INCOME TAX ACT, 1961

Section 143(3)

Assessment - - -

Assessee-partnership firm was issued a PAN, which reflected its status as a company. But, it noticed such discrepancy much later, and immediately thereafter, it applied for and was issued a fresh PAN showing its status as a firm. During demonetization period, the assessee made certain deposits in its bank account, a portion of which comprised demonetized notes. Owing to the incorrect PAN that was available in the bank account, the cash deposits were reported by the bank to the Department under the wrong PAN that showed the assessee as a company. It was based on that, the AO initiated assessment proceedings under section 142(1) against the assessee, by asking it to file returns in response to the said notice. Although the said returns were filed under the correct PAN applicable to the firm, the AO issued a fresh notice to the assessee reiterating its earlier demand. It was the case of the assessee that while it explained the discrepancy in the PAN, and reiterated the said submission in the reply to the pre-assessment notice, the AO was not justified in finalizing the assessment ignoring the objections and explanations given by the assessee.Held: AO stated that the claims made by the assessee could not be accepted in view of the same not being substantiated with proper evidence and due to paucity of time. Although the AO was limited by time constraints in view of the statutory provisions mandating the completion of assessments within a particular time, however, the same could not be cited as a reason for abdicating his role as an adjudicating authority in tax assessment. Thus, the assessee could not be prejudiced on account of the delay occasioned by the AO in passing assessment orders. Further, the hasty manner in which the assessment order was passed without considering the material produced by the assessee could not be justified on the ground that the time limit for finalizing the assessment was nearing expiry. Since there was no proper consideration of the materials produced by the assessee, the AO was directed to redo his assessment by considering the materials produced by the assessee.