N 139A(6) OR RULE 114D(2) IS FOR FAILURE TO ENSURE THAT PAN OR GIR NU MBER IS QUOTED BY THE CUSTOMER AND FOR FAILURE IN FORWARDIN G THE COPIES OF FORM NO. 60, BUT NOT FOR ANY OTHER DEFAULT. 5.1 IN THE INSTANT CASE, IT IS APPARENT FROM THE RE CORD 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 W HATSOEVER, BY FILING THE WRONG PANS AND PAN WAS CORRECTED AFTER A SCERTAINING THE SAME FROM THE RESPECTIVE DEDUCTEES. IN OUR VIEW TH E ASSESSEE HAS PROVED THAT THERE WAS REASONABLE CAUSE FOR ALLEGED FAILURE AND HENCE NO PENALTY IS LEVIABLE. EVEN OTHERWISE ALSO NO PEN ALTY IS LEVIABLE WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE A CT. 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 ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT OF A QUASI-CRIMINAL PROCEE DINGS, AND PENALTY WILL NOT ORDINARILY BE IMPOSED UNLESS THE P ARTY OBLIGED EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS A GUILTY OR CONDUCT CONTUMACIOUS OR DISHONEST, OR ACTED IN CONS CIOUS DISREGARD OF ITS OBLIGATION. PENALTY WILL NOT ALSO BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENA LTY SHOULD BE IMPOSED FOR FAILURE TO PERFORM A STATUTORY OBLIG ATION IS A MATTER OF DISCRETION OF THE AUTHORITY TO BE EXERCIS ED JUDICIALLY AND ON A CONSIDERATION OF ALL THE RELEVANT CIRCUMST ANCES. EVEN IF A MINIMUM PENALTY IS PRESCRIBED, THE AUTHORITY C OMPETENT 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 FRO M A BONA FIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE. 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 ORDE R OF LD. CIT(A) IN CANCELING THE PENALTY. 6. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. 7. THE FACTS OF THE PRESENT CASE ARE SIMILAR TO THA T OF ITA NO. 773/CHANDI/2011, A.Y 2009-10 (SUPRA) AND THEREFORE RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL PASSED IN THAT CASE, WE UPHOL D THE ORDER OF THE LD. CIT(A) AND DISMISS THE APPEAL OF THE REVENUE. ITA NO. 743 & CO 67/CHANDI/2011 ITO (TDS) V,. BHARAT ELECTRONIC 5 5 8. CROSS-OBJECTIONS NO. 67/CHANDI/2011 AT THE TIME OF HEARING, MS. BHAWNA JOSHI, LD. COUNS EL FOR THE ASSESSEE DID NOT PRESS FOR THE GROUNDS RAISED IN THE CROSS-OBJEC TIONS AND HENCE WE DISMISS THE SAME AS NOT PRESSED. 9. IN THE RESULT, APPEAL OF THE REVENUE AND THE CRO SS-OBJECTIONS BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON 20.9.2011 SD/- SD/- (MEHAR SINGH) (H.L. KARWA) ACCOUNTANT MEMBER VICE PRESIDENT CHANDIGARH, THE .9.2011 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/ THE DR