Gujarat High Court
Punjab National Bank vs Income Tax Officer, Ward 1(1) on 12 September, 2025
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
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C/SCA/11087/2022 ORDER DATED: 12/09/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 11087 of 2022
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PUNJAB NATIONAL BANK
Versus
INCOME TAX OFFICER, WARD 1(1) & ORS.
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Appearance:
MR TEJ SHAH(5743) for the Petitioner(s) No. 1
MR.VARUN K.PATEL(3802) for the Respondent(s) No. 1,2,3
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR.JUSTICE D.N.RAY
Date : 12/09/2025
ORAL ORDER
(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)
1. Heard learned advocate Mr. S. Krishnan
for learned advocate Mr. Tej Shah for the
petitioner and learned Senior Standing
Counsel Mr. Varun K. Patel for the
respondents.
2. This Court passed an order on 17th
March, 2025 whereby the following
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conclusion is arrived at:
"12. In view of the foregoing
reasons, the petition succeeds and
is accordingly allowed. The
impugned Assessment order is
hereby quashed and set aside. At
this juncture, in the facts of the
case it is apparent that the
respondents, oblivious of the
facts submitted by the petitioner-
PNB, has proceeded to pass
impugned assessment order
resulting into high-pitch
assessment of Rs. 393.97 Crore
attracting the tax demand of Rs.
648.26 Crore and such high-pitch
assessment order could not have
been passed against a non-existing
OBC under PAN "AAACO7436M" which
was already requested to be
cancelled since 2013 and hence,
and for no fault on part of the
petitioner, the impugned order is
passed on account of total non-
application of mind and negligence
on part of the respondent No.1. We
therefore deem it to be a fit case
to impose exemplary cost of Rs. 1
Crore upon the respondent to be
paid to the petitioner-Bank for
passing such high pitched
assessment order contrary to the
facts available on record.
13. After the judgement was
dictated in the open Court,
whereby, we deemed it fit to
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impose exemplary cost of Rs. 1
Crore upon the respondents while
signing the present judgement, we
felt that an opportunity should be
granted to the respondents to show
cause as to why such cost should
not be imposed.
14. We are conscious of the fact
that quantum of the cost proposed
to be imposed by us is a small
fraction of the quantum of the
high-pitched assessment and
consequent demand raised upon the
petitioner-PNB.
15. In view of the above, let this
matter be listed for further
hearing on 04.04.2025 granting an
opportunity to the respondent to
show cause as to why the cost of
Rs. 1 Crore should not be
imposed."
3. Pursuant to the aforesaid order, an
affidavit-in-reply is filed on behalf of
the respondent nos.2 and 3 affirmed on
29.04.2025 pursuant to the oral directions
of this Court issued on 22.04.2025 to
place on record the response to various
queries raised regarding the software
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system programme of the department on the
basis of inputs to be provided by the
Director General of India Tax (Systems),
New Delhi with regard to the data syncing,
availability of information to the
Assessing Officers in the field and also
the status of functionality/mechanism to
identify duplicate Permanent Account
Number (PAN) and alerting the Assessing
Officers and also measures and initiatives
being taken to identify duplicate PANs by
the Systems to make such duplicate PANs
inactive.
4. In the aforesaid affidavit-in-reply
received from DGIT(Systems), it is stated
as under:
"3. With regard to the issue of
data syncing and availability of
the information to the Assessing
Officers in the field, it is
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submitted that the following
queries were raised with the
DGIT(Systems), New Delhi, for
which the replies are received as
follows:
(i) Whether any event like legal
heir registration on the event of
death of an assessee is auto
displayed/displayed to the JAO on
both ITBA and Insight portal once
the request submitted through the
e-filing portal is approved by the
concerned Authority? Is any alert
sent to the JAO through ITBA, e-
mail or SMS in this regard?
Reply:
α. In the event of death of an
assessee, the registration of
Representative Assessee (Legal
Heir) of the deceased can be done
on the e-filing portal by the
Legal Heir. Once approved, an
email is sent to the
representative assessee who had
made the application in the e-
filing portal. Further, after
approval, the registration of the
legal heir can be viewed by the
Jurisdictional Assessing Officer
(JAO) on the CPC 2.0/ B.O portal.
