Assessee committed fraud by applying registration u/s 12AA without surrendering earlier PAN issued as firm in the very same name – High Court
ABCAUS Case Law Citation:
ABCAUS 3751 (2023) (05) HC
The Petitioner assessee had challenged the assessment order passed making addition towards unexplained money u/s 69A of the Income Tax Act, 1961 (the Act).
The petitioner was a registered society and on its application for a Permanent Account Number (PAN) the Income Tax Department had allotted PAN No to the petitioner against which it had been filing returns regularly.
However, when the department commenced online mode of filing of income tax returns, the petitioner could not upload the returns online as an Association of Persons (AOP).
On inquiry it was found that the petitioner was issued with a wrong PAN No. as a firm and not as an AOP. The department realizing the mistake asked the petitioner to file a de novo application for PAN upon which the petitioner was issued another PAN No as an AOP in the relevant Assessment Year.
The petitioner claimed that two different Assessing Officers made assessment of the Society. One of the assessments was made as an AOP but on the ground that the bank account maintained by the society was disclosed as an account of the firm relatable to the earlier PAN number, an assessment was made under that earlier PAN number.
The assessment order made under the old PAN was challenged by the Society by invoking the Writ jurisdiction of the Hon’ble High Court.
However, the Department apprised the Hon’ble High Court that the assessee had earlier registered as a firm and the said firm had subsequently registered as an AOP with a Certification of Exemption obtained under Section 12AA of the Act. It was submitted that the change of the registration was only to get the benefit of a charitable institution.
The Hon’ble High Court observed that the impugned Assessment Order indicated the PAN No. of the firm. The Assessing Officer found that assessee had failed to furnish a return of income for the relevant AY.
The Hon’ble High Court noted that the assesse was found to be a society registered under the Societies Registration Act, 1860 engaged in running an educational institution. The assessment was reopened under the provisions of Section 147 on detection of a deposit in the bank account of the assessee during the demonetization period. Notice under Section 148 of the Act was sent to the assessee. In response, the assessee admitted categorically that a certificate under Section 12AA of the Act was obtained for a new PAN No. It was also admitted that the society had been allotted old PAN No originally. The Hon’ble High Court observed that statement was made by the assessee that there was a correction of PAN applied which was contrary to the statement that the Assessing Officer asked the petitioner to apply for a new PAN Number.
The Hon’ble High Court further observed that on the assessee’s contention that the amounts were already assessed at the hands of the AOP relatable to the new PAN No.; the Assessing Officer sent a communication to ITO (exemption) who informed that the earlier PAN number was not disclosed to the said Assessing Officer.
Subsequent to that a fresh show cause notice was issued to the assessee specifically pointing out the proposal to include cash deposited in bank as escaped assessment.
The assessee did not respond to the notice issued under Section 142(1) of the Act. It was found that the assesse had not filed its return of income for the relevant AY and did not respond to the notice under Section 142(1) issued on various dates.
The Hon’ble High Court observed that there was no explanation for the deposit into bank accounts and the source of such money. Hence it was deemed as unexplained money under Section 69A of the Act and added to the total income of the assessee which was taxed under Section 150BBE(1) of the Act @ 60%.
The Hon’ble High Court opined that there was no valid argument against the assessment of the assessee as a firm for the relevant AY.
The Hon’ble High Court doubted the claim of the assessee that an application was filed as an AOP but the registration was issued as a firm, especially since the assessee claimed that from the time of its very registration more than 10 years ago, the assessee had been regularly filing returns.
The Hon’ble High Court found that the earlier returns filed relatable to the first PAN number issued was as a firm, and not as an AOP. Later, the assessee filed afresh application for registering the very same institution as a charitable institution under Section 12AA of the Act, without surrendering the earlier PAN issued in the very same name. This was to avail the benefit of Section 12AA.
The Hon’ble High Court opined that the assessee from the above facts was guilty of misrepresentation and even fraud.
Accordingly, the writ petition would stand dismissed.
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