PAN Mix-Up Costs Nothing: ITAT Bangalore Strikes Down ₹2.35 Crore Addition Against Manappuram Finance Area Manager
Overview of the Case
A significant ruling has emerged from the Income Tax Appellate Tribunal, Bangalore, offering crucial relief to an individual who found himself at the centre of a tax dispute — not because of any wrongdoing on his part, but due to an error committed by his bank. The Tribunal, in ITA No. 3152/Bang/2025, adjudicated the appeal filed by Sri Anathi Hanumegowda Vijay Kumar for Assessment Year 2017–18 and directed deletion of an addition of approximately ₹2.35 crore that had been made solely on the basis of a wrongly reported PAN in the Statement of Financial Transactions (SFT) filed by Federal Bank.
The order, pronounced on 10th June 2026, serves as a stark reminder that mechanical reliance on SFT data — without independent verification of who actually owns or benefits from a bank account — can lead to grossly erroneous tax demands.
Background: How the Dispute Arose
The Assessee's Profile and the Triggering Information
Sri Anathi Hanumegowda Vijay Kumar was employed as an Area Manager with Manappuram Finance Limited, a well-known non-banking financial company. He had not filed his return of income for Assessment Year 2017–18, which placed him in the category of a non-filer.
The Assessing Officer (AO), acting on information received through the SFT mechanism, observed that cash deposits amounting to ₹23,522,118 (approximately ₹2.35 crore) had been made into a bank account linked to the assessee's PAN — specifically PAN No. ANJPV9000B. Based on this data, the AO concluded that these deposits were income of the assessee that had escaped assessment.
Initiation of Reassessment Proceedings
A notice under Section 148 of the Income Tax Act, 1961 was issued to the assessee on 26th March 2021. When the assessee failed to file a return in response to the notice, a further notice under Section 142(1) of the Act was issued seeking relevant information. The assessee responded with only partial information.
Finding the response inadequate, the AO proceeded to frame a best judgement assessment under Section 144 of the Income Tax Act, 1961. A final show cause notice was issued on 24th March 2022, to which the assessee replied on 25th March 2022. However, the AO remained unconvinced, primarily because no documentary evidence was produced at that stage to conclusively establish that the deposits did not belong to the assessee.
Assessment Order and Addition
The AO passed an assessment order dated 29th March 2022 under Section 147 read with Section 144 read with Section 144B of the Income Tax Act, 1961, determining the total income of the assessee at ₹23,522,118. The entire amount of deposits was treated as unexplained income chargeable to tax.