In a recent ruling, the Bangalore bench of the Income Tax Appellate Tribunal ( ITAT ) has ruled that an error in linking a PAN to a partnership firm resulted in an addition under Section 69A to the assessee and held that the order by the First Appellate Authority ( FAA ) to be unclear and has directed a fresh examination of the case.
In this case, the assessee, Ambasa Babansa Raibagi, did not file his income tax returns ( ITR ) within the time limit for the assessment year ( AY ) 2017-18.
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It was noticed by the assessing officer ( AO ) that the the assessee has deposited cash in his bank account during the demonetisation period. A notice was issued to AO under Section 142 ( 1 ) of the Income Tax Act, 1961, and provided with an opportunity to file his Income Tax Returns ( ITR ), which he didn’t. Although a show cause notice was issued to the asseee and reply was filed, the AO noted that the assessee did not provide the details and documents in respect of cash deposits.
The AO completed the assessment with available materials under Section 144 of the Income Tax Act 1961, and an addition of Rs. 25,66,195 was made under Section 69 A of the Income Tax Statute.
Although the assessee appealed before the First Appellate Authority ( FAA ), the appeal was dismissed.
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The counsel on behalf of the assessee contended that the money belongs to a partnership firm and submitted the certificate issued by the bank. It was furter submitted by the counsel that he had retired since 02.04.2016 and he is not concerned with the activity of the partnership firm, and the assessee’s PAN was linked to the bank account, and now it has been changed.
Thus, the assessment must have been made in the hands of the partnership firm.
The ITAT bench noted that cash deposits were made during the demonetization period, and the PAN of the assessee was linked to the firm’s bank account in error, as confirmed by a bank certificate. It was further observed by the bench that the FAA did not fully consider the assessee’s submissions and issued a cryptic order.
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The ITAT bench, comprising of Soundararrajan K ( Judicial Member ) and Laxmi Prasad Sahu ( Accountant Member ), remitted the case to the AO for fresh consideration, directing the assessee to submit necessary documentation. The bench held that the assessee should also be given a reasonable opportunity to be heard and was expected to cooperate for a timely resolution.
The appellant was represented by Mr. Kashinath Kalamath and the respondent by Mr. Ganesh R. Ghale.
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