Kiran Reddy Muddasa Vs ITO (ITAT Hyderabad)
Appeal Cannot Be Dismissed Merely for Two PANs; ITAT Remands Case for Verification of Cash Deposits & Deletes Consequential Penalty
Assessee, engaged in catering business, regularly filed returns since AY 2009-10 under a new PAN (BFTPM6705H) after allegedly losing the old PAN (AQOPK2022J). AO issued notice u/s 148 on the old PAN based on cash deposits of ₹85.31 lakh in an HDFC Bank account linked to that PAN. As there was no response, AO passed an ex-parte reassessment order u/s 147 r.w.s. 144 treating the deposits as unexplained money u/s 69A.
Before CIT(A), Assessee explained that the bank deposits were business receipts from railway catering sub-contracting, duly recorded in books & part of declared turnover of ₹38.64 lakh, & withdrawals were used for business expenses. However, CIT(A) dismissed the appeal on technical ground that the assessment was made under old PAN, while the appeal was filed under the new PAN, holding that multiple PANs are impermissible & appeal is infructuous.
Tribunal held that having two PANs may attract penalty u/s 272B, but cannot be a ground to dismiss an appeal without deciding on merits. It noted that the Assessee had consistently filed returns & was assessed under new PAN in earlier years. Tribunal relied on its own decision in Lova Impex Pvt. Ltd. (ITA 247-252/Hyd/2025) & held that the matter requires verification of whether deposits under old PAN are already recorded in books under new PAN. Since assessment was ex-parte & CIT(A) did not examine merits, the Tribunal set aside the order of CIT(A) & remanded the matter to AO to verify turnover, bank deposits, & books of accounts, after giving proper opportunity.
Consequently, the penalty u/s 271(1)(c), being consequential, was also set aside, with liberty to AO to re-initiate penalty depending on fresh outcome. Thus, both appeals were allowed for statistical purposes.
