Nileshkumar Ramlaxman Upadhyay, Surat V. Income Tax Officer, Ward - 2, Bardoli

ITA 171/SRT/2023

AI Insights

The case involves two appeals by the assessee, Nileshkumar Ramlaxman Upadhyay, against penalties imposed under sections 272B and 271B of the Income Tax Act, 1961, for using multiple PANs and not getting his books of account audited, respectively. The assessee argued that the use of multiple PANs was unintentional and due to the allotment of two PANs by mistake. The assessing officer imposed penalties, which were upheld by the CIT(A). The Tribunal, after hearing both parties, decided to remit the matter back to the assessing officer for further verification regarding the cancellation of the duplicate PAN and the turnover associated with it.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 301910 (ITAT-SURAT)
• Duration Of Justice: 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 06-08-2023
• Assessment Year: 2010-2011
• Appeal Filed On: 08-03-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAKESH R. SHAH; USING DUPLICATE PAN NUMBER; HAVE BEEN PART OF ASSESSEES TURNOVER OR NOT
• Section: 44AD; 143(3); 133(6); 271B; 44AB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM आयकर अपील सं./ITA Nos.171 & 172/SRT/2023 (Ǔनधा[रणवष[ / Assessment Years: (2010-11) (Virtual Court Hearing) Nileshkumar Ramlaxman Upadhyay 123, Bajar Faliyu, Raniamba Tapi, Surat-394365 Vs. Income Tax Officer Ward-2 Bardoli, 2 nd Floor, BSNL Tower, Main Road, Bardoli-394601 èथायीलेखासं./जीआइआरसं./PAN/GIR No.: AAOPU 5931 C (अपीलाथŎ/Appellant) (ŮȑथŎ /Respondent) Ǔनधा[ǐरती कȧ ओर से/ Assessee by : Shri Rakesh R. Shah, CA राजèव कȧ ओर से /Revenue by : Shri Vinod Kumar, Sr. DR स ु नवाई कȧ तारȣख/ Date of Hearing : 07/08/2023 घोषणा कȧ तारȣख/Date of Pronouncement : 31/08/2023 आदेश / O R D E R PER DR. A. L. SAINI, ACCOUNTANT MEMBER: Captioned two appeals filed by the assessee, pertaining to same Assessment Year (AY) 2010-11, are directed against the separate orders passed by the National Faceless Appeal Centre, Delhi (for short to as “NFAC” / CIT(A), which in turn arise out of separate penalty orders passed by the assessing officer u/s 272B r.w.s 271B of the Income Tax Act, 1961 [hereinafter referred to as the “Act”] dated 11.06.2018 and 13.06.2018 respectively. 2. Since both the appeals relate to same assessee and identical facts are involved, therefore both the appeals have been clubbed and heard together and a consolidated order is being passed for the sake of convenience and brevity. Page | 2 ITA Nos. 171-172/SRT/2023 A. Y. 2010-11 Nileshkumar R Upadhyay 3. First, we shall take ITA No.171/SRT/2023, wherein the grounds of appeal raised by the assessee are as follows: “1. The AO has grossly erred in initiating penalty of Rs.10,000/- u/s 272B for owing and using multiple PANs inspite of the fact that wrong PAN was erroneously used by the assessee wile opening bank accounts. 2. We reserve right to add alter, demand or delete any grounds of appeal.” 4. Succinctly, the factual panorama of the case is that assessee before us is an Individual and filed his return of income by using PAN: AAOPU5931C on 29.03.2011 through e-filing, declaring turnover of Rs.32,12,202/- and net profit of Rs.2,55,272/- u/s 44AD of the Act. The assessing officer observed that assessee was using two PAN numbers for the purpose of banking transactions and filing of Income Tax Return (ITR). Therefore, assessing officer asked the assessee to furnish the explanation about using two PAN numbers. In response, the assessee submitted the reply before the assessing officer stating that by mistake two PAN numbers were allotted to him by the Department. The assessee also stated before lower authorities that he is going to surrender one PAN number. However, assessing officer rejected the contention of the assessee and imposed penalty of Rs. 10,000/-, under section 272B of the Act. 5. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the Learned CIT(A), who has confirmed the action of the Assessing Officer observing as follows: “6.2 Surely 272B is a deterrent proceeding and must be read construed and implemented as such. In view of the facts discussed above and the provisions of law, the appellant has failed to bring on record any cogent reason which is reasonable enough to make his case an exception. Accordingly, I see no reasons to interfere with the order of the AO and accordingly the action of AO is upheld and the appeal is dismissed.” 6. Aggrieved by the order of ld CIT(A), the assessee is in appeal before us. Page | 3 ITA Nos. 171-172/SRT/2023 A. Y. 2010-11 Nileshkumar R Upadhyay 7. Before us, Learned Counsel for the assessee submitted that assessee was not aware about the consequence of having double PAN number, which were allotted to him by mistake. The ld Counsel further stated that assessee has surrendered one PAN number. Apart from this, ld Counsel submitted before us written submission, which are reproduced below: “The appellant has two PAN as per the information available in ITD system identified by AO in the list of non-filers. The appellant has used PAN for opening bank account, however, appellant has filed application for surrendering the PAN immediately upon coming to know that it is not required. Grounds: The AO has grossly erred in initiating penalty of Rs.10,000/- u/s 272B for owing and using multiple PANs in spite of the fact that wrong PAN was erroneously used by the assessee while opening bank accounts. Submission: Assessee was inadvertently allotted 2 PANs viz. AAOPU5931C and AAEPU4068Q. assessee is an uneducated rural person. Hence, he was not aware about the legal consequences of having 2 PANs. While opening bank accounts, assessee submitted the other PAN i.e. AAEPOU4068Q whereas return of income was filed on PAN AAOPI5931C. The fact that different PAN was given while opening bank accounts came to notice of the assessee during 2012 only when notice for non-filing of return of income containing different PAN was received by the assessee. Hence the AR of the assessee immediately intimated the AO the correct PAN on which assessee regularly filed his return of income to cancel the duplicate PAN viz. AAEPU4068Q on which no return of income was being filed vide letter dated 28.03.2012 Ack No.101280312133825. The assessee was having a total of 5 bank accounts viz 2 savings a/c, 1 current a/c and 1 cash credit a/c with SBI. Fort Songadh Branch and 1 savings a/c with BOB, Fort Songadh Branch. All the 5 accounts were reflected in balance sheet submitted with original return of income as well as revised balance sheet submitted during assessment proceedings. Assessee submitted the entire books of account including cash book, bank books, purchase register, sales register etc., in the course of assessment proceedings. Thus, there was no mala fide intention or mens rea on part of the appellant to hold 2 PANs. It is also not the case of the AO that the assessee agreed to have 2 PANs on being pointed out by the AO during scrutiny assessment proceedings. The said fact has been acknowledged by the AO also in the assessment order. Penalty proceedings were initiated u/s 272B for owning and using multiple PANs inspite of the fact that wrong PAN was erroneously used by the assessee while opening bank accounts. However, the said bank accounts are already reflected in the books of account and return of income filed on the basis of books of account maintained. In fact, assessee had himself informed the said fact to the then AO and requested for cancellation of wrong PAN on 28.03.2012 i.e., much before the case was re-opened and subjected to scrutiny assessment.” Page | 4 ITA Nos. 171-172/SRT/2023 A. Y. 2010-11 Nileshkumar R Upadhyay 8. Therefore, based on the above facts, the ld Counsel contended that penalty may be deleted. 9. On the other hand, Learned Senior Departmental Representative (ld. Sr. DR) for the Revenue relied on the order passed by lower authorities and submitted that assessee has used two PAN number, one PAN is being used for opening bank account and another PAN was using by him for filing of Income Tax Return. Therefore, intention of the assessee is to do the fraudulent activities, hence, penalty imposed by Assessing Officer should be affirmed. 10. We have heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished on record. We note that as per learned Counsel, the assessee immediately intimated to the assessing officer (AO) to take into account correct PAN number, on which assessee regularly filed his return of income and to cancel the duplicate PAN viz. AAEPU4068Q, on which no return of income was being filed vide letter dated 28.03.2012 Acknowledgement No. 101280312133825. We note that if the assessee gets the PAN cancelled, the penalty should not be imposed, as assessee has agreed that by mistake, he has been allotted double PAN. However, it is not certain whether actually the PAN has been cancelled or not. Therefore, we remit this issue back to the file of the assessing officer with the direction to him to examine the fact whether duplicate PAN viz. AAEPU4068Q has been cancelled by the Revenue Authorities or not. If the said duplicate PAN number has been cancelled then in that circumstances, the assessing officer should delete the penalty of Rs.10,000/-, or if the said duplicate PAN number has not been cancelled, the assessing officer may pass the order in accordance with law. We also direct the assessee to submit the evidence before the assessing officer that said duplicate PAN number has been cancelled by the Revenue Page | 5 ITA Nos. 171-172/SRT/2023 A. Y. 2010-11 Nileshkumar R Upadhyay Authorities. Therefore, for statistical purposes, the appeal of the assessee is treated to be allowed. 11. In the result, appeal filed by the assessee is allowed for statistical purposes. 12. Now we shall take assessee’s appeal in ITA No.172/SRT/2023, wherein the assessee has raised the following grounds of appeal: “The AO has grossly erred in initiating penalty of Rs.36,270/- u/s 271B for not getting books of account audited u/s 44AB of the Income Tax Act, 1961 since the turnover as per return of income filed was less than Rs.40.00 lacs. We reverse right to add alter, demand or delete any grounds of appeal.” 13. Succinct facts qua the issue are that during the assessment proceedings, it was observed by the assessing officer that assessee`s turnover is more than Rs. 40 lakhs, however assessee did not get the books of accounts audited, therefore assessing officer issued a show cause notice to the assessee stating that why the penalty of Rs.36,270/- should not be levied u/s 271B of the Act. The assessee replied to the assessing officer stating that turnover as per return of income filed was less than Rs.40.00 lacs, therefore penalty of Rs.36,270/- u/s 271B, for not getting books of account audited, u/s 44AB of the Income Tax Act, 1961 should not be imposed. However, assessing officer rejected the contention of the assessee and imposed penalty of Rs.36,270/- u/s 271B of the Act, for not getting books of account audited, u/s 44AB of the Income Tax Act, 1961. 14. Aggrieved by the order of Assessing Officer, the assessee carried the matter in appeal before Ld. CIT(A), who has confirmed the penalty imposed by Assessing Officer observing as follows: “6.2 Surely 271B is a deterrent provision and must be read construed and implemented as such. In view of the facts discussed above and the provision of law, the appellant has failed to bring on record any cogent reason which is reasonable enough to make his case an exception. Accordingly, I see no reasons to interfere with the order of the AO and accordingly the action of AO is upheld and the appeal is dismissed. Page | 6 ITA Nos. 171-172/SRT/2023 A. Y. 2010-11 Nileshkumar R Upadhyay 15. Aggrieved by the order of NFAC/Ld. CIT(A) the assessee is in appeal before us. We have heard both the parties. Before us, Ld. Counsel for the assessee argued that assessee submitted entire books of account including cash book, bank book, sales register etc, during the course of assessment proceedings. Thus, there was no mala fide intention on the part of assessee to hold two PAN numbers and assessee has himself agreed that he was having two PAN numbers, by mistake and assessee has erroneously used the wrong PAN to open his bank account, however, the said bank account is duly reflected in the books of accounts of the assessee and return of income. Therefore just because by mistake, the assessee got two PAN numbers does not mean that assessee has more turn over. The disputed turnover was also taken in its books of account which was generated by using another duplicate PAN number, which was used for the purpose of opening bank account. Thus, there was no mala fide intention, on the part of assessee to have two PAN Numbers. The ld Counsel also submitted that assessee has surrendered duplicate PAN number to Income Tax Authorities for cancellation, vide assessee’s application dated 28.03.2012 submitted to ITO. 16. On the other hand, Ld. DR for the Revenue, argued that assessee has used duplicate PAN number, to open bank account and the bank account so opened has not been considered in computing turnover. That is, the turnover which is reflected in the new bank account so opened, by using duplicate PAN number, have not been counted for the purpose of tax audit, hence assessing officer has rightly imposed the penalty on the assessee. 17. We have heard both the parties. The ld Counsel submitted before us written submission also, which is reproduced below: “The assessee is engaged in retail trading of grocery items under the name and style of M/s Ramlaxman jagdipnarayan and Sons. Return of income was filed by the assessee using PAN: AAOPU5931C on 29.03.2011 vide e-filing Page | 7 ITA Nos. 171-172/SRT/2023 A. Y. 2010-11 Nileshkumar R Upadhyay Ack.No.2068415900311 declaring turnover of Rs.32,12,202/- and net profit of Rs.2,55,272/- u/s 44AD of the Income Tax Act, 1961. In this case, the information was available in ITD systems identified the assessee as non-filer for the year under consideration and reveals that the assessee made cash deposits of Rs.38,07,200/- in his bank account maintained with State Bank of India. To verify the above source of cash deposits in the bank account maintained with State Bank of India, notice u/s 133(6) of the I.T. Act dated 10.03.2017 was issued and served upon the assessee on 11.03.2017, the assessee has submitted all the proof to establish cash deposit to be a business turnover despite erred AO has treated the same and added entire turnover as a income of the year. Assessment proceedings were finalized by passing order u/s 143(3) r.w.s. 147 of the Act or 27.12.2017 by initiating wrongful penalty proceedings u/s 271B of the Act for not getting the books audited u/s 44AB and filed a copy of such audit report on or before the prescribed date. Grounds: The AO has grossly erred in initiating penalty of Rs.36,270/- u/s 271B for not getting books of account audited u/s 44AAB of the Income Tax Act, 1961 since the turnover as per return of income filed was less than Rs.40 lakhs. Submission: The assessee was having a total of 5 bank accounts viz. 2 savings a/c, 1 current a/c, and 1 cash credit a/c, with SBI, Fort Songadh branch and 1 savings a/c, with BOB, Fort Songadh branch. All the 5 accounts were reflected in balance sheet submitted with original return of income as well as revised balance sheet submitted during assessment proceedings. Assessee submitted the entire books of account including cash book, bank books, purchase register, sales register etc., in the course of assessment proceedings. The said fact has been acknowledged by the AO also in the course of assessment proceedings. The said fact has been acknowledged by the AO also in the assessment order. Assessee also submitted the revised books of account wherein turnover was enhanced to Rs.72,54,166/- and enhanced net profit of Rs.5,49,941/- was offer for taxation. It was submitted to AO that the original return of income was filed by the assessee u/s 44AF on presumptive basis since the turnover disclosed was Rs.32,12,202/- i.e., less than Rs.40 lakhs. Hence no audit u/s 44AB was required at the time of filing of original return. The said fact was again reiterated during penalty proceedings u/s 271B.” 18. After considering the submission of ld Counsel for the assessee and ld DR for the Revenue, it is not clear whether duplicate PAN number, which the assessee has used to open bank account, has been cancelled or not by the Income Tax Officer/Revenue Authorities. It is also not certain whether entries reflected in the bank account, which was opened by the assessee by using duplicate PAN number, have been part of assessee`s turnover or not, if any. Therefore, we are of the view that matter may be remitted back to the Page | 8 ITA Nos. 171-172/SRT/2023 A. Y. 2010-11 Nileshkumar R Upadhyay file of the assessing officer to examine the above narrated facts and pass the order in accordance with law. The assessee is also directed to submit the relevant details and documents, as required by the Assessing Officer. Therefore, for statistical purposes, the appeal of the assessee is treated to be allowed. 19. In the result, appeal filed by the assessee is allowed for statistical purposes. 20. In combined result, both appeals filed by the assessee are allowed for statistical purposes. A copy of the instant common order be placed in the respective case file(s). Order is pronounced on 31/08/2023 by placing result on notice board. Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER lwjr/Surat / Ǒदनांक/ Date: 31/08/2023 Dkp Outsourcing Sr.P.S. Copy of the Order forwarded to: 1. The Assessee 2. The Respondent 3. The CIT(A) 4. Pr.CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // True Copy // Assistant Registrar/Sr. PS/PS ITAT, Surat