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Showing contexts for: two pan in Income Tax Officer, Junagadh vs M/S Kanji Ambabhai Cotton Industries, ... on 15 December, 2025Matching Fragments
9.. The assessee craves leave to add, amend, alter or withdraw any or more grounds of appeal at the time of hearing of appeal."
3. The facts of the case which can be stated quite shortly are as follows:
The assessee is engaged in the business of running a cotton ginning factory at Manavadar of Junagadh District. The information has been received by the assessing officer, in the assessee`s case that during the year under I.T.A Nos. 345/Rjt/2025 A.Y. 2017-18 M/s. Kanji Ambabhai Cotton Industries consideration, the assessee had undertaken certain financial transactions. Therefore, assessee`s case was reopened on the basis of information. Accordingly, notice u/s148 of the I.T. Act was issued to the assessee on 30.03.2021, which was duly served upon the assessee, requiring the assessee to file the return of income within 30 days of receipt of the said notice. In response to the notice u/s.148 of the Act, the assessee filed return of income on 19-05-2021 declaring total income at Rs.1,74,130/-. Subsequently, the notice u/s. 143(2) was issued on 17-11-2021. Accordingly, notice u/s 142(1) of the I.T. Act, 1961 dated 24-12-2021, fixing the hearing on 07-01-2022 was issued. The assessee was requested to furnish the details of business activity, computation of total income and also requested to explain the reasons for maintaining two PAN Numbers, that is, Kanji Ambabhai & Co.
AAIFK1676L) and M/s Kanji Ambabhai & Co (PAN: AACFK2391J) are two separate firms with the same set of partners; M/s Kanji Ambabhai Cotton Industries (PAN: AAIFK1676L) has been projected as a separate entity only to obtain textile modernization subsidy from the Ministry of Textiles as the said subsidy was not admissible to the already existing M/s Kanji Ambabhai & Co (PAN: AACFK2391J). It was also contended that though the major portion of business has been done in the name of M/s Kanji Ambabhai Cotton Industries (PAN: AAIFK1676L), the results of such business has been consolidated in the hands of M/s Kanji Ambabhai & Co (PAN: AACFK2391J) and return of income for the assessment year (AY) 2017-18 has also been filed in the name of the said company; no return of income has been filed in the name of M/s Kanji Ambabhai Cotton Industries (PAN: AAIFK1676L) for the assessment year (AY) 2017-18. Further, it was stated that similar issues, as in the case of the present assessment cropped up in the assessment year (AY) 2013-14 when the proceedings were reopened and subsequently dropped. The assessing officer observed that with two distinct PANs, M/s Kanji Ambabhai Cotton Industries (PAN:
I.T.A Nos. 345/Rjt/2025 A.Y. 2017-18 M/s. Kanji Ambabhai Cotton Industries
9. On the other hand, Shri Samir Jani, Learned Counsel for the assessee submitted that assessee is an entity holding two PAN and assessed as one unit. The reason for two different PAN is that prior to assessment year (A.Y.) 2017-18, the assessee approached Ministry of Textile for subsidy under Modernization Scheme of Textile policy. It was informed that they should not be an existing entity and holding a different PAN to prove separate entity, in order to eligible for subsidy. Accordingly, the assessee with the same set of partners and same set of shareholding obtained a fresh PAN for the assessee and applied and was granted subsidy from Textile Ministry. The same is also evident from the accounts of the assessee. Fault, if any, lies with PAN authority for granting dual PAN. The Bank account was also opened on the basis of the so allotted PAN. The assessee and M/s. Kanji Ambabhai & Company both maintain separate and regular books of accounts and the accounts are duly audited and profits at the end of the year is transferred to Profit & Loss account of M/s. Kanji Ambabhai & Company. The Capital, Funds and Unsecured Loans of M/s Kanji Ambabhai & Company were being used by the assessee. The Separate audit reports for M/s. Kanji Ambabhai & Company and the assessee are separately done and then profit is merged. Remuneration to Partners eligibility is made as one unit. Judicial precedents also lays down that when partners and there share is same, the income requires clubbing and assessed as a single unit. At the utmost it could be termed as Special Purpose Vehicle (SPV) and a single assessment is required. It is this wrong notion/conclusion which has led the whole reassessment procedure since the Bank has filed all the information through Specified Financial Transactions (SFT) under the PAN of the assessee. The assessing officer has also accepted the fact that there was no I.T.A Nos. 345/Rjt/2025 A.Y. 2017-18 M/s. Kanji Ambabhai Cotton Industries business in the accounts of M/s. Kanji Ambabhai & Company. The entire business is only in the accounts of the assessee. Therefore, learned Counsel relied on the submissions made by the assessee, during the appellate proceedings and submitted that the order passed by the learned CIT(A) may be upheld.
AAIFK1676L), holding it as a firm distinct and separate from M/s Kanji Ambabhai & Co. (AACFK2391J). Such a double addition based on same facts and figures is erroneous because it was within the knowledge of the assessing officer that the transactions have been reflected by way of consolidation of accounts in the hands of M/s Kanji Ambabhai & Co. (AACFK2391J). However, the assessing officer was under an apparent compulsion since PANs of the two firms were different and details of transactions were uploaded in the systems in the name of M/s Kanji Ambabhai Cotton Industries (PAN: AAIFK1676L), for which no return of income was filed. This entire episode is the result of using two PANs for the same entity for the purpose of availing government subsidy. The ld.CIT(A) also noticed that the assessee in regard to assessment year (AY) 2013-14 I.T.A Nos. 345/Rjt/2025 A.Y. 2017-18 M/s. Kanji Ambabhai Cotton Industries when proceedings u/s 147 were initiated and dropped in the case of the assessee on identical facts and circumstances. Therefore, ld.CIT(A) held that the additions made by the assessing officer cannot sustain, since the additions tantamount to double addition. The assessing officer has simply relied and reproduced the information available with him and despite the facts that the entire set of books of accounts were produced before him, the assessing officer has not identified any omission or escapement of income. Therefore, ld. CIT(A) observed that all the transactions done in the name of M/s Kanji Ambabhai Cotton Industries (PAN: AAIFK1676L) has been duly incorporated in the consolidated accounts in the name of M/s Kanji Ambabhai & Co. (AACFK2391J) and there is no loss of Revenue to the income tax department. As such, even if the assessee, i.e. M/s Kanji Ambabhai Cotton Industries (PAN: AAIFK1676L) is considered as a separate firm, the additions made cannot sustain, as profit having been declared in the consolidated accounts of M/s Kanji Ambabhai & Co. (AACFK2391J). Therefore, based on these facts and circumstances of the case, the learned CIT(A) deleted the addition.