TMI Blog2007 (10) TMI 547X X X X Extracts X X X X X X X X Extracts X X X X ..... to 114D, the assessee was not liable to any penalty. In the result, we, first of all, direct the Assessing Officer to see if enhancement made by the CIT(A) has resulted in double levy of penalty of section 209 accounts and if it is so, then penalty to that extent should be reduced straightaway. We cancel the penalty in question. Without prejudice to the aforesaid conclusion, even if it is assumed that it was the assessee s obligation to procure duly filled in Form No. 60 and supporting evidence thereof and the penalty u/s 272B is leviable for such failure of the assessee, then also we are of the opinion that the assessee having procured Form No. 60, though defective one, it should have been allowed an opportunity to make good that of efficiency, but was not a fit case for levying of any penalty u/s 272B of the Act. So far as the assessee s plea that the penalty, if at all, was leviable, could be levied only with respect to 237 accounts is concerned, we, having cancelled the penalty as a whole, are of the opinion that this ground requires no independent adjudication. The assessee s another plea that penalty, if any, leviable could be only for default as a whole ; i.e., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sitors initiated penalty proceedings under section 272B of the Act and for that purpose required the assessee to explain as to why penalty for the assessee s default in complying with the provisions of section 139A of the Act read with rules 114B to 114D of the Income-tax Rules in the case of 793 depositors may not be imposed. 3. After considering the assessee s reply, the Assessing Officer imposed penalty for 793 cases at Rs. 10,000 per case totalling Rs. 79,30,000. 4. The assessee went in appeal before the Commissioner of Income-tax (Appeals) and first of all, pleaded that out of 793 cases, 209 cases relate to the period prior to coming of the provisions of section 272B in the statute, i.e., prior to June 1, 2002, when the assessee was not required to comply with the aforesaid provisions and, therefore, penalty with respect to 209 cases may be deleted. The Commissioner of Income-tax (Appeals) instead of deleting penalty on 209 cases, issued enhancement notice under the impression that the Assessing Officer had not imposed penalty with respect to 209 cases and, consequently, after considering the assessee s reply against the show-cause notice for enhancement as well as with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... djournment for further verification. Hearing fixed on August 26, 2006. (Sd.) . . . . . . . . . . . . . . C. P. Jaria (Sd.) A. S. Mumna Income-tax Officer 26-8-2006 Shri C. P. Jaria attended. Verification of Form No. 60 and application forms done. Further adjournment on August 28, 2006. 28-8-2006 Shri C. P. Jaria attended, submitted, kept on record. Further verification made, in some cases PAN No./copy of PAN found and taken note of it. (Sd.) . . . . . . . . . . . . C. P. Jaria. (Sd.) . . . . . . . . . . . . A. S. Mumna, Income-tax Officer. From the above, it will be clearly seen that the photocopies of all the account opening forms along with annexures, which were impounded in course of the survey, were verified by the Assessing Officer in the presence of the assessed authorised representative. The authorised representative had sufficient opportunity to explain the defects. It was after such discussions that it was found that 1074 accounts which had been inventoried by the survey party included 56 accounts which pertained to fixed deposits below Rs. 50,000. Thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r deliberate concealment. It was simply a case of not complying with the statutory provisions which were introduced purely in larger national interests to ensure that all the customers of a banking company were bona fide and hence not involved in any hawala or money laundering or terrorist activities. Since, there was large scale failure to comply with such provisions for well over seven years and since, national security was at stake, penal provisions were introduced to ensure strict compliance. Therefore, it was not a case where mens rea was to be established. In the case relied upon by the authorised representative, the truck driver was not carrying any contra band goods, nor was he trying to conceal anything and therefore, the hon ble court rightly held that no penalty could be levied in such cases. The facts of both the cases are completely different from the facts of the assessee s case. The authorised representative s reliance therefore, is misplaced. 