ITO (TDS), Panchkula V. Oriental Bank of Commerce, Ambala

ITA 773/CHANDI/2011

• Counselvise Citation: 77321514 RSA 2011
• Duration Of Justice: 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 02-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K SAINI
• Keywords: Reasonable cause; Revised return; TDS
• Section: 273B; 139

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. 773/CHANDI/2011 ASSESSMENT YEAR: 2009-10 ITO (TDS) PANCHKULA V. ORIENTAL BANK OF CO MMERCE NARAINGARH, DISTT. AMBALA RTK000670 K APPELLANT BY: SHRI N K SAINI RESPONDENT BY: NONE DATE OF HEARING: 19.9.2011 DATE OF PRONOUNCEMENT: 19 .9.2011 ORDER PER H.L. KARWA, V.P THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER PASSED BY THE LD. CIT(A), PANCHKULA DATED 19.5.2011 IN CANCEL ING THE PENALTY OF RS. 7,70,000/- IMPOSED U/S 272B OF INCOME-TAX ACT, 1961 (IN SHORT THE ACT) FOR ASSESSMENT YEAR 2009-10. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS RUNNING A BANKING BUSINESS UNDER THE NAME AND STYLE OF ORIENT AL BANK OF COMMERCE. THE ITO (TDS) WHILE GOING THROUGH THE QUARTERLY RETURN ON FORM NO. 26Q FILED BY THE ASSESSEE NOTED THAT IT HAD OMITTED TO QUOTE PAN/HAS QUOTED INVALID PAN IN 77 CASES. THE AO HAS AFFORDED TWO OPPORTUNITIES TO TH E ASSESSEE TO EXPLAIN ITS POSITION AND FILE THE CORRECT DETAILS IN THIS REGAR D. HOWEVER, THE ASSESSEE DID NOT FILE ANY REPLY DUE TO WHICH THE AO CONCLUDED THAT T HE ASSESSEE HAS COMMITTED A DEFAULT U/S 139A(5B) OF THE ACT FOR WHICH PENALTY U /S 272B(1) OF THE ACT, WAS LEVIABLE. THE ITO(TDS), THEREFORE LEVIED A PENALTY OF RS. 7,70,000/- @ RS. 10,000 PER DEFAULT VIDE HIS ORDER DATED 28.7.2010. 3. AGGRIEVED BY THE ORDER PASSED BY THE ITO(TDS), P ANCHKULA THE ASSESSEE CARRIED THE MATTER IN APPEAL TO THE LD. CIT(A). BE FORE THE LD. CIT(A), THE ASSESSEE TOOK THE FOLLOWING LINE OF ARGUMENTS:- I) THAT THE APPELLANT IS RUNNING BANKING BUSINESS UNDER THE NAME AND STYLE OF ORIENTAL BANK OF COMMERCE (OBC), NARAINGARH, AMBALA . THE APPELLANTS IS WORKING IN RURAL AREA/BACKWARD AREA OF DISTT. AMBAL A WHERE MOST OF THE DEPOSITORS ARE AGRICULTURIST OR LOW INCOME GROUP PE RSONS. ITA NO. 773/CHANDI/2011 ITO (TDS) V,. ORIENTAL BANK OF COMMERCE 2 2 II) THAT THE APPELLANT HAS EXCLUSIVE BANKING BUSINE SS AND THEY ARE ALWAYS ABIDING WITH INCOME TAX RULES AND RBI DIRECTIONS AN D ALSO DULY AUDITED BY THEIR AUTHORITIES. III) THAT THE APPELLANT HAS ALWAYS TRIED TO COLLECT THE CORRECT PANS/FORM NO. 60/61. IV) THAT THE APPELLANT HAS DEDUCTED THE TAX CORRECT LY AND THE SAME HAS BEEN PAID WELL IN TIME. V) THAT THE APPELLANT HAS MOST OF THE DEDUCTEES PA NS IN ITS POSSESSION. THE APPELLANT HAS TRIED HIS BEST TO CORRECT THE PANS IN THE SAID RETURN BY FILING OF REVISED RETURNS VIDE RECEIPT NO. 072370300151612 DA TED 18.9.2010, 072370300195185 DATED 11.5.2011, 072370300197241 DA TED 14.5.2011. THE APPELLANT HAS PLACED RELIANCE IN THE DECISIONS OF HON'BLE ITAT AHMEDABAD D BENCH IN THE CASE OF FINANCIAL COOPER ATIVE BANK LTD V. ITO, WARD 2(3), SURAT 116 ITD 358. 4. THE LD. CIT(A) CANCELLED THE PENALTY BY STATING THAT THE TDS WAS DEDUCTED AND DEPOSITED IN TIME. ACCORDING TO HIM THE DEFAUL T WAS ONLY WITH REGARD TO WRONG QUOTING OF PAN OF 77 OF THE DEDUCTEES AS THE DEDUCT EES QUOTED WRONG PAN. CORRECT PAN WAS GIVEN AS SOON AS THE DEFAULT WAS BR OUGHT TO THE NOTICE OF THE ASSESSEE. THE LD. CIT(A) CATEGORICALLY OBSERVED TH AT TAX WAS DEDUCTED CORRECTLY REVISED COPY OF RECEIPT WAS ALSO SUBMITTED. THE LD . CIT(A) OBSERVED THAT THE PENALTY WAS LEVIED IF THE DEFAULT COMMITTED U/S 139 A. HOWEVER, IN THE INSTANT CASE, THE PENALTY HAS BEEN LEVIED FOR DEFAULT 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 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. THE LD. CIT(A) ALSO CATEGORICALL Y MENTIONED THAT THE ASSESSEE QUOTED INVALID PAN FOR 77 DEDUCTEES WHICH WAS CORRE CTED BY THE ITO(TDS). THE LD. CIT(A) FURTHER OBSERVED THAT IN THE INSTANT CAS E, THE ASSESSEE HAS EXPLAINED THAT THE FAILURE TO QUOTE THE RIGHT PAN OCCURRED AS THE CONCERNED DEPOSITOR HAD MISQUOTED PAN. IT HAS FURTHER BEEN STATED THAT THE PAN WAS CORRECTED AFTER ASCERTAINING THE SAME FROM THE RESPECTIVE DEDUCTEES . THEREFORE, THE LD. CIT(A) OBSERVED THAT CORRECT DETAILS WERE FILED BY THE ASS ESSEE, NO PENALTY IS LEVIABLE. HE ALSO RELIED ON THE DECISION OF ITAT AHMEDABAD BE NCH IN THE CASE OF FINANCIAL ITA NO. 773/CHANDI/2011 ITO (TDS) V,. ORIENTAL BANK OF COMMERCE 3 3 CO-OPERATIVE BANK LTD V. ITO, WARD 2(3), SURAT (200 9) 116 ITD 358 WHEREIN THE TRIBUNAL DELETED THE PENALTY LEVIED U/S 272B FOR NO N COMPLIANCE U/S 139A OF THE ACT, OBSERVING AS UNDER:- IN A NUT SHELL, THE CUMULATIVE ANALYSIS OF SECTION 139A AND RULES 114B TO 114D TO SHOW THAT OBLIGATION TO QUOTE PAN OR GIR NU MBER OR TO FILE FORM NO. 60 IS THAT OF THE CUSTOMER AND NOT THAT OF THE BANK. THE LD. CIT(A) CONCLUDED THAT THE ASSESSEE DEDUCTED TDS CORRECTLY AND REVISED PAN AND FILED THE REVISED STATEMENT ON FORM NO. 26Q , HENCE THERE WAS SUFFICIENT COMPLIANCE OF SEC 139A. HE, THEREFORE, CANCELLED T HE PENALTY OF RS. 7,70,000/-. 5. WE HAVE HEARD SHRI N.K. SAINI, DR FOR THE REVENU E 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 HA S EXPLAINED THAT FAILURE TO QUOTE RIGHT PAN WAS OCCURRED AS THE CONCERNED DEPOSITOR HAS HIMSELF MIS-QUOTED PAN. IT IS ALSO THE CASE OF THE ASSESSEE THAT THE PAN WAS CORRECTED AFTER ASCERTAINING THE SAME FROM RESPECTIVE DEDUCTEES. I N THE CASE OF THE FINANCIAL CO- OPERATIVE BANK LTD V. ITO (SUPRA) THE AHMEDABAD BEN CH HAS HELD AS UNDER:- WE ARE, THEREFORE OF THE OPINION THAT SINCE THE F URNISHING OF INCOMPLETE DECLARATION BY THE CUSTOMER WAS A MISTAKE COMMITTED BY THE CUSTOMER AND NOT BY THE BANK, THE FAILURE TO COMPLY WITH THE PRO VISIONS 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 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 PENALIZED IF IT FAILS TO COM PLY WITH THE PROVISIONS OF SECTION 139A(6) OR RULE 114D(2) IS FOR FAILURE TO E NSURE 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 RE CORD THAT THE ASSESSEE DEDUCTED TDS CORRECTLY AND REVISED THE PAN AND FILE D REVISED STATEMENT IN FORM NO. 26Q, HENCE THERE WAS SUFFICIENT COMPLIANCE OF T HE PROVISIONS OF SECTION 139A OF THE ACT. EVEN OTHERWISE THE ASSESSEE DID NOT DE RIVE ANY BENEFIT WHATSOEVER, BY FILING THE WRONG PANS AND PAN WAS CORRECTED AFTE R 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 P ENALTY IS LEVIABLE. EVEN OTHERWISE ALSO NO PENALTY IS LEVIABLE WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF ITA NO. 773/CHANDI/2011 ITO (TDS) V,. ORIENTAL BANK OF COMMERCE 4 4 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 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 PARTY OBL IGED EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS A GUILTY OR CONDUCT CONTUMACIOUS OR DISHONEST, OR ACTED IN CONSCIOUS DI SREGARD OF ITS OBLIGATION. PENALTY WILL NOT ALSO BE IMPOSED MEREL Y BECAUSE IT IS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IMPOSED FOR FAILURE TO PERFORM A STATUTORY OBLIGATION IS A MATTER OF DISCR ETION OF THE AUTHORITY TO BE EXERCISED JUDICIALLY AND ON A CONSIDERATION O F ALL THE RELEVANT CIRCUMSTANCES. EVEN IF A MINIMUM PENALTY IS PRESCR IBED, THE AUTHORITY COMPETENT TO IMPOSE THE PENALTY WILL BE J USTIFIED IN REFUSING TO IMPOSE PENALTY, WHEN THERE IS A TECHNICAL OR VEN IAL 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 TH E 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 CIRCUMST ANCES OF THE PRESENT CASE. WE, THEREFORE UPHOLD THE ORDER OF LD. CIT(A) IN CANCELI NG THE PENALTY. 6. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. ORDER PRONOUNCED ON 19.9.2011 SD/- SD/- (MEHAR SINGH) (H.L. KARWA) ACCOUNTANT MEMBER VICE PRESIDENT CHANDIGARH, THE 19.9.2011 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/ THE DR ITA NO. 773/CHANDI/2011 ITO (TDS) V,. ORIENTAL BANK OF COMMERCE 5 5