The Delhi Bench of the Income Tax Appellate Tribunal ( ITAT ) has quashed an addition of over ₹14 lakh under Section 69B of the income tax act, 1961, holding that the investment was inadvertently made using a different PAN but was duly disclosed in the company’s financial statements filed under its main PAN.
The Tribunal found no evidence of misreporting or concealment and directed the Assessing Officer (AO) to reconcile both PANs and regularise the records.
The matter began when the AO reopened the assessment under Section 148 after learning that the assessee had allegedly failed to file its return and made investments in mutual funds totaling more than ₹2 lakh.
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It later emerged that the company, Aquakiosk India Pvt Ltd, had been allotted two PANs- PAN AACCAXXXXH under which it regularly filed its tax returns, and PAN AADCAXXXXC, which was mistakenly used for certain mutual fund transactions.
Despite repeated requests, the AO did not provide the assessee with the reasons for reopening, only reproducing them later in the reassessment order. The company argued that all mutual fund transactions had been carried out through its single bank account, fully reflected in its audited financials, and that the investments during the year were merely switch-outs within the same mutual fund schemes, with no new undisclosed inflows.
In contrast to the AO’s allegation of willful under-reporting, the ITAT examined the paper books and financial records and found that the mutual fund investments were, in fact, recorded under the right PAN in the company’s annual statements and capital gains schedules.
The Revenue was criticized by the Tribunal for neglecting to take into account the comprehensive documentation proof that demonstrated the net investment matched the reported amount.
Observing that the use of two PANs was an inadvertent error without any mala fide intent, the Tribunal concluded that the addition under Section 69B was unsustainable. It further held that failing to provide reasons for reassessment before finalising the order violated settled legal principles laid down in GKN Driveshafts.
Accordingly, the ITAT allowed the assessee’s appeal, directed the deletion of the addition, and instructed the AO to update the department’s records by verifying both PANs and ensuring that the correct one is used for future compliance. At the same time, the Tribunal reminded the assessee to avoid such administrative lapses going forward to prevent unnecessary reassessment controversies.