DEEPAK KUMAR JAIN, DHAMTARI,DHAMTARI V. INCOME TAX OFFICER, WARD- DHAMTARI, DHAMTARI

MA 15/RPR/2024

AI Insights

The case involves a miscellaneous application filed by Deepak Kumar Jain, the proprietor of Sapna Steels, against an order of the Income Tax Appellate Tribunal, Raipur, which had earlier dismissed his appeal regarding the addition of Rs. 50,87,015 as unexplained cash credits for the assessment year 2014-15. The assessee contended that a significant portion of the added amount represented opening balances from previous years and should not have been added in the year under consideration. The Tribunal, however, found that the assessee did not provide sufficient evidence to prove that these credits were not generated during the year in question. The Tribunal's decision was based on the failure of the assessee to substantiate his claims during the original proceedings, leading to the dismissal of the miscellaneous application.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 360626 (ITAT-RAIPUR)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 20-05-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Assessment Year: 2014-2015
• Other Referred Cases: Kohinoor Enterprises Vs. ACIT, Shri Devi Chand Jain Vs. ITO, T.S. Balaram, ITO v. Volkart Bros., Commissioner of Income Tax (IT-4) Vs. Reliance Telecom Ltd., CIT Vs. Ramesh Electric & Trading Company
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PRIYANKA PATEL
• Assessee Lawyers: VEEKAAS S SHARMA; FILING PRESENT MISCELLANEOUS
• Keywords: Unexplained cash credit; Rectification of order; Bogus
• Section: 68; 133(6)

Judgement Text

"आयकर अपीलȣय अͬधकरण Ûयायपीठ रायपुर मɅ। IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR BEFORE SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER AND SHRI ARUN KHODPIA, ACCOUNTANT MEMBER M.A. No.15/RPR/2024 (Arising out of ITA No.142/RPR/2023) Ǔनधा[रण वष[ / Assessment Year : 2014-15 Deepak Kumar Jain Prop. Sapna Steels, Baster Road, Dhamtari (C.G.)-493 773 PAN: ACHPJ0155A ……….. आवेदक/Applicant बनाम / V/s. The Income Tax Officer, Ward-Dhamtari (C.G.) ……Ĥ×यथȸ / Respondent Assessee by : Shri Veekaas S Sharma, CA Revenue by : Dr. Priyanka Patel, Sr. DR सुनवाई कȧ तारȣख / Date of Hearing : 16.05.2025 घोषणा कȧ तारȣख / Date of Pronouncement : 20.05.2025 2 MA No. 15/RPR/2024 A.Y. 2014-15 आदेश / ORDER PER PARTHA SARATHI CHAUDHURY, JM: The captioned Miscellaneous Application has been filed by the assessee arising out of the order passed by the Tribunal in ITA No.142/RPR/2023 for assessment year 2014-15, dated 07.11.2023 u/s. 254(2) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’). 2. The Ld. Counsel for the assessee by filing present miscellaneous application submitted as follows: (relevant extract) “(2). It is respectfully submitted that the Ld. AO had made an addition of Rs.50,87,015/- by invoking section 68 of the Income Tax Act, 1961, in this regard, it is humbly submitted that during the course of assessment proceedings, I had duly submitted the following before the Learned A.O:- 3 MA No. 15/RPR/2024 A.Y. 2014-15 (3) It is humbly submitted that out of the aggregate amount of Rs.50,87,015/- that has been added by the Learned AO u/s. 68 of the Income Tax Act, 1961, the aggregate amount of Rs.42,87,015/- represents the opening balance of advances that were received by me in the preceding previous years and not in the year under consideration and therefore, no addition u/s 68 of the Income Tax Act, 1961 was warranted in the year under consideration. It is humbly submitted that the fact that the aggregate amount of brought forward opening balance amounting to Rs.42,87,015/- has been added is discernible from the documents already on record of the Learned A.O. It is humbly submitted that it’s a trite law that opening balance brought forward from earlier years cannot be the subject matter of addition u/s. 68 of the Income Tax Act, 1961 in the subsequent year, in this regard, reliance is placed on the following judicial pronouncements:- 4 MA No. 15/RPR/2024 A.Y. 2014-15 S. No. Title