M/s Skypack India Pvt. Ltd., Ballabgarh V. ITO, Faridabad

ITA 2028/DEL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53393 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 09-12-2011
• Assessment Year: 2009-2010
• Appeal Filed On: 25-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S MOHANTY
• Assessee Lawyers: P J KHANNA
• Keywords: Salary income; Opportunity of being heard; Reasonable cause; Corroborative evidences; Non compliance; Revised return
• Section: 273B; 27; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI G BENC H BEFORE SHRI RAJPAL YADAV, JM & SHRI A.N. PAHUJA, A M ITA NO.2028/D/2011 ASSESSMENT YEAR:2009-10 M/S SKYPACK INDIA PVT., PLOT NO.190A, SECTOR-59, MATHURA ROAD, BALLABGARH V/S INCOME TAX OFFICER, (TDS), FARIDABAD [PAN: AACCS5331F ] (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI P.J. KHANNA, AR REVENUE BY SMT.S. MOHANTY, DR DATE OF HEARING 09-12-2011 DATE OF PRONOUNCEMENT 23-12-2011 O R D E R A.N.PAHUJA:- THIS APPEAL FILED ON 25.04.2011 BY THE ASSESSEE AG AINST AN ORDER DATED 24.01.2011 OF THE LEARNED CIT(A), FARIDABAD, RAISES THE FOLLOWING GROUNDS:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LE ARNED CIT(A) IS UNJUSTIFIED, ARBITRARY AND HAS ERRED UNDER THE L AW BY NOT DELETING THE FOLLOWING ADDITIONS MADE BY THE ASSESS ING AUTHORITY. 1. BY UNJUSTIFIED PENALTY OF ` ` 30 ,000/- IMPOSED ON THE APPELLANT U/S 272B OF THE INCOME-TAX ACT, 1961 AND IT IS THER EFORE, PRAYED THAT THE UNJUSTIFIED AND ARBITRARY ADDITIONS TO INCOME BE DELETED AND RELIEF ACCORDINGLY BE GRANTED TO THE ASSESSEE. 2. THAT THE APPELLANT CRAVES FOR THE PERMISSION TO ADD DELETE OR AMEND THE GROUNDS OF APPEAL BEFORE OR AT THE TIME O F HEARING. 2. FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THA T A PERUSAL OF THE E- TDS QUARTERLY STATEMENT OF DEDUCTION OF TAX IN FORM NO.24Q FOR THE FINANCIAL YEAR 2008-09 REVEALED THAT THE ASSESSEE FURNISHED INCORR ECT PERMANENT ACCOUNT NUMBER[ PAN] FOR AS MANY AS 5 TAX-DEDUCTEES. ACCORD INGLY, THE ASSESSING OFFICER I.E ITO(TDS)(A.O. IN SHORT) ISSUED A SHOW C AUSE NOTICE U/S 272B OF THE I.T.A. NO.2028/DEL./2011 2 INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS TH E ACT). IN RESPONSE, THE ASSESSEE DID NOT FILE ANY REPLY NOR ANY REASONS FOR NOT QUOTING CORRECT PAN IN THE QUARTERLY STATEMENT IN RESPECT OF FIVE DEDUCTEES. IN RESPONSE TO ANOTHER NOTICE DATED 7 TH JUNE, 2010, THE ASSESSEE REPLIED THAT THEIR COUNSE L BEING OUT OF TOWN, THE MATTER MAY BE ADJOURNED. DESPITE GRANTING ADJO URNMENT TO 29.06.2010, THE TAX-DEDUCTOR NEITHER ATTENDED NOR SUBMITTED ANY REP LY LEADING TO THE CONCLUSION THAT IT HAS NOTHING TO SAY IN THE MATTER. ACCORDIN GLY, THE AO IMPOSED A PENALTY OF ` ` 50,000/- @ ` `10,000/- PER DEFAULT FOR THE FAILURE ON THE PART O F THE ASSESSEE TO QUOTE CORRECT PAN IN TERMS OF PROVISIONS OF SEC TION 139A OF THE ACT. 3. ON APPEAL, THE LEARNED CIT(A) UPHELD THE FINDIN GS OF THE AO IN THE FOLLOWING TERMS:- 6. I HAVE CONSIDERED THE SUBMISSIONS OF LEARNED CO UNSEL FOR THE APPELLANT AND GONE THROUGH THE RELEVANT DOCUMENTS A ND EVIDENCES PLACED ON RECORD. THE PROVISIONS OF SECTION 272B O F THE ACT READ AS UNDER:- PENALTY FOR FAILURE TO COMPLY WITH THE PROVISIONS O F SECTION 139A. 272B. (1) IF A PERSON FAILS TO COMPLY WITH THE PROV ISIONS OF SECTION 139A, THE ASSESSING OFFICER MAY DIRECT THAT SUCH PE RSON SHALL PAY, BY WAY OF PENALTY, A SUM OF TEN THOUSAND RUPEES. (2) IF A PERSON WHO IS REQUIRED TO QUOTE HIS PERMAN ENT ACCOUNT NUMBER IN ANY DOCUMENT REFERRED TO IN CLAUSE (C) OF SUB-SECTION (5) OF SECTION 139A, OR TO INTIMATE SUCH NUMBER AS REQU IRED BY SUB- SECTION (5A) OR SUB-SECTION (5C) OF THAT SECTION, Q UOTES OR INTIMATES A NUMBER WHICH IS FALSE, AND WHICH HE EITHER KNOWS OR BELIEVES TO BE FALSE OR DOES NOT BELIEVE TO BE TRUE, THE ASSESSING OFFICER MAY DIRECT THAT SUCH PERSON SHALL PAY, BY WAY OF PENALT Y, A SUM OF TEN THOUSAND RUPEES. (3) NO ORDER UNDER SUB-SECTION ( 1) OR SUB-SECTION (2) SHALL BE PASSED UNLESS THE PERSON, ON WHOM THE PENALTY IS PR OPOSED TO BE IMPOSED, IS GIVEN AN OPPORTUNITY OF BEING HEARD IN THE MATTER. HOWEVER, THE IMPOSITION OF PENALTY UNDER THE PROVIS IONS OF I.T.A. NO.2028/DEL./2011 3 SECTION 272B OF THE ACT IS AGAIN SUBJECT TO THE PRO VISIONS OF SECTION 273B OF THE ACT, WHICH READ AS UNDER: PENALTY NOT TO BE IMPOSED IN CERTAIN CASES. 273B. NOTWITHSTANDING ANYTHING CONTAINED IN THE PRO VISIONS OF CLAUSE (B) OF SUB-SECTION (1) OF ..... OR SECTION 272B OR .... , NO PENALTY SHALL BE IMPOSABLE ON THE PERSON OR THE ASS ESSEE, AS THE CASE MAY BE, FOR ANY FAILURE REFERRED TO IN THE SAID PROVISIONS IF HE PROVES THAT THERE WAS REASONABLE C AUSE FOR THE SAID FAILURE. THE PROVISIONS OF SECTION 139A(5B) READ AS UNDER: (5B) WHERE ANY SUM OR INCOME OR AMOUNT HAS BEEN PAI D AFTER DEDUCTING TAX UNDER CHAPTER XVIIB, EVERY PERS ON DEDUCTING TAX UNDER THAT CHAPTER SHALL QUOTE THE PERMANENT ACCOUNT NUMBER OF THE PERSON TO WHOM SUCH SUM OR INCOME OR AMOUNT HAS BEEN PAID BY HIM- (I) IN THE STATEMENT FURNISHED IN ACCORDANCE WITH THE PROVISIONS OF SUB- SECTION (2C) OF SECTION 192; (IL) IN ALL CERTIFICATES FURNISHED IN ACCORDANCE WITH TH E PROVISIONS OF SECTION 203; (III) IN ALL RETURNS PREPARED AND DELIVERED OR CAUSED TO BE DELIVERED IN ACCORDANCE WITH THE PROVISIONS OF SECT ION 206 TO ANY INCOME-TAX AUTHORITY; [(IV) IN ALL STATEMENTS PREPARED AND DELIVERED OR CAUSED TO BE DELIVERED IN ACCORDANCE WITH THE PROVISIONS OF S UB- SECTION (3) OF SECTION 200: IT IS ABUNDANTLY CLEAR FROM THE ABOVE PROVISIONS TH AT A LEGAL OBLIGATION HAS BEEN CAST UPON EVERY PERSON (DEDUCTO R) TO QUOTE PAN WHERE:- I) A NY SUM OR INCOME OR AMOUNT HAS BEEN PAID AFTER DEDUCTING TAX UNDER CHAPTER XVIIB; (II) EVERY PERSON DEDUCTING TAX UNDER THAT CHAPTER SHALL QUOTE THE PERMANENT ACCOUNT NUMBER OF THE. PERSON TO WHOM SUCH SUM OR INCOME OR AMOUNT HAS BEEN PAID. THUS, THE LEGAL OBLIGATION TO QUOTE THE PAN IS ON T HE PERSON WHO I.T.A. NO.2028/DEL./2011 4 HAS DEDUCTED THE TAX AT SOURCE AND HAS PAID ANY AMO UNT AFTER SUCH DEDUCTION TO THE DEDUCTEE. THE LEARNED COUNSEL HAS CONTENDED THAT SECTION 272B OF THE ACT NOWHERE SPEC IFICALLY RELATES TO DEFAULT UNDER SECTION 139A(5B) WHICH CAS TS AN OBLIGATION ON THE DEDUCTOR TO QUOTE THE PAN OF DEDU CTEES. THE AO HAS MISUNDERSTOOD THE PROVISIONS OF SECTION AND ERRED IN IMPOSING PENALTY UNDER SECTION 272B OF THE ACT. THE RELIANCE HAS ALSO BEEN PLACED ON THE ORDER DATED 07.10.2009 PASSED BY MY LD. PREDECESSOR IN APPEAL NO. 136/2008- 09 IN THE CASE OF PACKRAFT CONTAINER INDIA PVT. LTD . FOR A.Y.2008-09 IN WHICH PENALTY IMPOSED IN THE IDENTIC AL FACTS HAS BEEN DELETED. IT HAS ALSO BEEN CONTENDED THAT DUE TO LOSS OF ORIGINAL RETURN DATA, THE REVISED RE TURN NOW PREPARED AND UPLOADED IN THE SYSTEM IS REJECTED BY THE TIN FACILITATION CENTRE. AS A RESULT, IT HAS NOT BEEN POSSIBLE TO FILE EVEN THE CORRECTION RETURN SO AS TO RECTIFY THE MISTAKE IN THE PAN OF THREE DEDUCTEES. 6.1. ON EXAMINATION OF THE DOCUMENTS FILED BY THE APPELLANT, IT IS OBSERVED FROM THE RECEIPT OF CORRE CTION RETURN DATED 14.06.2010 THAT THE SAME IS REJECTED B Y TIN WHEREAS THE ORIGINAL STATEMENT FILED ON 02.06.2 009 WAS' ACCEPTED. AS PER THE STATUS VIEWED ON THE WEBS ITE OF NSDL, THE SYSTEM IS SHOWING THE ERROR IN AS MUCH AS. THE PAN DATA OF TWO DEDUCTEES IS NOT AVAILABLE IN THE SYSTEM AND PAN QUOTED BY THE APPELLANT IN RESPE CT OF ONE DEDUCTEE IS INVALID. THUS, THE APPELLANT HAS WRONGLY QUOTED THE PAN OF THREE DEDUCTEES (PERTAINI NG TO 5 RECORD S) AS PER THE FOLLOWING DETAILS: NAME OF THE DEDUCTEE CORRECT PAN PAN Q UOTED 1. SHASHI TALWAR ABLPT8888K AB C PT8888K* 2 SHIKHA TALWAR AFTPK5700M A A TPK5700M 3. NARESH KUMAR AEXPK3285J AEXPK3 5 85J (* WRONG MARKED BOLD AND UNDERLINED.} THUS, THE ADMITTED FACT REMAINS THAT THE PANS OF TH REE DEDUCTEES WERE WRONGLY QUOTED BY THE APPELLANT IN T HE QUARTERLY RETURNS AS IS EVIDENT FROM THE ABOVE STAT ED FACTS IN WHICH THE ALPHABETS AND NUMBER WERE WRONGL Y ENTERED IN THE SYSTEM. THE ERRORS IN MULTIPLE CASES I.T.A. NO.2028/DEL./2011 5 CANNOT BE CONSIDERED TO BE IN THE NATURE OF INADVER TENT MISTAKE BUT A CASE OF NEGLIGENCE. THE SUBSEQUENT FILING OF CORRECTION STATEMENT ON 14.06.2010 CAN ON LY SET RIGHT THE DEFECTS IN THE ORIGINAL QUARTERLY RET URN BUT NOT THE DEFAULT COMMITTED IN TERMS OF THE PROVISION S OF SECTION 139A(5B) WHICH MANDATES QUOTING OF PAN IN RESPECT OF ALL THE DEDUCTEES TO WHOM SUMS HAVE BEEN PAID AFTER DEDUCTION OF TAX AT SOURCE. THE CONTENTI ONS OF THE APPELLANT THAT THE AO HAS MISUNDERSTOOD THE PROVISIONS OF LAW AND THE PENALTY U/S 272B IS NOT LEVIABLE FOR ANY DEFAULT COMMITTED UNDER SECTION 139A(5B) OF THE ACT ARE DEVOID OF ANY MERIT AND BER EFT OF ANY RATIONALITY. SUB SECTION (1) OF SECTION 272B EMPOWERS THE AO TO LEVY PENALTY. 0N BOTH THE 'DEDUCTOR' AND 'DEDUCTEE' IF THERE IS CONTRAVENTION 139A OF THE ACT. SUB SECTION (2) OF SECTION. 272B PROVID ES FOR IMPOSITION OF PENALTY ONLY ON THE DEDUCTEES PAN REQUIRED TO BE QUOTED IN ANY DOCUMENT REFERRED TO I N (C) OF SUB-SECTION (5) OF SECTION 139A, OR TO BE INTIMA TED AS REQUIRED BY SUB-SECTION (5A) OR SUB-SECTION (5C) OF SECTION 139A OF THE ACT IS FOUND TO BE FALSE. THERE FORE, THE PENAL PROVISIONS UNDER SUB SECTION (2) OF SECTI ON 272B ARE ATTRACTED IN THE CASES OF DEDUCTEES ONLY F OR FALSE QUOTING OR FALSE INITIATION OF PAN. THE NON COMPLIANCE TO OTHER PROVISIONS OF SECTION 139A WOULD ATTRACT PENALTY UNDER SUB SECTION (1) OF SECTION 27 2B OF THE ACT WHICH MAY BE IMPOSED. ON BOTH THE 'DEDUCTOR S' OR THE 'DEDUCTEES', AS THE CASE MAY BE. TO ELABORAT E FURTHER, A PENALTY MAY BE IMPOSED UNDER SUB SECTION (1) OF SECTION 2728 ON A DEDUCTEE FOR FAILURE TO CO MPLY WITH THE PROVISIONS OF SECTION 139A(1) OF THE ACT WHEREAS A PENALTY UNDER THE SAME PROVISIONS MAY BE IMPOSED ON A DEDUCTOR FOR NON COMPLIANCE TO THE PROVISIONS OF SECTION 139A(5B) OF THE ACT. THEREFOR E, THE LEARNED COUNSEL DOES NOT APPEAR TO HAVE UNDERSTOOD THE PROVISIONS OF LAW CORRECTLY. I HAVE GONE THROUGH THE ORDER OF MY LEARNED PREDECESSOR PASSED IN THE CASE OF PACKRAFT CONTAINER INDIA PVT. LTD. FOR A.Y.200B-09, THE OPERATIVE PART OF WHICH READS AS UNDER: 'IT IS FOUND THAT THE BARE READING OF THE CONTENTS OF SECTION 272B WOULD REVEAL THAT IT DOES NOWHERE SPECIFICALLY RELATE TO THE DEFAULT U/S 139A(5B) WHICH IN FACT CASTS AN OBLIGATION ON THE 'D EDUCTOR' TO QUOTE THE PAN OF THE DEDUCTEES UNDER HIS COMMAND. THEREFO RE, THE A.O. WAS NOT JUSTIFIED TO PROCEED AGAINST THE PR I.E. THE DE DUCTOR ASSESSEE IN THE I.T.A. NO.2028/DEL./2011 6 INSTANT CASE. IN THIS CONTEXT, RECENTLY IN THE CASE OF FINANCIAL CO- OPERATIVE BANK LTD. VS. ITO (2008) 117 TT] (AHMEDABAD 'D'-BENCH) 782, IT HAS BEEN HELD THAT SECTION 272B DOES NOT PRE SCRIBE IMPOSITION OF ANY PENALTY FOR SUCH FAILURE ON THE PART OF THE DED UCTOR U/S 139A(5B) OF THE INCOME TAX ACT, 1961. THEREFORE, KEEPING IN VIE W THIS LEGAL POSITION AS TO THE DEFAULT IN CLAUSE (IV) OF SECTION 139A(5B ) VIDE WHICH THE A.O. HAS PENALIZED THE APPELLANT, THE IMPUGNED PENALTY O RDER BEING ILLEGAL IS UNSUSTAINABLE AND HENCE IT IS QUASHED.' THE LEGISLATIVE INTENTION BEHIND INSERTION OF PROVI SIONS OF SECTION 139A(5B) MORE PARTICULARLY CLAUSE (IV) O F SECTION 139A(5B) HAS TO BE UNDERSTOOD IN THE CONTEX T OF EMERGING E-ENVIRONMENT IN THE INCOME TAX DEPARTMENT AND PROPER IMPLEMENTATION OF INCOME TAX ACT. UNDER THE SCHEME OF COMPULSORY E-FILING OF RETURNS BY CERTAIN CLASSES OF PERSONS AND FILING OF INCOME TAX RETURNS WITHOUT ANY ENCLOSURES, THE CRED IT FOR TDS AND OTHER TAXES PAID BY THE ASSESSEES CAN B E AVAILED ONLY WHEN CORRECT PAN IS QUOTED IN THE TAX PAYMENT CHALLANS, E-PAYMENTS, TDS CERTIFICATES AND THE RETURNS AND STATEMENTS REQUIRED TO BE FILED AS MENTIONED IN SUB SECTION (5B) OF SECTION 139A OF TH E ACT. IF THE PAN OF DEDUCTEES IS NOT QUOTED OR WRONG LY QUOTED IN THE TDS RETURNS REQUIRED TO BE FILED UNDE R SECTION 200(3) OF THE ACT, THAN THE DEDUCTEES SHALL NOT ABLE TO GET THE CREDIT FOR TAX DEDUCTED ON THEIR BEHALF BY THE DEDUCTOR WHILE PROCESSING OF THEIR RETURNS OF INCOME. THEREFORE, THE PENAL PROVISIONS OF SECTION 272B ARE BROUGHT ON STATUTE TO ENSURE COMPLIANCE OF PROVISIONS OF SECTION 139A SO THAT THE WHOLE SCHEME OF THE GOVERNMENT IS NOT PUT TO JEOPARDY. THE CBDT IN THE CIRCULAR NO.9/200B IN PARA 4.10 HAS EMPHASIZED AS UNDER: '4.10 QUARTERLY STATEMENT OF TDS - THE PERSON DEDUCTING THE TAX (EMPLOYER IN CASE OF SALARY INCOME), IS REQUIRED TO FILE QUARTERLY STATEMENTS OF TDS FOR THE PERIODS ENDING ON 30TH JU NE, 30TH SEPTEMBER, 31ST DECEMBER AND 31 ST MARCH OF EACH FINANCIAL YEAR, DULY VERIFIED, TO THE DIRECTOR GENERAL OF INCOME-TAX (SYSTEMS) OR M/S. NATIONAL SECURITIES DEPOSITORY LTD. (NSDL). THESE STATEMENTS ARE REQUIRED TO BE FILED ON OR BEFORE THE 15TH JULY, THE 15TH OCTOBER, THE 15TH JANUARY IN RESPECT OF THE FIRST THREE QUARTERS OF THE FINANCIA L YEAR AND ON OR BEFORE THE 15TH JUNE FOLLOWING THE LAST QUARTER OF THE FIN ANCIAL YEAR. THE REQUIREMENT OF FILING AN ANNUAL RETURN OF TDS HAS BE EN DONE AWAY WITH EFFECT FROM 1-4-2006. THE QUARTERLY STATEMENT FOR T HE LAST QUARTER FILED IN FORM 24Q (AS AMENDED BY NOTIFICATION NO. S.O. 70 4(E), DATED 12-5- I.T.A. NO.2028/DEL./2011 7 2006) SHALL BE TREATED AS THE ANNUAL RETURN OF TDS. IT IS NOW MANDATORY FOR ALL OFFICES OF THE GOVERNME NT AND ALL COMPANIES TO FILE QUARTERLY STATEMENTS OF TDS ON COMPUTER MED IA ONLY IN ACCORDANCE WITH THE 'ELECTRONIC FILING OF RETURNS O F TAX DEDUCTED AT SOURCE SCHEME, 2003' NOTIFIED VIDE NOTIFICATION NO. S.O. 974(E), DATED 26-8-2003. (ANNEXURE-V), THE QUARTERLY STATEMENTS A RE TO BE FILED BY SUCH DEDUCTORS IN ELECTRONIC FORMAT WITH THE E- TDS INTERMEDIARY AT ANY OF THE TIN FACILITATION CENTRES, PARTICULARS OF WHI CH ARE AVAILABLE AT WWW.INCOMETAXINDIA.GOV.IN AND AT HTTP://TIN.NSDL.CO M. IF A PERSON FAILS TO FURNISH THE QUARTERLY STATEMENTS IN DUE TIME, HE SHALL BE LIABLE TO PAY BY WAY OF PENALTY UNDER SECTION 272A(2)(K), A SUM W HICH SHALL BE RS.100 FOR EVERY DAY DURING WHICH THE FAILURE CONTINUES. H OWEVER, THIS SUM SHALL NOT EXCEED THE AMOUNT OF TAX WHICH WAS DEDUCT IBLE AT SOURCE. THE QUARTERLY STATEMENTS ARE TO BE FILED ON COMPUTER MEDIA ONLY IN ACCORDANCE WITH RULE 31A OF THE INCOME-TAX