2025 (5) TMI 1410 - AT - Income Tax

Assessment order passed by the AO u/sec.147 r.w.s.144 in old PAN - appellant company has been allotted PAN in the status of Firm although the appellant company is a Private Limited Company incorporated under the Companies Act 1956. HELD THAT - Appellant company has surrendered the old PAN and has obtained the new PAN from assessment year 2007-2008 which is evident from PAN card issued by the Department by new PAN. Further it is also not in dispute that the appellant company has filed it s return of income right from assessment year 2007-2008 under new PAN in the status of Company and the Department has assessed the appellant as a company which is evident from the assessment order passed by the AO for the assessment years 2015-2016 and 2017-2018 where the AO has assessed the appellant company in the status of a Company under PAN . Therefore the impugned assessment order passed by the Assessing Officer under old PAN needs to be examined in light of facts brought on record to ascertain whether it is duplicate assessment or the transactions reported in the said PAN recorded in the regular books of accounts of the appellant company reported in the relevant bank statement filed for the assessment years 2015-2016 and 2017-2018. Going by the evidences placed on record including relevant assessment order passed by the Assessing Officer for the assessment year 2016-2017 u/sec.148A(d) of the Act dated 30.03.2023 it is an undisputed fact that there are two Pan nos. in the name of the appellant company i.e. one in the status of Firm and the other in the status of Company . The Assessing Officer after considering the relevant facts and also evidences placed by the appellant company has accepted the fact that there is a duplicate PAN in the status of Firm and transactions reported in the old PAN no. are already considered by the appellant company in the new PAN and therefore there is no need of fresh assessment. Since the appellant company has already filed return of income under new PAN for both the assessment years and further for both the assessment years the Department has passed assessment orders u/sec.143(3) of the Income Tax Act 1961 under new PAN in our considered view the assessment order passed by the Assessing Officer u/sec.147 r.w.s.144 of the Act in old PAN for both the assessment years cannot survive provided the transactions reported by the DGFT in old PAN are already considered and accounted by the appellant company in their books of accounts. Since the appellant company was not aware of the proceedings initiated by the Department u/sec.148A of the Act and it came to know only during the proceedings for the assessment year 2016-2017 before the Assessing Officer in our considered view the delay in filing of the appeal before the learned CIT(A) needs to be condoned for both the assessment years because there is sufficient and reasonable cause for the appellant company for not filing the appeals on or before the due date provided under the Act. Thus we condone the delay in filing of the appeals before the learned CIT(A) for both the assessment years. Since there are two PAN nos. in the name of the appellant company in our considered view the matter needs to be verified by the jurisdictional Assessing Officer in light of our discussion hereinabove to ascertain the fact with regard to the transactions reported by the DGFT under old PAN whether the said transactions are already accounted by the appellant company in their books of accounts or not ?

Summary

The core legal questions considered by the Tribunal in this batch of appeals pertain to: (1) the validity and consequences of reopening assessments under two different PANs allotted to the same assessee entity, one erroneously categorized as a 'Firm' and the other correctly as a 'Company'; (2) the propriety of condoning the delay of 585 days in filing appeals against the reassessment orders; (3) the correctness of additions made by the Assessing Officer based on import transactions reported under the old PAN; and (4) the validity of penalty orders levied under sections 271B and 271(1)(c) of the Income Tax Act, 1961, consequential to the reassessment orders.

Regarding the first issue, the legal framework involves the provisions of the Income Tax Act, 1961, particularly sections 143(3), 144, 147, and 148A governing assessment, reassessment, and reopening of assessments. The matter also implicates procedural fairness principles when duplicate PANs exist for the same entity. The Tribunal examined whether the reassessment orders passed under the old PAN (erroneously allotted under the 'Firm' category) were sustainable, given that the appellant company had surrendered the old PAN and filed returns under the new PAN (correctly categorized as 'Company') since assessment year 2007-2008. The Tribunal noted that the Assessing Officer had initially accepted the existence of two PANs and recognized that transactions reported under the old PAN were already accounted for in the books of accounts maintained under the new PAN. This was supported by the assessment order for the assessment year 2016-2017, where the Assessing Officer dropped the reopening notice under section 148A, and by a similar order for assessment year 2018-2019 where no additions were made for transactions under the old PAN.

The Tribunal reasoned that since the appellant company had filed returns and assessments under the new PAN, and the transactions under the old PAN were duplicates already reflected in the new PAN's accounts, the reassessment orders under the old PAN could not be sustained. The Tribunal emphasized that the old PAN was still active, which complicated matters, but the appellant company's failure to update the IEC Code with the new PAN led to import transactions being reported under the old PAN to the Income Tax Department by the Directorate General of Foreign Trade (DGFT). This failure, whether attributable to the appellant or the Department, resulted in reopening assessments and passing of ex-parte orders under the old PAN. The Tribunal concluded that the Assessing Officer must verify whether the transactions reported under the old PAN are indeed duplicates accounted for under the new PAN before proceeding further.

On the second issue concerning the delay in filing appeals, the Tribunal considered the appellant's explanation that the delay of 585 days was due to lack of knowledge of the reassessment orders under the old PAN, difficulties in obtaining departmental credentials, preoccupation with business, and ill-health of the consultant. The Revenue contested that these reasons did not constitute 'reasonable cause' under the Act for condonation of delay. The Tribunal, however, found the appellant's explanation sufficient and held that the delay was neither intentional nor to gain undue advantage. It thus held that the delay in filing appeals before the CIT(A) should be condoned, as there was 'sufficient and reasonable cause' for the delay.

Regarding the third issue of additions made by the Assessing Officer based on import transactions reported under the old PAN, the Tribunal directed remand to the jurisdictional Assessing Officer for verification. The Assessing Officer was tasked with examining the appellant's books of accounts and bank statements to ascertain whether the transactions reported under the old PAN were already accounted for under the new PAN. The Tribunal emphasized that if the transactions were found to be accounted for, the additions made in the reassessment orders should be deleted. This approach balanced the need to prevent duplication of income and ensure correct tax assessment.

On the fourth issue concerning penalties under sections 271B and 271(1)(c), which were consequential to the reassessment orders, the Tribunal held that since the reassessment orders themselves were set aside and remanded for fresh verification, the penalty orders could not be sustained. The Tribunal accordingly set aside the penalty orders and remitted the matter back to the Assessing Officer for reconsideration after the reassessment issue was resolved.

In its conclusions, the Tribunal explicitly stated: "Since the appellant company has already filed return of income under new PAN AAACL8515G for both the assessment years and further for both the assessment years, the Department has passed assessment orders u/sec.143(3) of the Income Tax Act, 1961, under new PAN, in our considered view, the assessment order passed by the Assessing Officer u/sec.147 r.w.s.144 of the Act in old PAN for both the assessment years cannot survive, provided, the transactions reported by the DGFT in old PAN are already considered and accounted by the appellant company in their books of accounts."

The Tribunal also affirmed the principle that delay in filing appeals should be condoned when there is a reasonable cause beyond the control of the appellant, stating: "In our considered view, the delay in filing of the appeal before the learned CIT(A) needs to be condoned for both the assessment years because, there is 'sufficient and reasonable cause' for the appellant company for not filing the appeals on or before the 'due date' provided under the Act."

Finally, the Tribunal's directions to the Assessing Officer to verify the transactions under the old PAN and the remand of the penalty issues underscore the principle that reassessment and penalty proceedings must be grounded in verified facts and proper accounting, avoiding duplication and ensuring fairness.

In result, the Tribunal allowed the appeals for statistical purposes, condoned the delay in filing appeals, set aside the orders of the CIT(A) dismissing the appeals for delay, and remanded the matters to the Assessing Officer for fresh verification and appropriate action consistent with the Tribunal's findings.