Mere Citation of Different PANs by Assessee & AO doesn’t dismiss Appeal

Maneken Keshvalla Patel Vs NFAC (ITAT Mumbai)

Introduction: The Income Tax Appellate Tribunal (ITAT) Mumbai recently pronounced a significant ruling in the case of Maneken Keshvalla Patel Vs National Faceless Appeal Centre (NFAC). In a critical judgement, the tribunal stated that merely citing different Permanent Account Numbers (PANs) by the assessee and the Assessing Officer cannot be grounds for dismissing an appeal.

Analysis: The dispute arose around the addition of a sum to the appellant’s account as an unexplained cash credit. The Assessing Officer issued a notice on a PAN that the appellant claimed was incorrect. The appellant argued that the assessment proceedings were illegal due to the change in place of residence and the incorrect PAN. The CIT(A) maintained that the appeal was not maintainable, arguing that the assessment order was passed on a different PAN than the one filed in the appeal.

However, the ITAT Mumbai opined that an appeal could not be dismissed as non-maintainable solely based on a difference in PANs cited by the assessee and the Assessing Officer. Instead, the tribunal emphasized the need to examine the source of the credit under section 68 of the Act, a task neither the Assessing Officer nor the Ld. CIT(A) had undertaken.

FULL TEXT OF THE ORDER OF ITAT MUMBAI

This appeal by the assessee is directed against order dated 18.04.2022 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2011-12 raising following grounds:

1.1 The order passed u/s 250 on 18.04.2022 for A. Y. 2011-12 by NFAC, Delhi upholding the addition of Rs. 63,76,868/- towards credits in account no. 001801520946 with ICICI Bank Borivali Branch Mumbai as unexplained is wholly illegal, unlawful and against the principles of natural justice.

1.2 That in the facts and circumstances of the case as well as in law, the assessment proceedings continued and completed by ITO Ward-32(2)(3) Mumbai were illegal, unlawful and without jurisdiction in view of change in place of residence from Mumbai to ‘nagar which was not disputed by any of the authorities. The Ld. NAC has failed to appreciate that place of having bank account does not confer jurisdiction to assess under IT Act.

1.1 That in the facts and circumstances of the case as well as in law, the Ld. CIT (A) erred in not considering fully and properly the evidence produced and explanation furnished by the appellant. The Ld CIT(A) ought to have given opportunity to produce evidence relating to the impugned addition of RS. 63,76,868/- in case the assessment & appeal proceedings were to be persisted by them failing which there was violation of the principles of natural justice. so The appellant should be allowed to produce additional evidence which may be admitted as per Rule 29.

2.1 The Ld. NFAC has grievously erred on facts and in law in upholding addition of Rs.63,76,868/-as unexplained credit.

2.2 That in the facts and circumstances of the case as well as in law, the Ld. NFAC ought not to have upheld the addition of RS 63,76,868/-. The Ld. NFAC ought to have provided copy of and details relating to the impugned credits in said bank account and allowed sufficient opportunity to explain the same.

It is, therefore, prayed that addition of unexplained cash credit u/s 68 Rs. 63,76,868/- deserves to be deleted.

2. Briefly stated, facts of the case are that on receipt of the information from the Investigation Wing about the banking transactions carried out through one bank account in the name of assessee maintained with ICICI bank, the Assessing Officer issued notice u/s 148 of the Income-tax Act, 1961 (in short ‘the Act’). In response, the assessee filed return of income and submitted that assessee was issued notice u/s 148 on wrong PAN i.e. AICPP1497J, whereas assessee was already filing return of income against PAN ALFPP74 1 0D . The Assessing Officer thereafter issued notice under section 142(1) of the act however same were not responded by the assessee. The Assessing Officer also issued a final show cause notice on 17/12/2018 and passed the final assessment order on 20/12/2018 under section 147 read with section 143(3) of the Act and added the deposits of Rs.63,76,868/- as unexplained cash credit u/s 68 of the Act observing as under:

“6. The requirement of statutory notices issued from time to time affording the assessee opportunity to explain the case have not been complied with. Also it is found that the credits to the bank account of BhaveshKeshavlal Patel (HUF) were mainly received from the bank account of the concerns of the family members of Smt. Manekben Keshavlal Patel and immediately debited the same amount to the individual’s account of the family members of the assessee. Since the assessee has not filed her Return of Income the quantum and patterns of the transaction are not match with her income profiles. Therefore, the creditworthiness and identity of the parties advancing these amounts has not been established in the case of the assessee. Hence, the credit to the bank account of the assessee remain unexplained. Therefore, the amount of Rs.63, 76,868/- is added back towards the taxable income under section 68 of the Act as unexplained cash credit. Penalty proceedings u/s 271(1)(c) of the I.T. Act, 1961 are initiated for concealment of income.

Thus the total income of the assessee for the year under reference is computed as under:

Assessed u/s 143(3) r. w.s. 147 of the Income Tax Act, 1961. Give credit for taxes paid after due verification. Enclosed ITNS 150 as Annexure which will form part of this order. Issue DN/RO accordingly. Issue notice u/s 274 r.w.s. 271(1)(c) of the I.T. Act, 1961.”

3. On further appeal, the Ld. CIT(A) held that the said appeal was not maintainable as it was filed against PAN ALFPR74 10 D whereas assessment order was passed on PAN No. AICPP1497J. The relevant finding of the Ld. CIT(A) is reproduced as under:

“6.1 I have considered the facts mentioned in the grounds of appeal and statement of facts, submission of the assessee and the assessment order passed u/s 143(3) r.ws. 147 dated 20.12.2018 of the Act in case of the assessee.

