Justices Akil Kureshi and Biren Vaishnav of Gujarat High Court, in a recent ruling, held that mere allotment of Permanent Account Number (PAN) under section 139A of the Income Tax Act, 1961 would not not make the allottee necessarily a separate entity for the purpose of assessment of tax.
The petitioner, Sardar Vallabhbhai Patel Education Society, is an educational society and is also a trust registered under the Bombay Public Trust Act. The petitioner society runs various educational institutions including one N.G.Patel polytechnic college. The petitioner opened a bank account to maintain the separation of funds of N.G.Patel polytechnic. As required by the bank, the PAN of N.G.Patel polytechnic were given for opening the account and they had deposited a sum of Rs. 2.37 crores in the account. On scrutiny of returns filed by the petitioners, the AO found the above receipt and initiated proceedings on the ground that N.G.Patel polytechnic had a separate PAN and in its savings bank account of Bank of Baroda, sizable cash amount of Rs.2.37 crores was deposited. Despite this, they did not filed their returns. Accordingly, re-assessment was carried out against the assessee.
Objecting the proceedings, the petitioners contended that N.G.Patel polytechnic did not have any independent legal existence and was merely a college run by the society. It further contended that the society had already offered to tax the said amount.
After perusing the provisions of section 139A of the Income Tax Act, the bench noted that mere allotment of PAN would not make the allottee necessarily a separate entity for the purpose of assessment of tax.
“The statute recognizes certain eventualities where quite outside the requirement of payment of tax and for filing return of income, the Assessing Officer may allot a PAN to individual. The contention of the Assessing Officer therefore that merely because N.G.Patel polytechnic had obtained the PAN, it was a separate entity for the purpose of filing of the return and assessment of tax was not valid.”
Read the full text of the Order below.
