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PENALTY U/S 272BB FOR INVALID /WRONG PAN NO

Chinmay Sahu (Finance Analyst) (51 Points)

20 July 2010

Dear All,

I want to know the maximum penality u/s 272BB for invalid / wrong PAN No or PAN No. is not given in the quaterly statement filed by a company. Whether the penality is one time or it will be paid quaterly/yearly.

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Harpreet (* * * * * *) (1670 Points)
Replied 20 July 2010

Contrary to general belief , there is no provision for imposing penalty for quoting wrong PAN in the Return of Income.The reasons for such an opinion is as under:

Section 139A is regarding Permanent Account Number . Sub-section (5) of section 139A of the I T Act makes it mandatory to quote PAN in return and at other times. The said provision is as under :

(5) Every person shall

(a) quote such number in all his returns to, or correspondence with, any income-tax authority;

(b) quote such number in all challans for the payment of any sum due under this Act;

(c) quote such number in all documents pertaining to such transactions as may be prescribedby the Board in the interests of the revenue, and entered into by him:

Provided that the Board may prescribe different dates for different transactions or class of transactions or for different class of persons:

Provided further that a person shall quote General Index Register Number till such time Permanent Account Number is allotted to such person;

(d) intimate the Assessing Officer any change in his address or in the name and nature of his business on the basis of which the permanent account number was allotted to him.

Mark the clause ( a) which makes quotation of PAN mandatory in all "his returns"

Clause C makes it mandatory for a person having prescribed transaction like fixed deposits, mutual fund investment, car purchase,property purchase etc.

Let us now visit section 272 B of the I T Act which prescribes penalty for contravening section 139A. The said penalty provision is as under :

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.

The aforesaid penalty provision describes two types of contravention of section 139A for which penalty u/s 272B can be levied

i) For failing to comply with provision of section 139A.

ii) For wrong quotation of PAN in case of

1. Clause C of section 139A(5)

2. Section 139A(5A)

3. Section 139A(5C)

So what is clear from aforesaid provision that quoting wrong PAN in the return is not a contravention for which penalty u/s 272B of the I T Act is prescribed. Had there been no distinction, law makers would have mention Clause A and Clause B of section 139A(5) also and not only Clause C .The deliberate omission of Clause A and B of section 139A (5) has a meaning .

Therefore, if you do not mention PAN in the Return , it is equal to not comply with section 139A and therefore penalty is imposable as per subsection 1 of section 272B , but not if there is an error in PAN mentioned in return.

Filling out PAN in the Return of income is mandatory as per section 139A(5). Section 272B of the I T Act prescribes that in case a person fails to comply with section 139A may be asked to pay a penalty of Rs 10,000 . You have filled the PAN , but the PAN is wrong . In this case , penalty is not imposable for reasons mentioned above.

However,you should immediately intimate the A.O in writing that your PAN is wrongly given in the return ands that the correct PAN is as per the letter.

Section 272B(3) provides that penalty can not be imposed unless an opportunity is given to person on whom penalty is proposed to be imposed.In case the A.O initiates penalty proceedings u/s 272B , give reason

1. Wrong quotation was inadvertent.

2. There is no provision under section 272B for imposing penalty for wrong quotation of PAN in Return of Income.