By TIOL News Service

AHMEDABAD, SEPT 15, 2017: THE issue is - Whether mere allotment of PAN u/s 139A to an educational institution being run by a registered trust would make the allottee necessarily a separate entity for the purpose of assessment to tax. NO is the verdict.

Facts of the case

The Assessee was an educational trust registered under the Bombay Public Trust Act. The Assessee had filed its return. The Assessee ran various educational institutions including one N.G.Patel polytechnic college. The return was accepted without scrutiny. The AO noticed that N.G.Patel polytechnic had a separate PAN and in its savings bank account of Bank of Baroda, cash amount of Rs.2.37 crores was deposited, on which, it had also received interest of Rs.2.40 lakhs. Despite this, it failed to file the return, for which a notice was issued for reopening of the assessment and to furnish a source of the cash deposited. However, there was no reponse from the account holder. Moreover, few objections were raised by the Assessee and stated that N.G.Patel polytechnic was assigned a separate PAN which would indicate that it was a separate entity for the purpose of payment and assessment of tax and it had not filed the return despite the fact that sizable cash amount was deposited in its bank account. The objection so raised were rejected by the AO.

In Writ, the High Court held that,

++ section 139A pertains to PAN. Section 139A(1) provides various categories of persons who are required to pay tax or for some other reason required to furnish return of income, would apply to the AO for allotment of a PAN. Under sub-section(1B), the Central Government may for the purpose of collecting any information which may be useful for or relevant to the purposes of the Act, may by notification require any class or classes of persons who shall apply to the AO for the allotment of the PAN. Under sub-section (2), the AO having regard to the nature of transactions as may be prescribed, may also allot a PAN to any other person following the prescribed procedure. Section 139A(3) provides that any person not falling under sub-section (1) or sub-section (2), may also apply to the AO for allotment of PAN, upon which, the AO shall allot the same;

++ it can thus be seen that mere allotment of PAN u/s 139A would not make the allottee necessarily a separate entity for the purpose of assessment of tax. The statute recognizes certain eventualities where quite outside the requirement of payment of tax and for filing return of income, the AO may allot a PAN to individual. The contention of the AO therefore that merely because N.G.Patel polytechnic had obtained the PAN, it was a separate entity for the purpose of filing of the return and assessment of tax was not valid. In the order rejecting the objections, the AO did not examine other objections and contentions raised on behalf of the petitioner on his summary conclusion.

(See 2017-TIOL-1895-HC-AHM-IT)