M/s. Om Prakash Subhash Kumar, Delhi V. ITO, New Delhi

ITA 2221/DEL/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52988 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 5 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 17-10-2011
• Assessment Year: misc
• Appeal Filed On: 11-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S NEGI
• Assessee Lawyers: PEEYUSH KAUSHIK
• Keywords: Reasonable cause; TDS
• Section: 273B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E NEW DELHI) BEFORE G.E. VEERABHADRAPPA, HON'BLE PRESIDENT AND SHRI RAJPAL YADAV: HONBLE JUDICIAL MEMBER ITA NO. 2221/DEL/2010 ASSESSMENT YEAR : 2005-06 M/S. OM PRAKASH SUBHASH KUMAR, VS. INCOME-TAX OFFIC ER, 6114/10, RAMDEV MARKET, TDS WARD 51(5), KHARI BAOLI, DELHI. NEW DELHI. (PAN: AAAFO1688A) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI PEEYUS H KAUSHIK, ADV. RESPONDENT BY: SHRI R.S. NEGI, SR.DR ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE OR DER OF LEARNED CIT(APPEALS) DATED 18.03.2010 PASSED FOR ASSESSMENT YEAR 2005-06. THE SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT LEARNED CIT(APPEALS) HAS ERRED IN CONFIRMING THE PENALTY OF RS.10,000 LEVIED UNDER SE CTION 272B OF THE INCOME-TAX ACT, 1961. 2. THE BRIEF FACTS OF THE CASE ARE THAT A TDS RETUR N IN FORM NO.26Q FOR THE QUARTER ENDING ON 30.6.2005 WAS FILED BY THE AS SESSEE ON 12.8.2005. ON PERUSAL OF THE RETURN, IT REVEALED TO THE ASSESSING OFFICER THAT ASSESSEE HAD DEDUCTED TAX FROM PAYMENTS MADE TO 8 PERSONS. HE FU RTHER FOUND THAT THE 2 ASSESSEE HAS MADE THE PAYMENT OF TAX TO THE GOVERNM ENT TREASURY BUT FAILED TO QUOTE PAN NUMBERS OF THE DEDUCTEES. ACCORDING TO THE ASSESSING OFFICER, SUB-SECTION 5B OF SECTION 139A MANDATES TH E DEDUTOR OF THE TAX TO QUOTE PAN NUMBERS OF THE PERSONS TO WHOM SUCH SUMS OR INCOME OR AMOUNT HAS BEEN PAID BY HIM. THE ASSESSEE FAILED TO QUOTE THE PAN OF FIVE PARTIES, THEREFORE, HE INITIATED THE PENALTY PROCEE DINGS UNDER SEC. 272B OF THE ACT. 3. IN RESPONSE TO THE SHOW-CAUSE NOTICE, IT WAS CON TENDED BY THE ASSESSEE THAT IT IS A PARTNERSHIP FIRM HAVING TAN BEARING NU MBER (DEL007326D), ENGAGED IN THE BUSINESS OF GROCERY ITEMS IN WHOLESA LE, IN RAM DEV MARKET, KHARI BAOLI, DELHI. IT HAS DEDUCTED THE TAX FROM PA YMENTS MADE TO 8 PARTIES. THE TAX WAS DEPOSITED IN TIME. IT HAS ALSO FILED TH E TDS RETURN. THE FAILURE ON ITS PART WAS TO QUOTE PAN NUMBERS OF FIVE DEDUCT EES. IT HAS WRITTEN LETTERS TO THOSE DEDUCTEES FOR PROVIDING THEIR PAN NUMBERS BUT THEY FAILED TO GIVE. THERE IS NO MECHANISM WITH THE ASSESSEE TO COMPEL S UCH PERSONS FOR PROVIDING THE PAN. THE ASSESSEE FILED COPIES OF THE LETTERS WRITTEN BY IT TO THOSE PERSONS. HOWEVER, ASSESSING OFFICER DID NOT A CCEPT THE CONTENTIONS OF THE ASSESSEE AND IMPOSED THE PENALTY OF RS.10,000. 3 4. APPEAL TO THE LEARNED CIT(APPEALS) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 5. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THERE WAS A REASONABLE CAUSE FOR NOT QUOTING PAN OF THE DEDUCTE ES. THEREFORE, ASSESSING OFFICER OUGHT TO HAVE NOT IMPOSED THE PEN ALTY. ON THE STRENGTH OF ITATS ORDER IN THE CASE OF M/S. D.V. STEEL CORPORA TION VS. ITO REPORTED IN 2009 TIOL 370 (ITAT BANGALORE), THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ACT DID NOT EMPOWER THE DEDUCTOR TO COMPEL THE DEDUCTEE FOR PROVIDING PAN THOUGH THE OBLIGATION IS THERE UP ON THE DEDUCTOR TO QUOTE PAN. HE SUBMITTED THAT THIS ASPECT WAS CONSIDERED B Y THE ITAT IN THE CASE OF D.V. STEEL CORPORATION (SUPRA) AND THE ITAT CONC URRED WITH THE PROPOSITION THAT ACT DID NOT EMPOWER THE DEDUCTORS TO COMPEL THE DEDUCTEES FOR PROVIDING PAN AND IN SUCH SITUATION, IF ANY PEN ALTY WAS TO BE IMPOSED THEN IT SHOULD BE UPON THE DEDUCTEES FOR NOT PROVID ING THE PAN TO THE DEDUCTORS INSTEAD OF IMPOSING THE PENALTY UPON THE DEDUCTORS. LEARNED DR ON THE OTHER HAND, RELIED UPON THE ORDERS OF THE RE VENUE AUTHORITIES BELOW. 6. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AN D GONE THROUGH THE RECORD CAREFULLY. SUB-SECTION (3) OF SEC. 272 B OF THE ACT PROVIDES AN OPPORTUNITY OF HEARING TO THE PERSONS UPON WHOM A P ENALTY UNDER SUB- SECTION (1) OR SUB-SECTION(2) OF SEC. 272B OF THE A CT IS PROPOSED TO BE IMPOSED FOR COMMITTING A DEFAULT OF NO COMPLIANCE O F SECTION 139A OF THE 4 ACT. THUS, IT WOULD BE A LOGICAL INFERENCE THAT IN A GIVEN CASE, IF ASSESSEE HAS EXPLAINED HIS POSITION THEN IT WOULD BE IN THE DISCRETION OF THE ASSESSING OFFICER TO IMPOSE OR NOT TO IMPOSE THE PENALTY UPON THE ASSESSEE. SIMILARLY, SECTION 273B OF THE ACT ALSO PROVIDES A DISCRETION IN THE ASSESSING OFFICER FOR NOT IMPOSING THE PENALTY IF AN ASSESSEE DEMONST RATE THE REASONABLE CAUSE FOR THE FAILURE COMMITTED BY HIM. SECTION 273B IS A LSO APPLICABLE ON SECTION 272B OF THE ACT. THE STAND OF THE ASSESSEE IS THAT INSPITE OF ITS REQUEST, THE DEDUCTEE DID NOT PROVIDE THE PAN. IN SUCH SITUATION , IT WAS QUITE DIFFICULT FOR THE ASSESSEE TO COMPLY WITH THE PROVISION. THE ASSE SSEE HAS WRITTEN LETTERS TO THE DEDUCTEE WHESE COPIES ARE PLACED ON RECORD. THU S, ASSESSEE HAS TRIED ITS BEST TO COMPLY WITH THE PROVISIONS. TAKING INTO CON SIDERATION BOTH THESE SECTIONS AS WELL AS THE EXPLANATION SUBMITTED BY TH E ASSESSEE, WE ARE OF THE OPINION THAT ASSESSEE WAS PREVENTED BY SUFFICIENT R EASONS FOR NOT COMPLYING WITH SECTION 139A SUB-SECTION (5B) OF THE ACT. ASSE SSING OFFICER OUGHT TO HAVE NOT IMPOSED THE PENALTY. WE ALLOW THE APPEAL O F ASSESSEE AND DELETE THE PENALTY IMPOSED BY THE ASSESSING OFFICER. DECISION PRONOUNCED IN THE OPEN COURT ON 17.10.201 1 SD/- SD/- ( G.E. VEERABHADRAPPA) ( RAJPAL YAD AV ) PRESIDENT JUDICIAL MEMBER DATED: 17/10/2011 MOHAN LAL 5 COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR