The Branch Manager, Yamunanagar v. ITO (TDS), Panchkula, Income Tax Appellate Tribunal, Judgment, Law, casemine.com

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Case Number

Income Tax 850/CHANDI-2012,Income Tax 848/CHANDI-2012,Income Tax 849/CHANDI-2012,Income Tax 852/CHANDI-2012,Income Tax 851/CHANDI-2012

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Factual and Procedural Background

This is a consolidated order disposing of a bunch of five appeals filed by the same assessee against separate orders of the Commissioner of Income-tax (Appeals), Karnal dated 30.05.2012. The appeals relate to assessment years (inter alia) 2006-07, 2008-09 and 2009-10 and challenge penalties levied under section 272B of the Income-tax Act, 1961.

Notice of hearing had been issued to the assessee but no one appeared on behalf of the assessee and no application for adjournment was moved. The Tribunal proceeded to hear the matter for the Revenue through the Departmental Representative. Because common issues arose in all appeals, they were consolidated and decided together for convenience.

The basic factual matrix recited in the order is that the assessee was found to have defaulted in furnishing correct Permanent Account Numbers (PANs) of various deductees in its e-TDS quarterly returns filed for different financial years. Specific returns, dates, number of affected deductees and penalties (each Rs.10,000) as recorded in the order include (as stated in the opinion):

Financial Year 2005-06 — Form No. 26Q — (filed) 30.8.2005 — 109 deductees — Penalty Rs.10,000
Financial Year 2007-08 — Form No. 24Q — (filed) 16.6.2008 — 3 deductees — Penalty Rs.10,000
Financial Year 2007-08 — Form No. 26Q — (filed) 16.6.2008 — 10 deductees — Penalty Rs.10,000
Financial Year 2008-09 — Form No. 26Q — (filed) 24.7.2008 — 8 deductees — Penalty Rs.10,000
Financial Year 2008-09 — Form No. 26Q — (filed) 10.11.2008 — 8 deductees — Penalty Rs.10,000

The Assessing Officer held the assessee to be in default for not furnishing correct PAN numbers and levied penalty under section 272B for the assessment years noted (each penalty recorded at Rs.10,000 in the order). The Commissioner (Appeals) upheld the levy on the ground that the assessee had not furnished the correction statement before the Assessing Officer, i.e., before completion of the penalty proceedings in the respective years. The assessee appealed to the Tribunal.

Legal Issues Presented

Whether penalty under section 272B of the Income-tax Act is leviable for failure to furnish correct PAN numbers of deductees in e-TDS quarterly returns.
Whether a belated furnishing of correction statements (i.e., corrected PAN information filed after the original return but before or during appellate proceedings) establishes a reasonable cause under section 273B so as to render the assessee not liable to penalty under section 272B.

Arguments of the Parties

The opinion does not contain a detailed account of the parties' legal arguments.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Chief Executive Officer, Cantonment Board, Ambala Cantt. vs. The Income Tax Officer (TDS), Panchkula — ITA No. 470/Chd/2012; order dated 26.9.2012	The Tribunal explored the interaction between section 139A(2) (duty to furnish PAN details in prescribed returns), section 272B (penalty for failure to furnish PAN details in TDS/TCS statements) and section 273B (discretion not to impose penalty where reasonable cause is shown). It recognised that while section 272B is leviable for non-compliance with section 139A(2), section 273B allows the Tribunal/AO to refrain from imposing penalty if reasonable cause is established.	The Tribunal in that precedent found that where the assessee had filed revised computation / correction statements belatedly (corrections filed after original return but before final resolution) and had a bona fide/reasonable cause for not furnishing correct PANs earlier, penalty under section 272B was not exigible and the Assessing Officer was directed to delete the penalty. The present Tribunal relied on that ratio and applied it to the consolidated appeals before it.

Court's Reasoning and Analysis

The Tribunal proceeded with the consolidated appeals because a common issue — levy of penalty under section 272B for failure to furnish correct PAN numbers in e-TDS returns — arose in all appeals. The Assessing Officer had levied penalties after finding incorrect PAN details in the assessee's e-TDS statements; the Commissioner (Appeals) upheld the penalty on the ground that correction statements had not been furnished before the Assessing Officer, i.e., before completion of penalty proceedings.

The Tribunal examined an earlier, directly analogous decision in ITA No. 470/Chd/2012 (order dated 26.9.2012). That decision considered materially similar facts: e-filed quarterly TDS return with incorrect PANs for several deductees, corrected PANs later available and revised computation/correction statement filed belatedly (dated examples include a revised computation on 25.10.2010). In the precedent the Tribunal held that:

While section 272B is leviable where an assessee fails to comply with the provisions of section 139A(2),
Section 273B authorises non-imposition of penalty where the assessee establishes a reasonable cause for the failure, and
On the facts, the assessee had a bona fide reason and had filed the corrected information (albeit belatedly), so penalty under section 272B was not exigible and the AO was directed to delete the penalty.

Applying that precedent to the present consolidated appeals, the Tribunal found the facts in the present case identical to those in ITA No. 470/Chd/2012. Consequently, the Tribunal concluded that where an assessee had furnished correction statements in respect of deductees whose PANs were originally incorrect — even if done belatedly — that amounted to a reasonable cause for not furnishing correct PANs in time, and therefore penalty under section 272B should not be imposed.

The Tribunal did note one distinction recorded by the CIT(A) in respect of ITA No. 852/Chd/2012: the CIT(A) had observed that although the assessee claimed to have filed the correction statements on specified later dates (6.1.2011 / 17.3.2011), the assessee had not produced evidence of such filings before the CIT(A) or the Assessing Officer. In that situation the Tribunal directed the Assessing Officer to verify the assessee's stand; if the correction statement had indeed been filed, no penalty would be leviable under section 272B, but if no correction statement had been filed the assessee would be liable to penalty totaling Rs.10,000 (as recorded in the appellate order).

Holding and Implications

Holding: The Tribunal allowed the appeals of the assessee in ITA Nos. 848 to 851/Chd/2012 and allowed ITA No. 852/Chd/2012 for statistical purposes. The Tribunal followed the ratio of ITA No. 470/Chd/2012 (order dated 26.9.2012) and held that where corrected PAN information/correction statements have been furnished (even belatedly) and a bona fide/reasonable cause exists, penalty under section 272B is not exigible.

Implications and immediate consequences:

The direct effect of the decision is that the penalties levied under section 272B in the allowed appeals are to be set aside in light of the Tribunal's application of the earlier ratio.
In the specific instance noted by the CIT(A) (ITA No. 852/Chd/2012), the Tribunal directed the Assessing Officer to verify whether the correction statement was filed; if it was, no penalty; if not, penalty of Rs.10,000 would remain exigible as recorded in the appellate order.
The order follows an existing Tribunal ratio rather than laying down a novel principle; accordingly the Tribunal applied that precedent to the facts at hand rather than claiming to create new law.

Order pronounced in open court on 31st October, 2012.

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The Branch Manager, Yamunanagar v. ITO (TDS), Panchkula

PE R S USH M A CHO WL A, J . M, : T hi s bu n ch o f f i v e a p p e a l s a r e f i l ed b y t h e s a m e a s s e s se e a ga i n s t t h e s ep a r a t e o rd er s o f t h e Com mis s i on e r o f In c o me - t ax ( Ap p ea l s ) , K a r n a l , a l l d a t e d 30 . 05 .2 01 2 r e l a t i n g t o as s e s sm e n t ye a r s 20 06 - 07 , 20 0 8-

0 9 a nd 20 0 9- 10 aga i n s t t h e p en a l t y l e v i e d u nd e r s e c t i on 2 72 B o f t h e In c o m e T ax Ac t , 19 6 1 ( i n sh or t t h e A c t ) .

2 . T h ou gh n o t i c e o f h e a r i n g w as i s su e d to t h e a s s e s s e e bu t no n w a s p r e s en t o n b e h a l f o f t h e a s s e s s e e no r a n y a p p l i c a t i on w a s mo v ed f o r a d jo ur nm e n t . In v i e w o f t h e i s s u e i n vo lv e d b e in g c ov e r ed b y t h e e a r l i e r o r d e r s o f t h e T r ibu n a l , we p ro c e ed to d i sp os e o f f t h e b u nc h o f a pp e a l s a f t e r h ea r in g t h e l ea r n e d D. R . f o r t h e R e ve nu e .

