Delhi High Court rules against notice issued on income evasion based on deactivated PAN

Delhi High Court rules against notice issued on income evasion based on deactivated PAN

The petitioner had repeatedly communicated to the revenue department of its active permanent account number

The Delhi High Court has held that the notice issued pointing to income escapement in the form of stock/bills of entry for import on deactivated PAN is not valid.

The petitioner, Mittal International challenged the impugned order passed by the authorities under the Income Tax Act, 1961. It stated that the respondent conducted the impugned proceedings on its deactivated Permanent Account Number (PAN).

This, despite the petitioner repeatedly communicating to the respondent of making all income tax-related compliances on active PAN, as all relevant financial transactions were fully recorded and accounted for in the regular audited final accounts of the petitioner.

The company contended that even until April 2022, there was correspondence communicating the deactivation of the incorrect PAN. Still, the notice was issued. The petitioner apprised that Ajit Sharma, the counsel, accepted the notice on behalf of the respondent.

However, the respondent argued that the assessee did not file any response on the case and Rs.10,15,17,895 was determined as income having escaped the assessment in the form of stock/bills of import entry.

The bench comprising Justice Manmohan and Justice Manmeet Pritam Singh Arora viewed that the interest of justice would be served if the petitioner was allowed to file a supplementary reply to the notice issued under the IT Act.

Thus, the court set aside the impugned order and directed the petitioner to file a supplementary reply to the notice within four weeks.