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Facts
The assessee allegedly had two PANs. Reassessment proceedings were initiated based on a cash deposit of Rs. 14,60,000/-, and an assessment order was passed under the second, purportedly duplicate, PAN. The assessee claimed to have already declared this income under Section 44AE using their regular PAN.
Held
The Tribunal noted that the assessee had two PANs and the assessment was made on a PAN which was subsequently surrendered for cancellation. The cash deposit remained unexplained by the assessee. The Tribunal decided to remit the matter back to the Assessing Officer to consider the explanation for the cash deposit.
Key Issues
Whether the reassessment proceedings initiated on a duplicate PAN were valid, and whether the cash deposit was adequately explained and properly assessed.
Sections Cited
147, 143(3), 144, 44AE, 148, 234A, 234B, 234C
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “H(SMC
Before: SANDEEP SINGH KARHAIL & SHRI GIRISH AGRAWAL
PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of Ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi, vide order no. ITBA/NFAC/S/250/2023-24/1059631231(1), dated 11.01.2024, passed against the assessment order by Income Tax Officer, Ward- 27(1)(4), Mumbai, u/s. 144 r.w.s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), dated 01.11.2018 for Assessment Year 2011-12.
Grounds taken by the assessee are reproduced as under: “ON JURISDICTION 1.1 The learned Commissioner of Income tax (Appeals), NFAC ["Ld. CIT (A)") erred in confirming the action of the Assessing Officer (AO) in initiating reassessment proceedings and framing assessment of the Appellant by invoking the provisions of Section 147 r.w.s.144 r.w.s.143(3) of the Income tax Act, 1961 ["the Act"].
1.2 While doing so, the Ld. CIT (A) failed to appreciate that the assessment itself made along with the addition made therein was beyond the scope of assessment under section 147 of the Act and the necessary conditions for initiating reassessment proceedings and completion of the assessment were not fulfilled.
1.3 It is submitted that in the facts and the circumstances of the case, and in law, the assessment order is bad, illegal and void.
ON NATURAL JUSTICE 2.1 The Ld CIT(A) erred in dismissing the appeal ex-parte, only for not replying or filing any written submission with evidences, even though the Appellant had filed the copy of application to AO for cancellation of this PAN, as the Appellant had filed return under the regular PAN.
2.2 The Ld CIT(A) erred in dismissing the appeal for non-prosecution, without adjudicating on merit, as the letter for duplicate PAN with ITRV copy on regular PAN of Appellant for this very Assessment Year was filed before CIT(A).
WITHOUT PREJUDICE TO THE ABOVE:
2.1 On facts and circumstances of the case, the Ld CIT(A) erred in upholding the Assessment Order u/s.147 rws.144 rws.143(3) as on merit of the case, that the Appellant had already declared the said Income u/s.44AE under the regular PAN 2.2 The Ld CIT(A) erred in upholding the Assessment Order u/s 147 rws.144 rws.143(3) which was passed on duplicate PAN, without appreciating that Appellant on having came to know about duplicate PAN, immediately filed application before Ld AO to cancel the duplicate PAN.
2.3 It is submitted that in the facts and in the circumstances of the case, and in law, no such assessment or addition was called for.
ON MERIT 3.1 The Ld. CIT (A) erred in confirming the action of the AO in making an addition u/s.68 of the Act on account of alleged cash deposited in the Bank.
3.2 The Ld. CIT (A) failed to appreciate that the transactions entered inns by de Appellant were genuine transactions which were duly disclosed by the Appellant in its return of income under regular PAN.
3.3 On facts and circumstances of the case, the La CIT(A) erred by upholding the Assessment Order has inflicted double taxation of the same Income on the Appellant, as the Appellant had filed this Income u/s44AE under the regular PAN and this very same receipts are again assessed separately under this duplicate PAN 3.4 It is submitted that in the facts and in the circumstances of the case, and in law, no such assessment or addition was called for.
4.1 The Ld. CIT (A) erred in confirming the action of the AO in making the addition to the income of the Appellant on account of alleged cash deposit.
4.2 While doing so, the Ld. CIT (A) failed to appreciate that:
(i) the Appellant had duly explained that the Appellant had filed the tax Return under regular PAN wherein the business income was duly disclosed, by placing on record the letter filed before the AO for cancellation of PAN and ITRV of regular PAN of the Appellant for this very Assessment Year, being relevant documentary evidences;
(ii) the cash deposit was part of the business income of the Appellant being regularly filing returns as small transport operator, and (iii) the action of the AO in making the alleged addition was based purely on surmises, suspicion and conjectures.
4.3 It is submitted that in the facts and the circumstances of the case, and in law, no such assessment or addition was called for.
5. The Ld CIT (A) erred in upholding the AO order of charging interest u/s 234A, u/s.234B & u/s.234C of the Act without appreciating the fact of the case.
The Appellant craves leave to add, alter, delete or modify all or any of the above grounds at the time of hearing.”
The issue in this appeal arises on account of assessee having two PAN namely, one as “ALJPB2768G” and second as “ABRPB4625J”. According to the assessee, he has been filing all his returns and making all the required compliances under the Act by using the PAN ALJPB2768G. For the second PAN, assessee had applied to the ld. Assessing Officer for its cancellation vide letter dated 12.11.2018. According to the ld. Assessing Officer, assessee is a non-filer, since he did not file his return for the impugned year. Based on information available on I-Tax.net, ld. Assessing Officer noted that assessee had deposited cash of Rs.14,60,000/- which led to reopening of the case. Accordingly, notice u/s. 148 dated 23.03.2018 was issued. In the said reopening of the assessment, there was no compliance from the assessee which led the ld. Assessing Officer to conclude the assessment by making an addition of Rs.14,60,000/-. This assessment order was passed under the PAN ABRPB4625J. The order is dated 01.11.2018, passed u/s.144 r.w.s. 147. In this context, it is important to note that assessee had made an application for cancellation of this PAN on 12.11.2018, i.e., after the passing of the impugned assessment order. Aggrieved, assessee went in appeal before the ld. CIT(A).
Along with Form 35, assessee submitted the copy of letter addressed to the Assessing Officer for cancellation of the second PAN, fact of which is noted by ld. CIT(A) in his order in para – 3.3. Ld. CIT(A) also took note of the fact that assessee had filed his return of income for the year under consideration under his regularly used PAN which was filed on 31.03.2012. Since, assessee did not make any submissions at the first appellate stage, ld. CIT(A) disposed the appeal based on material available on record. Appeal of the assessee was dismissed by sustaining the addition made by the ld. Assessing Officer. Aggrieved, assessee is in appeal before the Tribunal.
Before us, ld. Counsel for the assessee reiterated the facts narrated above. In addition to the same, he pointed out that in the regular return filed by the assessee with the first PAN, which he had been using it regularly, he had disclosed income from transport business u/s.44AE of Rs.5,40,000/-. Assessee also reported interest income from Punjab and Maharashtra Cooperative Bank Ltd., amounting to Rs.62,246/- on which TDS of Rs.6,225/- was done duly reflected in Form 26AS of the assessee. According to the ld. Counsel, assessee had duly reported all of his income earned during the year in the regular return filed against his regularly used PAN. He also asserted that reopening of the case by issuing notice u/s.148 is on a wrong fact that assessee is a non-filer though he has filed his regular return of income reporting all the incomes earned during the year.
6. Per contra, ld. Sr. DR asserted that assessee had made application for cancellation of second PAN subsequent to the completion of assessment u/s.144 r.w.s. 147. According to him, if the assessee was aware of this fact of having two PAN, he ought to have taken such corrective action much earlier. Further, the deposit of cash has not been explained and therefore been rightly added by ld. Assessing Officer and sustained by ld. CIT(A).
We have heard both the parties and perused the material on record. It is an admitted fact that assessee had two PANs, one of which he had been using regularly for making compliances and the second one against which the impugned assessment order has been passed, has been surrendered by the assessee for cancellation but the application made by the assessee is after the passing of impugned assessment order. This fact of request for cancellation of second PAN was before the ld. CIT(A), he also took note of the regular return filed by the assessee against the first PAN. The addition made in the present case is in respect of deposit of cash of Rs.14,60,000/- which remains to be explained by the assessee, since, both ld. Assessing Officer and ld. CIT(A) have passed ex parte order. Assessee has the responsibility to explain the deposit of cash in his bank accounts, irrespective of which PAN has been used by him in making the compliances. In the present case, the impugned assessment is on a PAN for which a request has been made for its cancellation. This deposit of cash of Rs.14,16,000/- ought to be explained by the assessee in the return filed against his first PAN, claimed to be used regularly in making all the compliances.
7.1. Accordingly, in the given set of facts, we find it appropriate to remit the matter back to the file of ld. Assessing Officer to consider the submission of the assessee for the purpose of explaining the deposit of cash and complete the assessment in accordance to the provisions of law. Needless to say, that assessee be given reasonable opportunity of being heard and make his submissions to substantiate the claims. We also direct the assessee to be diligent in attending the hearing proceedings and not to seek adjournments unless warranted by compelling reasons so as to expedite the disposal. Accordingly, grounds raised by the assessee are allowed for statistical purposes.
In the result appeal of the assessee is allowed for statistical purposes.