ITAT Quashes Income Tax Reassessment Carried On Old PAN
Pranav B Prem
In a significant ruling, the Pune Bench of the Income Tax Appellate Tribunal (ITAT) has quashed the reassessment proceedings initiated against Shri Agrasen Maharaj Nagari Sahakari Pathsanstha Maryadit based on an old Permanent Account Number (PAN). The bench, comprising Dr. Manish Borad (Accountant Member) and Ms. Astha Chandra (Judicial Member), held that the reassessment under Section 147 of the Income Tax Act, 1961, against a cancelled PAN is not in accordance with the law.
Background of the Case
The appellant, Shri Agrasen Maharaj Nagari Sahakari Pathsanstha Maryadit, is a cooperative society registered under the Maharashtra Cooperative Societies Act, 1960. The society is engaged in accepting deposits and providing credit facilities to its members. The case was reopened after the Income Tax Business Application (ITBA) module indicated that the assessee had made a time deposit of Rs. 12 lakh and a cash deposit of Rs. 1.10 crore with Lonavala Sahakari Bank Maryadit. Consequently, the Assessing Officer (AO) issued a notice under Section 148 of the Income Tax Act.
In response to the notice under Section 142(1), the assessee clarified that it had two PAN numbers:
PAN Number AAMAS4518Q: Pertaining to Bhagwan Shree Agrasen Nagari Sahakari Pathsanstha.
PAN Number AAJCS0457K: Pertaining to Shri Agrasen Maharaj Nagari Sahakari Pathsanstha Maryadit.
The assessee further stated that PAN AAJCS0457K had been cancelled and that the department was duly informed. The assessee had been filing regular income tax returns under the new PAN (AAMAS4518Q) since April 2015.
AO's Position
The AO rejected the assessee's explanation, arguing that the two PANs were linked to different entities and that there was no correlation between them. As a result, the AO determined the assessee's income to be Rs. 1.24 crore and passed an assessment order under Sections 147, 144, and 144B of the Income Tax Act.
CIT(A)'s Decision
On appeal, the Commissioner of Income Tax (Appeals) [CIT(A)] ruled in favor of the assessee, emphasizing that the reassessment was conducted on a cancelled PAN. The CIT(A) noted: "The appellant had also intimated to the AO that they have obtained the new PAN in April of 2015 for want of change of 4th character being AOP and not as the company... The appellant further claims that the cash credits on which addition is made are already accounted for in the regular books of accounts, are part of income declared in the ROI filed in the regular course."
The CIT(A) also highlighted that the department had accepted the assessee's position in similar reassessment proceedings for the Assessment Years (AY) 2015-16 and 2018-19. Despite the assessee providing multiple communications regarding the cancellation of the old PAN, the AO did not act on this information. "I am of the opinion that reopening of assessment proceedings under Section 147 in the name of old PAN AAJCS0457K is not in accordance with the provisions of the Act. Hence, the grounds of appellant, in this regard, are hereby allowed."
ITAT's Observation
The ITAT upheld the CIT(A)'s findings, observing that the department was aware of the PAN change and had previously accepted similar contentions by the assessee for earlier assessment years. The tribunal remarked: "In the light of these facts, the ld.CIT(A) held that reopening of assessment proceedings is not in accordance with the provisions of the Act. In the absence of any contrary material brought to our notice by the Revenue, we are disinclined to hold that the impugned order suffers infirmity and therefore no interference is called for." The tribunal emphasized that the AO had failed to consider the multiple notifications from the assessee regarding the PAN change and did not offer any substantial evidence to counter the CIT(A)'s findings.
Verdict
The ITAT dismissed the department's appeal and upheld the CIT(A)'s decision, ruling that the reassessment proceedings under Section 147 initiated against the old PAN were invalid. This judgment reinforces the principle that reassessment cannot be conducted on a cancelled PAN when the taxpayer has duly informed the department of the PAN change and is filing returns under the new PAN.
Appearance
For Respodnet Assessee: Mr. Akshay Ram Deshmukh
For Revenue: Shri Sandeep P. Sathe
Cause Title: ITO V. Shri Agrasen Maharaj Nagari
Case No: ITA No.1306/PUN/2024
Coram: Astha Chandra [Judicial Member], Manish Borad [Accountant Member]
[Read/Download order]
