TREASURY OFFICER, SECRETARIAT V. COMMISSIONER OF INCOME TAX-1 and

MA/79/2010

AI Insights

The case involves an appeal by the Treasury Officer, Patna against the order of the Income Tax Appellate Tribunal, which had dismissed their earlier appeal concerning a penalty imposed for issuing a defective Tax Deducted at Source (TDS) certificate. The original certificate, required for assessment proceedings, was not in the prescribed form as mandated by Section 203 of the Income Tax Act, read with Rule 31 of the Income Tax Rules. The defect was rectified only after the Assessing Officer's intimation. The Tribunal's decision to uphold the penalty was contested on the grounds that the current Treasury Officer was not responsible for the initial error, as he had joined the office after the defective certificate was issued.

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 686757 (HC-PATNA)
• Appeal Type: Others
• Pronouncement Date: 12-04-2012
• Assessment Year: misc
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: HARSHWARDHAN PRASAD; ARCHANA SINHA
• Assessee Lawyers: AJAY RASTOGI; MANISH RASTOGI
• Keywords: Defective Certificate; Penalty; Quasi criminal proceeding; TDS Certificate
• Section: 203; 31; 272-A(2)(g)

Judgement Text

"IN THE HIGH COURT OF JUDICATURE AT PATNA Miscellaneous Appeal No.79 of 2010 ====================================================== Treasury Officer, Secretariat Treasury, Vikash Bhawan, Patna .... .... Appellant/s Versus Commissioner Of Income Tax-1 & .... .... Respondent/s ====================================================== Appearance : For the Appellant/s : Mr. Ajay Rastogi, Advocate Mr Manish Rastogi, Advocate For the Respondent/s : Mr. Harshwardhan Prasad, Advocate & Mrs. Archana Sinha, Advocate.. CORAM: HONOURABLE MR. JUSTICE SHIVA KIRTI SINGH and HONOURABLE MR. JUSTICE VIKASH JAIN ORAL ORDER (Per: HONOURABLE MR. JUSTICE SHIVA KIRTI SINGH) 4 12-04-2012 Heard the parties. 2. 2. This appeal is directed against the order of Income Tax Appellate Tribunal, Patna Bench, Patna dated 25-8-2009 whereby appeal preferred by the appellant bearing I.T.A. No. 40/ PAT/2009 has been dismissed. The matter relates to levy of penalty under section 272 A (2) ( g ) of the Income Tax Act (hereinafter referred to as ` the Act’). A treasury officer at Patna Treasury issued a certificate for tax deducted at source in respect of assessee Madan Lal Rajak, retired Deputy Director of Education which was required in assessment proceeding under the Act. Patna High Court MA No.79 of 2010 (4) dt.12-04-2012 2 / 4 2 3. 3. There is no dispute that the certificate was not in the prescribed form as required by Section 203 of the Act read with Rule 31 of the Income Tax Rules. Shri Rajak obtained the certificate without any protest within the prescribed time but later in course of assessment proceeding the Assessing Officer found the certificate to be defective as it was not in the prescribed form and hence an intimation to that effect was sent to the Treasury Officer, Patna. On receipt of such intimation on 7-3-2005 the required certificate in correct form was issued by the appellant on 27th July, 2005. Ultimately, the Assessing Officer after issuing notice to the appellant imposed a penalty of Rs.45,300/- by order passed on 24-1-2007. The penalty at the rate of Rs.100/- per day appears to have been calculated from the date of issue of wrong certificate till the date a correct certificate was issued. 4. 4. When the appellant received notice of proposed penalty, he filed reply wherein it was pointed out that he had joined as Treasury Officer in the concerned office only on 30th June, 2005. He disclosed that he issued the TDS certificate in proper form when an application to that effect was made by Shri Rajak. He ventured to offer a probable explanation on behalf of Treasury Officer who had issued the defective certificate originally by stating that perhaps due to lack of knowledge TDS certificate was not issued in proper form earlier. 5. 5. There can be no doubt that imposition of penalty is a Patna High Court MA No.79 of 2010 (4) dt.12-04-2012 3 / 4 3 punishment for a wrong done by a person. The proceeding in relation to imposition of penalty must be viewed as a quasi criminal proceeding against the concerned person who committed the fault. Section 272 A (2) (g) provides that if any person fails to furnish the certificate as required by Section 203 ( applicable in this case), he shall pay, by way of penalty, a sum of Rs.100/- for every day during which the failure continues. Subsection (4) of Section 272 A requires grant of an opportunity of hearing in the matter by the concerned authority to the person on whom the penalty is proposed to be imposed. 6. 6. Several questions of law were raised on behalf of appellant but the primary issue was whether penalty could be proposed to be imposed upon the appellant when he was not at fault in issuing a defective certificate. There is no dispute on facts and hence in our considered view, if at all there was any requirement of imposing penalty in the facts of the case, notice could be issued only against the person who had issued the defective certificate. For the fault of predecessor in office the appellant could not have been penalized. The Assessing Officer erred in not appreciating the show cause filed on behalf of appellant. After it became apparent that the defective certificate has been issued by another person and not by the appellant, no proceeding for imposition of penalty against the appellant should have been continued. The imposition of penalty against the post, Patna High Court MA No.79 of 2010 (4) dt.12-04-2012 4 / 4 4 Treasury Officer, as done in this case amounts to sparing the real person who was at fault and penalizing the office for which there is no provision in Section 272 A. In a quasi criminal proceeding only the person at fault can be subjected to any penalty, in accordance with law. 7. 7. In the facts of the case, we are of the considered view that penalty proceeding was not initiated against the person at fault and therefore, in absence of any such person imposition of penalty is against the provision of the Act. Since the appeal has been allowed on the ground that the proceeding is against a person not at fault, it is not necessary to go into other issues such as whether issue of defective TDS certificate would amount to failure to furnish the certificate. 8. 8. In the result, the appeal is allowed. The impugned order of the Tribunal is reversed and it is held that imposition of penalty on the appellant is against law. Such imposition of penalty is, therefore, set aside. Naresh/- (Shiva Kirti Singh, J) (Vikash Jain, J) "