ITO TDS-II, THANE V. THE THANE JANATA SAHAKARI BANK LTD, THANE

ITA 6643/MUM/2009

• Counselvise Citation: 664319914 RSA 2009
• Duration Of Justice: 1 year(s) 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 07-07-2011
• Assessment Year: 2008-2009
• Appeal Filed On: 31-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reasonable cause; Revised return

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH: MUMBAI CORAM: SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.6643/MUM/2009 (ASSESSMENT YEAR: 2008-09) ITO, TDS-II GR. FLOOR, QUERESHI MANSION, GOKHALE ROAD, NAUPADA, THANE (W) ....... APPELLANT VS THE THANE JANATA SAHAKARI BANK LTD. ANANT LAXMI CHAMBERS, GOKHALE ROAD, NAUPADA, THANE (W), DIST. THANE ..... RESPONDENT C.O. NO. 161/MUM/2010 ARISING OUT OF ITA NO.6643/MUM/2009, A.Y. 2008-09 THE THANE JANATA SAHAKARI BANK LTD. ANANT LAXMI CHAMBERS, GOKHALE ROAD, NAUPADA, THANE (W), DIST. THANE ....... CROSS OBJECTOR VS ITO, TDS-II GR. FLOOR, QUERESHI MANSION, GOKHALE ROAD, NAUPADA, THANE (W) ..... RESPONDENT PAN: AAAAT 4062 E REVENUE-APPELLANT BY: SHRI GOLI SRINIWAS RAO ASSESSEE-CROSS OBJECTOR BY: SHRI ARUN SATHE DATE OF HEARING: DATE OF PRONOUNCEMENT: 07.07.2011 19.08.2011 O R D E R PER R.S. PADVEKAR, JM: THIS APPEAL IS FILED BY THE REVENUE CHALLENGING THE IMPUGNED ORDER OF THE LD. CIT (A)-II THANE DATED 26.10.2009 FOR THE A.Y. 2008- 09. THE ASSESSEE HAS FILED THE CROSS OBJECTION RAI SING THE GRIEVANCE ITA 6643/MUM/2009 C.O. NO.161/MUM/2010 THE THANE JANATA SAHAKARI BANK LTD. 2 AGAINST THE PART OF THE ORDER SUSTAINING THE PENALT Y LEVIED BY THE A.O. THE REVENUE HAS TAKEN THE FOLLOWING EFFECTIVE GROUN DS:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND LAW, THE LEARNED CIT (A) ERRED IN REDUCING THE PENALTY LEVIE D U/S.272B OF I.T. ACT TO ` 10,000/-. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND L AW, THE LEARNED CIT (A) ERRED IN HOLDING THAT THERE WAS SIN GLE DEFAULT INSTEAD OF 2112 DEFAULTS AS HELD BY THE ASS ESSING OFFICER U/S.272B OF THE I.T. ACT. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND L AW, THE LEARNED CIT (A) ERRED IN RELYING UPON THE DECISION OF HONBLE ITAT, DECISION IN THE CASE OF FINANCIAL COO PERATIVE BANK LTD. VS. INCOME-TAX OFFICER 117 TTJ (AHD) 782. 2. BRIEFLY STATED THE FACTS ARE AS UNDER. THE ASSE SSEE IS A CO- OPERATIVE BANK ENGAGED IN THE BANKING BUSINESS. FO R THE FIRST QUARTER OF FINANCIAL YEAR 2007-08, THE ASSESSEE HAS FILED I TS TDS RETURNS WITHOUT QUOTING THE PAN NUMBERS OF DEDUCTEES IN 193 3 CASES. IN VIEW OF THE A.O. IT IS VERY MUCH ESSENTIAL ON THE PART O F THE ASSESSEE TO QUOTE THE PAN NUMBERS OF ALL THE DEDUCTEES IN THE T DS RETURN FILED. THE A.O., THEREFORE, PROCEEDED TO LEVY THE PENALTY U/S.272B OF THE ACT AND ISSUED THE SHOW CAUSE NOTICE TO THE ASSESSEE. 