BABITA JAIN,AMBALA CITY V. INCOME TAX OFFICER ,WARD -1 AMBALA, AMBALA CANTT

MA 1/CHANDI/2025

AI Insights

The case involves Babita Jain, who was engaged in trading of sugar, edible oil, and other foodgrain items. She filed her income tax return for the assessment year 2017-18, declaring an income of Rs.3,81,290. During scrutiny, it was revealed that she had deposited Rs.48,70,000 in cash during the demonetization period, which she claimed was from cash sales. The Assessing Officer (AO) doubted the source of these deposits based on a comparative analysis of cash sales and deposits in previous years. The CIT (Appeals) upheld the AO's decision, leading Jain to appeal to the ITAT. The ITAT initially set aside the CIT (Appeals) decision for re-adjudication but faced criticism for not adhering to the legal standards and for making observations beyond the scope of the appeal. The current Miscellaneous Application seeks to rectify these observations and return the matter to the CIT (Appeals) for a decision based solely on the merits of the case.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 669475 (ITAT-CHANDIGARH)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 26-06-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Other Referred Cases: Coca Cola India Pvt Ltd vs ITAT, Sony Pictures India Pvt Ltd vs ITAT, Star India Pvt Ltd vs ITAT, Sarika Jain vs CIT, Puranmal Radhakrishnan vs CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIVEK VARDHAN
• Assessee Lawyers: ROHIT GOEL; DHRUV GOEL
• Keywords: Set aside; Right to appeal; Revision of order
• Section: 142(1); 263