6.2 The assessee in its reply submitted during the appellate proceedings has mentioned that she had shifted to Gandhinagar and was continuously filing her return of income. For the year under consideration also, she filed her ITR on 18.07.2011 declaring total income of Rs.8,70,245/- and net taxable income of Rs. 7,50,250/- against PAN ALFPP7410D. The assessee also submitted that the PAN against which the proceedings u/s 148 is initiated by the Ld. AO doesn’t belong to her and to prove that she submitted copy of her PAN, ITR and Adhaar card etc. The assessee has raised that the asst. order which is made on a different PAN but with assessee’s address on it, has no connection with the assessee and therefore should be invalidated.

6.3 The AO on receiving the information from DDIT (Inv.) Unit 7(4), found that against the PAN AICPP1497J, registered against assessee Manekben Keshavlal Patel, a bank account 001801520946 is maintained with ICICI Bank, Borivali Branch, against which during the F. Y. 2010-11 high value non cash transaction was carried out. An amount was received in this bank account through RTGS from saving account of M/s Bhavesh Keshavlal Patel (HUF) and the same was immediately transferred to Hetal Bhavesh Patel’s account where Bhavesh Patel is a joint holder and then transferred to Bhavesh Patel’s account through RTGS. During the F.Y. 2010- 11 the assessee was credited Rs. 63,76,868/- and immediately debited Rs.63,23,531/- to the bank account maintained in ICICI Bank Ltd. The AO issued various notices against the same PAN and address against which the earlier mentioned transaction took place. However, no replied to explain the patterns of transaction were received by the AO.

6.4 In the present case, it is found that PAN No. AICPP1497J on which assessment order has been passed making the aforesaid addition is in the name of Manekben Keshavlal Patel and corresponding address of the said PAN no is Manek Kunj, Anandpura Vas., Village Pundhara, Mansa, Gandhinagar, North Gujarat-382001. There was huge debits and credits in the bank account maintained with ICICI bank opened with PAN No. AICPP1497J. The appellant has not categorically denied that she has not opened the impugned bank account. What she is disputing is that the PAN quoted against the bank does not being to her.

6.5 So far the validity of the assessment order is concerned, it is found that the AO has correctly made assessment on the PAN which was used for opening the bank account wherein huge funds were deposited by transfer entries. Further, the said PAN was having the name of the assessee with corresponding address which also matched with the assessee. Therefore, I am of the view that this seems to be a case of duplicate PAN which was taken by the assessee in the past and the Department has regularly carried out de-duplication process in such cases where duplicate PANs were issued. Further, this appeal is also not maintainable for the reason that appeal has been filed using PAN ALPP741 0D on which there was no assessment order passed. To conclude, I do not find any infirmity in the assessment order and addition of Rs.63,76,868/- in the name of the person holding the PAN on which bank account was opened. Therefore, all the grounds of appeal are hereby dismissed.”

4. Before us, the Ld. Counsel of the assessee submitted that assessee was regularly filing its return of income under the PAN ALFPP74 1 0D and assessee duly intimated shifting of address from Mumbai to Gandhi Nagar, therefore, the notice u/s 148 of the Act based on the reasons recorded that the assessee did not file any return of income, is invalid. He further submitted that the Assessing Officer issued show cause letter on 17.12.2018 and without awaiting the reply of the assessee passed the assessment order on 20.12.2018 i.e. within a period of 3 days. He further submitted that the assessee has already filed detailed information in respect of banking transaction of the deposit and transfer of money. However same has not been considered by the lower authorities and therefore, issue may be restored back to the Ld. CIT(A) for deciding afresh. The Ld. CIT(A) has pointed out that the addition has been made by the Assessing Officer on the basis of bank account in the name of the person holding the PAN on which assessment is made. Before us, the Ld. Counsel of the assessee referred to the Paper book and submitted that relevant bank account was opened with the PAN which has been cited by the assessee in the appeal. Thus the Ld. CIT(A) is not justified in dismissing the appeal.

5. On the other hand, the Ld. Departmental Representative (DR) relied on the order of the lower authorities.

6. We have heard rival submission of the parties on the issued in dispute and perused the relevant material on record. We find that the Ld. CIT(A) has held that the appeal is not maintainable mainly for the reason that appeal has been filed by the assessee citing the PAN No. ALFPP74 10D, which the assessee is using for filing its regular return of income. In our opinion, the Ld. CIT(A) is not justified in dismissing the appeal merely for the reason that PAN cited in the appeal is different from the PAN cited by the Assessing Officer in the assessment order. Citing of the different PAN by the assessee and the Assessing Officer might be an issue of duplication of the PAN and which can be resolved by the Assessing Officer and appeal cannot be dismissed as not maintainable on this ground. The substantial issue is of examination of the source of the credit in terms of section 68 of the Act which neither the Assessing Officer not the Ld. CIT(A) has examined. In the circumstances, we set aside the order of the Ld. CIT(A) and restore the matter back to him directing to admit the appeal as maintainable and then examining the issue of addition of Rs.63,76,868/- made by the Assessing Officer. The assessee shall be afforded adequate opportunity of being heard. The grounds of appeal of the assessee are accordingly allowed for statistical purposes.

Order pronounced in the open Court on 31/05/2023.