3. THE ASSESSEE CONTENDED THAT THE PAN NUMBERS OF T HE ASSESSEES WERE INADVERTENTLY LEFT OUT IN THE SOFT COPY OF THE FORMAT DUE TO THE SYSTEM ERROR IN GENERATING THE CONCERNED REPORT. I T WAS ALSO CONTENDED THAT AFTER RECEIVING SHOW CAUSE NOTICE FR OM THE A.O. THE ASSESSEE FURNISHED THE REVISED RETURNS WITH THE DET AILS OF THE PAN AND FORM NO.60 FOR E-FILING. THE A.O. WAS NOT CONVINCE D WITH THE REPLY OF THE ASSESSEE AS HE WAS OF THE OPINION THAT THE REVI SED RETURN IS ITA 6643/MUM/2009 C.O. NO.161/MUM/2010 THE THANE JANATA SAHAKARI BANK LTD. 3 BELATED IN E-TDS OF NSDL W.E.F. 1.4.2007 AS THE VAL IDATION UTILITY OF THE NSDL DOES NOT ALLOW UPLOADING IF THE RETURN DOE S NOT QUOTE PAN OF MINIMUM 70% DEDUCTEES ARE NOT COLLECTED. THE ASSES SEE ALSO CONTENDED THAT THE REVISED RETURN COULD NOT BE UPLO ADED IN E-TDS OF NSDL AS IF THE 70% OF THE PAN NUMBERS OF THE DEDUCT EES ARE NOT QUOTED. THE ASSESSEE-BANK ALSO EXPLAINED THAT MOST OF THEIR CUSTOMERS ARE SUBMITTING FORM 60 AS PER RULE 114B W HO HAVE NOT HAVING PAN NUMBERS. IN THOSE CASES, IT IS NOT POSS IBLE TO LEVY THE PENALTY. THE A.O. WAS NOT IMPRESSED WITH THE EXPLA NATION OF THE ASSESSEE, AS IN HIS OPINION, IT IS NOT REASONABLE C AUSE. THE A.O., THEREFORE, HELD THAT THE ASSESSEE BANK WITHOUT REAS ONABLE CAUSE FAILED TO COMPLY WITH THE PROVISIONS OF SECTION 272B AND A CCORDINGLY COMMITTED DEFAULT AND AS PER SEC 272B WHAT IS DEFA ULT? THE PENALTY OF ` 10,000/- IS TO BE LEVIED. THE A.O. ACCORDINGLY LE VIED THE PENALTY OF ` 1,93,30,000/- ( ` 10,000/- X 1933 CASES). THE ASSESSEE CHALLENGED THE PENALTY ORDER BY TAKING THE DIFFERENT CONTENTIO NS AND PLEAS. IN SUM AND SUBSTANCE, THE PLEA OF THE ASSESSEE WAS THA T THERE WAS NO CONSCIOUS FAILURE ON THE PART OF THE ASSESSEE. MOR EOVER, IN ANY OF THE CASES, DEDUCTEES ARE FILING FORM NO.60. IT IS NOT POSSIBLE TO QUOTE PAN NUMBERS. IT WAS PLEADED THAT THE ASSESSEE IS REGUL ARLY FILING THE TDS RETURNS AND DUE TO THE SYSTEM ERROR, THE COLUMN IN WHICH THE PAN IS REQUIRED TO BE QUOTED IS LEFT BLANK. THE ASSESSEE ALSO FILED THE REVISED RETURN GIVING THE DETAILS OF THE PAN NUMBERS. THE LD. CIT (A) SUSTAINED THE PENALTY TO EXTENT OF ` 10,000/-. THE OPERATIVE PART OF THE REASONING OF THE LD. CIT(A) IS AS UNDER: 5. I HAVE GONE THROUGH THE PENALTY ORDER OF THE AO AND THE SUBMISSIONS MADE BY THE APPELLANT DURING THE PENALT Y PROCEEDINGS BEFORE ME. I INTEND TO AGREE WITH THE S UBMISSIONS