Citation Authority Page No. of the LPB 1. Kohinoor Enterprises Vs. ACIT (2019) 410 ITR 153 (J & K) Hon’ble High Court of Jammu & Kashmir 01-14 2. Shri Devi Chand Jain Vs. ITO ITA No.277/RPR/2016, ITA No.78/RPR/2015 dated 21.02.2022 Hon’ble ITAT Raipur Bench 15-16 4) It is humbly submitted that the fact that the aggregate amount of Rs.42,87,015/- out of Rs.50,87,015/- represents the opening balance is discernible from the following documentary evidences that are already on record of the Learned A.O:- Sl. No. Particulars Copy of documentary evidences is placed on following page No. of Paper book 1. Copy of list of sundry creditors reflecting opening and closing balance submitted during assessment proceedings vide reply dated 11.07.2016 1-3 2. Copy of Audited Financial statements submitted during assessment proceedings vide reply dated 11.07.2016 4-21 3. Copy of confirmation of accounts of Shri Kamlesh Patel (Prop. of Baba Glass decorator) submitted during assessment proceedings vide reply dated 11.07.2016. 22-22 4. Copy of reply dated 28.11.2016 submitted during assessment proceedings 23-24 5 MA No. 15/RPR/2024 A.Y. 2014-15 (5) It is humbly submitted that the aggregate amount of Rs. 3,00,000/- out of the sum of Rs.50,87,015/- which has been added by the Learned A.O u/s 68 represents the closing balance of Sundry Creditors which had arisen in the ordinary course of the business against goods purchased by me from the creditors, the fact that I had not received any money from the said creditors is discernible from copy of Confirmation of Accounts submitted during assessment proceedings vide reply dated 11.07.2016 which is already on record of the Learned A.O, it is humbly submitted that addition u/s 68 presupposes receipt of money either in cash or in the bank account inasmuch as the plain language of Section 68 itself states\" Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the [Assessing] Officer, satisfactory, the sum so credited may be charged to income-tax as the income of the assessee of that previous year.\", On bare perusal of the aforesaid text of Section 68, it transpires that the provisions of Section 68 are applicable only when any sum is found credited in the books maintained for any previous year, to put it differently, the provisions of Section 68 are applicable only in the year in which \"sum is found credited in the books\", as a corollary, the provisions of Section 68 cannot be applied where no sum is found credited in the books of the previous year or where the sum is found credited in the books of any other previous year, in the instant case, the sum of Rs.3,00,000/- that came to be added on account of other creditors as unexplained cash credit was not received in the year under consideration. Thus, as per the literal interpretation of Section 68 no addition is warranted in A.Y.2014-15 as the sum of Rs.3,00,000/- was not found credited in the books of accounts of the F.Y 2013-14 relevant to A.Y.2014-15, thus the addition is liable to be deleted on this score itself.” It was thus submitted by the Ld. Counsel for the assessee that the order passed by Tribunal in ITA No.142/RPR/2023, dated 07.11.2023 suffers from mistake apparent from record which is amenable for rectification u/s. 254(2) of the Act. 6 MA No. 15/RPR/2024 A.Y. 2014-15 3. Per contra, the Ld. Sr. DR for the revenue relied on the order of the Tribunal passed in ITA No.142/RPR/2023, dated 07.11.2023. It was further submitted by the Ld. Sr. DR that the Ld. Counsel for the assessee had failed to point out any mistake apparent from record which is rectifiable u/s.254(2) of the Act, therefore, the present miscellaneous application filed by the assessee cannot be accepted, and is liable to be rejected. 4. We have heard the parties herein, considered the contents in the miscellaneous application along with the Tribunal order. That on a perusal of the order of the Tribunal passed in ITA No.142/RPR/2023, dated 07.11.2023, we find that the Tribunal while dismissing the appeal of the assessee had adjudicated the issue on merits after detailed examination of facts and records. The relevant paras of the order of the Tribunal are extracted as follows: “8. We have thoughtfully considered the issue in hand, i.e., sustainability of the addition of Rs.50.87 lacs (approx.) made/sustained by the lower authorities as unexplained cash credits u/s. 68 of the Act. As the assessee had failed to substantiate on the basis of any material his claim that the credit balances aggregating to Rs.50.87 lacs (approx.) disclosed in the respective accounts of the aforesaid parties were the opening balances that were brought forward from the earlier year, and were not generated during the year under consideration; therefore, the same cannot be accepted. On the contrary, as observed by the A.O., the aforementioned seven parties had in their reply to the notices issued u/s. 133(6) of the Act denied having advanced money or entered into any transaction with the assessee. For the sake of clarity, the observation of the A.O is culled out as follows: “To verify the genuineness of such credit balances shown in the books of a/c in the assessee, notice u/s 133(6) of the Income-tax Act, 1961 7 MA No. 15/RPR/2024 A.Y. 2014-15 issued to some persons calling information in this regard. Out of above, some of the persons have denied to advanced money or any transactions with the assessee for the year under consideration Details are as under: Sl. No. Name & address of the persons Amount 1. Shri Ashis Roy, Rampur Ward, Dhamtari Rs.10,00,000/- 2. Shri Vinay Mishra, S/o. Shri Naval Kishore Mishra Rs.8,00,000/- Shiv Chouk, Dhamtari (C.G.) 3. Shri Kamlesh Patel, Prop.M/s. Baba Glass Decorator, Rs.3,00,000/- Dhamtari 4. Shri Dani Ram Devangan, Vill. Kanhapur, Tah. Gurur Rs.8,00,000/- Distt. Balod (C.G.) 5. Shri Ajay Kumar Sandilya, Near Gujrati Dharmshala Rs.6,50,000/- Dhamtari 6. Shri Amit Jha, Rampur Ward, Sapna Pink City, Dhamtari Rs.8,00,000/- 7. Shri Manish Agarwal, Prop. M/s. Mittal Supply Agency, Rs.7,37,015/- Total Rs.50,87,015 Since the persons who have been shown as sundry creditors have been denied to advanced money or any transactions with the assessee, vide order sheet entries dtd. 28/11/2016 and 02/12/2016 assessee has been asked to please explain as to why the amount shown by him in his books as sundry creditors for Rs. 50,87,015/- in the name of above persons, should not be treated as bogus creditors/unexplained cash credits u/s 68 of the Income-tax Act, 1961 and will be added to the total income.” 9. We, thus, considering the aforesaid facts, wherein the assessee had failed to discharge the onus that was cast upon him as regards proving to the satisfaction of the A.O the “nature” and “source” of credits aggregating to Rs.50.87 lacs (supra) reflected in his books of accounts, find no justification to dislodge the well-reasoned view taken by him, which, thereafter, had rightly been upheld by the CIT(Appeals). Thus, the Ground of appeal No.1 raised by the assessee being devoid and bereft of any merit is dismissed in terms of our aforesaid observations. 10. The Ground of appeal No. 2, being general, is dismissed as not pressed. 11. In the result, the appeal of the assessee is dismissed in terms of our aforesaid observations.” 8 MA No. 15/RPR/2024 A.Y. 2014-15 We are of the considered view that the assessee applicant had failed to point out any mistake apparent from the record and in the garb of the aforesaid miscellaneous application, he is seeking a review of the order passed by the Tribunal in ITA No.142/RPR/2023, dated 07.11.2023, which is beyond the scope of its powers as envisaged u/s. 254(2) of the Act. There are series of decisions by the Hon'ble Supreme Court as well as Hon'ble High Court expounding scope of exercising powers under section 254(2) of the Act. We do not deem it necessary to recite and recapitulate all of them, but suffice to say that core of all these authoritative pronouncements is that power for rectification under section 254(2) of the Act can be exercised only when mistake, which is sought to be rectified, is an obvious and patent mistake, which is apparent from the record and not a mistake, which is required to be established by arguments and long drawn process of reasoning on points, on which there may conceivably be two opinions. 