2014 (2) TMI 867 - AT - Income Tax

CBDT Clarification: Penalty Reduced to Rs. 30,000 Per Person

The tribunal upheld the reduction of penalty to Rs. 30,000 per person in accordance with a CBDT clarification, dismissing the revenue's appeal. The ... Penalty under section 272B read with section 139A(5B) - Liability for missing PAN in TDS return - Penalty leviable per person and not per PAN entry - CBDT clarification dated 05.08.2008 on levy of penalty under section 272BPenalty under section 272B read with section 139A(5B) - Penalty leviable per person and not per PAN entry - CBDT clarification dated 05.08.2008 on levy of penalty under section 272B - Whether penalty under section 272B for missing/incorrect PAN in e TDS returns is imposable for each default/entry or is linked to the person and leviable once per person - HELD THAT: - The Tribunal upheld the approach adopted by the Commissioner (Appeals) which followed the CBDT clarification dated 05.08.2008 that the penalty under section 272B is linked to the person and not to the number of defaults in the PAN quoting in the e TDS return. The revenue did not dispute the existence or applicability of the CBDT clarification and the Assessing Officer's imposition of penalty at the rate of Rs.10,000 per missing PAN entry (multiplying by number of deductees) was therefore not sustained. The Tribunal noted the practical position that the deductor cannot compel a deductee to furnish PAN and that the Board's clarification, read together with the statutory provisions relied upon, supports treating the penalty as person linked rather than per individual default. [Paras 6, 7]Penalty reduced to the amount directed by the Commissioner (Appeals); revenue's appeals dismissed.Final Conclusion: The Tribunal dismissed the revenue's appeals for AY 2005-06 to 2007-08, upholding the Commissioner (Appeals) decision that penalty under section 272B is linked to the person and not leviable per PAN entry, having regard to the CBDT clarification of 05.08.2008. Issues:Appeal against penalty levied under section 272B of the IT Act for missing PAN in TDS return.Analysis:The appeals were directed against the order of Ld. CIT(A)-XXX for the AYs 2005-06 to 2007-08, all arising from a common order with identical grounds. The revenue challenged the deletion of penalty and the direction to collect a reduced penalty per person per year under section 272B. The Assessing Officer imposed a substantial penalty for missing/incorrect PAN in TDS returns, leading to the appeals. The Ld. CIT(A) reduced the penalty to a nominal amount of Rs. 30,000 based on the explanation offered by the assessee.The revenue contended that penalty under section 272B should be levied per default, emphasizing the conjunction of sections 272B and 139A(5B). On the other hand, the assessee argued that the penalty should not be per default but per person, highlighting the non-availability of PAN from deductees. The assessee also referenced a CBDT clarification and a decision by the ITAT, Banglore Bench, supporting their stance that the penalty is linked to the person and not the number of defaults.After considering the submissions, the tribunal upheld the decision of the Ld. CIT(A) to reduce the penalty to Rs. 30,000 per person, per the CBDT clarification. The tribunal found no fault in the Ld. CIT(A)'s order and dismissed the revenue's appeals, as the CBDT clarification established the penalty as per person and not per default. The tribunal's decision was based on the fact that the penalty amount was linked to the person, as clarified by the CBDT, and not based on the number of defaults in the PAN mentioned in the TDS return.In conclusion, the tribunal's judgment upheld the reduction of penalty to Rs. 30,000 per person in line with the CBDT clarification, rejecting the revenue's appeal and affirming that the penalty under section 272B is person-centric and not linked to the number of defaults in the PAN.