M/S P.N. GADGIL & SONS,PUNE vs. DCIT, CIRCLE 6, PUNE

4. However, the Assessing Officer rejected the explanation and levied a penalty of Rs.23,20,000/- (Rs.10,000/- for each of the default) u/s 272B, which was challenged before Ld. CIT(A)/NFAC. After considering the reply of the assessee, Ld. CIT(A)/NFAC dismissed the appeal filed by the assessee by observing as under :- “4.2 During the course of appellate proceedings, it is submitted that the Central Govt. vide the Finance Act No. 2, 2019 (i.e. budget 2019) has amended section 2728 of the Income tax Act to add the words " ten thousand rupees for each such default" in the section specifying the amount of penalty to be levied in respect of violation of the said section. This amendment is effective from 1st Sept 2019 which means that till A.Y. 2017-18 which is the year involved before your honour the company's interpretation of the section was the correct one. Had it not been so then there was no necessity of the amendment itself. The central Government by its own action has fortified the company's contention and therefore your honour may kindly cancel the penalty or at best may sustain a penalty of only Rs. 10,000/- on the assessee. It is pertinent to note that in the case of assessee firm's successor P N Gadgil and sons Ltd. similar issue arose for A.Y. 2018-19 where the ld. AO accepted these contentions and restricted the penalty only to Rs. 10,000/-. 4.3 I have gone through the grounds of appeal

, statement of facts, penalty order and the submissions of the appellant. The case law referred by the appellant in the case of ACIT Circle 49(1), New Delhi Vs. DHTC Logistics Ltd. vide 676 and 677/Del /2012 of the Hon'ble ITAT, Delhi Bench B, New Delhi, wherein it has been clarified penalty u/s. 272B of Rs. 10,000/- is linked to the person and not with the number of default. In the instant case the appellant had failed to mention the PAN of 232 persons. The Hon Tribunal held that the penalty of Rs. 10,000/- for each person. In the appellant case there are 232 persons and 232 transactions where failure under rule 114C(2) prescribed at Sr. No.

18. I Rule 114 B as stipulated under section 139A has been noticed. The Assessing officer has elaborately discussed about the quantum of penalty to be leviable in this case. Under the circumstances and in view of report of the Director General (I & CI), Pune under sec. 133A of the I T Act, I am of the opinion that no interference is required in the penalty order. Hence Rs. 23,20,000/- is upheld. All the grounds raised in this appeal are dismissed.”

5. It is this order against which the assessee is in appeal before this Tribunal.

6. Ld. AR appearing from the side of the assessee submitted before us that Ld. CIT(A)/NFAC was not justified in not considering the decision passed by Co-ordinate Bench of this Tribunal in the case of DHTC Logistic Ltd. wherein it has been clarified that the penalty u/s 272B of Rs.10,000/- is linked to the person and not with the number of defaults. Accordingly, it was submitted that since the person who committed the default is one, may be in 232 instances but the default should be treated as one and, therefore, the penalty should not be more than Rs.10,000/-. Ld. AR further submitted that the assessee was a partnership firm and subsequently converted into a private limited company and 272B penalty proceedings were also initiated in the case of private limited company for the same default and the Assessing Officer initiated 272B penalty proceedings under identical facts for 91 instances of sales which are made to 91 different persons for Rs.2,00,000/- or more, wherein the PAN details of the purchasers were not obtained during the financial year 2017-18, and the 272B of Rs.10,000/- only, for above 91 instances of default of not obtaining PAN & not informing to the department by treating it as one default. Accordingly, it was submitted before the Bench that in the case of assessee itself, the Assessing Officer has accepted the contentions of the assessee that the penalty u/s 272B is linked with person and not with number of defaults. Ld. AR further submitted before the Bench that w.e.f. 01.09.2019, Central Government has made amendment in section 272B and inserted the words “ten thousand rupees for each such default” in the section. This amendment itself supports the contention of the assessee that prior to September, 2019 the default will be linked to the person but after September, 2019 i.e. after the amendment the penalty is leviable for each such default. Accordingly, it was prayed that the matter pertains prior to September, 2019 and therefore the amended provisions will not be applicable and a penalty of Rs.10,000/- only was leviable. On the basis of all the above contentions, Ld. AR requested to restrict the penalty of Rs.23,20,000/- to Rs.10,000/- only.

7. Ld. DR appearing from the side of the Revenue relied on the orders passed by the subordinate authorities and requested to confirm the same.

8. We have heard Ld. Counsels from both the sides and perused the material available on record. In this regard, we find that section 139A(5)(c) requires the assessee to inform the PAN of all such purchasers who purchased jewellery of Rs.2,00,000/- or more in one bill. During the relevant period, there were 232 instances wherein the assessee failed to inform the PAN of such purchasers to the Department. Accordingly, penalty proceedings u/s 272B was initiated and a penalty of Rs.23,20,000/- was imposed, (i.e. 232 defaults at the rate of Rs.10,000/- per default) which was confirmed by Ld. CIT(A)/NFAC. It was the contention of Ld. AR that previously the assessee runs the business in the status of partnership firm and subsequently converted the business into private limited company. In the case of private limited company, the Assessing Officer also initiated penalty u/s 272B for 91 such defaults and imposed penalty of Rs.10,000/- only u/s 272B for 91 such defaults. Therefore, it was contended that in one of the case of the assessee, the Department has taken one view and in the case of the same assessee, taken another view. Therefore, the Department is blowing hot and cold at the same time, which is not justified. In this regard, copy of penalty order passed u/s 272B in the case of P. N. Gadgil & Sons Ltd. for assessment year 2018-19 was furnished before us. It was also the contention of Ld. AR that upto September, 2019 the language of section 272B suggests that for all such defaults penalty of Rs.10,000/- can be imposed but from September, 2019 the Government has amended section 272B and inserted the words “ten thousand rupees for each such default”, therefore, after September, 2019 penalty for each such default have to be imposed but not prior to that. In this regard, we may refer section 272B prior to and after amendment which is as under :- “Penalty for failure to comply with the provisions of section 139A. 272B. (1) If a person fails to comply with the provisions of section 139A, the Assessing Officer may direct that such person shall pay, by way of penalty, a sum of ten thousand rupees. (2) If a person who is required to quote his permanent account number in any document referred to in clause (c) of sub-section (5) of section 139A , or to intimate such number as required by sub-section (5A)or sub-section (5C) of that section, quotes or intimates a number which is false, and which he either knows or believes to be false or does not believe to be true, the Assessing Officer may direct that such person shall pay, by way of penalty, a sum of ten thousand rupees. (3) No order under sub-section (1) or sub-section (2) shall be passed unless the person, on whom the penalty is proposed to be imposed, is given an opportunity of being heard in the matter.” xxxxx Penalty for failure to comply with the provisions of section 139A. 272B. (1) If a person fails to comply with the provisions of section 139A , the Assessing Officer may direct that such person shall pay, by way of penalty, a sum of ten thousand rupees. (2) If a person who is required to quote his permanent account number [or Aadhaar number, as the case may be,] in any document referred to in clause (c) of sub-section (5) of section 139A , or to intimate such number as required by sub-section (5A) or sub-section (5C) of that section, quotes or intimates a number which is false, and which he either knows or believes to be false or does not believe to be Assessing Officer may direct that such person shall pay, by way of penalty, a sum of ten thousand rupees [for each such default]. [(2A) If a person, who is required to quote his permanent account number or Aadhaar number, as the case may be, in documents referred to in sub-section (6A) of section 139A or authenticate such number in accordance with the provisions of the said sub-section, fails to do so, the Assessing Officer may direct that such person shall pay, by way of penalty, a sum of ten thousand rupees for each such default. (2B) If a person, who is required to ensure that the permanent account number or the Aadhaar number, as the case may be, has been,— (i) duly quoted in the documents relating to transactions referred to in clause (c) of sub-section (5) or in sub-section (6A) of section 139A ; or (ii) duly authenticated in respect of transactions referred to under sub-section (6A) of that section, fails to do so, the Assessing Officer may direct that such person shall pay, by way of penalty, a sum of ten thousand rupees for each such default.] (3) No order under sub-section (1) or sub-section (2) [or sub-section (2A) or sub-section (2B)] shall be passed unless the person, on whom the penalty is proposed to be imposed, is given an opportunity of being heard in the matter.”