Lender’s PAN Submission by Assessee Sufficient to Discharge Onus: ITAT Quashes PCIT’s Revisionary Order

The Income Tax Appellant Tribunal (ITAT) quashed the PCIT’s revisionary order, ruling that the submission of lenders’ PAN by the assessee was sufficient to discharge the onus under section 68 of the Income Tax Act.

The assessee, Vikram Sudhir Khurana’s case was reopened as the case was flagged by the insight Portal based on the information that the assessee had purchased the shares of West India Recreation Projects Pvt Ltd (WIRPPL) worth Rs 2,76,00,000. During the reassessment, the assessee submitted that he was the director of WIRPPL and made detailed submissions before the Assessing officers to prove that the shares were held in his name. The AO asked for the particulars regarding the source of a credit entry and the PAN and ITR of the lenders.

The assessee explained that the credit entry was related to the EPF withdrawal. Additionally, the assessee also submitted the EPF withdrawal documents, along with the PAN of all lenders, their confirmation, and the ledger account. The assessee also explained that the funds were received through verified banking channels and also submitted the details of share purchase transactions and the relevant bank statements. However, the assessee expressed his inability to furnish the bank statement, financial statement and ITR of Lenders. The AO considered these submissions and accepted the explanation and the submissions.

However, the PCIT invoked revisionary jurisdiction, claiming that the assessing officer failed to carry out enquiries or verification which he should have conducted, related to the non-submission of the bank statement, financial statement and the ITR of Lenders. The assessee argued that once he had submitted the PAN details of the lenders, he had discharged the primary onus cast upon him under section 68.

The Tribunal cited the High Court Decision in CIT v. Ranchhod Jivabhai Nakhava (supra), which clearly held that once the assessee has established that he has taken money from the lenders who are all income tax assessees and whose PANs have been disclosed, the initial burden under section 68 is discharged. Upholding the same, the Tribunal said that the statutory obligation was shifted to Assessing Officers to verify whether those lenders have reflected such transactions in their returns.

The Tribunal also accepted that the assessee had made detailed submissions and records also showed that the assessing officer had made the required enquiries. The Tribunal said that if the PCIT believed that the AO should have made further verifications, it should have sought such verifications from the Assessing Officers rather than invoking revisional jurisdiction based on assumptions. The Tribunal held that the insufficient inquiry by the Assessing Officer cannot be used as a basis to revise the assessment when the PCIT himself did not do any inquiry.

Based on these findings, the Tribunal quashed the revisionary order passed by the PCIT and restored the assessment order.