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Pan error in tds return and section 206aa

Mohan (Audit Assisstant & Accounts Manager) (489 Points)

08 April 2015

Hello everybody,

We filed our TDS return (26Q) for 4th quarter of F.Y. 2012-2013, inadvertentl mentioning wrong PAN of one of the deductee. Later on correction statement was filed correcting the PAN error. However, once again default statement for short deduction due to PAN error is generated by TDSCPC asking to pay the difference amount of TDS i.e. to pay TDS @ 20% since wrong PAN was mentioned in the original statement. The helpdesk asked to refer to section 206AA for this. My question is whether we need to pay the difference amount when we have filed correction statement? Whether it is valid on the part of TDSCPC or income tax department for that matter, to ask assessee to pay the difference amount? What remedy is available?

Thanks

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27 Replies

Sonakshi Mangla (Employee) (310 Points)
Replied 08 April 2015

u cannot correct pan number by more than 2 characters. u must have received demand notice again because of the same reason , the earlier pan number which u quoted had more thn 2 wrong characters. Ideally you are required to pay the demand but if you want to avoid payment, then you can do one thing.. revise return n delete those enteries which contains wrong pan & insert new enteries quoting the correct pan. I hope this helps u out...

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Mohan (Audit Assisstant & Accounts Manager) (489 Points)
Replied 08 April 2015

Ms.Sonakshi,

Thanks for your reply however, I think you have missed the part in my question that we have already filed revised return and still default is generated asking to pay TDS @ 20% inspite of providing correct PAN. Section 206AA provides that 20% rate will be applicable if no PAN is intimated by deductee. In our case we have provided the PAN. So what is the remedy in our case?

Sonakshi Mangla (Employee) (310 Points)
Replied 08 April 2015

Dear Mohan,

I had already mentioned that if you correct more than 2 characters in pan number quoted in original return then department wont consider the revised/updated pan & issues notice for demand. Remedy is same as i mentioned in my previous reply

Mohan (Audit Assisstant & Accounts Manager) (489 Points)
Replied 08 April 2015

Ms.Sonakshi,

The conso file now cotains corrected PAN. Will deleting that row and appending new challan help? I really doubt that demand will be delelted by doing this.

Sonakshi Mangla (Employee) (310 Points)
Replied 08 April 2015

I have handled such type of tds defaults but in ur case as you said that in your latest conso file correct pan is mentioned then the way which i suggested wont work. In my case, the old incorrect pan was appearing in the latest conso file which i downloaded after revising return & then i adopted the same method which i told u to do.. n things resolved.

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Sonakshi Mangla (Employee) (310 Points)
Replied 08 April 2015

did u ammend more than two characters of the pan?

Mohan (Audit Assisstant & Accounts Manager) (489 Points)
Replied 08 April 2015

Ms.Sonakshi,

You handled it, so did I and thats the reason I pursued my query wondering how deleting a record and appending new can work in my case? I think it was my mistake that I did not made it clear in earlier part of my query that I have latest conso file containing corrected PAN (but then I had also said that we corrected the statement after original return was filed). Anyways, thanks for your prompt replies.

Now the question is sub-section (6) of section 206AA states that "Where the Permanent Account Number provided to the deductor is invalid or does not belong to the deductee, it shall be deemed that the deductee has not furnished his Permanent Account Number to the deductor and the provisions of sub-section (1) shall apply accordingly.]"

Does this mean that even if correct PAN is provided in revised return later on it will not be considered, or is CPC wrong in raising it's demand? The section is silent on correct PAN provided later on.

Mohan (Audit Assisstant & Accounts Manager) (489 Points)
Replied 08 April 2015

Wrong PAN : AAHCA6929Q

Correct PAN : AAHCA6292Q

Sonakshi Mangla (Employee) (310 Points)
Replied 08 April 2015

oh there is not much diff in earlier & new pan number so the demand raised is incorrect

Sonakshi Mangla (Employee) (310 Points)
Replied 08 April 2015

one can rectify upto 2 alpha & 2 numeric characters in pan number of a deductee. Dont know why department has raised a demand. I have faced numerous cases where department issues wrong demand notices. Since i was working as an article & that too in a medium sized firm, we ignored the demand notices. If you get the solution for the same, then inform me aswell on the same thread.

Thanks :)

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Mohan (Audit Assisstant & Accounts Manager) (489 Points)
Replied 08 April 2015

I think they have counted 3 errors in number 2 digits changing their place and 1 wrong digit reporting. Thats funny.

Mohan (Audit Assisstant & Accounts Manager) (489 Points)
Replied 08 April 2015

Sure. I will be glad to help and inform.

Once again thank you very much for your replies.

Sonakshi Mangla (Employee) (310 Points)
Replied 08 April 2015

yup thy might hv done tht counting mistake... tds department is known Fr issuing such vague demand notices.. neways bst of luck... I hope ur issue get resolved soon... !!

rishi (CA) (22 Points)
Replied 16 June 2015

Hello everyone,

We filed our TDS return (26Q) for 4th quarter of F.Y. 2014-2015, inadvertentl mentioning wrong PAN of one of the deductee. Later on correction statement was filed correcting the PAN error. However, once again default statement for short deduction due to PAN error is generated by TDSCPC asking to pay the difference amount of TDS i.e. to pay TDS @ 20% since wrong PAN was mentioned in the original statement. The helpdesk asked to refer to section 206AA for this. My question is whether we need to pay the difference amount when we have filed correction statement? Whether it is valid on the part of TDSCPC or income tax department for that matter, to ask assessee to pay the difference amount? What remedy is available?

wrong pan JSJPP2514Q

CORRECT PAN CHZPP4135P

Is their any remedy to solve this issue ?