Mentioning PAN in place of TAN in TDS challan-No punishment when there is no loss to Revenue – ITAT

Mentioning PAN in place of TAN in TDS challan-Assessee should not be penalized or punished for technical mistakes when there is no loss to Revenue – ITAT

ABCAUS Case Law Citation
ABCAUS 2365 (2018) 06 ITAT

The instant appeal was preferred by the Income Tax Officer (ITO/Assessing Officer) against the order of the Commissioner of Income Tax (Appeals) (CIT-A), challenging the deletion of addition made u/s 40a(ia) of the Income Tax Act, 1961 (the Act).

During the course of the assessment proceedings, scrutiny of the books of the assessee the AO noted that the assessee had claimed that it had deducted and deposited the TDS on labour payments. However, the amount claimed to had been dedcuted was not appearing in the 26Q quarterly return filed by the assessee for the relevant quarter. The AO further observed that the number of deductees records with PAN were also not reflecting in the documents furnished by the assessee relating to TDS return.

When asked, the assessee submitted that he, instead of TAN, inadvertently had mentioned PAN on the TDS challan presented to bank for payment. However, the AO rejected the submission by observing that as per 26AS Statement, the said challan deposited by assessee was not for TDS payment because the minor head mentioned on challan was 400 i.e. for regular payment of tax.

Accordingly, the AO made addition under section 40(a)(ia) of the Act for alleged non-deduction of TDS.

Being aggrieved, the assessee preferred an appeal before the CIT-A. The assessee submitted that the observations made by the Assessing Officer were contrary to the facts on record inasmuch as complete details of labour contractors were filed before the Assessing Officer. The TDS was deposited and was included in the total deposit of TDS. The case of the assessee was that inadvertently TDS was deposited on a non-TDS challan and PAN number of the assessee was mentioned in place of TAN number.

The assessee submitted that he had made serious efforts to rectify the said challan on system and made several request to I.T. authorities to rectify the mistake to insert PAN to TAN on system but the concerned authority did not provide necessary help for which the appellant cannot be punished.

The assessee submitted that only because of this technical error, the disallowance had been made. The assessee also filed ITR of the labour contractor and stated that the recipient contractors had been duly disclosed the labour receipt in their ITR and claimed the TDS amount in their respective ITR which was deducted by appellant on total payment of labour charges.

The CIT-A held that the AO was not justified in making the addition u/s 40a(ia) of the Act. The appellant cannot be punished for small mistake mentioned in the challan of PAN instead of TAN, specifically when all the relevant papers, documents, books of account and the copy of ITR and form No. 26AS strengthen the claim of appellant that due TDS was made and paid.

The Tribunal observed that the required TDS had been deducted by the assessee and the required documents were also produced which essentially meant that there had been no loss to the Revenue. The TDS was deducted and deposited in the Government Treasury but in the challan, instead of mentioning TAN, PAN was mentioned my mistake.

The Tribunal opined that being a quasi judicial authority, the Assessing Officer should have looked into the entirety of the proceedings as to whether there was any loss to the Revenue or whether there is any fault on the part of the assessee so as to not following the required procedure laid down by the law. There was only a technical error that in the challan PAN number of the assessee was mentioned instead of TAN in the relevant column on account of bonafide mistake, for which assessee should not be penalized or punished when there is no loss to the Revenue.

The ITAT dismissed the appeal.

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