TaxTMI 
TaxTMI 
TaxTMI 
2015 (11) TMI 1376
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.... 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) ought to have directed the Dy. CIT, Centralized Processing Cell-TDS, to verify whether the deductee had furnished its retur....
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....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 and filing its TDS returns regularly and looking to the size of appellant's business there are thousands of deductees of whom the asses....
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....um 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 person furnishes a certificate to this effect from an accountant in such form as may be prescribed] Provided [further] that no penalty shall be charged under section 221 from such pe....
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..... 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 statement of form no.26Q. The deductee i.e. GETCO Ltd. was holding and possessing valid PAN i.e. AABCG 4029R and regularly filing income-tax return and paying due taxes. However, due to internal processing guidelines between the....
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....S 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 basic reason due to which ld. CIT(A) could not bring any relief to the assessee was due to application of provisions of section 206AA which refers to furnish PAN and this section was introduced w.e.f 1st April, 2010 and reads as below :- "206AA. Requirement to furnish Permanent....
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....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 online filing and processing of TDS returns. This scheme discusses about furnishing of correction statement of tax deducted at source, processing of statement and rectification of mistake and the relevant portion of this scheme in this regard are mentioned herein below :- Furnishing of correction statement of tax deducted at sourc....
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....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 check points are amended/rectified/removed as per the convenience of the system being appraised by the Director General and authorised agencies. 14. This scheme of Centralized Processing of statement of TDS clearly gives an option to the deductor to correct the quarterly return(s) filed by it and this correction has not been restricted to any particular correction. Therefore, correction can be made by way of deleting the en....
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....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 in the Government Treasury. The error was due to wrong quoting of PAN by the deductees t the assessee. The assessee had rectified the mistake by furnishing the correct PAN as soon as it came to its notice. The revised PAN and the revised statement were accordingly filed. Following findings recorded by the Tribunal may be read :- "6. In the instant case, the only question before us is whether there was reasonable cause for alleged failure on the part of the assessee. In....
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....ssee 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 with reference to the first first fold of contention made by the assessee. 16. Now we take up the issue in the light of second fold of contention of the ld. AR of assessee which refers to the application of proviso to sub-section (1) of section 201 of the Act. Even if we we have already allowed the appeal with reference to the ld. AR first fold of contention, we now examine the applicability of second fold of contention. For reference we again mention below the proviso to subsection (1) of sect....