One PAN was allotted to two taxpayers resulting Re-assessment order of wrong person quashed by High Court
In a recent judgment, the Hon’ble High Court has quashed a re-assessment order passed u/s 147 on a wrong person because one PAN was allotted by the Department to two taxpayers of identical names.
ABCAUS Case Law Citation:
ABCAUS 4027 (2024) (05) HC
In the instant case, the Petitioner assessee had filed a Writ Petition before the Hon’ble High Court for quashing/setting aside order passed under Section 264 of the Income Tax Act, 1961 (the Act) by Principal Commissioner of Income Tax (PCIT) and quashing the Assessment Order passed under Section 147 read with Section 144 read with Section 144B of the Act.
On the basis of the information available at Insight Portal of the Income Tax Department, the Petitioner was issued a notice by Income Tax Officer (Intelligence and Criminal Investigation). The Petitioner was asked to give clarifications regarding the sale deed executed for purchase of property.
The Petitioner did not respond to the notice issued u/s 148 of the Act. Further, notices under section 142(1) of the Act were issued. Later on, the case was migrated to NeFAC and NeFAC issued notices u/s 142(1) of the Act. A show cause Notice u/s 144 of the Act was also issued by NeFAC. But there was no response from the Petitioner’s side. Ultimately the assessment was completed by making addition to the returned income on account of purchase of immovable property. Penalty proceeding under section 274 read with section 271(1)(c) of the Act was also initiated.
However, the proceeding for penalty was finally dropped. In fact, the Assistant Director of Income Tax (Intelligence and Criminal Investigation) issued a clarification to the petitioner that she was never called for any enquiry.
The Petitioner moved a revision application u/s 264 before the PCIT to quash the re-assessment order passed. It was stated that the asseessee did not purchase any immovable property and even though repeatedly notices had been sent to assessee’s address and on the basis of information available in Insight Portal assessment had been completed.
On query from the PCIT, the jurisdictional Assessing Officer reported that as a matter of fact, the assessee had approached him with a request that her PAN is either being used by someone else or the same PAN had been allotted to another one since she had not purchased any immovable property and even then notices were being issued to her. The AO clearly stated that though the PAN and Name of the Petitioner is the same as name and PAN in the sale deed but date of birth, fathers name and address of the Petitioner is different from the data uploaded by the DDIT/ADIT(I&CI).
The AO gave a clear finding to the PCIT that the Petitioner who had filed application u/s 264 had not purchased the immovable property and the application of the assessee u/s 264 of the Act may be considered on merit.
The Hon’ble High Court observed that not only that despite the clear finding given by the jurisdictional AO, the Revision Petition of the Petitioner was dismissed by the PCIT as not maintainable, the Income Tax Department taken a stand to oppose the writ petition on the ground that the petitioner did not report compliances inasmuch as she never responded to numerous notices issued to her under sections 148, 142(1) and 144 of the Act except a reply filed by her.
The Hon’ble High Court observed that apparently, the procedure adopted by the Income Tax authorities was arbitrary and not supported by any provision in law. An individual who was not identified by the Income Tax Department as the person who purchased the property in question cannot be directed to undergo the reassessment proceedings.
The Hon’ble High Court stated that merely because the PAN Card appended with the sale deed carried the same name, the Department without identifying the person who moved the sale consideration could not have issued notices to the petitioner and thereby causing insurmountable harassment to her.
Accordingly, the Hon’ble High Court set aside the impugned orders and allowed the writ petition. It was also directed that a fresh PAN card shall be issued to the petitioner within fifteen days
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ABCAUS Note: The Hon’ble High Court despite observing that insurmountable harassment was caused to the Petitioner by the Income Tax Department, did not choose to impose any costs on the erring PCIT who clearly abused his powers despite full facts being made available to him. A suitable cost would perhaps acted as deterrent in such frivolous cases.
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