TaxTMI 
TaxTMI 
12 Aug 2026 
Learning for Assessee and tax authorities both from recent judgment. Wrongly quoting PAN of HUF in purchase documents even inadvertently, lead to addition in hands of HUF there can be further litigation.
The Income Tax Officer, Non-Corporate Ward 1 (6), Chennai. Versus Late Shri Chinnasamy Ramachandran Rep. by L/H Gowtham Chandhar, Chennai - 2026 (8) TMI 552 - ITAT CHENNAI- Assessee is said to be HUF.
Provisions expressly mentioned in the judgment/order text.
- Section 56 - Income from other sources
- Section 147 - Income escaping assessment
- Section 148 - Issue of notice where income has escaped assessment
Brief facts:
A property was purchased for stated consideration of Rs. ten lakh only.
Stamp duty authorities valued it for Rs. Rs. 2,72,50,000/-.
In the purchase deed PAN of assessee, who is stated to be HUF was mentioned.
Based on information received, Department issued notice u.s.148 to the assessee HUF. To which assessee did not respond by filing of Return of Income in response to said notice.
Hence, notices u/s. 142(1) were issued by the ld. AO.
In response, the assessee HUF,contended that the property was purchased by Karta in his individual capacity and inadvertently PAN of HUF was mentioned in deed and property was not acquired by assessee HUF.
Assessee furnished copies of the sale deed and sale agreement (per author. it should be properly described as purchase deed and purchase agreement in hands of buyer to reflect correct position).
These documents were furnished before Ld. AO and were subsequently also before the first appellate authority ( in short FAA).
The Ld. AO, rejected the explanation considering it without merit and completed the reassessment by making an addition of Rs. 2,65,50,000/- u/s. 56(2)(vii)(b) of the Act, being the difference between the stamp duty value and the purchase consideration. In hands of Assessee.
In first appeal, the same contentions were raised and all documents, mentioned above which were submitted before the Ld. AO were also submitted before the FAA.
On reading of the judgment, it appears that before the FAA Assessee also furnished other documents like Patta, and encumbrance certificate which also showed that its Karta acquired the immovable property in an individual capacity.
(per author. On reading of relevant portion of order of Tribunal, discussing order of assessment and FAA it appears that only agreement and deed were filed before ld. AO and Patta and encumbrance certificate were not filed before Ld.AO. This also become clear on reading of para 9 of order of ITAT
"9. Further, the FAA has also taken into consideration the patta and encumbrance certificate, which corroborate the assessee's stand that the property stood in the name of the Karta in his individual capacity.
Therefore, with due respect, it seems that the Patta and encumbrance certificate were not furnished before ld. AO and were furnished before FAA for first time. These have been considered corroborative evidence, hence not violating Rule 46A of ITAT Rules. However, so far FAA is concerned, he must have considered these documents as additional evidence and provided the same to Ld. AO for his comments and remarks which FAA seems to have failed.
With due respect author also feels that ( only on reading of judgment ) the following observations of Tribunal seems wrong
"The FAA has merely appreciated the very same material which was already available before the Assessing Officer. Consequently, we find no violation of Rule 46A of the Income-tax Rules, 1962, as alleged by the Revenue."
Because Patta and encumbrance certificates appears to be new evidence filed before FAA for first time and not before Ld.AO.
In view of order of ITAT if there was no new evidence relied by Ld. FAA, it seems that two ground of appeal were wrongly, mechanically and without application of mind were raised by revenue in this regard which reads as follows:
" ii) The Ld. CIT(A) failed to appreciate that the assessee had not furnished necessary evidences during assessment proceedings to establish that the property did not belong to the HUF.
iv)The Ld. CIT(A) erred in admitting and relying upon additional evidences in violation of Rule 46A of the Income Tax Rules, 1962 without affording opportunity to the Assessing Officer."
Unquote:
In above grounds new documents ( Patta and encumbrance certificate) could be mentioned for clarity and finality, this was not done .
On this issue honorable Tribunal, after examining records held as follows:
"Therefore, the documents relied upon by the FAA were not fresh evidence produced for the first time in the appellate proceedings. The FAA has merely appreciated the very same material which was already available before the Assessing Officer. Consequently, we find no violation of Rule 46A of the Income-tax Rules, 1962, as alleged by the Revenue."
Regarding addition made in assessment of assessee HUF,the same was deleted by FAA and the deletion was confirmed by Tribunal . Paragrph 9 of Tribunals order is reproduced below with highlights added:
9. Further, the FAA has also taken into consideration the patta and encumbrance certificate, which corroborate the assessee's stand that the property stood in the name of the Karta in his individual capacity. The Revenue has not brought any material on record to establish that the investment in the property was made by the HUF or that the property constituted an asset of the HUF. Mere mention of the PAN of the HUF in the sale deed, by itself, cannot be the sole basis to conclude that the property belonged to the HUF, particularly when the surrounding documentary evidence establishes otherwise. In the absence of any cogent material to controvert the findings recorded by the FAA, we find no infirmity in the conclusion that the provisions of section 56(2)(vii)(b) of the Act were not attracted in the hands of the assessee-HUF. Accordingly, we uphold the order of the FAA deleting the addition of Rs. 2,65,50,000/- made by the AO. The grounds raised by the Revenue are dismissed."
Un quote:
It is right to hold that when property was purchased in individual capacity by Karta, it belongs to him in personal capacity then addition cannot be made in hands of HUF merely because PAN was wrongly mentioned in deed of purchase.
On bare reading of judgment, it appears that honourable tribunal might have made a mistaken observation regarding documents submitted before Ld. AO and ld. FAA. Patta and Encumbrance certificate seem to have been filed before FAA for first time and not before ld. AO.
What Ld. AO and / or FAA seems to have missed:
In view of very big difference between stated consideration, as per deed and stamp valuation Ld. AO and / or Ld FAA must have made in depth enquiry from assessment records of HUF and Karta both.
With due respect it appears that ld. AO seems to have missed necessary enquiries about who purchased the property HUF or Karta personally?
For the Ld. AO it was necessary to properly read and reproduce from relevant paragraph and / or sentence from purchase agreement and /or purchase deed indicating transaction on behalf of HUF.
As a practice even on account of HUF, properties are purchased in name of Karta or other member of HUF. There is nothing found or mentioned in the order of Tribunal also about this aspect.
Ld.AO could have explored and proceed to assess / reassess the Karta, in his individual capacity and in meanwhile assess the HUF on protective basis.
Ld. FAA also could have explored scope of giving instructions and order for more enquiry and assessment in hands of HUF or Karta personally.
In the title of case the respondent is mentioned as
Late Shri Chinnasamy Ramachandran Rep. by L/H Gowtham Chandhar, Chennai.
This apparently shows a case of individual and not HUF. If the assessment was made in hands of HUF then the first appeal must have been filed in name of HUF and therefore, the name of HUF must appear as respondent and not legal heir of its Karta.
It seems not examined by any authority including ITAT as to why shri Gowtham Chandhar was made respondent as L/H instead of the HUF through its Karta.
This is well accepted legal and practicle aspect that a Hindu Undivided Family (HUF) is a single, distinct legal and tax entity with its own Permanent Account Number (PAN).
It cannot have joint holders in bank or investment accounts because the law treats the HUF itself as a single person, managed exclusively by the Karta on behalf of all family members.
HUF can be said to have a long-lasting existence and life not dependent on life of Karta. This is because on death of Karta, senior most coparcener or member will become Karta and HUF will continue if it has more than one coparceners / members and even possibly if a coparcener is yet to be born in the family.
Off course there can be some circumstances in which HUF can lose its existence, but if that was case, it must have been discussed some where and in any case by FAA and tribunal.
By mentioning individual L/H as respondent in appeal filed by Ld. AO, before ITAT, it can be said that the Ld. AO has accepted that the individual late Chinnasamy Ramacharan was the buyer of property and not the HUF.
Defect in appeal:
In appeal memo name of individual and his L/H have been mentioned, as respondent, then why assessment and first appeal has been entertained on account of HUF is not explained anywhere.
With due respect, author feels that it was fit case where ld. AO and / or Ld. Departmental Representative could have taken steps for correction in name of respondent.
The registry office of ITAT and Honourable Tribunal also could have initiated this step by raising necessary objection.
Therefore, it can be a case that the order passed by Tribunal is not sustainable because the Respondent is not correct assessee that is the HUF.
Furthermore, if logically considered, it is difficult to accept that there was inadvertent mistake by which PAN of HUF was mentioned. This is for the following main reasons:
Two important main documents - the agreement and deed for purchase by buyer assessee and sale by vendor.
Such documents are closely examined by parties and their advocates/consultants particularly when the deal is of important and valuable property.
PAN is important because tax may be required to be deducted.
Documents are also examined by Registry Officers where during registration photo copy of PAN card is to be provided and original is to be produced.
The registry office also examines these documents very carefully.
When PAN of HUF was provided, immediate question arises about who is buyer? If it is HUF who is Karta. And also, how it is mentioned in the deed. A purchase by HUF requires specific mention about these aspects.
The deed also require mention or in any case the Registry Office enquire about consideration - the amount, and how and when it was paid.
Therefore, this judgment and its background provide lot of scope for learning by assesses and Tax Officers and authorities.
If any steps for assessment or reassessment were not taken by authorities against the individual (Karta of HUF), then it can be said that the Tax Department did not raise an important step and proceedings which was desirable.