TDS Scheme is faulty as it doesn't allow more than 4 changes in character of PAN in revised return

System of processing TDS statements gives an option to deductor to correct invalid/no PAN entries in TDS statement through a correction statement without any restriction of correcting particular PAN with regard to number of characters

Facts

a)     The assessee was regularly filing TDS returns mentioning therein details of hundreds of deductee’s.

b)    Due to some clerical unintentional mistake it mentioned invalid PAN of a deductee in the quarterly TDS return.

c)     The CPC-TDS treated wrong PAN as no PAN and, accordingly, created demand by imposing a burden of 18 % as difference of low TDS deducted as per the provisions of section 206AA.

d)    The assessee tried to rectify the mistake by filing correction statement/revise return but it was rejected for reason that system allowed change of only 4 characters whereas there were more than 4 changes in wrong PAN quoted by assessee.

e)     The CIT(A) rejected assessee's appeal. Aggrieved by the order of CIT(A), assessee filed the instant appeal before the tribunal.

The tribunal held in favour of assessee as under-

1)     Centralized Processing of statement of TDS Scheme was introduced in year 2013 to tackle the genuine problems arising in detailed process of TDS deduction/collection, deposit of taxes, filing of returns, and to rectify clerical mistake made unintentionally by the deductee as well as to get relief from harsh impact of provisions of section 206AA arising due to quoting of wrong/no PAN.

2)     Further, the aforesaid scheme gives an option to the deductor to rectify any kind of mistake which has been inadvertently made by it at time of filing quarterly TDS return and this correction statement can be filed for multiple times

3)     Even from the perusal of the intimation under section 200A issued by TDS Centralized Processing Cell and Traces (TDS reconciliation analysis and correction enabling system), it was crystal clear that the system itself mentioned to correct the invalid/No PAN entries through a correction statement and there was no reference of a particular type of restriction on correction of particular PAN with regard to number of characters.

4)     Hence, system was erroneous to the extent it restricted deductor to revise its TDS return/statement within some corners which in this case was correction of PAN details subject to change of two alpha and two numerical characters.

5)     Therefore, correction statement filed by assessee needed to be accepted after ascertaining correctness of PAN furnished by deductor - Oil & Natural Gas Corporation Ltd. v. Dy. CIT [2016] 65 taxmann.com 2 (Ahmedabad - Trib.)