MADE BY THE APPELLANT. THE PLAIN READING OF THE PEN AL SECTION MAKES IT VERY CLEAR THAT THE DEFAULT U/S.272B IS NO T DIVISIBLE. DEFAULT U/S.272B CANNOT BE DIVIDED INTO SEVERAL OR MULTIPLE DEFAULTS TO IMPOSE PENALTY UNDER THE SECTION UNDER REFERENCE IN ITA 6643/MUM/2009 C.O. NO.161/MUM/2010 THE THANE JANATA SAHAKARI BANK LTD. 4 EACH AND EVERY CASE OF THE DEDUCTEE OF THE APPELLAN T. AS AN ASSESSEE THE PENALTY, IF AT ALL TO BE IMPOSED, CAN BE IMPOSED ONLY ONCE AND NOT 1933 PENALTIES CAN BE IMPOSED ON A SIN GLE ASSESSEE IN A SINGLE ORDER. THE AO HAS IMPOSED PENALTY OF `. 1,93,30,000/- @ OF `. 10,000/- EACH ON THE BASIS OF TOTAL NUMBER OF 1933 CASES FOUND WHEREIN THE PAN WAS NOT QUOTED. ALL THE DEFAU LTS CANNOT BE TAKEN SEPARATELY AND THEREAFTER AS BASIS FOR IMPOSI TION OF PENALTY IN EACH AND EVERY CASE. THIS IS NOT THE CORRECT INT ERPRETATION AND IMPLEMENTATION OF THE LEGISLATIVE PROVISIONS. RELIA NCE IS PLACED ON HON'BLE ITAT, AHMEDABAD DECISION IN THE CASE OF FIN ANCIAL CO- OPERATIVE BANK LTD. VS INCOME TAX OFFICER (2008) 11 7 TTJ (AHD.) 782 WHEREIN ON THE SIMILAR FACTS AND CIRCUMSTANCES PENALTY U/S.272B WAS CANCELLED BY THE HON'BLE BENCH. 5.1 SECTION 139A(5A) PUTS THE DEDUCTEES UNDER OBLIG ATION TO SUPPLY THEIR PAN TO THE DEDUCTOR AND FURTHER THE DE DUCTOR U/S.139A(5B) IS UNDER OBLIGATION TO QUOTE SUCH PAN OF THE DEDUCTEES WHILE FILING ITS TDS RETURN. IN THE INSTA NT CASE THE APPELLANT HAS ADMITTEDLY COMMITTED THE DEFAULT OF N OT QUOTING THE PAN IN CERTAIN CASES BUT THERE WAS A REASON FOR THA T. WHAT CONFRONTED WITH THE SITUATION, THE APPELLANT DURING THE PROCEEDINGS BEFORE THE ITO, TDSII THANE CLARIFIED T HE POSITION BY STATING THAT A SYSTEM ERROR HAD OCCASIONED WHILE GE NERATING THE RETURN IN E-FORMAT, SO THE COLUMN IN WHICH THE PAN WAS REQUIRED TO BE QUOTED WAS NOT LIFTED AND AS A RESULT THE COL UMN GOT HIDDEN AND THE SAME DATA WAS UPLOADED IN THE RETURN AT NSD L. IT HAS BEEN CONTENDED BY THE APPELLANT THAT TWO OFFICERS O F THE BANK MET THE AO ON 30.01.2008 AND SUBMITTED A SOFT COPY AND ALSO A HARD COPY WHEREIN PAN OF DEDUCTEES APPEARED AND WERE PLA CED IN THE RECORD FILE OF THE ITO, TDS II THANE. IT CAN BE SEE N THEREFORE, THAT THE APPELLANT HAS COMMITTED THE DEFAULT BUT THERE W AS A REASONABLE CAUSE FOR THAT. 5.2 NOTWITHSTANDING WHATEVER HAS BEEN STATED ABOVE, THERE IS NO DENYING THE FACT THAT THE DEFAULT IS COMMITTED B Y THE APPELLANT ITA 6643/MUM/2009 C.O. NO.161/MUM/2010 THE THANE JANATA SAHAKARI BANK LTD. 5 FOR NOT QUOTING THE PAN IN CERTAIN CASES AND THE VI OLATION OF PROVISIONS OF SECTION 139A HAS TAKEN PLACE AND THE APPELLANT IS LIABLE FOR PENALTY U/S.272B OF THE I.T. ACT, 1961, BUT THE SAME CANNOT BE TAKEN AS MULTIPLE DEFAULTS. THE DEFAULT I S A SINGLE DEFAULT FOR WHICH THE APPELLANT IS LIABLE FOR PENAL TY OF `. 10,000/- AS STIPULATED IN THE SECTION U/S.272B. IMPOSITION O F 1933 PENALTIES ON THE SINGLE ENTITY ORDER IS NOT THE INT ENTION OF THE LEGISLATURE. EVEN THE APPELLANT HAS ADMITTED THE DE FAULT VIDE SUBMISSIONS DATED 02.01.2009 AT PARA 2.3 STATING TH AT IN AS MUCH AS SECTION 272B STIPULATES THE DEFAULT AND ALS O PROVIDES THE MEASURE OF PENALTY IT IS A COMPLETE CODE IN ITS ELF. THE MEASURE OF PENALTY IS PROVIDED AT `. 10,000/-. IT IS NOT DEPENDENT ON THE GRAVITY OF THE DEFAULT OR DOES NOT PROVIDE ANY DISC RETION AS TO THE AMOUNT EXCEPT THAT HE MAY CONCLUDE THAT THE PENALTY IS NOT LEVIABLE, BUT ONCE HE DECIDES THAT IT IS LEVIABLE I T SHOULD BE LEVIED AT `. 10,000/-. 5.3 IN VIEW OF THE FACTS AND CIRCUMSTANCES EXPLAINE D ABOVE, THE ACTION OF THE AO IMPOSING PENALTY UPTO ` .10,000/- IN THE CASE OF THE APPELLANT FOR THE PERIOD UNDER CONSIDERATION IS CONFIRMED AND BALANCE PENALTY IMPOSED IS DELETED. 4. NOW THE REVENUE IS IN APPEAL BEFORE US RAISING T HE GRIEVANCE FOR SUSTAINING PENALTY TO EXTENT OF ` 10,000/- ONLY AND ASSESSEE HAS FILED THE CROSS OBJECTION RAISING THE GRIEVANCE FOR SUSTA INING THE PENALTY OF ` 10,000/-. 5. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD . IN THIS CASE THERE IS NO DISPUTE THAT THE ASSESSEE HAS FILED THE TDS RETURN. THE CONTENTION OF THE LD. COUNSEL IS THAT E-FILING OF T HE TDS RETURN WAS NEWLY INTRODUCED AND THERE WAS A SYSTEM ERROR AND N O FAULT CAN BE ATTRIBUTABLE TO THE ASSESSEE FOR NON-QUOTING OF THE PAN NUMBER AND IT WAS THE DEFECTIVE SOFTWARE OF THE SYSTEM. HE FURTH ER SUBMITTED THAT THE ASSESSEE IMMEDIATELY FILED THE REVISED RETURN A LONG WITH THE PAN ITA 6643/MUM/2009 C.O. NO.161/MUM/2010 THE THANE JANATA SAHAKARI BANK LTD. 6 NUMBERS. HE FURTHER SUBMITTED THAT THERE WAS AGAIN SYSTEM PROBLEM IN UPLOADING THE REVISED RETURN AND AS PER THE (LAT EST PREVALENT) SYSTEM UNLESS THE 70% PAN NUMBERS ARE QUOTED, UPLOA DING IS NOT POSSIBLE. HE SUBMITS THAT RESPONSIBILITY OF THE AS SESSEE-BANK IS ASKED FOR THE PAN OR TO ASK RECEIVER OF INTEREST TO FILE FORM NO.60 . IT C ANNOT FORCE THE DEDUCTEES THAT THEY MUST FURNISH THE PAN NUMBERS, IF THEY DO NOT HAVE. 6. IN THE CROSS OBJECTION, THE LD. COUNSEL SUBMITS THAT EVEN THERE IS NO JUSTIFICATION TO SUSTAIN THE PENALTY OF ` 10,000/-. HE PLEADED FOR DELETING THE ENTIRE ADDITION TOWARDS LEVY OF THE PE NALTY. WE HAVE ALSO HEARD THE LD. D.R. 7. THE FACTS ARE NARRATED IN DETAIL HEREINABOVE. T HE SHORT CONTROVERSY IS THAT THE ASSESSEE DID NOT QUOTE PAN NUMBER IN TDS E- RETURN WHILE UPLOADING THE E-RETURNS. IN OUR OPINI ON, IT IS A REASONABLE CAUSE. WHAT WE FIND THAT AS ADMITTEDLY THE NEW SYSTEM OF FILING E-TDS-RETURNS IS INTRODUCED. BEING A NEW SY STEM, HAVING A SOME PROBLEMS WITH SOFTWARE AND FOR THAT THE ASSESS E BANK CAN NOT BE HELD RESPONSIBLE. NO WHERE IS DENIED BY THE A.O. TH AT AS CLAIMED BY THE ASSESSE, THERE SYSTEM ERROR. IN OUR OPINION, IT IS A REASONABLE CAUSE FOR NOT QUOTING PAN NUMBERS IN E-RETURN OF TD S. WE FURTHER FIND THAT THE ASSESSEE THEREAFTER IMMEDIATELY FILED THE REVISED TDS E- RETURN AND ALSO HAVE FURNISHED FORM NO.60. IN THE CASE OF HINDUSTAN STEEL LTD. VS STATE OF ORISSA 83 ITR 26 THE HONBLE SUPREME COURT HAS HELD AS UNDER:- AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT OF A QUASI-CRIMINAL PROCEE DING, AND PENALTY WILL NOT ORDINARILY BE IMPOSED UNLESS THE P ARTY OBLIGED, EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF 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 ITA 6643/MUM/2009 C.O. NO.161/MUM/2010 THE THANE JANATA SAHAKARI BANK LTD. 7 IMPOSED FOR FAILURE TO PERFORM A STATUTORY OBLIGATI ON IS A MATTER OF DISCRETION OF THE AUTHORITY TO BE EXERCISED JUDICIA LLY AND ON A CONSIDERATION OF ALL THE RELEVANT CIRCUMSTANCES. E VEN IF A MINIMUM PENALTY IS PRESCRIBED, THE AUTHORITY COMPET ENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY, WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVIS IONS 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 TH E STATUTE. 8. IN OUR OPINION, THERE IS A REASONABLE CAUSE ON T HE PART OF THE ASSESSEE FOR NOT QUOTING THE PAN NUMBERS IN E-TDS R ETURN AND NO PENALTY IS LEVIABLE. ACCORDINGLY, ALL THE GROUNDS IN THE REVENUES APPEAL ARE DISMISSED AND THE CROSS OBJECTION FILED BY THE ASSESSE IS ALLOWED AND WE DELETE THE PENALTY SUSTAINED BY THE LD. CIT (A). 9. IN THE RESULT, REVENUES APPEAL IS DISMISSED AND ASSESSEES CROSS OBJECTION IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 1 9TH AUGUST 2011. SD/- SD/- ( P.M. JAGTAP ) ACCOUNTANT MEMBER ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI, DATE: 19TH AUGUST 2011 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A)II, THANE. 4) THE CIT (TDS), PUNE. 5) THE D.R. H BENCH, MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN ITA 6643/MUM/2009 C.O. NO.161/MUM/2010 THE THANE JANATA SAHAKARI BANK LTD. 8 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 08.08.2011 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 09.08.2011 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER