THE MAYYANAD REGIONAL CO-OPERATIVE BANK LTD. V. INCOME TAX OFFICER

WP(C)/24358/2021

AI Insights

The case involves the Mayyanad Regional Co-operative Bank Ltd., which initially registered for a Permanent Account Number (PAN) as a firm but later corrected it to reflect its status as an association of persons. Despite this correction, the bank continued to use the old PAN for banking transactions, leading to confusion during tax assessments. The Income Tax Department conducted assessments under both PANs, leading to legal proceedings. The court's decision allows for reassessment under the new PAN, emphasizing the petitioner's responsibility in not deactivating the old PAN and the procedural integrity of the tax assessments.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 749786 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 06-01-2023
• Assessment Year: misc
• Other Referred Cases: W.P.(C) No. 35333/17, W.P.(C) No. 17323/2019
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: CHRISTOPHER ABRAHAM
• Assessee Lawyers: HARISANKAR MENON; MEERA MENON
• Keywords: Assessment; Demonetization; Income Tax; Permanent Account Number; Reassessment; Unexplained Cash Deposits
• Section: 148; 150(1)

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE GOPINATH P. FRIDAY, THE 6TH DAY OF JANUARY 2023 / 16TH POUSHA, 1944 WP(C) NO. 24358 OF 2021 PETITIONER: THE MAYYANAD REGIONAL CO-OPERATIVE BANK LTD.NO.94, MAYYANAD, KOLLAM-691303, REPRESENTED BY K.B.VENUGOPALAN ACHARI, CHIEF EXECUTIVE. BY ADVS. HARISANKAR V. MENON MEERA V.MENON RESPONDENTS: 1 INCOME TAX OFFICER WARD 2, KOLLAM-691 301. 2 THE ADDITIONAL/JOINT/DEPUTY/ ASSISTANT COMMISSIONER OF INCOME TAX/INCOME TAX OFFICER, NATIONAL FACELESS ASSESSMENT CENTRE, DELHI-100 001. 3 THE INCOME TAX OFFICER, WARD 4, KOLLAM-691 301. BY ADV CHRISTOPHER ABRAHAM, INCOME TAX DEPARTMENT THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 06.01.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C)No.24358/2021 2 JUDGMENT Petitioner is a Co-operative Society. It was originally allowed a Permanent Account Number by the Income Tax Department showing its status as that of a firm. The petitioner had also submitted the said PAN number in respect of its banking transactions. On realising the fact that the PAN number should have been allotted showing the status of the petitioner as that of an association of persons, the petitioner applied for and obtained a new PAN number and started filing returns under the new PAN number from the assessment year 2013-2014 onwards. 2. On the basis of the information received by the Income Tax Department that there were certain unexplained cash deposits in the Bank accounts of the petitioner for the assessment year 2017-2018, proceedings were initiated against the petitioner and the assessment was completed against the petitioner by the National Faceless Assessment Centre with reference to the PAN number given by the petitioner to the Bank. This PAN number was the old PAN number showing the status of the petitioner as a firm. W.P.(C)No.24358/2021 3 3. The statement filed on behalf of the respondents would show that the assessment was completed with reference to the old PAN number only on account of the mistake committed by the petitioner by not having the old PAN number cancelled and by not providing the new PAN number in respect of its banking transactions. The learned counsel appearing for the respondent department fairly submits that since the assessment of the petitioner for the assessment year 2017-2018 had already been completed by another assessment order under the new PAN number, a fresh assessment order for the same year under the old PAN number in respect of the petitioner may not be sustainable. He however submits with reference to paragraphs 5 and 6 of the statement, that the department may be permitted to initiate fresh proceedings for the assessment year 2017-2018, by issuing notice under Section 148 of the Income Tax Act under the new PAN number, treating the issues which led to the impugned order of assessment (Ext.P7) as a ground for reopening of assessment for the assessment year 2017-2018. Paragraphs 5 and 6 of the statement filed in this case by the W.P.(C)No.24358/2021 4 respondent department reads as follows: “5. After careful analysis of the circumstances under which two separate assessments of the same assessee under two separate PANs have been made, it is found that the sole reason for such happening is that the assessee had not surrendered or deactivated the first PAN though the assessee has been filing returns in the new PAN from the assessment year 2013-14 onwards. The assessee has also failed to intimate the banks in time about the new PAN which resulted in the uploading of bank transactions continuously in the old PAN. The huge amount of cash deposits made by the assessee during the demonetization period and uploading of the same by banks in the old PAN resulted in the selection of the case for scrutiny for the second time. On verification of the records, it is found that the fault in this regard lies with the assessee only and not with the department. 