While allowing a petition filed by M/s Purnima Advertising Agency Pvt Ltd, a division bench of the Gujarat High Court directed the Income Tax department to allow the petitioner to correct PAN of the deductee in the statement of tax deducted at source filed by them.
In the instant case, the petitioner had challenged the action of the Deputy Commissioner, Income Tax, who do not permitted the assessee to correct the error in mentioning the Permanent Account Number (PAN) of one of the agencies to whom the petitioner had made multiple payments during the relevant financial period for which deduction of tax at source was necessary.
The department pointed out that all the forms are to be generated online and corrections can also be therefore, made only online. It also pointed out that looking to the large number of such statements and entries in such statements, it would be impossible to process individual claims of corrections, whether they are based on bona fide mistakes or otherwise.
Analyzing the relevant provisions under the Act, the bench noted that neither the statute nor the department completely rules out the possibility of genuine and bona fide typographical or even mechanical errors. Section 200A refers to a statement of tax deducted at source or a correction statement. However, this provision 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.
It noted that para 4 of the Notification dated 15.1.2013 issued by the department provides for the correction statement of tax deducted at source. Para. 11 of the scheme authorises the Director General to specify the procedures and processes for effective functioning of the Cell where such declarations would be processed which includes receipt of correction statement of tax deducted at source.
Justice Akil Kureshi and Justice Biren Vaishnav, pointed out that “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.”
“We are not unsympathetic to the department’s view that late corrections can derail assessments of the deductees. If the legislature therefore, had laid down that no corrections would be permitted or the department had provided that no correction would be permitted beyond a particular period, we could have examined the issue in different light. However, that is not the present situation. In the present case, as noted, section 200A itself refers to correction statement of tax deducted at source. The intimation sent to the petitioner of shortfall in deduction of tax also referred to the possibility of correction but limited it to certain characters. In the affidavit in reply also same stand has been taken.”
It therefore, said that the decision of department in not permitting the petitioner to correct PAN of the deductee in the statement of tax deducted at source was impermissible. “In the present case, department shall verify the petitioner’s claim of actual deduction of tax at the prescribed rate in case of M/s. Star (India) Pvt. Ltd., verify that the PAN sought to be corrected by the petitioner belongs to the said agency and that the tax was actually deposited in case of such deductor. If these questions are answered in favour of the assessee, the department shall not insist on raising higher demand from the petitioner of failing to deduct tax at source in terms of subsection(1) of section 206AA of the Act,” it added.
Read the full text of the Judgment below.
