NILESHKUMAR RAMLAXMAN UPADHYAY,SURAT vs. INCOME TAX OFFICER, WARD - 2, BARDOLI

O R D E R

PER DR. A. L. SAINI, ACCOUNTANT MEMBER:

ITA Nos. 171-172/SRT/2023 A. Y. 2010-11 Nileshkumar R Upadhyay 3. First, we shall take wherein the grounds of appeal raised by the assessee are as follows: “1. The AO has grossly erred in initiating penalty of Rs.10,000/- u/s 272B for owing and using multiple PANs inspite of the fact that wrong PAN was erroneously used by the assessee wile opening bank accounts.

2. We reserve right to add alter, demand or delete any grounds of appeal.”

4. Succinctly, the factual panorama of the case is that assessee before us is an Individual and filed his return of income by using PAN: AAOPU5931C on 29.03.2011 through e-filing, declaring turnover of Rs.32,12,202/- and net profit of Rs.2,55,272/- u/s 44AD of the Act. The assessing officer observed that assessee was using two PAN numbers for the purpose of banking transactions and filing of Income Tax Return (ITR). Therefore, assessing officer asked the assessee to furnish the explanation about using two PAN numbers. In response, the assessee submitted the reply before the assessing officer stating that by mistake two PAN numbers were allotted to him by the Department. The assessee also stated before lower authorities that he is going to surrender one PAN number. However, assessing officer rejected the contention of the assessee and imposed penalty of Rs. 10,000/-, under section 272B of the Act.

5. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the Learned CIT(A), who has confirmed the action of the Assessing Officer observing as follows: “6.2 Surely 272B is a deterrent proceeding and must be read construed and implemented as such. In view of the facts discussed above and the provisions of law, the appellant has failed to bring on record any cogent reason which is reasonable enough to make his case an exception. Accordingly, I see no reasons to interfere with the order of the AO and accordingly the action of AO is upheld and the appeal is dismissed.”

6. Aggrieved by the order of ld CIT(A), the assessee is in appeal before us. -172/SRT/2023 A. Y. 2010-11 Nileshkumar R Upadhyay 7. Before us, Learned Counsel for the assessee submitted that assessee was not aware about the consequence of having double PAN number, which were allotted to him by mistake. The ld Counsel further stated that assessee has surrendered one PAN number. Apart from this, ld Counsel submitted before us written submission, which are reproduced below: “The appellant has two PAN as per the information available in ITD system identified by AO in the list of non-filers. The appellant has used PAN for opening bank account, however, appellant has filed application for surrendering the PAN immediately upon coming to know that it is not required. Grounds: The AO has grossly erred in initiating penalty of Rs.10,000/- u/s 272B for owing and using multiple PANs in spite of the fact that wrong PAN was erroneously used by the assessee while opening bank accounts. Submission: Assessee was inadvertently allotted 2 PANs viz. AAOPU5931C and AAEPU4068Q. assessee is an uneducated rural person. Hence, he was not aware about the legal consequences of having 2 PANs. While opening bank accounts, assessee submitted the other PAN i.e. AAEPOU4068Q whereas return of income was filed on PAN AAOPI5931C. The fact that different PAN was given while opening bank accounts came to notice of the assessee during 2012 only when notice for non-filing of return of income containing different PAN was received by the assessee. Hence the AR of the assessee immediately intimated the AO the correct PAN on which assessee regularly filed his return of income to cancel the duplicate PAN viz. AAEPU4068Q on which no return of income was being filed vide letter dated 28.03.2012 Ack No.101280312133825. The assessee was having a total of 5 bank accounts viz 2 savings a/c, 1 current a/c and 1 cash credit a/c with SBI. Fort Songadh Branch and 1 savings a/c with BOB, Fort Songadh Branch. All the 5 accounts were reflected in balance sheet submitted with original return of income as well as revised balance sheet submitted during assessment proceedings. Assessee submitted the entire books of account including cash book, bank books, purchase register, sales register etc., in the course of assessment proceedings. Thus, there was no mala fide intention or mens rea on part of the appellant to hold 2 PANs. It is also not the case of the AO that the assessee agreed to have 2 PANs on being pointed out by the AO during scrutiny assessment proceedings. The said fact has been acknowledged by the AO also in the assessment order. Penalty proceedings were initiated u/s 272B for owning and using multiple PANs inspite of the fact that wrong PAN was erroneously used by the assessee while opening bank accounts. However, the said bank accounts are already reflected in the books of account and return of income filed on the basis of books of account maintained. In fact, assessee had himself informed the said fact to the then AO and requested for cancellation of wrong PAN on 28.03.2012 i.e., much before the case was re-opened and subjected to scrutiny assessment.” -172/SRT/2023 A. Y. 2010-11 Nileshkumar R Upadhyay 8. Therefore, based on the above facts, the ld Counsel contended that penalty may be deleted.

9. On the other hand, Learned Senior Departmental Representative (ld. Sr. DR) for the Revenue relied on the order passed by lower authorities and submitted that assessee has used two PAN number, one PAN is being used for opening bank account and another PAN was using by him for filing of Income Tax Return. Therefore, intention of the assessee is to do the fraudulent activities, hence, penalty imposed by Assessing Officer should be affirmed.

.”

13. Succinct facts qua the issue are that during the assessment proceedings, it was observed by the assessing officer that assessee`s turnover is more than Rs. 40 lakhs, however assessee did not get the books of accounts audited, therefore assessing officer issued a show cause notice to the assessee stating that why the penalty of Rs.36,270/- should not be levied u/s 271B of the Act. The assessee replied to the assessing officer stating that turnover as per return of income filed was less than Rs.40.00 lacs, therefore penalty of Rs.36,270/- u/s 271B, for not getting books of account audited, u/s 44AB of the Income Tax Act, 1961 should not be imposed. However, assessing officer rejected the contention of the assessee and imposed penalty of Rs.36,270/- u/s 271B of the Act, for not getting books of account audited, u/s 44AB of the Income Tax Act, 1961.

14. Aggrieved by the order of Assessing Officer, the assessee carried the matter in appeal before Ld. CIT(A), who has confirmed the penalty imposed by Assessing Officer observing as follows: “6.2 Surely 271B is a deterrent provision and must be read construed and implemented as such. In view of the facts discussed above and the provision of law, the appellant has failed to bring on record any cogent reason which is reasonable enough to make his case an exception. Accordingly, I see no reasons to interfere with the order of the AO and accordingly the action of AO is upheld and the appeal is dismissed. -172/SRT/2023 A. Y. 2010-11 Nileshkumar R Upadhyay

15. Aggrieved by the order of NFAC/Ld. CIT(A) the assessee is in appeal before us. We have heard both the parties. Before us, Ld. Counsel for the assessee argued that assessee submitted entire books of account including cash book, bank book, sales register etc, during the course of assessment proceedings. Thus, there was no mala fide intention on the part of assessee to hold two PAN numbers and assessee has himself agreed that he was having two PAN numbers, by mistake and assessee has erroneously used the wrong PAN to open his bank account, however, the said bank account is duly reflected in the books of accounts of the assessee and return of income. Therefore just because by mistake, the assessee got two PAN numbers does not mean that assessee has more turn over. The disputed turnover was also taken in its books of account which was generated by using another duplicate PAN number, which was used for the purpose of opening bank account. Thus, there was no mala fide intention, on the part of assessee to have two PAN Numbers. The ld Counsel also submitted that assessee has surrendered duplicate PAN number to Income Tax Authorities for cancellation, vide assessee’s application dated 28.03.2012 submitted to ITO.

16. On the other hand, Ld. DR for the Revenue, argued that assessee has used duplicate PAN number, to open bank account and the bank account so opened has not been considered in computing turnover. That is, the turnover which is reflected in the new bank account so opened, by using duplicate PAN number, have not been counted for the purpose of tax audit, hence assessing officer has rightly imposed the penalty on the assessee.

A copy of the instant common order be placed in the respective case file(s).

Order is pronounced on 31/08/2023 by placing result on notice board.