ITO Vs Porbandar Credit Cooperative Society Ltd. (ITAT Rajkot)
The ITAT Rajkot considered the Revenue’s appeal for AY 2016-17 against the NFAC order dated 02.01.2025, which had deleted an addition arising from cash deposits in the assessee’s bank account. The assessee, a co-operative society, had been assessed under Sections 147 read with 144 of the Income-tax Act, 1961, after information was received regarding substantial cash deposits in its savings bank account.
The reassessment was initiated against PAN AAAAS8104Q, whereas the assessee contended that it had regularly filed its returns under PAN AAAAS2528L. According to the assessee, the former PAN had been inadvertently allotted as a duplicate PAN and an application for its cancellation had already been filed on 05.12.2022, before commencement of the assessment proceedings. The assessee maintained that the bank account in question and its transactions were duly reflected in its books, audited financial statements and return filed under the regular PAN.
The Assessing Officer, however, treated the cash deposits in the bank account as unexplained and made an addition under Section 68. The CIT(A) deleted the addition after noting that the bank account was reflected in the assessee’s financial statements and that the return had been filed under the regular PAN.
Before the Tribunal, the Revenue argued that the assessee had failed to establish the source of the cash deposits with supporting documentary evidence. The assessee maintained that the reassessment resulted from the duplicate-PAN issue and that the relevant bank account and transactions had already been disclosed under the correct PAN.
The ITAT found that the audited balance sheet and Schedule 5 reflected the relevant bank balance and that the bank account was disclosed in the return filed under PAN AAAAS2528L. It observed that the assessee had not concealed the existence of the bank account and that the controversy arose because two PANs had been allotted to the same assessee.
However, instead of finally sustaining the CIT(A)’s deletion, the Tribunal considered it appropriate to restore the matter to the Assessing Officer for verification. The AO was directed to examine the transactions in Account No. 4507 maintained with Porbandar Commercial Co-operative Bank Ltd., verify whether those transactions had already been disclosed under the regular PAN, examine the cancellation status of the duplicate PAN, and determine whether any independent transactions had been carried out under the duplicate PAN.
The Tribunal further directed that, if any transactions under the duplicate PAN were found to have not been disclosed under the regular PAN, the AO could take appropriate action in accordance with law. The assessee was to be given a reasonable opportunity of being heard.
Accordingly, the Revenue’s appeal was allowed for statistical purposes, the CIT(A)’s order was set aside, and the matter was restored to the AO for fresh examination in accordance with the Tribunal’s directions. The order was pronounced on 23 July 2026.
FULL TEXT OF THE ORDER OF ITAT RAJKOT
