ITO-1(1), BILASPUR, BILASPUR V. SATWANT KAUR SALUJA, BILASPUR

MA 12/RPR/2025

AI Insights

The case revolves around a miscellaneous application filed by the revenue against an order of the Income Tax Appellate Tribunal, Raipur, which had earlier dealt with an appeal and a cross-objection concerning the assessment year 2013-14. The revenue sought to challenge the Tribunal's decision which had addressed the addition of Rs.22,96,000 made by the Assessing Officer under section 69A of the Income Tax Act, 1961. The Tribunal, after reviewing the submissions and the record, concluded that the revenue's application did not point out any obvious or patent mistake in the original order, but rather sought a re-evaluation of the merits, which is not permissible under section 254(2).

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 708850 (ITAT-RAIPUR)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 17-07-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Assessment Year: 2013-2014
• Other Referred Cases: M/s. Andaman Timber Industries Vs. Commissioner of Central Excise, Kolkata-II, C.A No.4228 of 2006 (SC), T.S. Balaram, ITO v. Volkart Bros., (1971) 82 ITR 50 (SC), Commissioner of Income Tax (IT-4) Vs. Reliance Telecom Ltd., (2021) 133 taxmann.com 41 (SC), CIT Vs. Ramesh Electric & Trading Company, 203 ITR 497 (Bom.)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: PRIYANKA PATEL
• Assessee Lawyers: CARRYING OUT CROSSEXAMINATION
• Keywords: Set aside; Opportunity of being heard; Unexplained expenditure; Principle of natural justice; Search and seizure; Rectification of order; Assessment record
• Section: 147; 143(3); 68; 69C

