Facts of the Case

The Assessing Officer discovered that the assessee had two PAN numbers—one used for filing returns and another linked to certain bank accounts. Treating the bank accounts associated with the second PAN as undisclosed, the Assessing Officer initiated reassessment proceedings and added cash deposits of ₹1,36,16,605 along with other credits of ₹16,96,801 as unexplained money under section 69A.

The assessee’s appeal before the CIT(A) was dismissed in limine due to delay in filing. Before the Tribunal, the assessee explained that the delay occurred due to serious illness requiring hospitalization, supported by medical evidence.

 Issues Involved

  1. Whether bank transactions linked to a second PAN can be treated as undisclosed income without verifying reconciliation with the assessee’s active PAN.
  2. Whether dismissal of appeal for delay without considering genuine circumstances is justified.
  3. Whether additions under section 69A can be sustained without examining the complete bank account transactions.

 Petitioner’s Arguments

The assessee contended that the second PAN had been issued as a duplicate after the original PAN was lost, and all transactions were actually disclosed in returns filed under the active PAN.

It was argued that earlier proceedings initiated under the duplicate PAN had already been dropped after reconciliation was furnished. Due to ill health, the assessee could not present detailed explanations during assessment proceedings. He requested an opportunity to submit full reconciliation showing that deposits arose from disclosed sources.

Respondent’s Arguments

The Revenue submitted that maintenance of multiple PAN numbers created suspicion regarding concealment of income. The additions were made due to the assessee’s failure to provide satisfactory explanations and non-compliance with notices. However, if the matter were remanded, strict directions for compliance should be issued.

 Court Order / Findings (ITAT Allahabad)

The Tribunal observed that the assessee’s inability to present his case before lower authorities was attributable to serious illness. It also noted that earlier proceedings concerning the duplicate PAN had been dropped after the Department accepted that the bank transactions were disclosed under the active PAN.

However, the reconciliation demonstrating this fact had not been properly furnished during the reassessment proceedings, leading to the impugned additions.

In the interest of justice, the Tribunal restored the matter to the Assessing Officer for a de novo assessment, directing the assessee to produce evidence showing that transactions in accounts linked to the duplicate PAN were already disclosed in returns filed under the valid PAN. The appeal was allowed for statistical purposes.

 Important Clarification

The Tribunal did not adjudicate on the merits of the additions but emphasized that taxation must follow verification of facts, especially where duplicate PAN issues may create apparent discrepancies. Proper reconciliation and documentary evidence are essential before treating bank transactions as unexplained income.

Link to download the order - https://www.mytaxexpert.co.in/uploads/1771062055_RAJESHKUMARMIRZAPURVS.NFACDELHI.pdf

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