6. However, two assessments for the same assessee for the same assessment year under different PANs for different reasons do not appear to be correct. Therefore, the impugned Ext.P7 assessment may have to be set aside. However, this may be done with a direction to consider the inclusion of the cash deposits found uploaded in the old PAN as income, if called for, by reopening the assessment already completed by Ext.P4 order. This prayer is made in order to protect the interests of the Revenue as the normal time limit for reopening the assessment for 2017-18 is already over. It may be kindly noted that the non-consideration of the W.P.(C)No.24358/2021 5 cash deposits found uploaded in the old PAN for inclusion as income while completing the original assessment was on account of the fact that the details of these cash deposits were uploaded in the old PAN only and the reason for this is the failure of the petitioner to deactivate the old PAN. If the Hon'ble High Court is pleased to give a direction as prayed for as above, the time limit for reopening the assessment get obliterated in terms of Section 150(1) of the Income Tax Act”. 4. The learned counsel appearing for the petitioner would submit that the petitioner could not get the old PAN number cancelled only on account of the fact that the petitioner could not retrieve its password to enable access the portal. It is submitted that though Exts.P3 to P3(b) requests were filed in this regard there were no response from the Income Tax Department. 5. The contention of the petitioner is that the petitioner could not have the old PAN number cancelled etc. since the petitioner did not have access to the password and hence the portal, is only to be rejected as this is a case where the petitioner had quoted and had given the details of its old PAN number while carrying out Banking transactions with Banks where it had maintained accounts. This was done even W.P.(C)No.24358/2021 6 in the assessment year 2017-2018, even after the petitioner was clearly aware that it had been issued with a new PAN number from the assessment year 2013-2014 onwards and that the assessments of the petitioner were being completed under that PAN number. Therefore, for the mistake of the petitioner, the department cannot be found fault with. 6. Therefore, I am of the view that Ext.P7 assessment order can be set aside with a right reserved to the respondent department to initiate reassessment proceedings in respect of the assessment year 2017-2018, by issuing a notice under Section 148 of the Income Tax Act. In the peculiar facts and circumstances of this case I hold that it will not be open to the petitioner to contend that the notices issued under Section 148 of the Income Tax Act for the assessment year 2017-2018 is barred by limitation. I am constrained to direct so, only on account of the fact that according to the department, the unexplained cash transactions relate to the period of demonetisation and also on account of the fact that it was the petitioner’s own mistake in providing its old PAN number that led to initiation of proceedings and its completion by Ext.P7 W.P.(C)No.24358/2021 7 order of assessment under the old PAN number. Ext.P7 order of assessment is quashed permitting the Income Tax Department to initiate fresh proceedings by issuance of notice under Section 148 of the Income Tax Act for the assessment year 2017-2018. The petitioner is precluded from contending that the proceedings are barred by limitation. The proceedings for reassessment shall be initiated as above under the new PAN number of the petitioner. The writ petition is disposed of as above. Sd/- GOPINATH P. JUDGE ats W.P.(C)No.24358/2021 8 APPENDIX OF WP(C) 24358/2021 PETITIONER EXHIBITS Exhibit P1 COPY OF NOTICE ISSUED BY THE 1ST RESPONDENT Exhibit P2 COPY OF REPLY FILED BY THE PETITIONER BEFORE THE 1ST RESPONDENT Exhibit P3 COPY OF E-MAIL LETTER SUBMITTED BY THE PETITIONER BEFORE THE 2ND RESPONDENT Exhibit P3(A) COPY OF E-MAIL LETTER SUBMITTED BY THE PETITIONER BEFORE THE 2ND RESPONDENT Exhibit P3(B) COPY OF E-MAIL SUBMITTED BY THE PETITIONER BEFORE THE 3RD RESPONDENT Exhibit P4 COPY OF ASSESSMENT ORDER ISSUEDBY THE 3RD RESPONDENT Exhibit P5 COPY OF DRAFT ASSESSMENT ORDER ISSUED BY THE 2ND RESPONDENT Exhibit P6 COPY OF REPLY FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT. Exhibit P6(A) COPY OF REPLY FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT Exhibit P7 COPY OF ASSESSMENT ORDER ISSUED BY THE 2ND RESPONDENT FOR THE YEAR 2017-18 Exhibit P8 COPY OF JUDGMENT IN W.P.(C)NO.35333/17 OF THIS HON'BLE COURT Exhibit P8(A) COPY OF JUDGMENT IN W.P.(C)NO.17323/2019 OF THIS HON'BLE COURT. "