RULES, 1 962. THESE QUARTERLY STATEMENTS COMPULSORILY REQUIRE QUOTING O F THE TAX DEDUCTION ACCOUNT NUMBER (TAN) OF THE TAX-DEDUCTOR A ND THE PERMANENT ACCOUNT NUMBER (PAN) OF THE EMPLOYEES WHOS E TAX HAS BEEN DEDUCTED. THEREFORE, ALL DRAWING AND DISBURSING OFFICERS OF THE CENTRAL AND STATE GOVERNMENTS/ DEPARTMENTS, WHO HAVE NOT YE T OBTAINED TAN, MUST IMMEDIATELY APPLY FOR AND OBTAIN TAN. SIMILARLY , ALL EMPLOYEES (INCLUDING NON-RESIDENT EMPLOYEES) FROM WHOSE INCOM E, TAX IS TO BE DEDUCTED MAY BE ADVISED TO OBTAIN PAN, IF NOT ALREADY OBTAINED, AND QUOTE THE SAME CORRECTLY, AS OTHERWISE THE CREDIT F OR THE TAX DEDUCTED CANNOT BE GIVEN. A PENALTY UNDER SECTION 272B OF RS. 10,000 HAS BEEN PRESCRIBED FOR WILLFULLY INTIMATING A FALSE PAN. FOR AND FROM THE QUARTER ENDING 30-9-2007, FILING O F TDS RETURNS IN ELECTRONIC FORM IS ALSO MANDATORY FOR DEDUCTORS REQ UIRED TO GET THEIR ACCOUNTS AUDITED UNDER SECTION 44AB OF THE INCOME-T AX ACT IN THE IMMEDIATELY PRECEDING FINANCIAL YEAR OR WHERE THE N UMBER OF DEDUCTEES' RECORDS IN A QUARTERLY STATEMENT FOR ANY QUARTER OF THE IMMEDIATELY PRECEDING FINANCIAL YEAR IS EQUAL TO OR MORE THAN FIFTY. TDS RETURNS IN PAPER FORM WILL NO LONGER BE ACCEPTED FRO M SUCH TAX DEDUCTORS.' CONSIDERING THE ABOVE POSITION AND WITH DUE RESPECT , IT APPEARS TO ME THAT MY LEARNED PREDECESSOR HAS NOT APPRECIATED THE POSITION OF LAW CORRECTLY IN HOLDING THAT THE PROVISIONS OF SECTION 272B ARE NOT APPLICABLE TO THE DEFAULT COMMITTED UNDER SECTION 139A(5B) OF THE ACT. SUB SECTION (5B) IS AN INTEGRAL PART OF THE PROVISIONS OF SECTION 139A OF THE ACT AND NON COMPLIANCE TO THE SAME IS COVERED BY THE PENAL I.T.A. NO.2028/DEL./2011 8 PROVISIONS OF SECTION 272B(1) OF THE ACT AS FAR AS A TAX DEDUCTOR IS CONCERNED. 6.2. THE RELIED UPON CASE OF PACKRAFT CONTAINER IND IA PVT. LTD. WAS ALSO REPRESENTED BY THE COUNSEL FOR THE PR ESENT APPEAL IN WHICH RELIANCE WAS PLACED ON CERTAIN DECI SIONS IN THE CASES OF MAHAVIR AGENCY VS. ITA (58 ITD 386) [A HD.] (TAX DEDUCTED AT SOURCE WAS DULY PAID IN TIME BUT R ETURN IN FORM 26A WAS FILED LATE), MAHENDRA PRAKASH SARAF VS . DCIT (64 ITD 382) (DEL) (PENALTY WAS LEVIED FOR DEL AY IN FILING RETURN IN FORM 26A) AND BANSAL BROS. VS. DCI T (64 ITD 129) (DEL) WHERE A PENALTY WAS LEVIED UNDER SEC TION 272A(G} ON THE GROUND OF DELAY IN ISSUE OF CONSOLID ATED CERTIFICATE AT THE END OF THE ACCOUNTING PERIOD. HE NCE, THE DECISIONS IN THESE CASES ARE NOT APPLICABLE TO THE FACTS OF PRESENT CASE AS THE PENALTY IN THOSE CASES WAS LEVIED FOR THE DEFAULTS OF ALTOGETHER DIFFERENT NATURE. IN THE CASE OF PACKRAFT CONTAINER INDIA PVT. LTD., MY LEARNED PRED ECESSOR PLACED RELIANCE ON THE, DECISION OF HON'BLE AHMEDAB AD 'D' BENCH IN THE CASE OF FINANCIAL CO-OPERATIVE BANK LT D. VS. ITA (117 TTJ 782). THE HEAD NOTE OF THE DECISION IN THIS CASE IS REPRODUCED BELOW: 'SECTION 272B, READ WITH SECTION 139A OF THE INCOME -TAX ACT, 1961 AND RULES 114B TO 1140 OF THE INCOME-TAX RULES, 196 2 - PENALTY - FOR FAILURE TO COMPLY WITH PROVISIONS OF SECTION 13 9A - ASSESSMENT YEAR 2006-07 ASSESSEE, ENGAGED IN BUSINESS OF BANKI NG, WAS TO GET EITHER PERMANENT ACCOUNT NUMBERS (PANS) OF DEPOSITO RS OR FORM NO. 60 DULY FILLED IN BY THEM AS SPECIFIED IN SECTI ON 139 A AND RULES 114B TO 114D - ASSESSEE OBTAINED FORM NO. 60 FROM D EPOSITORS WHO DID NOT HAVE PANS BUT IN SOME CASES EITHER SAID FORM HAD NOT BEEN COMPLETELY FILLED UP OR SUPPORTING EVIDENCE WI TH RESPECT TO ADDRESSES OF DEPOSITORS WAS NOT AVAILABLE - ASSESSI NG OFFICER IMPOSED. PENALTY UNDER SECTION 272B FOR SAID FAILUR E OF ASSESSEE - WHETHER ASSESSEE-BANK' COULD BE PENALIZED FOR ITS F AILURE TO OBTAIN COMPLETELY. FILLED IN FORM NO. 60 AND/OR SUPPORTING EVIDENCE WITH RESPECT TO ADDRESSES OF THE DEPOSITORS - HELD, NO' THE ABOVE DECISION WAS DELIVERED IN THE CONTEXT OF PROVISIONS OF SECTION 139A(5) AND (6) AND RULES 114 B(C), 114B(F), 114C(2)(C) AND 114D OF THE INCOME-TAX RULE S, 1962, WHEREIN IT WAS HELD THAT AN OBLIGATION TO QUO TE PAN OR GIR NUMBER IN THE DOCUMENTS FOR ENTERING INTO THE TRANSACTIONS OF THE TYPE MENTIONED IN ABOVE PROVISI ONS IS OF THE CUSTOMERS AND NOT OF THE BANK: AND THE CUMULATI VE I.T.A. NO.2028/DEL./2011 9 ANALYSIS OF AFORESAID RULES. LEADS ONE TO BELIEVE T HAT THE ONLY OBLIGATION OF THE BANK MANAGER IS AS PER RULE 114C(2)(C) AND THE SAME IS ONLY TO ENSURE THAT A PE RSON ENTERING INTO TRANSACTION OF THE NATURE SPECIFIED U NDER RULE 114B HAS QUOTED HIS PAN DULY AND CORRECTLY. IN OTHE R WORDS. NONE OF THOSE RULES CASTS AN OBLIGATION ON T HE MANAGER OF A BANK TO ENSURE THAT FORM NO. 60 FILED BY THE CUSTOMER HAS BEEN DULY FILLED UP OR NOT. SIMILARLY. NONE OF THE PROVISIONS OF SUB-SECTION (5) OR (6) OF SECTION 139A CASTS SUCH AN OBLIGATION ON THE BANK: MANAGER OR THE BANK . THUS, THIS DECISION WAS IN THE DIFFERENT CONTEXT OF THE PROVISIONS OF SUB SECTION (5) AND (6) OF SECTION 13 9A AND NOT ON THE PROVISIONS OF SECTION 139A(5B}. HENCE, T HE RELIANCE ON THE SAME BY MY LEARNED PREDECESSOR DOES NOT APPEAR TO BE CORRECT. THE HON'BLE RAJASTHAN HIGH CO URT IN THE CASE OF CHHOGMAL CHIRANJI LA1 VS. CIT (257 ITR 51) HAS HELD THAT IF LAW PROVIDES FOR DOING A THING IN AN PARTICULAR MANNER, THEN IT HAS TO BE DONE IN THAT M ANNER ALONE. IN THE CASE OF ESCORTS EMPLOYEES ANCILLARIES LTD. VS. CIT, THE HON'BLE ITAT, DELHI BENCH 'B' (THIRD MEMBER) (74 ITD1 ), IN A JUDGMENT DELIVERED IN THE CONTEXT OF PROVISIONS OF SECTION 272A(2) READ WITH SECTION 197 A(2), HAS HELD THAT THAT THE PENALTY IS TO BE LEVIED WITH REFERENCE TO THE DEFAULT OR DELAY IN SUBMITTING COPY OF EACH DECLARATION IN FORM NO 15 H, SEPARATELY. ON THE SAME ANALOGY AND INTERPRETATION, THE PENALTY OF R S.10,000/- UNDER SECTION 272B IS REQUIRED TO BE LEVIED FOR NOT QUOTING OR WRONG QUOTING OF EACH PAN. IT IS EVIDENT FROM THE SUBMISSIONS OF APPELLANT THA T WRONG PAN HAS BEEN QUOTED IN RESPECT OF THREE DEDUCTEES BUT IN FIVE RECORDS. IT MAY BE REITERATED THAT WRONG QUOTING OF PAN CANNOT BE INFERRED TO BE A COMPLIANCE AS PER THE PROVISIONS OF SECTION 139A (5B) OF THE ACT AND CONSEQUENTLY, THE PENAL PROVISIONS O F SECTION 272B(1) WOULD BE ATTRACTED. IN RESPECT OF T WO DEDUCTEES, WRONG PANS HAVE BEEN QUOTED TWICE. THE APPELLANT HAS NOT SUBMITTED AS TO WHAT WAS THE REASONABLE CAUSE FOR NOT QUOTING THE PAN CORRECTLY. HENCE, I HOLD THAT THE APPELLANT WAS IN DEFAULT IN VIEW OF THE PROVISIONS OF SECTION 272B R.W.S 139A(5B) OF TH E ACT IN NOT QUOTING THE CORRECT PANS OF THREE DEDUCTEES DESPITE HAVING THEIR CORRECT PANS. THE COPIES OF TH EIR PAN CARDS HAVE BEEN FILED BY THE APPELLANT WITH THE SUBMISSIONS BEFORE ME. HOWEVER, SINCE IN TWO RECORD S OF TWO DEDUCTEES, THE MISTAKE WAS REPEATED ON ACCOU NT I.T.A. NO.2028/DEL./2011 10 OF THEIR BEING QUOTED WRONGLY IN THE FIRST PLACE, T HE SAME MAY BE CONSIDERED AS A REASONABLE CAUSE. ACCORDINGL Y, IT WOULD BE FAIR AND REASONABLE TO IMPOSE PENALTY I N RESPECT OF THREE DEFAULTS OF QUOTING THE PAN WRONGL Y IN THE CASE OF THREE DEDUCTEES AND TO RESTRICT THE PEN ALTY TO RS.30,000/- HENCE, THE ORDER PASSED BY THE AO IMPOSING PENALTY TO THE EXTENT OF RS.30,000/- IS CONFIRMED. THE BALANCE' PENALTY OF RS.20000/ - IS DELETED. 4. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF LD. CIT(A), UPHOLDING THE LEVY OF PENAL TY OF ` ` 3 0,000/-. THE LD. AR ON BEHALF OF THE ASSESSEE WHILE INVITING OUR ATTENT ION TO THE IMPUGNED ORDER CONTENDED THAT ONLY BECAUSE OF TYPOGRAPHICAL ERROR IN MENTIONING THE PAN IN THE CASE OF SHASHI TALWAR, SHIKHA TALWAR & NARESH KUMAR , PENALTY OF ` ` 30,000/- HAS BEEN UPHELD BY THE LD. CIT(A). HE ADDED THAT ON ID ENTICAL FACTS, THE LD. CIT(A) VIDE HIS ORDER DATED 07.10.2001 IN APPEAL NO.136/20 08-09 IN THE CASE OF M/S PACKCRAFT CONTAINER INDIA PVT. LTD., CANCELLED THE PENALTY IN VIEW OF THE DECISION OF AHMEDABAD D BENCH IN THE CASE OF FINANCIAL CO- OPERATIVE BANK LTD. VS. I.T.O. ,117 TTJ 782. ON THE OTHER HAND, LEARNED DR SUPPORTED THE FINDINGS OF LD. CIT(A). 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. INDISPUTABLY, THE ASSESSEE MENTIONED INCORRE CT PAN IN THE CASE OF FOLLOWING THREE PERSONS IN FORM NO. 24Q: NAME OF THE DEDUCTEE CORRECT PAN PAN Q UOTED 1. SHASHI TALWAR ABLPT8888K AB C PT8888K 2SHIKHATALWAR AFTPK5700M A A TPK5700M 3.NARESH KUMAR AEXPK3285J AEXPK3 5 85J IN RESPONSE TO A SHOWCAUSE NOTICE BEFORE LEVY OF PENALTY U/S 272B OF THE ACT FOR NOT QUOTING CORRECT PAN IN TERMS OF PROVISIONS OF SEC. 139(5B) OF THE ACT, THE ASSESSEE DID NOT APPEAR NOR PLEADED ANY REASONABLE CAUSE FOR THEIR FAILURE TO I.T.A. NO.2028/DEL./2011 11 QUOTE CORRECT PAN. ON APPEAL, THE ASSESSEE CONTENDE D THAT THOUGH THEY MENTIONED PAN OF THE AFORESAID THREE PERSONS AS PER DETAILS GIVEN BY THESE PERSONS IN FORM NO.24Q AFTER DEDUCTING TAX AT SOURC E FROM SALARY PAID TO THEM, ON PROCESSING FORM NO. 24 Q BY THE AO, IT TRANSPIRE D THAT PAN OF THE AFORESAID THREE PERSONS WAS INCORRECT IN FIVE RECORDS. THOUGH THEY SUBMITTED CORRECT PAN TO THE CONCERNED AO, HE DID NOT ACCEPT THEIR SUBMI SSIONS ON THE GROUND THAT THE ASSESSEE ITSELF SHOULD REVISE & UPLOAD THE SAME , T HE AO HAVING NO POWER TO RECTIFY THE DEFECT. IT WAS FURTHER SUBMITTED THAT T HAT THOUGH THE ASSESSEE TRIED TO UPLOAD REVISED FORM, THEY COULD NOT DO SO DUE TO MISMATCH OF DATA AND ACCORDINGLY, IT WAS REJECTED BY THE FACILITATION CE NTRE.. THE ASSESSEE ALSO ENCLOSED A COPY OF REVISED RETURN FILED BY IT AND THE PROCESSING DETAILS AS ALSO COPIES PAN CARDS OF THE AFORESAID THREE PERSONS. TH E AO FAILED TO PROVIDE A PROPER SOLUTION AND INSTEAD IMPOSED A PENALTY OF ` 50,000/-, THE ASSESSEE SUBMITTED . ON APPEAL, THE LD. CIT(A) REDUCED THE P ENALTY TO ` 30,000/-, THERE BEING REPETITION OF PAN IN THE CASE OF TWO DEDUCTEE S, OBSERVING, INTER ALIA, THAT THE ASSESSEE DID NOT GIVE ANY REASONABLE CAUSE FOR QUOTING INCORRECT PAN. WE FIND THAT THOUGH THE ASSESSEE QUOTED PAN OF THE A FORESAID THREE PERSONS IN FORM NO. 24Q, ONE ALPHABET EACH IN THE PAN OF SHASHI TALWAR & SHIKHA TALWAR AS ALSO ONE NUMERIC IN THE PAN OF SHRI NARES H KUMAR WAS MENTIONED INCORRECTLY. ACCORDING TO THE ASSESSEE, T HEY QUOTED PAN AS PER DETAILS GIVEN BY THESE THREE PERSONS AND ONLY AFTER PROCESSING THE FORM 24Q MISTAKE WAS BROUGHT TO THEI R KNOWLEDGE BY THE AO.. THE LD. CIT(A), WITHOUT EVEN VERIFYING THIS CONTENTION AS TO WHETHER DETAILS OF PAN QUOTED BY THE ASSESSEE IN FORM 24Q, WERE GIVEN BY THE AFORESAID THREE PERSONS INCORRECT LY OR THE ASSESSEE ALONE QUOTED INCORRECT PAN , UPHELD THE LE VY OF PENALTY. IN THESE CIRCUMSTANCES, ESPECIALLY WHEN THE ASSESSE E QUOTED INCORRECT PAN IN FORM 24Q DUE TO APPARENT INADVERT ENCE ON THE PART OF EITHER THE ASSESSEE ITSELF OR THE AFORESAID THREE PERSONS, LEVY OF PENALTY IS UNJUSTIFIED. WHETHER OR NOT THE RE WAS REASONABLE CAUSE WITHIN THE MEANING OF PROVISIONS OF SEC. 273B OF THE ACT IS I.T.A. NO.2028/DEL./2011 12 A QUESTION OF FACT . THERE IS NO DISPUTE THAT THE ASSESSEE QUOTED PAN O F THE AFORESAID THREE PERSONS. THERE IS NOTHING TO SUGGE ST THAT THE INCORRECT PAN WERE MENTIONED WILLFULLY OR PAN WERE FALSE. ACCORDING TO THE ASSESSEE, PAN DETAILS QUOTED BY THEM WERE SUPPLIED BY THE AFORESAID THREE PERSONS. THE ONLY DEFECT IN PAN WAS DUE TO INCORRECT MENTION OF ONE ALPHABET IN TWO CASES AND ONE NUMERIC IN THE THIRD. EVEN IF, THERE IS ANY DEFAULT , WHICH RESULTED IN THE INFRACTION OF LAW, THE DEFAULT IS TECHNICAL AND VENIAL WHICH DID NOT P REJUDICE THE INTERESTS OF THE REVENUE AS NO TAX AVOIDANCE OR TAX EVASION WAS INVO LVED. HON'BLE DELHI HIGH COURT IN THE CASE OF WOODWARD GOVERNOR INDIA (P) LT D. VS. CIT (2001) 168 CTR (DEL) 394 : (2002) 253 ITR 745 (DEL) HELD THAT THE WORD 'REASONABLE CAUSE' AS APPLIED TO HUMAN ACTION, IS THAT WHICH WOULD CONSTR AIN A PERSON OF AVERAGE INTELLIGENCE AND ORDINARY PRUDENCE. IT MEANS AN HON EST BELIEF FOUNDED UPON REASONABLE GROUNDS, OF THE EXISTENCE OF A STATE OF CIRCUMSTANCES, WHICH ASSUMING THEM TO BE TRUE, WOULD REASONABLY LEAD AN ORDINARY, PRUDENT AND CAUTIOUS MAN, PLACED IN THE POSITION OF THE PERSON CONCERNED, TO COME TO THE CONCLUSION THAT THE SAME WAS THE RIGHT THING TO DO. IN TERMS OF LAW LAID DOWN BY THE SUPREME COURT, THE PENALTY COULD NOT BE LEVIED FOR EVERY VENIAL AND TECHNICAL BREACH OF PROCEDURAL LAWS. IN THIS CONNECTION, IT M AY BE APPOSITE TO DRAW ATTENTION TO THE DECISION OF THE SUPREME COURT IN H INDUSTAN STEEL LTD. V. STATE OF ORISSA [1972] 83 ITR 26 ; [1970] 25 STC 211, WHERE IT WAS LAID DOWN THAT EV EN IF A MINIMUM PENALTY IS PRESCRIBED, THE AUTHORITY COMP ETENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY WHE N THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT OR WHERE THE BR EACH FLOWS FROM A BONA FIDE BELIEF THAT THE OFFENDER IS NOT LIABLE TO ACT IN TH E MANNER PRESCRIBED BY THE STATUTE. IN THE INSTANT CASE, THE ASSESSEE ATTEMPTED TO CORR ECT THEIR MISTAKE ON BEING POINTED OUT BUT WERE UNABLE TO DO SO. THERE IS NO MATERIAL ON RECORD THAT THE ASSESSEE INTENDED TO QUOTE FALSE PAN. CONSIDERING T HE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, IN OUR OPINION, THE AFOR ESAID RATIO IN HINDUSTAN STEEL LTD.'S CASE [1972] 83 ITR 26 (SC) CASE FULLY GOVERNS THE FACTS OF THE PRESENT C ASE AND, THEREFORE, THE ASSESSEE WAS ENTITLED TO ABSOLU TION FROM THE LIABILITY TO PENALTY UNDER SECTION 272B FOR QUOTING INCORRECT PA N OF THE AFORESAID THREE I.T.A. NO.2028/DEL./2011 13 PERSONS IN FORM NO. 24Q. IN VIEW THEREOF, WE HAVE N O HESITATION IN VACATING THE FINDINGS OF THE LD. CIT(A) AND ACCORDINGLY, THE PEN ALTY LEVIED BY THE AO AND UPHELD BY THE LD. CIT(A) TO THE EXTENT OF ` ` 30,000/- IS CANCELLED. THEREFORE, GROUND NO.1 IN THE APPEAL IS ALLOWED. 6. NO ADDITIONAL GROUND HAVING BEEN RAISED BEFORE US IN TERMS OF THE RESIDUARY GROUND NO.2 IN THE APPEAL, ACCORDINGLY, THIS GROUND IS DISMISSED. 7. IN THE RESULT, APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT SD/- SD /- (RAJPAL YADAV) (A.N. PAHUJA) JUDICIAL MEMBER ACCOUNTANT MEM BER NS COPY OF THE ORDER FORWARDED TO :- 1. M/S SKYPACK INDIA PVT. LTD., PLOT NO.190A, SECTO R-59, MATHURA ROAD, BALLABGARH. 2. INCOME TAX OFFICER (TDS), FARIDABAD. 3. CIT (APPEALS), FARIDABAD. 4. THE CIT CONCERNED. 5. THE DR, ITAT,G BENCH, NEW DELHI 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, DELH I