While granting opportunity to the petitioner to contest the matter effectively by producing the details of transactions based on the new PAN, the Kerala High Court quashed the reassessment proceedings initiated by the Department on a Cooperative society based on a cancelled PAN, which showed the status of the petitioner as a ‘company’ to render it ineligible for purpose of benefit of exemption u/s 80P of the Income Tax Act.
The Single Judge Bench of Justice Ziyad Rahman A.A. was dealing with a matter where a co-operative society engaged in the business of providing credit services to its members, was wrongly denied the benefit of exemption u/s 80P, by simply relying on the previous PAN issued to it which was later cancelled by issuing a new PAN from the Department itself.
Essentially, based on the status as a ‘company’ and not as a ‘cooperative society’, as per the then existing PAN at the time of filing I-T return, the petitioner was unable to claim exemption u/s 80P, which it was otherwise eligible for. Immediately, on realizing this mistake, the petitioner applied for a fresh PAN, which was issued showing its status as a ‘cooperative society’. However, based on the previous PAN, the Department initiated reassessment proceedings and issued a demand letter, by denying the benefit of Section 80P.
The Court found that the transactions were based on the PAN card that was then in existence, which was later cancelled, and by the time the reopening proceedings were initiated, the petitioner was issued with a new PAN card, wherein, the status of the petitioner was shown as the AOP (Association of Persons). Therefore, the Single Judge noted that the petitioner could not effectively contest the matter due to technical reasons and even their attempt to file appeal has failed.
Accordingly, the High Court observed that the contention of the petitioner regarding the denial of a proper opportunity to contest the matter effectively cannot be ignored, and directed the Department to issue fresh notices to the petitioner by referring to the fresh PAN and then finalize the proceedings after giving the petitioner an opportunity to submit the reply.
Appearances:
Advocate C.A. Jojo for the Petitioner/ Assessee
Advocates Christopher Abraham & P.R. Ajith Kumar, for the Respondent/ Department
