Case Law Details
Ramaswamy Balasubramanya Vs ITO (ITAT Bangalore)
Return Filed Under Correct PAN Cannot Be Ignored Due to Duplicate PAN Issue-Bengaluru ITAT Deletes Section 69 Addition
The Bengaluru ITAT allowed the appeal of an individual taxpayer and deleted additions made under section 69, holding that the Revenue cannot ignore a return of income merely because it was filed under the taxpayer’s correct PAN while proceedings were initiated under an old PAN that the assessee had already sought to deactivate.
The assessee had purchased an immovable property worth ₹70 lakh, carried out equity share transactions and earned interest income. The case was reopened on the premise that no return of income had been filed. The assessee explained that his original PAN contained an incorrect date of birth, prompting him to apply for rectification. Due to a departmental error, two new PANs were issued. The assessee consistently used one of the new PANs for filing his return of income and had repeatedly requested the department to deactivate the old PAN. He also furnished copies of the return, bank statements, Form 26AS, Form 26QB, property purchase documents, share transaction statements and correspondence with the department.
The Tribunal found that the Assessing Officer as well as the CIT(A) completely ignored the documentary evidence uploaded by the assessee on the income-tax portal and wrongly proceeded on the assumption that no return had been filed. It held that once the return was filed under the correct PAN and the department had been informed about the duplicate PAN issue, it was incorrect to treat the investment in the property as unexplained under section 69. The source of investment stood duly explained through banking channels and was disclosed in the return of income.
The ITAT also deleted the additions relating to equity share transactions, observing that the Assessing Officer was not justified in disallowing the cost of acquisition and taxing the gross sale proceeds. Likewise, the addition of interest income was deleted since the income had already been disclosed in the return filed under the valid PAN. Accordingly, the Tribunal deleted all the additions and allowed the appeal in full.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
This is an appeal filed by the assessee challenging the order of the NFAC, Delhi dated 23/07/2025 in respect of the A.Y. 2016-17.
2. The brief facts of the case are that the assessee is an individual and not filed his return of income. Thereafter the case was reopened by passing an order u/s. 148A(d) of the Act. The assessment was reopened for the reason that the assessee had financial transactions but not filed any return of income. The AO had issued notice u/s. 148 and thereafter the assessee filed his return of income. The AO had issued a notice u/s. 143(2) and thereafter notice u/s. 142(1) was issued. The reason for the issuance of the notices are that the assessee had purchased an immovable property for a value of Rs. 70 Lakhs and also effected sale of equity shares of Rs. 3,29,627/- and purchase of equity share for Rs. 2,61,954/-. The AO based on the TDS statement had taken the interest received by the assessee at Rs. 35,585/-. The assessee filed his response and submitted that the notice was issued to his old PAN number and also submitted that a new PAN has been obtained by him and he filed his return of income in the new PAN in which all the details were disclosed. The assessee also submitted that in view of the mistake in the date of birth in the old PAN number, he had applied for a new PAN card whereas the department had issued two new PAN cards mistakenly. The assessee also furnished the details as requested by the AO and also attached the correspondence made with the department about the cancellation of duplicate PANs received from the department. The assessee also furnished the details of the property purchased, computation of income for the relevant A.Y., form 26AS, bank account details and statements, form 26QB, trading account statement maintained with the ICICI Bank, copies of the letters submitted to the department for deactivation of the old PAN and activating the new PAN number CGVPB3069B. The AO had not considered the said details and documents furnished by the assessee and treated the purchase of immovable property as unexplained transaction u/s. 69 of the Act. Similarly, the AO had also confirmed the other additions of purchase and sale of equity shares. The AO had also added the interest income on the ground that the assessee has not filed his return of income.
3. As against the said additions, the assessee filed an appeal before the Ld.CIT(A). The assessee had contended that the assessee had filed a detailed submission as well as the documents on 23/10/2023 through the portal and therefore the finding that the assessee had not produced any documentary evidence is not correct. The Ld.CIT(A) had confirmed the additions made by the AO even though the assessee had submitted the details before him.
4. As against the said order, the present appeal is filed by the assessee.
5. At the time of hearing, the Ld.AR submitted that the assessee had declared the purchase of immovable property as well as the purchase and sale of equity shares while filing the return of income in the new PAN number and therefore the allegation that the assessee had not filed their return of income in the old PAN number as well as not filed the details about the purchases is not correct. The Ld.AR also furnished the copy of the acknowledgment from the portal of the department which is dated 23/10/2023 in which all the details sought for by the AO were furnished including the correspondence made with the department regarding the duplicate PAN card and also the return of income filed in the new PAN number. The Ld.AR further submitted that the details about the purchase of immovable property and also the equity shares were all furnished to the AO along with the objections on 23/10/2023. The Ld.AR further submitted that before the Ld.CIT(A) also, all the details were again submitted but the Ld.CIT(A) also without considering the said details, had confirmed the order of the AO by saying that the assessee had not furnished the details sought for by the AO and therefore both the authorities had erred in passing the orders. The Ld.AR in the appeal set also filed the written submissions filed before the Ld.CIT(A) and the acknowledgement for having filed the details before the AO and the details of the flat purchased, income tax acknowledgment for four prior years and also the bank statements with interest receipts and prayed to allow the appeal.
6. The Ld.DR relied on the orders of the lower authorities and prayed to dismiss the appeal.
7. We have heard the arguments of both sides and perused the materials available on record.
8. It is the case of the assessee that he got the PAN number AATPB0440Q in which the date of birth has been wrongly mentioned and therefore made efforts to rectify the said mistake and finally he applied for the new PAN card by incorporating the correct details. Thereafter the assessee also approached the authorities to deactivate the old PAN number. In the meanwhile, the department has processed the application for issue of new PAN card and two PAN cards were issued to him with PAN number AHWPB7934M and CGVPB3069B. The assessee used the PAN number CGVPB3069B and filed his return of income in the said PAN. This fact was informed to the department with a request to deactivate the old PAN number and the new PAN number which is not used by the assessee as early as 18th March, 2023 in response to the notice issued u/s. 148A(b) of the Act. In the subsequent letters also, the assessee explained the said facts and submitted that the assessee had filed his return of income in the new PAN number and therefore the allegation that the assessee had not filed his return of income is not correct. The copies of various correspondences made with the department would support the contention of the assessee that he has filed his return of income in the new PAN number CGVPB3069B. In spite of the said facts, the AO based on the specific information which was flagged as per the Risk Management Strategy formulated by the CBDT through ITBA software, had alleged that the assessee had not filed any return of income in the old PAN number which was also requested by the assessee to deactivate the said PAN. The AO without considering the said facts, had alleged that the assessee had entered into financial transactions during the year and sought for the explanation towards the same. The assessee also filed all the details on 23/10/2023 but the AO had observed that no details were furnished by the assessee. We have also gone through the acknowledgment downloaded from the portal of the department in which all the details were furnished by the assessee. In fact, the purchase of the new property was effected through the banking transactions and therefore nothing was suppressed by the assessee. We have also perused the submission made by the assessee that from the A.Y. 2016-17, the assessee had filed his return of income in the new PAN number CGVPB3069B. When the assessee had filed his return of income in the new PAN, it could not be presumed that the assessee had not filed his return of income in the old PAN number. In fact, the assessee had sought for the deactivation of the old PAN number as early as 17/06/2015 which was also acknowledged by the revenue. These facts were also brought to the notice of the authorities but both the AO as well as the Ld.CIT(A) had failed to look into the details and therefore the orders of the authorities below are not in order.
9. We have also perused the written statement filed before the Ld.CIT(A) in which a detailed submission was made and also the various documents were relied on by the assessee but unfortunately, the Ld.CIT(A) also not considered the said documents but observed that no details were filed before the AO and dismissed the appeal. The assessee was able to show that the purchase of the immovable property is not an unexplained transaction since all the details about the source for the funds were explained. Further, it is also proved by the assessee that the investment in the immovable property was also reflected in the return of income filed by the assessee in the new PAN number and in such circumstances, it could not be treated as unexplained investment u/s. 69 of the Act. Considering the facts and the materials placed by the assessee before the authorities, we are satisfied that the addition made by the AO on the investment made in the immovable property as unexplained investment u/s. 69 is not sustainable and therefore deleted the said addition.
10. Similarly, the other addition by disallowing the cost of acquisition of securities sold during the year under consideration is also not in accordance with the provisions and therefore it should be also deleted by the Ld.CIT(A) instead of confirming the same. The disallowance of the cost of acquisition of securities and treating the same as income of the appellant is not in accordance with the provisions and therefore we are satisfied that the said addition is not required.
11. Insofar as the interest income earned by the assessee which was also treated as undisclosed income, we have considered the fact that the said interest income was properly disclosed in the return of income filed by the assessee with the new PAN number and therefore it could not be added as undisclosed income in the old PAN number.
12. In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on 03rd July, 2026.
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