5. The assessee is aggrieved and came in appeal before us. 6. Learned counsel for the assessee, first of all, reiterated his submissions as were made before the Commissioner of Income-tax (Appeals) that out of 793 cases ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d counsel for the assessee, further, submitted that if at all the penalty to be imposed, it is not for each default. According to him, if we read the provisions of section 272B(1) of the Act, it will be revealed that penalty of Rs. 1,000 is leviable not on the basis of each account, but for failure of the bank to comply with the provisions of section 139A of the Income-tax Act read with rules 114B to 114D of the Income-tax Rules. He, therefore, submitted that penalty, if any, was to be imposed, it could be imposed only to the extent of Rs. 10,000. Another argument submitted by learned counsel for the assessee was that if we read the provisions of section 139A(5) and 139A(6) of the Act, it will be revealed that obligation to quote PAN, or General Index Registered Number (GIR) is of the person who opens the account, i.e., the customer and not of the bank. According to him, the bank s obligation as per section 139A(6) of the Act is only to ensure that the customer had quoted his PAN or GIR number. 9. From the aforesaid provisions of section 139A(6) of the Act, learned counsel for the assessee submitted that requirement of procurement of Form No. 60 and supporting evidence thereof i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n-resident Indian referred to in section 115G : Provided further that a person referred to in this sub-section, shall intimate the General Index Register Number till such time permanent account number is allotted to such person. (5B) . . . (5C) Every buyer referred to in section 206C shall intimate his permanent account number to the seller referred to in that section. (5D) Every seller collecting tax in accordance with the provisions of section 206C shall quote the permanent account number of every buyer referred to in that section (i) in all certificates furnished in accordance with the provisions of sub-section (5) of section 206C ; (ii) in all returns prepared and delivered or caused to be delivered in accordance with the provisions of sub-section (5A) or subsection (5B) of section 206C to an income-tax authority. (6) Every person receiving any document relating to a transaction prescribed under clause (c) of sub-section (5) shall ensure that the permanent account number or the General Index Register Number has been duly quoted in the document. Rule 114B clauses (c) and (f) (c) A time deposit, exceeding fifty thousand rupees, with a bank ing company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he forms received up to 30th September, shall be forwarded latest by 31st October of that year and the declaration till the 31st March shall be furnished latest by 30th April of the same year. 12. Having considered all the provisions of section 139A(5) and (6) and rules 114B(c), 114B(f) and 114C(2)(c) and 114D of the Income-tax Rules, 1962, we are of the opinion that (i) Obligation to quote PAN or GIR Number in the documents for entering into the transactions of the type mentioned in these provisions, except as discussed hereinafter, is of the customer and not of the bank. (ii) Rule 114C(2)(c) imposes an obligation of manager or an officer of a bank only to ensure that the person entering into transaction of the nature referred to in section 139A(5)/139A(6) has quoted his PAN in the relevant documents. (iii) Further, from the second proviso to rule 114B, it is clear that a person who does not have a PAN, but enters into any transaction specified in rule 114B, is to make a declaration in Form No. 60 giving therein the particulars of such transaction. (iv) From rule 114D of the Income-tax Rules, 1962, requires that the bank manager will forward a copy of Form No. 60 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sub-section (1) of section 272B of the Act was of the customer and not of the bank ; meaning thereby that penalty under section 272B(1) of the Act, if any, is to be imposed, it is to be imposed on the customer and not on the bank. The bank can be penalised if it fails to comply with the provisions of section 139A(6) or rule 114D(2) is for failure to ensure that PAN or GIR Number is quoted by the customer and for failure in forwarding the copies of Form No. 60, but not for any other default. 17. Our aforesaid conclusion is supported by sub-section (2) of section 272B which clearly provides that if the person, who is required to quote or intimate his PAN in any document, referred to in clause (c) of sub-section (5) or sub-section (5A) of section 139A, quotes or intimates the PAN which is false, and which he either knows or believes to be false or does not believe to be true, is liable to pay penalty of Rs. 10,000. 18. In view of aforesaid interpretation of the provisions of sections 139A(5), 139A(6), 272B(1) and of 272B(2) of the Act, and rules 114B to 114D we are of the opinion that penalty for failure to comply with the provisions of section 139A of the Act can be imposed onl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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