In a recent ruling, the Patna High Court invalidated a suo motu PAN issued by the Income Tax Department to a taxpayer who already held a valid PAN and quashed the reassessment orders based on it.
Gyanti Devi, the petitioner filed a writ petition challenging the income tax demand for Assessment Year 2016-17 raised against her under a PAN number (HICPD0166H) that was different from her validly issued PAN (BBHPD1337C). She had consistently filed returns under her original PAN and argued that the department’s actions were unlawful.
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The dispute arose when a show-cause notice was issued to the petitioner concerning land purchases which she responded to under her original PAN. The department proceeded to assess her under a suo motu-issued PAN and raised a demand notice dated September 14, 2023, and a penalty order.
The petitioner argued that she was not served notices, and the procedures under Section 148A of the Income Tax Act were not followed. The petitioner’s counsel claimed that issuing a new PAN was unnecessary and invalid since she already had a valid one.
The department counsel relying on directives from the Principal Chief Commissioner of Income Tax and the Central Board of Direct Taxes, claimed that the actions were part of a broader directive for handling non-PAN cases.
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The bench comprising Chief Justice K. Vinod Chandran and Justice Partha Sarthy observed that the suo motu issuance of a PAN and the proceedings violated statutory requirements. The court held that the assessment was invalid as the mandatory procedures under Section 148A of the Income Tax Act were not adhered to.
The court quashed the assessment order, demand notice, and penalty order. It directed the cancellation of the erroneously issued PAN and clarified that if the limitation period allows, the department may initiate fresh proceedings under the applicable provisions of the law.
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