Judgement Text

"आयकर अपीलȣय अͬधकरण,चÖडीगढ़ Ûयायपीठ, चÖडीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, ‘A’ CHANDIGARH BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT AND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER M.A. No. 1/CHD /2025 in आयकर अपील सं./ ITA No. 820/CHD/2023 िनधाªरण वषª / Assessment Year: 2017-18 Babita Jain, Ambala City. Vs The ITO, Ward-1, Ambala. Öथायी लेखा सं./PAN NO: AEVPJ6700K अपीलाथê/Appellant ÿÂयथê/Respondent Assessee by : Shri Rohit Goel, CA and Shri Dhruv Goel, CA Revenue by : Shri Vivek Vardhan, Addl. CIT, Sr.DR Date of Hearing : 25.04.2025 Date of Pronouncement : 26.06.2025 PHYSICAL HEARING O R D E R PER RAJPAL YADAV, VP The present Miscellaneous Application is directed at the instance of the assessee pointing out an apparent error in the order of the Tribunal dated 30.07.2024 passed in ITA No.820/CHD/2023. MA-1/CHD/2025 In ITA 820/CHD/2023 A.Y. 2017-18 2 2. Though it is a very exhaustive Miscellaneous Application running into four pages, but we deem it appropriate to take note of this MA, which reads as under : Sub: Miscellaneous Application u/s 254(2) in ITA 820/CHD/2023 to order dated 30.7.2024 Hon'ble Members, 1. The Appellant is in receipt of order dated 30-07-2024 wherein the order of CIT(A) has been set aside and remitted back to CIT(A) for denovo decision. The decision of Hon'ble Bench ordering the set aside is without appreciating the facts, submission during the hearing of appeal and observations of Honble Bench on 24- 6-2024. The correct facts can be verified from the Video Recording of hearing in this case. 2. Page 9, 4th Line of Para 17 of ITAT order \"The learned AR proceeded on merits of the case his arguments was books of accounts are not rejected by the Learned AO as well as by CIT(A) and on this Limited ground the impugned order of CIT(A) should be set aside.\" The Honble Bench has failed to appreciate that this ground is to be read with reference to legal submissions detailed in para 6 of synopsys filed before Bench being the decision of Apex Court, Jurisdictional HC and Judgments of Chandigarh Bench. 2.1 Hon'ble Bench has set aside the order of CIT(A) on the basis of the findings contained in Para 20 \"We hold that in the original proceedings before the Ld AO the sales bills of the assessee ought to have been verified and cross checked …..From where she has sourced these goods ought to have checked and verified….. we on basis of material on record particularly para B6 of cash transaction 2016 sheet wherein it is clearly recorded that an amount of Rs. 48,70,000/- are deposited in cash as cash received from unidentifiable persons, which makes issuance of sale bills issued by assessee to persons as doubtful in nature.\" The casting of doubt on the books of accounts is not permissible when no appeal is filed by Department. 2.2 In Para 21.1 Page 12 of the ITAT order \"The Ld AO ought to have done exhaustive and deeper inquiry before arriving at finding whereby income is assessed as at Rs. 53,55,786/-. The Ld AO has not invoked any section of the Income Tax Act, 1961 i.e. 69/69A r.w.s. 115BBE.\" The issue of invocation of s. 69/69A was never discussed by the Bench during the hearing. In fact, AO in computation of Income has applied the tax rate of s.115BBE so the appeal. MA-1/CHD/2025 In ITA 820/CHD/2023 A.Y. 2017-18 3 2.3 Similarly Para 22 Page 13 of ITAT order \"Accordingly, impugned order of CIT(A) is set aside as and by way of remand on denovo basis with a direction to pass a reasoned order on merits including a finding on books of accounts.\" That once the books of accounts has been accepted by AO and restoring the matter for decision on books of accounts is beyond the powers of Hon'ble Bench. JUDGMENTS OF SUPREME COURT, PUNJAB & HARYANA HC, CHANDIGARH BENCH IS NOT CONSIDERED WHILE DECIDING THE PRESENT APPEAL 3. The attention of Hon'ble Bench is invited to the fact that present appeal is filed by Assessee against the order of CIT(A) confirming the additions of Rs. 48,70,000/- made by AO on account of cash deposit in bank which is as per the cash available in Cash Book on the date of deposit. The source of cash is out of cash sales in the normal course of business. The complete details of sales, cash in hand and books were filed before AO which were examined and books of account were accepted but at the same time AO made such additions by doubting on the entries in the same books of accounts. The law is settled by Hon'ble Supreme Court, Jurisdictional Punjab & Haryana High Court and Coordinated Benches of Chandigarh ITAT in large number of cases that it is not open to make additions of cash deposit emerging out of cash book which is accepted. 3.1 That precisely is the question before ITAT to be decided and during the hearing on 24-6-2024 a clear observation was made on this account by the Members acknowledging the settled law on this subject in favour of Assessee. Hon'ble Bench has filed to appreciate the submissions and judgments referred as detailed above as such the order in question needs to be recalled. APPEAL FILED BY ASSESSEE ONLY AND NO CROSS APPEAL BY DEPARTMENT 4. The present appeal is filed by Assessee against the order of CIT(A) confirming the order of AO. Income Tax Department has not filed any appeal / Cross Objection against the order of CITA. Hon'ble Bench is to decide the issues raised by Assessee only. 4.1 The issue of acceptance of books of accounts stand settled by the orders of authorities below. The observations of Hon'ble Bench in Para 20 (As detailed in Para 2.1 above) that AO should have examined the Purchases, Sales Stock is neither contested by Assessee, nor Department, nor discussed by the Bench on the date of hearing from both the parties and such facts are also not emerging from the order of AO. 4.2 In case there is any allegation that AO has not conducted due verification of Purchase, Sales and books of accounts the power is vested with PCIT u/s 263 to review and recall the assessment order which is also not done in this case. Moreso, MA-1/CHD/2025 In ITA 820/CHD/2023 A.Y. 2017-18 4 during appeal before the Bench it was never argued by the Respondent that suitable enquiry has not been conducted by AO. 4.3 The casting of doubt on the books of accounts by the Bench under Para 20 of the ITAT order is prejudicial to the interest of Assessee when no appeal is filed by Department. Your attention is invited to the settled law that it is not open to the Tribunal to give a finding adverse to the assessee which does not arise from any question raised in the appeal. Nor it is open to the Tribunal to raise any ground which would work adversely to the appellant and pass an order which makes his position worse that it was, under the order appealed against. 