19 April 2014
effectively both. but please note Rs 10000 is the penalty. 20% deduction is not a penalty but the amount you need to deduct from the payments made to the deductee.
19 April 2014
yes you do receive notices for the short deduction. however, penalty can only be levied through AO issuing notice for penalty proceedings and the deductor has the rights to present his case
well, first thing is to ask the prospective deductee to provide a copy of the PAN or a snapshot from income tax website to ensure that only correct PAN is available in your records.
second, at the time of filing TDS returns, make sure you do double check.