3 . S i n c e c omm on i s su e s a r e i n vo lv e d in a l l t h e a pp e a l s , t h e p r es en t b u nc h o f ap p e a l s i s b e i n g d e c i de d b y t h i s c o nso l i da t ed o rd e r f o r t h e s ak e o f co nv e n i en c e .

4 . T h e c omm on i s s ue r a i s ed i n a l l t h e ap p e a l s i s a ga in s t t h e l e v y o f p e n a l t y u n d e r s e c t io n 2 72 B o f t h e A c t .

5 . T h e b r i e f f a c t s o f t h e c a se a r e t h a t t he a s se s s e e w as fo un d t o h a v e d e f a u l t e d i n fu rn i sh in g P A N n um be r s i n t h e r es p e c t i ve e - T DS qu a r t e r l y r e tu r ns f i l e d b y i t f o r d i f f e r en t f i n a n c i a l ye a r s a s d e t a i l ed un de r :

----------------------------------------------------------------------------------------------- Financial Year E-TDS Return E-TDS Return No. of deductees Penalty filed on (PAN not filed) levied - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

2 0 0 5 - 0 6 F o r m N o . 2 6 Q 3 0 . 8 . 2 0 0 5 1 0 9 R s . 1 0 , 0 0 0 / -

2 0 0 7 - 0 8 F o r m N o . 2 4 Q 1 6 . 6 . 2 0 0 8 3 R s . 1 0 , 0 0 0 / -

2 0 0 7 - 0 8 F o r m N o . 2 6 Q 1 6 . 6 . 2 0 0 8 1 0 R s . 1 0 , 0 0 0 / -

2 0 0 8 - 0 9 F o r m N o . 2 6 Q 2 4 . 7 . 2 0 0 8 8 R s . 1 0 , 0 0 0 / -

2 0 0 8 - 0 9 F o r m N o . 2 6 Q 1 0 . 1 1 . 2 0 0 8 8 R s . 1 0 , 0 0 0 / -

6 . T h e As s es s in g O f f i c e r h e ld t h e a s s es s e e t o b e i n d e f au l t i n no t f u r n i s h i n g co r r e c t P AN n um b er s o f v a r i ou s d ed u c t e es i n t h e e -T DS r e tu r ns f i l e d qu a r t e r l y i n t h e r esp e c t i v e a s s es sm en t ye a r s an d h e l d t h e a s s es s e e t o b e l i ab l e t o l e v y o f p e n a l t y u n d e r s e c t io n 27 2 B o f t h e A c t . T h e As s es s in g O f f i c e r t h us l ev i e d p e na l t y u n d e r s e c t i on 2 7 2 B o f t h e A c t a s u nd e r : A s se s s me n t Y e a r P e na l t y l e v i ed

2 0 06 -0 7 R s . 10 ,0 00 / -

2 0 08 -0 9 R s . 10 ,0 00 / -

2 0 09 -1 0 R s . 10 ,0 00 / -

2 0 09 10 R s . 10 ,0 00 / -

7 . T h e C IT ( A p p e a l s ) u p he ld t h e l e v y o f p e n a l t y a s t h e as s e s s e e h a d n o t fu r n i s h ed t h e co r r e c t i on s t a t em e n t b e fo r e t h e A ss es s i n g O f f i ce r i . e . b e f o re c om pl e t io n o f t h e p e n a l t y p r o c e e d in gs i n t he r e s p e c t i v e ye a r s . T h e as s es s e e i s i n a p p e a l a ga in s t t he a f o r es a i d l e v y o f p e n a l t y u n d e r s e c t io n 27 2 B o f t h e A c t .

8 . W e f in d t h a t s imi l a r i s s ue o f l e v y o f p e n a l t y u n d e r s e c t i on 2 72 B o f t h e A c t a r os e b e f o re t h e T r i bu n a l i n t h e c as e o f Ch ie f Ex e c u t i v e O f f i c e r , C a nn t on m en t Bo ard , A mb al a C an t t . V s . Th e In c o m e Tax O f f i ce r ( TDS ) , P a nc hk u l a i n ITA No. 470/Chd/2012 and vide order dated 26.9.2012 it was held as under:

4 . O n p eru sa l o f t h e r e c or d , w e f i n d tha t t he i s s u e r a i s ed th e p r es e n t a pp e a l i s a ga in s t l e v y o f p e na l t y u n de r s e c t i on 27 2B o f t h e Ac t . P e na l t y u / s 2 72 B o f t h e A c t i s l e v i ab l e i n a l l s uc h ca s es wh ere t h e a s s es s e e h as f a i l e d t o c om pl y w i t h t h e pro v i s i on s o f s e c t io n 1 39 A (2 ) o f t h e A c t . In t h e f a c t s o f t he pr e s en t c as e , t he a s s e s s e e ha d e - f i l e d i t s qu ar t e r l y TD S r e t ur n fo r t h e f i n an c i a l y ea r 20 08 - 09 on 4 .6 .2 00 9 . I n t h e sa id T DS r e tu rn , i t h as r e f l e c t ed in f or m at i on i n r es p e c t o f d e du c te e s . H ow e v er , PAN Nu m be rs o f e l e v e n d e du c t e es f u r n i s h ed b y t h e as s es se e w er e f o und t o b e i n c or r ec t . T h e as s e s s e e f a i l ed t o f u r n i s h t h e r e qu i s i t e i n f or m at i on b e fo re t h e As s es s in g O f f i c er . How ev e r , c or r e c t PAN n u mb e rs w er e l a t e r a v a i l ab l e w i t h t h e a s s e s s e e a nd th e a s s e s s e e h ad f i l e d r e v i s ed c om pu ta t ion o n 2 5 . 10 .2 01 0 . I n t h e a bo v e sa id f a c t s a nd c i r c um s ta n c es o f t h e c a se , w e ar e o f t h e v i e w , t ha t t h e as s es se e i s no t e x ig ib l e t o l e v y o f p e na l t y u / s 2 7 2B o f t he A c t . F u r t h er , u nd e r t h e p ro v i s i on s o f s e c t io n 27 3B o f t h e A c t , p e na l t y i s n o t t o b e i mp os e d in ca ses w h er e t h e a s s es se e ha s e s ta b l i sh e d t ha t t h er e w as r e aso n ab l e ca us e f o r t he f a i l u r e r e f er r ed t o i n t he r es p e c t i ve s e c t io ns l e v y in g p e na l t y u nd e r t h e A c t . I n t h e t o ta l i t y o f f a c t s a nd c i rc u m s ta n c es o f t h e c a s e , t h e a s s es s e e h a d a bo na f id e c a us e f o r no t f i l i ng t h e ab o ve s a i d i n f or m at i on b e f or e t h e A ss e s s i ng O f f i c e r w h i ch th ou gh w as a v a i l ab l e w i t h t h e a s s e s s e e a nd th e r e v i s ed c om pu ta t ion h as a l s o b e e n f i l e d b y t h e a s s es s ee u n de r w h i c h co mp le t e i n f or m at i on o f P A N nu mb e rs o f d e du c te e s h av e bee n f ur n i sh ed . A c co rd in g l y , w e h o l d t ha t t h e c l a i m o f t h e a s s e s s e e w as bo n a f i de a nd t h er e w as a r eas on ab l e c a u s e f o r no t co m pl y i ng w i t h t h e p ro v i s i on s o f t h e Ac t i n t i m e . Th e as se s s e e u nd e r t h es e c i rc u ms t an c e s i s n o t e x ig ib l e t o l ev y o f p en a l t y u / s

2 7 2B o f t h e A c t and ac c or d i ng l y w e d i r ec t t h e As s es s in g O f f i c e r t o d e l e t e t he p e na l t y l e v i e d u / s 2 72 B o f t he A c t . T h e gro un d o f a pp e a l No .1 r a i se d b y t h e as s e s s e e i s a l l ow ed .

9 . In t h e f a c t s o f t h e p r e s en t c a se a nd f ro m t he p e ru s a l o f t h e o rd e r / s o f C IT ( A p p e a l s ) w e f in d t h a t t h e as s e s s e e ha d fu r n i s he d th e c o r r e c t io n s t a t em en t , w h i c h h a d b e en r e f e r re d t o b y t h e C IT ( A p p e a l s ) i n t h e r e s p ec t iv e p a r as as u nd e r : - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - F i n an c i a l Y e ar R e f e re n c e C o r r e c t io n S t a t em en t B y C IT ( A p p e a l s ) f i l e d on - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