4.4 The attention of Hon'ble Bench is invited to the settled law that it is not open to Tribunal or give a finding on a question which is not in dispute and which does not form the subject matter of the appeal as held in the case of Sarika Jain vs. CIT 407 ITR 254. Similarly in the landmark decision in the case of Puranmal Radhakrishnan vs CIT 31 ITR 294, it was held that in an appeal by the assessee and without a cross-appeal (or cross objections) by the Department, it is not open to the Tribunal to give a finding adverse to the assessee which does not arise from any question raised in appeal nor is it open to the Tribunal to raise any ground which would work adversely to the appellant and pass an order which makes his position worse that it was, under the order appealed against. 4.5 In the case in hand there is no challenge to the books of accounts by authorities below and no Cross appeal is filed by Department, as such the order of ITAT casting doubts on books of accounts is beyond the scope of powers vested with ITAT and ordering the re-verification of books of accounts when it is not a subject matter is beyond the scope of powers of ITAT. REMANDING MATTER BACK TO CIT(A) TO VERIFY BOOKS OF ACCOUNTS WHEN NO SUCH ISSUE IS PENDING BEFORE ITAT IS MISTAKE APPARENT ON RECORD 5. In addition, setting aside matter to CIT(A) for denovo assessment and verification of Purchase, Sales/Stock where AO has passed an assessment order after due verification to his prudence. There is no finding of AO that documents are not produced by Assessee during assessment. There is no order of PCIT u/s 263 that due enquiries/ verifications is not done by AO. In the light of above, direction of Hon'ble Bench for denovo adjudication and verification of books instead of adjudication of the matter on merits by the Hon'ble Bench constitutes an error apparent on record and the order dated 30.7.2024 deserves to be recalled even on such grounds. 6.4 Reliance in this regard is placed on decision of Hon'ble Bombay High Court in case of Coca Cola India Pvt Ltd vs ITAT, [2014] 368 ITR 487 (Bom) where the court allowed the MA of assessee noting that the ITAT should have adjudicated the matter on merits instead of directing de-novo adjudication. The above decision has also been reiterated by the Hon'ble Bombay High Court in its later decisions in MA-1/CHD/2025 In ITA 820/CHD/2023 A.Y. 2017-18 5 case of Sony Pictures India Pvt Ltd vs ITAT, [2019] 411 ITR 447 (Bom) and Star India Pvt Ltd vs ITAT, WP(L) no. 7813 of 2023. In light of above submissions, it is prayed to kindly recall the order dated 30-7- 2024 as correct facts as detailed above as well as binding Supreme Court, Jurisdictional High Court, Chandigarh ITAT decisions placed on record during hearing were not considered in such order. Thanking You Yours sincerely Sd/- BABITA JAIN 3. With the assistance of ld. Representative, we have gone through the record carefully. It emerges out from the record that assessee was engaged in trading of sugar, edible oil and other foodgrain items. The assessee has filed her return of income on 31.10.2017 declaring total income of Rs.3,81,290/-. The case of the assessee was selected for scrutiny assessment and notices u/s 143(2) and 142(1) were issued and served upon the assessee. During the course of assessment proceedings, it revealed to the AO that assessee has deposited a sum of Rs.48,70,000/- in cash during demonetization. The AO has confronted the assessee to explain the source of such deposits. It was contended by the assessee that these deposits were made out of cash sales and such cash sales were to the extent of Rs.51,80,331/-. The AO did not dispute these facts. The area of dispute between assessee and AO is qua the inference drawn from a comparative MA-1/CHD/2025 In ITA 820/CHD/2023 A.Y. 2017-18 6 study of the cash sales made during immediately preceding year vis-à-vis this year. The AO has observed that cash sales between the period 01.04.2015 to 08.11.2015 was Rs.83,22,221/- and 01.04.2016 to 08.11.2016 was Rs.51,80,331/-. Similarly, the deposits made by the assessee during financial year 2015-16 was Rs.1,67,81,000/- and during financial year 2016-17 was Rs.60,30,000/-. He made an analysis of this figure and then all of a sudden, jumped to the conclusion that this Rs.48,70,000/- deposit is nothing but an unexplained money. 4. Appeal to the ld.CIT (Appeals) did not bring any relief to the assessee. 5. Dissatisfied with the order of the ld.CIT (Appeals), assessee has come up in appeal before the ITAT who has remitted the issue back to the CIT (Appeals) for re-adjudication. 6. The grievance of the assessee by way of the present Miscellaneous Application is that ITAT has raked up certain fundamental issues which were not in dispute and therefore, it suffers from a patent error. On the other hand, ld. DR relied MA-1/CHD/2025 In ITA 820/CHD/2023 A.Y. 2017-18 7 upon order of the ITAT and submitted that it is just a set aside and no apparent error can be alleged. 7. We have duly considered the rival contentions and gone through the record. We are conscious of the fact that power of rectification u/s 254(2) of the Income Tax Act can be exercised only when the mistake which is sought to be rectified is an obvious and patent mistake, which is apparent from the record and not a mistake which requires to be established by arguments and a long drawn process of reasoning on points on which there may be conceivable two opinions. The question before the Tribunal was whether out of the alleged cash sale, it could be inferred that assessee has made deposits in cash in the bank account or not. There is no appeal in favour of the Revenue against an assessment in the Income Tax Act. The right to appeal is being given only to the assessee. Thus, the facts which have been accepted by the AO cannot be challenged by the Revenue. It is also the assessee who can dispute finding of the AO. It is also pertinent to note that an assessee cannot be put to a more disadvantageous situation than the dismissal of her appeal. The Tribunal has expounded the scope of assessment MA-1/CHD/2025 In ITA 820/CHD/2023 A.Y. 2017-18 8 order by making observations from paragraph No. 20 to 22 of the order. Therefore, to our mind, it suffers from a patent error which requires rectification. We expunge the observations made by the Tribunal in these paragraphs and dispose of this appeal with a simple direction that “ld. First Appellate Authority will adjudicate the issue whether it can be inferred that sum of Rs.48,70,000/- deposited by the assessee in the bank account was from the cash sales made by her or not ?” The other issue remitted by the ITAT about sum of Rs.52,248/- will remain as under - “The assessee will be at liberty to submit her explanation before the ld. First Appellate Authority”. 8. The appeal of the assessee is to be decided on merit by the CIT (Appeals). 9. In the above term, this Miscellaneous Application is partly allowed. Order pronounced on 26th June,2025. Sd/- Sd/- (MANOJ KUMAR AGGARWAL) (RAJPAL YADAV) ACCOUNTANT MEMBER VICE PRESIDENT “Poonam” MA-1/CHD/2025 In ITA 820/CHD/2023 A.Y. 2017-18 9 आदेश कȧ ĤǓतͧलͪप अĒेͪषत/ Copy of the order forwarded to : 1. अपीलाथȸ/ The Appellant 2. Ĥ×यथȸ/ The Respondent 3. आयकर आयुÈत/ CIT 4. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय आͬधकरण, चÖडीगढ़/ DR, ITAT, CHANDIGARH 5. गाड[ फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar "