Tax reassessment based on a cancelled PAN was invalid: ITAT Pune

ITO Vs Agrasen Maharaj Nagari (ITAT Pune)

The Income Tax Appellate Tribunal (ITAT) Pune addressed an appeal filed by the Income Tax Officer (ITO) against the order of the National Faceless Appeal Centre (NFAC). The case involved Agrasen Maharaj Nagari, a cooperative society, and a reassessment order issued under Section 147 of the Income-tax Act, 1961, based on a cancelled PAN. The society had informed the department about the cancellation of its old PAN (AAJCS0457K) and the adoption of a new PAN (AAMAS4518Q). The reassessment was initiated due to information from the ITBA module regarding time and cash deposits made by the society. The Assessing Officer (AO) proceeded with the reassessment using the cancelled PAN, disregarding the society’s explanation that the deposits were accounted for under the new PAN.

FULL TEXT OF THE ORDER OF ITAT PUNE

This appeal filed by the Revenue pertaining to the Assessment Year 2017- 8 is directed against the order dated 10.04.2024 passed by National Faceless Appeal Centre, Delhi u/s.250 of the Income-tax Act, 1961 (in short ‘the Act’) which in turn is arising out of the Assessment order dated 20.03.2022 passed u/s.147 r.w.s.144 r.w.s.144B of the Act.

2. Briefly stated, the facts of the case are that the assessee is a Cooperative Society registered under the Maharashtra Cooperative Societies Act, 1960. The assessee is engaged in the business of accepting deposits and providing credit facilities to its members. Based on the information available in ITBA module that the assessee inter alia made Time deposit of Rs.12.00 lakh and cash deposit of Rs.1.10 crore with Lonavala Sahakari Bank Maryadit, the case was reopened by way of issuance of notice u/s.148 of the Act. The assessee in response to notice u/s.142(1) of the act, the assessee stated that there are two PAN number. PAN Number AAMAS4518Q is in respect of Bhagwan Shree Agrasen Nagari Sahakari Pathsanstha and PAN Number AAJCS0457K is in respect of Shri Agrasen Maharaj Nagari Sahakari Pathsanstha Maryadit on which the case is reopened. He submitted that PAN AAJCS0457K has been cancelled and intimated to the same to the department. The assessee is filing the regular income- ax return on New PAN Number AMAS4518Q. However, ld. AO was not satisfied with the explanation of the assessee by holding that there is no relevance between these two PAN numbers as they pertain to different entities and Neither the name of the assessee is identical nor the PAN. Thus, the AO determined the income of the assessee at Rs.1.24 crore.

3.  Dissatisfied assessee preferred appeal before the ld.CIT(A) and the ld.CIT(A) gave succour to the assessee by holding as under :

“4. CIT(A)’s Decision:

The appellant given written submissions and grounds of appeal have been carefully perused. The assessing officer had made an addition on account of unexplained cash deposits of Rs. 1,22,40,470/-, had made an addition of Rs. Rs. 26,423/- w.r.t. interest on deposit with MSEDCL on the analogy that appellant failed to furnish any details and made an addition of Rs. 1,45,090/-w.r.t. commission/brokerage received from MSEDCL on the analogy that appellant failed to furnish any details called for.

In this regard, the appellant assessee had submitted before the assessing officer that the re-  ning of the case was done against the old PAN AAJCS0457K of the appellant assessee, whereas the appellant has already filed the return of income for the same AY 2017-18 with new PAN AAMAS4875Q. The appellant had also intimated to the AO that they have obtained the new PAN in April of 2015 for want of change of 4th character being AOP and not as the company. The appellant assessee further submitted before the AO that both the PAN numbers belong to the appellant assessee and due to change of PAN from the year 2015, regular return of income for AY 2017-18 is filed with new PAN. The appellant further claims that the cash credits on which addition is made are already accounted for in the regular books of accounts, are part of income declared in the ROI filed in the regular course. The assessing officer without considering the submissions made by the appellant concluded the assessment proceedings by passing the order against the old PAN of the appellant.

in the appellate proceedings, the appellant had again submitted with adequate documents that the PAN against which the assessment order u/s 144 rws 147 is passed was cancelled and new PAN was obtained by the appellant society in April 2015. On examination of both PAN from the documents submitted, it was seen that the name of appellant assessee in both the PAN are same and only the difference    the 4th character which was originally C and is modified in to A in the new PAN. The appellant also submitted that during the similar proceedings related to other AYs 2015-16 and 2018-19 in the appellant assessee’s case for the PAN AAJCS0457K u/s 148A(2)(d), this contention of the appellant was accepted by the AO. Further, the appellant had also submitted the details of different communication from the year 2017 onwards to AO for cancellation of old PAN AAJCS0457K, which was not carried out by the AO. In addition, the appellant has also filed and affidavit dt 21.04.2022 stating the above facts. Therefore, it can be said that the AO didn’t pay even a heed of attention to the submissions/claims made by the appellant. As, the appellant submitted that they had intimated to it’s jurisdictional assessing officer about filing of the return of income for AY 2015-   under new PAN by taking into account of cash deposits as its receipts in the books of accounts and also assessment was already made against that ROI for the same AY and informed reason for change of PAN, I am of the opinion that reopening of assessment proceedings u/s 147 in the name of old PAN AAJCS0457K is not in accordance with the provisions of the Act. Hence, the grounds of appellant, in this regard are hereby allowed.”

4. Now the Revenue is in appeal before us that ld.CIT(A) erred in giving relief to the assessee without providing an opportunity to the AO and without adjudicating the additions made by the Assessing Officer.

5. We have heard both the sides and perused the record placed before  We find the ld.CIT(A) gave relief to the assessee on verifying the PAN data of the assessee and information of change in the PAN is in the knowledge of the department.  Further, for the A.Yrs. 2015-16 and 2018-19, the similar contentions putforth by the assessee have been accepted by the department. The communication regarding cancellation of the old PAN AAJCS0457K has also been made by the assessee which the Assessing Officer has not carried out. It is also a fact that on new PAN AAMAS4875Q the assessee is filing the regular income-tax returns. In the light of these facts, the ld.CIT(A) held that reopening of assessment proceedings is not in accordance with the provisions of the Act. In absence of any contrary material brought to our notice by the Revenue, we are disinclined to hold that the impugned order suffers infirmity and therefore no interference is called for.

6. In the result, the appeal of the Revenue is  Order pronounced on this 21st day of January, 2025.