Delhi ITAT Orders Fresh Reassessment in Case Involving Alleged Fraudulent Misuse of PAN
Background of the Dispute
The case of Bharat Bhushan Vs ITO (ITAT Delhi) concerns reassessment proceedings for Assessment Year 2018-19, where exceptionally large cash deposits and banking transactions were attributed to the assessee based on his PAN and personal details. The assessee has consistently maintained that he is a victim of identity theft and that the impugned bank accounts and financial dealings were not carried out by him.
Two appeals reached the Delhi Bench of the ITAT:
- One appeal was filed by the assessee challenging the reassessment and additions sustained by the first appellate authority.
- The other appeal was filed by the Revenue contesting the partial relief granted by the CIT(A)/NFAC.
The Tribunal examined both appeals together, as they arose from the same order dated 01.11.2024 passed under Section 250 of the Income Tax Act 1961 by the National Faceless Appeal Centre (NFAC).
Delay in Filing Appeal and Condonation
Claim of Late Knowledge of NFAC Order
The assessee approached the Tribunal belatedly in respect of the NFAC order dated 01.11.2024. In his application seeking condonation of delay, the assessee explained that:
- He first came to know about the NFAC order only on 13.01.2026.
- The order was digitally uploaded on the income tax portal on 01.11.2024 and would, under the Income Tax Rules 1962, be deemed to have been served on that date.
- However, no hard copy/physical communication was ever served on him.
- He alleged that his PAN and supporting documents had been misused by another individual to carry out the transactions that formed the basis of the reassessment.
According to the assessee, once he became aware of the existence of the order, he acted without delay in filing the appeal. He stressed that he himself was a victim of fraudulent use of identity and was not at fault for the delay calculated from the date of the order.
Tribunal’s View on Delay
After considering the detailed reasons tendered in the condonation petition, the ITAT accepted the explanation. Recognising that the assessee had claimed to be a victim of fraud and that he had not been served physically with the NFAC order, the Tribunal:
- Held that the delay was satisfactorily explained; and
- Condoned the delay, thereby admitting the assessee’s appeal for adjudication on merits.
Reassessment Under Section 147 and Ex Parte Assessment Order
Basis for Reopening Under Section 147
The Assessing Officer (AO) initiated reassessment proceedings under Section 147 after receiving information that:
- A current account in PNB, Kailash Nagar, East Delhi stood in the name of the assessee.
- Cash deposits of Rs.210,929,395/- had been made into this account.
- Cash withdrawals totalling Rs.250,14,630/- had also been carried out.
- Additional information suggested that several other bank accounts linked to the assessee’s PAN or personal details reflected high-value transactions.
Despite these significant figures, the AO recorded that the assessee had not filed any return of income in response to notice issued under Section 148.
Ex Parte Assessment and Addition Under Section 69A
In the absence of any response or compliance from the assessee to the notices, the AO proceeded to complete the reassessment ex parte. Treating the unexplained banking activity as unaccounted money, the AO:
- Made a total addition of Rs.33,77,03,715/- under
Section 69Aon account of unexplained money; and - Finalised the reassessment order dated 14.02.2023 under
Section 147.
No meaningful participation or explanation was recorded from the assessee at this stage.