2012 (2) TMI 304 - AT - Income Tax

Tribunal Upholds Cancellation of Penalty for PAN Errors

The Tribunal confirmed the ld. CIT(A)'s decision to cancel the penalty of Rs. 3,30,000 imposed under section 272B of the Income-tax Act, 1961 for ... Penalty under section 272B - Non quoting/wrong quoting of PAN - Revision of TDS statement and compliance with section 139A - Show cause notice and opportunity of hearing - Cancellation of penalty for lack of service of noticePenalty under section 272B - Non quoting/wrong quoting of PAN - Revision of TDS statement and compliance with section 139A - Validity of penalty levied under section 272B for invalid PANs where the assessee revised the TDS statement and corrected PAN entries. - HELD THAT: - The CIT(A) cancelled the penalty on the basis that the assessee had deducted TDS correctly and filed a revised statement (Form 26Q), thereby effecting compliance with the requirements of section 139A. The Tribunal, upon reviewing the record and the order of the CIT(A) (which followed this Tribunal's earlier decision in Financial Co operative Bank Ltd. v. ITO, 116 ITD 358), agreed with that conclusion and held that the ITO(TDS) was not justified in levying the penalty where the defect in PANs had been rectified by filing the revised return. [Paras 4, 5]Penalty cancelled on the ground that revised TDS statement corrected the PAN defects and constituted sufficient compliance with section 139A.Show cause notice and opportunity of hearing - Cancellation of penalty for lack of service of notice - Validity of the penalty where there is no evidence of service of the show cause notice on the assessee before levy of penalty. - HELD THAT: - The Tribunal noted that although a show cause notice was prepared by the AO, the record does not demonstrate that it was served on the assessee. The assessee had specifically taken the ground before the CIT(A) that no show cause notice was served. In the absence of service and consequently of an opportunity of hearing prior to imposition of penalty, the levy of penalty under section 272B was held to be improper and liable to be cancelled. [Paras 5]Penalty cancelled for want of service of the show cause notice and consequent denial of opportunity of hearing.Final Conclusion: The Tribunal confirmed the CIT(A)'s order cancelling the penalty imposed under section 272B; the Department's appeal is dismissed. Issues:- Appeal against cancellation of penalty under section 272B of the Income-tax Act, 1961 for non-quoting/wrong quoting of PANs in TDS returns.Analysis:1. Facts of the Case: The appeal was filed by the Department against the order of the ld. CIT(A) canceling the penalty of Rs. 3,30,000/- imposed by the AO under section 272B of the Income-tax Act, 1961 for non-quoting/wrong quoting of PANs in 33 cases in TDS returns for the financial year 2008-09.2. Arguments: The Department, represented by the ld. DR, supported the AO's order, while the authorized representative for the assessee relied on the order of the ld. CIT(A).3. Observations and Decision: The ld. CIT(A) canceled the penalty based on the appellant's correct deduction of TDS, revision of PAN, and filing of the revised statement on Form No. 26Q, ensuring compliance with section 139A. The Tribunal agreed with the CIT(A)'s decision, citing the case of Financial Co-operative Bank Ltd. v. ITO,116 ITD 358. Additionally, the penalty was deemed liable for cancellation as the assessee was not given a hearing before its imposition, rendering the penalty invalid due to lack of service of a show cause notice.4. Confirmation of CIT(A) Order: The Tribunal confirmed the order of the ld. CIT(A), emphasizing that the penalty was rightly canceled due to the compliance with section 139A, lack of opportunity for a hearing, and absence of service of a show cause notice. Consequently, the appeal filed by the Department was dismissed, upholding the cancellation of the penalty amounting to Rs. 3,30,000/-.This analysis highlights the key aspects of the judgment, including the grounds for appeal, arguments presented, observations made by the Tribunal, and the final decision rendered in the case.