5. Our aforesaid view is supported by the judgment of the Hon'ble Supreme Court in the case of T.S. Balaram, ITO v. Volkart Bros., (1971) 82 ITR 50 (SC), wherein the Hon'ble Apex Court had held as under: \" ....A mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long-drawn process of reasoning on points on which there may conceivably be two opinions. As seen earlier, the High Court of Bombay opined that the original assessments were in accordance with law though in our opinion the High Court was not justified in 9 MA No. 15/RPR/2024 A.Y. 2014-15 going into that question.......an error which has to be established by a long-drawn process of reasoning on points where there may conceivably be two opinions cannot be said to be an error apparent on the face of the record. A decision on debatable point of law is not a mistake apparent from the record........\" Also, a similar view had been taken by the Hon'ble Supreme Court in the case of Commissioner of Income Tax (IT-4) Vs. Reliance Telecom Ltd., (2021) 133 taxmann.com 41 (SC), wherein it was held as under: \"From the impugned judgment and order passed by the High Court, it appears that the High Court has dismissed the writ petitions by observing that (i) the Revenue itself had in detail gone into merits of the case before the ITAT and the parties filed detailed submissions based on which the ITAT passed its order recalling its earlier order; (ii) the Revenue had not contended that the ITAT had become functus officio after delivering its original order and that if it had to relook/revisit the order, it must be for limited purpose as permitted by Section 254(2) of the Act; and (iii) that the merits might have been decided erroneously but ITAT had the jurisdiction and within its powers it may pass an erroneous order and that such objections had not been raised before ITAT. 6. None of the aforesaid grounds are tenable in law. Merely because the Revenue might have in detail gone into the merits of the case before the ITAT and merely because the parties might have filed detailed submissions, it does not confer jurisdiction upon the ITAT to pass the order de hors Section 254(2) of the Act. As observed hereinabove, the powers under Section 254(2) of the Act are only to correct and/or rectify the mistake apparent from the record and not beyond that\" 6. The Hon'ble High Court of Bombay in the case of CIT Vs. Ramesh Electric & Trading Company reported as 203 ITR 497 (Bom.) has held that the scope of section 254(2) is limited to rectification of mistake 10 MA No. 15/RPR/2024 A.Y. 2014-15 apparent from record itself and not rectification in error of judgment. The relevant observations of the Hon'ble High Court are as under: “The Tribunal cannot, in exercise of its power of rectification, look into some other circumstances which would support or not support its conclusion so arrived at. The mistake which the Tribunal is entitled to correct is not an error of judgment but a mistake which is apparent from the record itself.” 7. Accordingly, the miscellaneous application filed by the assessee u/s.254(2) of the Act is dismissed as devoid and bereft of any merit. 8. In the result, miscellaneous application filed by the assessee is dismissed. Order pronounced in the open court on 20th day of May, 2025. Sd/- Sd/- ARUN KHODPIA PARTHA SARATHI CHAUDHURY ACCOUNTANT MEMBER JUDICIAL MEMBER रायपुर/ RAIPUR ; Ǒदनांक / Dated : 20th May, 2025. SB, Sr. PS आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the Order forwarded to : 1. अपीलाथȸ /The Appellant. 2. Ĥ×यथȸ /The Respondent. 3. The CIT(Appeals)-1, Raipur (C.G.) 4. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण, रायपुर बɅच, रायपुर / DR, ITAT, Raipur Bench, Raipur. 5. गाड[ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलȣय अͬधकरण, रायपुर / ITAT, Raipur. "