TaxTMI 
TaxTMI 
2015 (11) TMI 1376
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....ake in quoting correct PAN of the deductee in the TDS returns, DCIT, Centralized Processing Cell-TDS, has raised demands for quarter 1, quarter 2 & quarter 3 and interest. The details of demand and interest for each quarter are mentioned below :- ITA No. A.Y. Quarter Demand (Rs.) Interest (Rs.) 1984/A/2015 2014-15 1st 35,97,360.80 3,59,730 ITA No. A.Y. Quarter Demand (Rs.) Interest (Rs.) 1985/A/2015 2014-15 2nd 7,25,162.20 65,360.00 ITA No. A.Y. Quarter Demand (Rs.) Interest (Rs.) 1986/A/2015 2014-15 3rd 7,20,622.20 43,234 3. The assessee has raised similar grounds of appeal for the three appeals (except with change of quarter) and the same read as under:- 1. The ld. CIT(A) has erred in law and in facts and circumstances of the case in upholding the order passed by the Dy. CIT, Centralized Processing Cell-TDS under section 154 for first quarter of financial year 2013-14, whereby ONGC's request for correction of PAN of the party and consequential deletion of demand for tax & interest u/s 201, was not accepted. 2. Without prejudice to the preceding ground, the ld. CIT(A) oug....
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....ct to maximum of two numerical characters and two alfa characters. Whereas in the wrong PAN quoted by the deductor there were more than 4 changes and, therefore, correction statement was not accepted. 7. Aggrieved, assessee went in appeal before CIT(A) which did not bring any relief to the assessee who has to put reliance on section 206AA of the Act which talks about deduction of TDS in cases when a deductee does not furnish PAN to deductor or furnishes incorrect PAN. CIT(A) has also appreciated the instructions made by Centralized Processing Cell in regard to correction of two alfa & two numerical characters to permit the genuine typing mistake and thereafter confirmed the demand raised by DCIT(CPC) TDS, Ghaziabad. 8. Aggrieved, the assessee is now in second appeal before the Tribunal. The ld. AR of the assessee has raised two folds of contentions in support of his grounds of appeal. In his first contention the ld. AR of the assessee submitted that deductor is a Government of India Undertaking and the deductee i.e. GETCO Ltd. is a Government of Gujarat Undertaking and deductor i.e. the assessee ONGC Ltd. has been regularly deducting and depositing the tax deducted at source ....
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....hich reads as under - 201. [(1) Where any person, including the principal officer of a company,- (a) who is required to deduct any sum in accordance with the provisions of this Act; or (b) referred to in sub-section (1A) of section 192, being an employer, does not deduct, or does not pay, or after so deducting fails to pay, the whole or any part of the tax, as required by or under this Act, then, such person, shall, without prejudice to any other consequences which he may incur, be deemed to be an assessee in default in respect of such tax: [Provided that any person, including the principal officer of a company, who fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a resident or on the sum credited to the account of a resident shall not be deemed to be an assessee in default in respect of such tax if such resident- (i) has furnished his return of income under section 139; (ii) has taken into account such sum for computing income in such return of income; and (iii) has paid the tax due on the income declared by him in such return of income, and the perso....
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....ief from imposition of TDS liability if they are able to prove that the deductee is regularly assessed to tax and has paid the due taxes and the sum paid by the deductor has been included in the income of the deducted. 9. On the other hand, the ld. DR relied on the orders of CIT(A) and did not bring anything new before us. 10. We have heard the rival contentions, perused the material on record and gone through the judicial pronouncement referred hereto. First we will deal the issue in the light of first fold of contention raised by the ld. AR of the assessee that once the correction statement is allowed to be filed then it should not be restrictive in nature and should give full opportunity to the deductor to make all the corrections which he intends to make in the TDS quarterly return. The solitary issue involved in all these three appeals is that the assessee i.e. the deductor which is a Government of India Undertaking and is regularly filing TDS returns mentioning therein details of hundreds of deductees and due to some clerical unintentional mistake invalid PAN (AABCG 2414F) of a deductee who too is a Govt. of Gujarat Undertaking, is mentioned in the quarterly TDS stateme....
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....h normally are either verbally spoken by the deductee or sent by message/copy of PAN Card. (d) Deductee does not have any mechanism to easily check the correctness of the PAN verbally spoken/received by message. (e) To deduct the TDS/TCS at the applicable rates by the end of the month. (f) To deposit the collected TDS normally within 7 days of the next month following the month in which tax has been deducted/collected. (g) Collect various information at the end of the quarter for deductees of whom tax has been deducted/tax deducted at lower rate/no tax deducted for certain categories of deductees mentioned in the provisions of the Act. (h) Furnish separate quarterly statement for salary, non-salary and tax collected at source. (i) Furnishing the forms manually/electronically in the way provided by Centralized Processing Cell TDS which gets some changes regularly due to advancement in technology. 12. The appellant-assessee has adhered to all the above requirements in case of all the deductees except for one deductee which too is a regular tax payer and State Government Undertaking of which invalid PAN has been mentioned. The b....
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....ayment from such deductees who do not furnish PAN and deposit the same to the Government so that even if such type of deductees do not file its income-tax return still some portion of tax is received by the Government at least to the extent of payments made by the deductors. But certainly it cannot be the intent of the law to impose 20% of TDS rate on deductees who are regularly filing their incometax returns and paying their due taxes and for this purpose there were some changes made in the system of furnishing of quarterly TDS returns. Earlier TDS returns were submitted manually and the system of filing revised TDS returns/correction of details was not that smooth. However, to tackle the genuine problems arising in this detailed process of TDS deduction/collection, deposit of taxes, filing of quarterly returns, and to rectify clerical mistake made unintentionally by the deductee as well as to get relief from harsh impact of provisions of section 206AA of the Act arising due to quoting of wrong/no PAN. CBDT vide its Notification no.3/2013 (F.142/39/2012- SO (TPL) dated 15.1.2013 came up with Centralized Processing of statement of TDS Scheme 2013 which deals with various aspects of....
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....passed by an Income-tax authority of the Cell shall be deemed to be a notice of demand under section 156 of the Act. 13. Further the power to specify procedure and processes for effective functioning of the Cell in an automatic and mechanized environment are given to the Director General as specified in point 11 to this Scheme. These procedure and processes as specified by Director General i.e. D.G. (I.T. System) who is appointed as such under sub-section (1) of section 117 of the Act are informed to an authorized agency which means the person authorized by the Director General to receive the statement of TDS or correction statement on TDS and this authorized agency runs portal of the Central Processing Cell. There is continuous communication between the Director General and authorised agencies for improving the TDS mechanism as well as smooth working of portal and in this process various types of procedural check points are made but all these communications are not available to the assessee(s) as they are not mentioned in the Income-tax Act and Income-Tax Rules. The deductor comes to know about these check points when the TDS returns are presented for filing and further these c....
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.... Punjab & Haryana High Court in the case of CIT (TDS) vs. Superintendent of Police (supra) similar issue was dealt by the Hon'ble Court wherein it was observed as below :- "3. The issue in this appeal relates to whether there was justifiable cause within the meaning of section 273B of the Act on the basis of which it could be said that sufficient cause had been shown by the respondent -Superintendent of Police in wrongly quoting PAN in respect of 196 employees of the department. The CIT(A) had recorded as under :- "In the instant case as already observed the appellant deducted TDS correctly and revised PAN and filed the revised statement on form No.26Q, hence there is sufficient compliance of the provisions of section 139A. In view of the aforesaid discussion, it is held that ITO (TDS) was not justified to levy the penalty of Rs. 19,60,000/- @ Rs. 10,000/- per default. The penalty levied by the ITO (TDS) under section 272B(1) is deleted." 4. The Tribunal had come to the conclusion that there was sufficient cause on the part of the respondent while quoting PAN of the deductees and as such no penalty was leviable. The tax was deducted and deposited in time ....
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.... legal position and therefore, we do not find any valid ground in interfering with the order of CIT(A). Consequently, appeal filed by the revenue is devoid of any merit and deserves to be dismissed." 6. Learned counsel for the appellant was unable to show that the findings recorded by the CIT(A) as well as the Tribunal are erroneous in any manner. It was urged that there was no reasonable cause on the part of the assessee to furnish inaccurate PAN in form 24Q." 15. In the case of assessee also there has been no finding by ld. CIT(A) to show that there was any intention on the part of the deductor or deductee to furnish wrong PAN details. Therefore, in view of above discussion, we are of the view that the system is erroneous to the extent if it restricts the deductor to revise its TDS return/statement within some corners which in this case was correction of PAN details subject to change of two alfa and two numberical characters and, therefore, correction statement filed by the assessee needs to be accepted after ascertaining the correctness of the correct PAN furnished by the deductor. Accordingly, the order of CIT(A) is quashed and assessee's ground of appeal is allowed....
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....rt of a month on the amount of such tax from the date on which such tax was deductible to the date on which such tax is deducted; and (ii) at one and one-half per cent for every month or part of a month on the amount of such tax from the date on which such tax was deducted to the date on which such tax is actually paid, and such interest shall be paid before furnishing the statement in accordance with the provisions of sub-section (3) of section 200:] [Provided that in case any person, including the principal officer of a company fails to deduct the whole or any part of the tax in accordance with the provisions of this Chapter on the sum paid to a resident or on the sum credited to the account of a resident but is not deemed to be an assessee in default under the first proviso to sub-section (1), the interest under clause (i) shall be payable from the date on which such tax was deductible to the date of furnishing of return of income by such resident.] 17. Applying the facts of the assessee's case wherein it is required to deduct tax and has deducted TDS @ 2% of sum paid/credited to GETCO Ltd. but due to filing of wrong PAN of deductee it has been deem....