No alert (SMS / email) is sent to
the JAO intimating such
registration.
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b. In cases where refund is to be
issued to the legal heir
(individual) exceeding Rs. 1 lakh,
a worklist is created to the
concerned JAO automatically on
ITBA for issue of refund.
c. Where the Representative
Assessee (Legal Heir) files an
application for registration as
legal heir with the JAO directly,
the ITBA allows for legal
heir/event marking by the JAO.
d. The information related to
legal heir (such as PAN, date of
registration of the legal heir,
etc.) is not populated on the
Insight portal.
(ii) If any request made by the
assessee in e-filing portal
requires verification/approval by
the JAO, whether any mechanism
exists to alert the JAO for
further necessary action? For
example, for event marking in PAN
module in ITBA by the JAO in cases
of amalgamation, merger, demerger,
dissolution, death of assessee,
etc.?
Reply:
Request made by an assessee
through the e-filing portal is
processed based on certain
documents which are required to be
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filed on the e-filing portal,
without the need of any
verification/approval from JAO.
However, event marking on the PAN
module of ITBA is a separate
process which is carried out by
the JAO. In cases such as
amalgamation, merger, demerger,
dissolution, or death of the
assessee, where requests are
received directly by the JAO, the
corresponding event marking is
done by the JAO in the PAN module
of ITBA. The event marking can be
viewed by all the officers in the
hierarchy of the JAO (JCIT/Addl.
CIT, CIT, PCIT, CCIT, PCCIT) in
the Event History Screen.
iii) Are the details/data
available in e-filing portal/ITBA/
Insight in harmony with each other
and synchronized and made
available to the JAO on real time
basis presently? For example, when
a request for legal heir is
approved by e-filing, is the data
updated in the PAN history of
ITBA, Insight in respect of the
PAN of the deceased person and the
legal heir?
Reply:
As stated in Reply to Question no
1 above, any legal heir
registration once approved on the
e-filing portal is available for
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the JAO to be viewed on the CPC
2.0/B.O portal. However, as on
date, there is no mechanism for
updating the PAN Module of ITBA
when a registration request for
legal heir is approved by e-
filing. To enable synchronization
of data between e-filing, ITBA,
Insight and PAN modules,
development of new functionalities
would be undertaken as part of the
new ITBA 2.0, PAN 2.0 and Insight
2.0 projects.
(iv) If no, what are the measures
being proposed to be taken to
synchronize such details on all
the portals used by the Assessing
Officers, particularly JAOs, like
ITBA, Insight, CPC 2.0, etc., to
avoid data mismatch/data
deficiency which is leading to
incorrect actions like reopening
of assessments in merged entities,
deceased persons, completing
assessments and raising demand in
PANs of non-existent persons,
etc.?
Reply:
As stated in reply to Question 3
above, development of new
functionalities would be
undertaken as part of the new ITBA
2.0, PAN 2.0 and Insight 2.0
projects to enable synchronization
of data between these projects.
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This would ensure that legal heir
registration and other event
markings are synchronized across
the ITBA, PAN, e-filing and
Insight projects, thereby enabling
consistency and accuracy in
processing of such cases.
(v) Is data sharing across portals
used by the Assessing Officers
from internal and external data
sources like judicial fora
(Supreme Court, High Courts, ITAT,
DRP, CIT(A), JCIT(Appeals)} or
other sources like NCLT, NCLAT,
IBS, CPC 2.0, e-filing, etc., made
available to the Assessing
Officers through ITBA and whether
such data is in sync with the data
available in ITBA.
Reply:
The ITBA system enables Assessing
Officers to access orders passed
or uploaded only by departmental
users such as CIT(A),
JCIT(Appeals), and the Dispute
Resolution Panel (DRP).
Additionally, orders issued by CPC
and forms submitted through the e-
filing portal are also accessible
to the AO through ITBA.
However, orders issued by the
Hon'ble Supreme Court, Hon'ble
High Courts, Hon'ble ITAT,
NCLT/NCLAT, etc., are available on
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separate IT platforms and
currently, there is no integration
between these platforms and the
ITBA system. Consequently, orders
issued by these institutions are
not directly available to the
Assessing Officer within ITBA.
