The Delhi Bench of Income Tax Appellate Tribunal ( ITAT ) quashed the order of the Principal Commissioner of Income Tax ( Pr. CIT ) under section 263, of Income Tax Act,1961 citing an error in using the deceased person’s Permanent Account Number ( PAN ) in the revision order.
Veena Rani ( legal heir ) appellant-assessee, filed his income tax return on 21.12.2018, showing an income of Rs. 21,60,670/-. She received Rs. 2,54,24,007/- as interest on enhanced compensation from HUDA due to the acquisition of her agricultural land, with Tax Deducted at Source ( TDS ) of 10%.
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The assessee claimed this interest as exempt in his return. The case was selected for scrutiny, focusing on income verification and refund claim. The assessment was completed by the Assessing Officer ( AO ) on 09.03.2021, based on the reported income.
The Pr.CIT exercised his powers under section 263 of the Act, finding that the AO had not properly examined the tax treatment of interest on enhanced compensation. After considering the facts and the assessee’s response, the Pr. CIT set aside the assessment order of 09.03.2021.
He directed the AO to conduct a fresh assessment with proper enquiries and verification, following the law, and to give the assessee a fair opportunity to present relevant information. The assessment was to be completed within the legal time frame.
Aggrieved by the order the the assessee appealed before the tribunal.
The assessee’s counsel stated that the notice under section 263 was issued in the name of the deceased. After informing the Pr. CIT, the notice was reissued to the legal heir, but the final order still mentioned the deceased’s PAN.
Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here
The two member bench comprising Vimal Kumar ( Judicial Member ) and Shamim Yahya ( Accountant Member ) reviewed the submissions and records. It noted that the Amritsar Coordinate Bench had ruled that if the person is deceased and the legal heir is on record, using the deceased’s PAN in the order makes the order invalid. No opposing decision was presented. Therefore, the appellate tribunal followed the Amritsar Bench’s ruling and quashed the Pr. CIT’s order under section 263.Since the order was quashed, the other grounds were not considered.
In short,the appeal filed by the assessee was allowed.
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