Facts of the Case

The assessee, Sandhya Das, filed an appeal against the order passed by the CIT(A), NFAC for Assessment Year 2017-18. The appeal before the Tribunal was delayed by 60 days, which was duly explained. During assessment proceedings, the Assessing Officer noticed credits amounting to ₹2,91,69,653 in a bank account maintained with State Bank of India, Haidarpara, Siliguri, including cash deposits of ₹32,39,000 during the demonetization period. The said bank account was linked with PAN No. AHDED1535B, in respect of which no return of income had been filed. The assessee, however, had filed her return of income using another PAN No. ADVPD0925B, under which a separate bank account was maintained. The existence of two PANs arose due to inadvertent mistake when the assessee’s PAN card was misplaced and a new PAN was applied for instead of applying for a duplicate PAN card. Based on the mismatch, the Assessing Officer made additions, which were confirmed by the CIT(A), leading to the appeal before the Tribunal.

Issues Involved

Whether the delay of 60 days in filing the appeal deserved to be condoned, whether additions made on the basis of bank deposits linked to an incorrect PAN were sustainable, whether the case involving double PAN required fresh verification and reconciliation, and whether the assessment should be restored for adjudication on merits.

Petitioner’s Arguments

The assessee contended that the delay in filing the appeal was due to bona fide and genuine reasons and deserved to be condoned. On merits, it was argued that the existence of two PANs was inadvertent and occurred due to mistake of the consultant when a fresh PAN was applied for instead of seeking a duplicate PAN card. It was submitted that the assessee was carrying on business and that the bank deposits represented sale proceeds duly recorded, and that proper reconciliation was never carried out by the Assessing Officer. The assessee prayed for restoration of the matter to the file of the Assessing Officer for fresh verification.

Respondent’s Arguments

The Revenue did not object to the condonation of delay. On merits, it was submitted that the additions were made based on information available to the Assessing Officer due to non-filing of return under the PAN linked to the bank account.

Court Order / Findings

The ITAT Kolkata condoned the delay of 60 days in filing the appeal, holding that the reasons explained were bona fide and genuine. On merits, the Tribunal observed that the assessee was inadvertently holding two PANs due to misplacement of the original PAN card and subsequent application for a fresh PAN. The Tribunal held that the issue required proper reconciliation and verification at the level of the Assessing Officer to determine the correct income chargeable to tax. It was held that, in the interest of justice, the assessment deserved to be restored for fresh adjudication. Accordingly, the Tribunal set aside the orders of the lower authorities and restored the matter to the file of the Assessing Officer with a direction to decide the issue afresh after affording reasonable opportunity of hearing to the assessee.

Important Clarification

The Tribunal clarified that cases involving double PAN and mismatch of bank accounts require careful factual verification and reconciliation. Additions cannot be sustained mechanically without examining the underlying business transactions and the correct linkage of PAN with bank accounts. Procedural errors should not result in unjust taxation without proper inquiry.

Final Outcome

The appeal filed by the assessee was partly allowed for statistical purposes. The delay of 60 days was condoned, and the matter was restored to the file of the Assessing Officer for fresh adjudication after proper verification and reconciliation, with reasonable opportunity of hearing to the assessee.

 Source Link- https://itat.gov.in/public/files/upload/1768297688-qQNksJ-1-TO.pdf

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