Integration with third-party
databases is planned as part of
the Insight 2.0 project which
would make the orders of these
institutions available to the
Assessing Officers.
4. With regard to the query about
the measures and initiatives being
taken to identify duplicate PANs
by the Systems to make such
duplicate PANs inactive, the
queries were sent by e-mail on
22.04.2025 to DGIT(System), New
Delhi. The reply received from the
office of the DGIT(Systems), New
Delhi is as under:
(i) Whether any functionality/
mechanism exists presently to
identify duplicate PANs by the
Department/Systems Directorate and
to alert the Assessing Officer
through ITBA, e-mail or SMS
regarding the same to enable the
Assessing Officer to take further
necessary action like de-
duplication, event marking, etc.?
Reply
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A person can apply for allotment
of a Permanent Account Number
(PAN) under the relevant
provisions of sec 139A of the
Income-tax Act, 1961. As per the
provisions of sec 139A (7) of
Income-tax Act, 1961, no person,
who has already been allotted a
PAN, shall apply, obtain or
possess another PAN. At present,
there is a mechanism through which
all requests for PAN are subjected
to a check as to whether a PAN
already exists in the PAN database
against the given details.
Further, to minimise the
possibility of allotting more than
one PAN to a person, the above-
mentioned de-duplication mechanism
is being revamped and strengthened
in the upcoming PAN 2.0 Project.
However, there is no system-
enabled functionality available at
present to proactively identify
duplicate PANs and to alert the
Jurisdictional Assessing Officer
(JAO) through ITBA, e-mail, or SMS
for initiating necessary action
such as de-duplication. This is
because of the risk of generation
of false positives in the system-
based identification of duplicate
PANs due to the probability of
matching of similar details of
different persons. Notwithstanding
the same, as per the existing
procedure, if a taxpayer is in
possession of more than one PAN,
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they are required to submit a
request for surrender of the
additional PAN(s) to the concerned
JAO, either through a physical
letter or via e-mail. Upon receipt
of such a request, and after
carrying out the necessary
verification, the JAO can delete
or deactivate the duplicate
PAN(s), with the approval of the
Range Head. Further, if the JAO
receives information from any
other reliable data source
indicating that a person may be
holding more than one PAN, the JAO
is empowered to initiate the PAN
deletion/deactivation process
following the prescribed procedure
after due verification.
(ii) If no, what are the
measures / initiatives being taken
to identify duplicate PANs by the
Department / Systems Directorate
and make such duplicate PANs
inactive to avoid usage of both
the PANs by such assessees having
duplicate PANS ?
Reply
The feasibility of system-based
proactive identification of
duplicate PANs through enhanced
measures is proposed to be
explored under the upcoming PAN
2.0 Project. However, any such
system-flagged cases will require
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verification and confirmation by
the Jurisdictional Assessing
Officer (JAO) before taking action
to deactivate or delete the
duplicate PAN."
5. Referring to the above reply received
from DGIT(Systems), it was submitted on
behalf of the respondents that the system
is being continuously updated to improve
the tax payer services and in view of the
development of new functionalities being
undertaken as part of the new ITBA 2.0,
PAN 2.0 and Insight 2.0 projects to enable
synchronization of data between such
projects along with integration with third
party databases, the same would make the
order passed by the institutions available
to the Assessing Officer.
6. Respondent nos. 2 and 3 have also
tendered unconditional apology and prayed
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to grant relief with respect to cost
proposed to be levied.
7. On the other hand, learned advocate
for the petitioner submitted that National
Faceless Assessment Center has failed to
inform the Jurisdictional Assessing
Officer about the communication dated
02.02.2022 regarding merger of Oriental
Bank of Commerce with the petitioner bank
and there is no functionality or resource
in ITBA for updating data in respect of
entities which have ceased to exist
inspite of specific provisions available
under sections 176, 177, 178 and 179 of
the Income Tax Act, 1961 (For short "the
Act") to give effect to the striking off
of the companies, merger and amalgamation
of the companies listed under the
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provisions of the Companies Act.
8. It was submitted that there is no
process of integrating the software of the
department to map the event either by
providing functionality on ITBA or
integrating it with tax department's
network of Nodal Officers, resulting into
non receipt of information related to a
dead/non-existent person by the
Jurisdictional Assessing Officer.
