Separate PAN and Return not Needed when Receipts of Institution Included in Financial Statement of Controlling Entity: ITAT deletes Penalty u/s 68 of Income Tax Act [Read Order]

The Delhi Bench of IncomeTax Appellate Tribunal (ITAT) has deleted the penalty under Section 68 of the Income Tax Act 1961 holding that a separate Permanent Account Number (PAN) and filing of return would not be needed when receipts of institutions had been included in the financial statement of the controlling entity.

B N Public School is owned and run by Garhwal Sabha having PAN number and all the income and expenditure of the appellant is reported under the financial statements of said sabha as the appellant comes under the administration and control of said sabha.

From the paper book page 21 computation of income, it was revealed that there was a clear mention of fact in the head particulars of business as running of B N Public School and Temple and page 24 also revealed that the income earned expenditure account of Garhwal Sabha for the year ended on 31.03.2017 reflected fee received from the students of B N Public School.

The assessee had filed appeal because the authorities had erred in holding the cash deposit made during the demonetization period appearing in the Bank accounts held with Bank of Baroda and Syndicate Bank, as unaccounted income of the assessee 68 under Section of the Income Tax Act and treating same as unexplained cash credit, ignoring the fact that the appellant, B N Public School, was a branch of the Garhwal Sabha, a trust registered as a separate entity under the Income Tax Act, and that the cash receipts, which was actually the school fees received from students, in the bank accounts of B N Public School was included in the Financial statements of Garhwal Sabha.

Ranjan Chopra, on behalf of the assessee contended that the authorities had ignored the fact that the appellant had explained the source of cash deposit as fee received from students by having furnished copies of IT & Computation of Garhwal Sabha having PAN AAATG8387N along with a reconciliation of fees received in cash and in bank account with the income reported in the financial statements, though the details pertaining to cash deposit during demonetization period was inadvertently not filled in the respective of column of IT filed by Garhwal Sabha.

On the other hand Om Parkash, who appeared on behalf of the revenue supported the orders of authorities below and submitted that the assessee failed to substantiate its explanation therefore the addition was rightly made by the Assessing Officer. 

The two-member Bench of Chandra Mohan Garg, (Judicial Member) and Pradip Kumar Kedia, (Accountant Member) allowed the appeal filed by the assessee holding that if an institution was owned and run by some society or trust then every institution need not to take separate PAN number and thus not required to file separate return of income particularly in a situation when the receipts of such institution are taken care and included in the income and expenditure account or controlling entity or society or trust.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates