MALLIKARJUN SOUHARD SAHAKARI NIYAMIT,HUBLI-DHARWAD vs. INCOME TAX OFFICER WARD 1(1), HUBLI

The brief facts of the case are that the assessee is a registered co-operative society under the provisions of the Karnataka Co-operative Societies Act. Initially, the society was treated as an Artificial Juridical Person and got a PAN as AAAJM1654L. The assessee got a new PAN in the status of Association of Persons and applied for the cancellation of the old PAN. Thereafter the assessee filed the return of income in the new PAN. The AO based on the information that the assessee had effected transactions in the old PAN but not filed their return of income, had initiated proceedings u/s. 148A(b) and made order u/s. 148A(d) of the Act. Notice u/s. 148 was also issued. The assessee had not filed their return of income and therefore notice u/s. 142(1) was issued. The assessee had replied to the said notice and stated that they have filed their return of income in the new PAN and requested to drop the proposals. The AO based on the fact that the old PAN was not cancelled, issued a show cause notice proposing to make addition u/s. 69A of the Act. The assessee replied that the department has not cancelled the old PAN and from the A.Y. 2013-14, the assessee had filed their return of income in the new PAN and also enclosed the ITR copy for A.Y. 2018-19 and the copy of the letter given to local AO for cancelling the old PAN. Thereafter, the e- assessment centre called for a report from the JAO and the JAO gave a report that the assessee had filed their return of income in the new PAN and the old PAN is still active. The AO on the basis of the report again issued a notice u/s. 142(1) for which the assessee had not furnished any reply and therefore the AO had concluded the assessment by making additions u/s. 69A, 69, 69C and the other additions.

As against the order, the assessee filed an appeal before the Ld.CIT(A). The Ld.CIT(A) had confirmed the additions made by the AO.

As against the said order, the present appeal has been filed by the assessee before this Tribunal.

At the time of hearing, the Ld.AR submitted that the assessee is filing return of income in the new PAN and also furnished the return copy and also the letter seeking to cancel the old PAN was produced before the authorities and therefore the assessment made on the very same transactions are not in order. Further, the Ld.AR submitted that the fact of filing the return was also accepted by JAO and therefore the non-cancellation of the PAN by the authorities could not be a reason for making the assessment in old PAN. The Ld.AR further undertook that the assessee will see that the old PAN would be cancelled and prayed to allow the appeal.

The Ld.DR submitted that the assessee had not produced the proof for the cancellation of the old PAN and also not established the fact that the deposits etc. were properly accounted for and included in the return of income filed under the new PAN and therefore the orders of the lower authorities are in order.

We have heard the arguments of both sides and perused the materials available on record.

The only dispute involved in the appeal is about the assessment made on the assessee in the old PAN. Admittedly, the assessee used the old PAN and thereafter obtained a new PAN and sought for the cancellation of the same, but the said request was not followed up and therefore the old PAN was still in existence. The AO based on the fact that the old PAN was linked and used by the assessee, made the addition u/s. 69C, 69, 69A of the Act.

The report of the JAO indicates that the assessee had filed the return of income for the A.Y. 2018-19 in the new PAN and also informed that the old PAN is active. It is the case of the assessee that from the A.Y. 2013-14, the assessee is filing the return in the new PAN. The only allegation of the AO is that the assessee’s old PAN is still active and therefore the assessment made is in order.

In such circumstances and also considering the undertaking given by the assessee that they will follow up the cancellation of the old PAN, we are inclined to set aside the orders of the lower authorities and remit this issue to the file of the AO for fresh consideration and in accordance with law. We also direct the assessee to get the old PAN cancelled and thereafter the AO could undertake the exercise of redoing the assessment afresh.

In the result, the appeal filed by the assessee is allowed for statistical purposes.