9. It was further submitted that issue of
multiple PAN is also not addressed by the
respondent in the affidavit-in-reply filed
on behalf of respondent nos. 2 and 3 and
software of the department has no resource
whatsoever for proactive identification of
cases of inactive/multiple PAN and
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rationalising the same. It was submitted
that in the initial years when General
Index Number (GIN) was required to be
converted into PAN, two agencies rendered
this service for the Income Tax department
i.e. UTI and NSDL. Applications from
taxpayers would remain pending with one
entity for long, prompting a second
application with the other and neither
agencies issued Tax Deduction and
Collection Account Number (TAN) without
issuing a new PAN. It was therefore,
submitted that in such cases, PAN was
allotted but no PAN Card was received and
therefore, another application was
required to be made resulting into
issuance of multiple PAN.
10. It was submitted that even with advent
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of software facility available with the
department, the department has no
proactive and regular functionality to
reconcile such issue. It was therefore
suggested that ITBA portal is required to
be directed to give complete data of all
cases of multiple/inactive PANs so as to
initiate the proceedings with relevant PAN
holders.
11. It was also pointed out that there is
an urgent need of data management in the
present time to provide correct data
before the Jurisdictional Assessing
Officer to take corrective steps. It was
pointed out that in view of the software
development, Jurisdictional Assessing
Officer is relying upon the software
system, rather than applying their mind
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exercising discretion and recording
reasons and only on the basis of the
information flagged in Insight Portal,
Jurisdictional Assessing Officer is taking
action for issuing notice for reopening
without conducting any inquiry with regard
to the veracity of the information
provided by the Insight Portal.
12. It was therefore, submitted that the
respondent officers should be subjected to
cost as may be deemed fit to be imposed by
this Court.
13. Having considered the submissions made
by learned advocates for both the sides
and on perusal of the response of
DGIT(Systems), it appears that the
respondent income tax department is taking
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corrective proactive steps for resolution
of the issues which are raised in this
petition pertaining to initiation or
proceedings on dead person/amalgamated
companies or business and inactive or
multiple PANs in the software system of
the department.
14. On perusal fo the affidavit in reply
filed on behalf of respondent nos.2 and 3,
it transpires that instead of action being
taken on the basis of information
available and exercise of discretion, the
respondent department is taking action as
per the information made available by the
software system. Thus we are of the
opinion that instead of department taking
help of the software system, is being
directed by the software system as if the
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software system is the master of the
respondent department and the respondent
department is blindly following the
information made available by the software
system and taking action without verifying
the veracity of the same. It may
therefore, happen that if someone enters
false or wrong information in the software
system, Jurisdictional Assessing Officer
would take action on the basis of such
information without verifying the
correctness of the same resulting into
multiple and protracted litigation.
15. Time and again, we have come across
major litigations on account of action
being taken by the respondent department
due to either mis-information, non-
information or false information made
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available by the Insight Portal without
having any nexus to the documents or
material available on record. The
Jurisdictional Assessing Officers are
acting as a tool of the software system to
initiate the proceedings rather than
taking information as only the basis,
without conducting any inquiry or
application of mind. Thus the software
system has become the master, rather than
a helpful tool for the department for
implementing the provisions of the Income
Tax Act.
16. The present petition is a classic
example where little verification or
application of mind by the Jurisdictional
Assessing Officer would not have resulted
into this litigation and it could have
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been avoided by not taking any action more
particularly, when there was a merger of
one National Bank with the petitioner
bank.
17. We are also apprised by the learned
advocate Mr. Patel that action is taken by
the department against the Jurisdictional
Assessing Officer on administrative side.
Therefore, we do not want to further
prejudice such departmental action by
observing in any manner.
18. The petition is therefore, disposed
off with a cost of Rs. 10,000/- (Rupees
Ten Thousand only) to be paid by the
respondent nos.1 and 2 with the Gujarat
State Legal Service Authority as a token
cost instead of Rs. 1 crore for such
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negligence which was deemed fit at the
time of passing the judgment on
17.03.2025.
(BHARGAV D. KARIA, J)
(D.N.RAY,J)
RAGHUNATH R NAIR