2 0 05 -0 6 P a r a 1 . 08 /P a ge 4 2 6 .3 .2 01 2

2 0 07 -0 8 P a r a 1 . 06 /P a ge 3 1 9 .9 .2 01 1

2 0 07 -0 8 P a r a 1 . 08 /P a ge 4 2 6 .3 .2 01 2

2 0 08 -0 9 P a r a 1 . 07 /P a ge 4 2 6 .3 .2 01 2

2 0 08 -0 9 P a r a 1 . 08 /P a ge 4 0 6 .1 .2 01 1 /1 7 . 3 . 20 11

1 0 . T h e f a c t s o f t he p r e s en t c a se a r e i d e n t i c a l t o t h e f ac t s i n IT A N o .4 70 /Ch d / 20 12 an d fo l l ow in g th e r a t i o l a id do wn b y t he T r ib un a l v i d e o r d e r d a t e d 26 .9 .20 1 2 w e h o l d t h a t w h e r e t h e a s s es s ee h a d f u rn i sh e d c o r r e c t i on s t a t e m en t i n r es p e c t o f t h e d e du c t e es w ho se P A N n um b er s w e r e f ou nd t o b e i n c o r re c t b y t h e Ass e s s i n g O f f i c e r , t ho u gh be l a t ed l y, h a d re a so n ab l e c aus e i n n o t fu rn i s h ing t h e s am e i n t h e e - T DS q u a r t e r l y r e tu r ns . Co ns e qu en t l y, w e f in d n o m e r i t i n t h e l e v y o f p en a l t y u n d e r s e c t io n 2 72 B o f t he A c t . Ho w ev e r , i n r es p e c t o f IT A N o . 85 2 /C hd / 20 12 , t h e o bs e r va t i ons o f t h e C IT ( A p p e a l s ) i n p a r a 1 .0 8 a t p a ge 4 o f t h e a p p e l l a t e o rd e r a r e t h a t t h e a s s es s ee t h o u gh c l a ims to h av e f u r n i sh ed th e c o r r e c t i on s t a t e m en t on 6 . 1 . 20 11 /1 7 .3 . 20 11 bu t h a d f a i l e d t o fu rn i s h an y e v id e nc e b e f o r e t h e C IT ( A p pe a l s ) o r t h e A ss es s i n g O f f i c e r i n t h i s r e ga r d . A c c or d i n gl y, w e d i r e c t t h e As s es s in g O f f i c e r t o v e r i f y t h e s t a nd o f t h e as s es s e e i n t h i s r e ga r d an d i n c a s e t h e co r r e c t i on s t a t e me n t h as b e e n so f i l ed b y t h e a s s es s e e n o p en a l t y i s l e v i a b l e u nde r s e c t io n 27 2 B o f t h e A c t . H o we v e r , i n c as e t h e a s s es s e e h as f a i l ed t o fu r n i s h t h e c o r r e c t i on s t a t em en t i n t h e s a i d c a se , t h e as s es s ee i s l i a b l e t o l ev y o f p e n a l t y u n d e r s e c t i on 27 2 B o f t h e Ac t t o t a l i n g R s . 10 ,00 0 / - . Th us t he a p p e a l s o f t h e a s s es s e e i n IT A N o s .8 48 to 85 1 /C hd / 2 01 2 a r e a l l o w e d a nd a p p e a l i n IT A N o . 85 2 / Ch d /2 01 2 i s a l l o w e d fo r s t a t i s t i c a l p u r po s es .

1 1 . In t h e r e su l t , t h e a p p ea l s o f t h e a s s es s e e i n IT A N o s . 84 8 to

8 5 1 /C hd / 20 12 a r e a l l o w ed a n d app e a l i n IT A N o .8 5 2 /C hd / 20 12 i s a l l o w ed f o r s t a t i s t i c a l p u r po s es . O r d e r P r on ou n ce d in t h e Op e n Co ur t on 31 s t d a y o f O c t obe r , 2 01 2 . S d / - Sd / - (T.R.SOOD) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated : 31st October, 2012 *Rati* Copy to: The Appellant/The Respondent/The CIT(A)/The CIT/The DR. Assistant Registrar, ITAT, Chandigarh

The Branch Manager, Yamunanagar v. ITO (TDS), Panchkula

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

The Branch Manager, Yamunanagar v. ITO (TDS), Panchkula

Comments