ITAT Gives Relief to Assessee in PAN Mix-Up Case: Remands Matter Back to AO with Cost Condition [Read Order]

The Income Tax Appellate Tribunal (ITAT), Indore Bench, has allowed an appeal filed by one Avdhesh Baggad of Dhar district. The case, which involved a substantial addition of ₹12.56 lakh under Section 69A of the Income Tax Act, 1961, was remanded back to the Assessing Officer (AO) for fresh adjudication. While granting the relief, the bench imposed a cost of ₹7,000 on the assessee, to be paid to the Prime Minister’s National Relief Fund (PMNRF), citing multiple procedural lapses on his part.

The appellant, a rural resident with limited exposure to income tax procedures, found himself on the wrong end of a best judgment assessment under Section 144 of the Act for the Assessment Year 2017–18. The AO had added ₹12.56 lakh to his income, alleging unexplained cash deposits in a bank account with Narmada Jhabua Grameen Bank, Kukshi.

What complicated matters was that the AO passed the assessment order against a PAN, while the appellant had originally filed his return for the same assessment year using another PAN, reporting a modest income of ₹3.04 lakh. The return was filed on 16 March 2018, and the appellant had paid the due taxes under the PAN used.

The appeal, though filed on 11 November 2024, was delayed by nearly a year. The appellant, through his counsel, submitted a notarized affidavit citing limited literacy and technological awareness. It was revealed that early notices from the CIT(A) were sent to the email address of a previous counsel who had disengaged from the case without informing the assessee. A final notice was sent to the assessee’s personal email just days before the hearing deadline, which he missed due to infrequent email checks.

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The assessee came to know of the appellate order only when a tax recovery inspector visited him in late September 2024. The ITAT found the explanation possible and in line with judicial precedents, particularly the Supreme Court ruling in Collector, Land Acquisition v. Mst. Katiji.

While hearing the matter, the tribunal considered certain facts like that the AO’s order was passed in an ex parte manner under Section 144. It was alos observed that the appellant admitted to holding two PANs, which added to the confusion. A bank certificate produced during the ITAT proceedings confirmed that the bank account under scrutiny did not even belong to the assessee. The amount added was likely linked to another individual. The assessee had already paid tax under one PAN, while the assessment and addition were made under another.

The division bench comprising B.M. Biyani (Accountant Member) and Paresh M. Joshi (Judicial Member) acknowledged the substantial merit in the assessee’s claim. However, it also criticized the procedural lapses, non-participation in prior hearings, delayed appeal, and confusion over PAN usage.

The bench ruled to Condone the delay in filing the appeal, recognizing a “sufficient cause.” The bench further remand the matter back to the AO for a fresh adjudication with proper opportunity to the assessee while imposing a cost of ₹7,000 to be paid to PMNRF, noting that such lapses should not be encouraged but the taxpayer should still be afforded fair redress. The ITAT instructed the AO to complete the reassessment only after affording due hearing and ensuring all relevant documents and facts are considered.

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