TaxTMI 
TaxTMI 
TaxTMI 
2017 (7) TMI 540
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....he petitioner would make payments to various recipients, on which the petitioner as per the law, would deduct tax at source at 2%. One of the recipients of such payments happened to be one M/s. Star (India) Pvt. Ltd. During the second and third quarters of the financial year 2010-2011, the assessee had made deductions at the rate of 2% made to M/s. Star (India) Pvt. Ltd. in terms of section 194C of the Income Tax Act ("the Act" for short). According to the petitioner, however, on account of an inadvertent error while filing TDS returns for the said second and third quarters, the PAN of the deductee M/s. Star (India) Pvt. Ltd. was wrongly mentioned in the prescribed format provided in Form No. 26Q. The petitioner had not immediately noticed such error. During the course of processing this declaration, the respondent authority however, found that the PAN indicated by the petitioner of the deductee in the declaration did not match with the actual PAN of M/s. Star (India) Pvt. Ltd.. The authority therefore, proceeded on the basis that the PAN provided to the deductor did not belong to the deductee and, therefore, in terms of subsection( 6) of section 206AA of the Act, it would have the....
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.... or equal to 2 alphabets and/or 2 numeric characters." 4. It appears that upon being served with communication dated 24.11.2014 raising substantial demand of Rs. 2.04 crores for default in deducting tax at source correctly, the petitioner realised the error leading to such high demand. As stated in the petition, the petitioner therefore, tried to correct its PAN declaration. However, the online system of the department would not permit the correction. According to the petitioner, this was so because the system is programmed to permit correction only in case four digits/characters are to be changed and no more. In case of the petitioner, entire PAN number of the recipient of the payment was wrongly fed. This required substitution of the entire number which the online system of the department would not permit the petitioner to carry out. In this background, the petitioner has filed the present petition. 5. The respondent has appeared and filed the reply. Heavy reliance was placed on subsection( 6) of section 206AA of the Act to contend that since there was a mismatch in the correct PAN of the deductee and that provided by the deductor, deductor would be deemed to be in default sinc....
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.... and taxpayers. In case of further relaxation, distinction between genuine mistakes and deliberate attempts to circumvent the provisions of 206AA shall not be feasible particularly in the case of an technology driven ecosystem with large volume of annual transactions (50 crore) reported through 60 lac TDS statements. The relaxation beyond a limit would defeat the whole purpose of the provision." 6. From the said affidavit it could be gathered that the Revenue attached a considerable importance on compliance of tax deduction at source and its timely declaration. It was only when the deductor files periodic declarations within the prescribed time and deposits the tax deducted at source with the department, the deductee would get the benefit of such deductions in its tax assessments. As per the above quoted portion of the affidavit in reply, we also gather that the department does not rule out the possibility of genuine errors in feeding PAN numbers of the deductees. However, the online computerised system of the department permits corrections limited to extent of four characters, two numeric and two alphabets and no more. A presumption is therefore, raised that a genuine typogra....
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....f tax or interest or fee; (e) an intimation shall be prepared or generated and sent to the deductor specifying the sum determined to be payable by, or the amount of refund due to, him under clause (d); and (f) the amount of refund due to the deductor in pursuance of the determination under clause (d) shall be granted to the deductor:] Provided that no intimation under this subsection shall be sent after the expiry of one year from the end of the financial year in which the statement is filed. Explanation.-For the purposes of this subsection, "an incorrect claim apparent from any information in the statement" shall mean a claim, on the basis of an entry, in the statement- (i) of an item, which is inconsistent with another entry of the same or some other item in such statement; (ii) in respect of rate of deduction of tax at source, where such rate is not in accordance with the provisions of this Act. (2) For the purposes of processing of statements under subsection (1), the Board may make a scheme for centralised processing of statements of tax deducted at source to expeditiously determine the tax payable by, or the refund due to, the deductor as required under t....
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....cribed format. The stand of the Revenue that it is only when such tax is not only deducted but properly declared before the authorities that the same can be processed and ultimate benefit can be given to the deductee, also can be easily appreciated. In this context, requirement of giving correct PAN number of the deductee is a statutory responsibility. 13. However, neither the statute nor the department completely rules out the possibility of genuine and bona fide typographical or even mechanical errors. It is in this context, section 200A refers to a statement of tax deducted at source or a correction statement. We may recall subsection (3) of section 200 refers to requirement of filing a statement of tax deducted at source. This provision though does not refer to any mechanism for correction of such a statement, subsection( 1) of section 200A specifically refers to a statement of tax deduction at source or a correction statement thus, clearly leaving the possibility of correcting a declaration once made by the assessee. Even the department does not dispute that there is absolutely no mechanism permitting such corrections. The department however, points out that all the forms are....
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.... would open flood gates, if corrections are permitted without any limit. 17. In our view, once the department recognises the possibility of errors and also makes provisions for making corrections, it would be wholly illogical to limit such corrections on arithmatical working out of only two alphabets or two numerics being found incorrect requiring change. Error in feeding an entry or a number may have multiple origins from typographical error of Data Entry Operation to mechanical failures or through pure oversight referring to one column of PAN instead of another while filling up and uploading the statement. It is not necessary nor possible for us to envisage different situations under which such errors could crop up and it need not necessarily be confined to limited figures on the letters of the PAN being incorrect. 18. It is entirely one thing to suggest that the department would not accept any change once certain entries are uploaded or at any rate no change would be permissible beyond a certain date. However, it is entirely another thing to suggest that the corrections may be permitted but should be limited to a number of characters where correction is needed. We are not unsy....