Judgement Text

"आयकर अपीलȣय अͬधकरण Ûयायपीठ “एक-सदèय” मामला रायपुर मɅ IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH “SMC”, RAIPUR Įी पाथ[ सारथी चौधरȣ, ÛयाǓयक सदèय क े सम¢ BEFORE SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER M.A. No.12/RPR/2025 (Arising out of ITA No.187/RPR/2024 & CO. No.11/RPR/2024) Ǔनधा[रण वष[/Assessment Year : 2013-14 The Income Tax Officer-1(1), Bilaspur (C.G.) .......अपीलाथȸ / Appellant बनाम / V/s. Satwant Kaur Saluja Riya Apartment, Tikrapara, Bilaspur (C.G.)-495 001 PAN: AEYPS1338D ……Ĥ×यथȸ / Respondent Assessee by : None (Adjournment Application) Revenue by : Dr. Priyanka Patel, Sr. DR सुनवाई कȧ तारȣख / Date of Hearing : 27.06.2025 घोषणा कȧ तारȣख / Date of Pronouncement : 17.07.2025 2 MA No.12/RPR/2025 आदेश / ORDER PER PARTHA SARATHI CHAUDHURY, JM The captioned Miscellaneous Application has been filed by the revenue arising out of the order passed ITA No.187/RPR/2024 & CO No.11/RPR/2024, dated 28.10.2024 for assessment year 2013-14 u/s.254(2) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’). 2. The revenue by filing the captioned miscellaneous application has raised following ground: “1. Whether on the facts and in the circumstances of the case, the Hon’ble ITAT was justified in treating the grounds raised by the revenue on the issue of addition of Rs.22,96,000/- made by the Assessing Officer u/s.69A of the Income Tax Act, 1961 terming the same as based on incorrect observation?” 3. At the time of hearing of the miscellaneous application neither the assessee nor his Authorized Representative was present. However, adjournment application has been filed by the assessee which is rejected and the matter is heard after recording the submissions of the Ld. Sr. DR and on perusal of the material available on record. 4. The Ld. Sr. DR submitted that the order passed by Tribunal in ITA No.187/RPR/2024 & CO No.11/RPR/2024, dated 28.10.2024 suffers 3 MA No.12/RPR/2025 from mistake apparent from record which is amenable for rectification u/s. 254(2) of the Act. 5. I have heard the Ld. Sr. DR, 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.187/RPR/2024 & CO No.11/RPR/2024, dated 28.10.2024, I find that the Tribunal while adjudicating the appeal of the revenue and cross objection filed by the assessee, had adjudicated the issues on merits after detailed examination of facts on record. The relevant paras of the order of the Tribunal are extracted as follows: “28. I have given thoughtful consideration to the aforesaid observation of the A.O, wherein he had declined the assessee’s request for allowing a cross- examination of the lender company, viz. M/s. Jayant Security and Finance Ltd., and am unable to persuade myself to concur with the same. I am of the considered view that the A.O was obligated to have facilitated to the assessee a cross-examination of the aforementioned lender company, as the statement of its directors was, inter alia, pressed into service by him both for initiating proceedings u/s 147 of the Act as well as for drawing adverse inferences as regards the authenticity of the loan transaction. My aforesaid view is supported by the judgment of the Hon’ble Supreme Court in the case of M/s. Andaman Timber Industries Vs. Commissioner of Central Excise, Kolkata-II, C.A No.4228 of 2006 (SC) dated 02.09.2015. In the aforesaid case the Tribunal had upheld the rejection by the lower authorities of the assessee/appellant’s request for allowing a cross- examination of the dealers whose statements were relied upon by the adjudicating authority while passing its order by observing as under: “6. The plea of no cross examination granted to the various dealers would not help the appellant case since the examination of the dealers would not bring out any material 4 MA No.12/RPR/2025 which would not be in the possession of the appellant themselves to explain as to why their ex factory prices remain static. Since we are not upholding and applying the ex factory prices, as we find them contravened and not normal price as envisaged under section 4(1), we find no reason to disturb the Commissioners orders.” On appeal, the Hon’ble Apex Court was of the view that the failure on the part of the adjudicating authority to allow to the assessee an opportunity to cross-examine the aforementioned persons whose statements were made the very basis of the impugned order was a serious flaw which rendered the order as nullity inasmuch as it amounted to violation of the principles of natural justice. It was observed by the Hon’ble Apex Court that though the assessee had requested for an opportunity to cross-examine the aforementioned persons but the said requests were turned down by the adjudicating authority. Considering the fact that the Tribunal had upheld the orders of the lower authorities which had turned down the assessee’s request for a cross-examination, the Hon’ble Apex Court held the order of the Tribunal as totally untenable. Referring to the observations of the Tribunal that cross-examination of the persons concerned would not serve any purpose, the Hon’ble Apex Court was of the view that it was not for the Tribunal to have taken recourse to any guess work as to for what purposes would have been served by the assessee appellant by carrying out cross-examination. For the sake of clarity, the observations of the Hon’ble Apex Court are culled out as under: “We have heard Mr. Kavin Gulati, learned senior counsel appearing for the assessee, and Mr. K. Radhakrishnan, learned senior counsel who appeared for the Revenue. According to us, not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross- examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating 5 MA No.12/RPR/2025 Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross- examine those dealers and what extraction the appellant wanted from them. As mentioned above, the appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. That apart, the Adjudicating Authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject matter of cross-examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the cross-examination and make the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civil Appeal No. 2216 of 2000, order dated 17.03.2005 was passed remitting the case back to the Tribunal with the directions to decide the appeal on merits giving its reasons for accepting or rejecting the submissions. In view the above, we are of the opinion that if the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the Show Cause Notice. We, thus, set aside the impugned order as passed by the Tribunal and allow this appeal.” 29. Considering the aforesaid judgment of the Hon’ble Apex Court, I am of the view that the A.O remained under a statutory obligation to have facilitated a cross-examination of the aforesaid lender company which, inter alia, was pressed 6 MA No.12/RPR/2025 into service by the department for drawing of adverse inferences as regards the authenticity of the subject loan transaction. The assessee could have dispelled the material that the A.O acted upon to disprove the authenticity of the loan transaction only if she was provided an opportunity to cross-examine the lender company which had allegedly referred the name of the assessee as a beneficiary of an accommodation entry. Although, there is no denying the fact that it was the assessee who had filed with the A.O copy of the assessment order passed u/s. 147 r.w.s. 143(3) of the Act, dated 13.09.2021 in the case of the lender company, which revealed that she was in touch with the latter and even had access to its assessment record, but then the same could not have formed a basis for declining her request for seeking a cross-examination of the aforesaid persons, specifically when adverse inferences were sought to be drawn as regards the authenticity of the loan which she had received from the said company based on their statements. As regards the observation of the A.O that the genuineness of the loan transaction was not being dislodged on the basis of statement of Shri Sharad Kumar Darak (supra) or on the basis of information received from ADIT (Inv.), Bhopal, therefore, there was no requirement for examination of the lender company, I am unable to comprehend the said observation. My view is fortified by the judgment of the Hon’ble Apex Court in M/s. Andaman Timber Industries Vs. Commissioner of Central Excise, Kolkata-II (supra), wherein the Hon’ble Court while holding the order of the Tribunal that had upheld the declining of the assessee’s request for cross-examination for the reason that the same would not serve any purpose; had held, that it was not for the Tribunal to have taken recourse to any guess work as to for what purposes would have been served by the assessee appellant by carrying out cross-examination. 30. In my view, the fact that the name of the assessee had figured as one of the beneficiaries of accommodation entry of Rs.20 lac from M/s. Jayant Security and Finance Ltd., i.e. the lender company, which in turn was based on the statement of Shri Sharad Kumar Darak (supra) as well as information received from ADIT (Inv.) Bhopal, therefore, the assessee was vested with a statutory right to dispel the same by seeking cross-examination of the said person, which I am afraid had wrongly been declined by the A.O. As the very declining of the assessee’s request for seeking cross- examination of the aforementioned lender company clearly militates against the mandate of law, therefore, the adverse 7 MA No.12/RPR/2025 inferences as regards the authenticity of the loan transaction, as had been drawn by the A.O, cannot be summarily accepted. Accordingly, in all fairness, the matter requires to be restored to the file of the A.O with a direction to facilitate the cross examination of Shri Sharad Kumar Darak (supra) and also, any other person/persons on whose statements adverse inferences as regards the authenticity of the loan transaction in question have been drawn in the case of the assessee. 31. Before parting, I shall deal with the Ld. AR’s claim that as the ITAT, Indore in the case of M/s. Global Realcon Pvt. Ltd. Mumbai Vs. ACIT (Central)-1, Indore, IT(SS)A No.170 to 174/Ind/2020 (supra), and other orders of Co- ordinate Benches of the Tribunal, had held, that the loan received by the respective assessees before them from M/s. Jayant Security and Finance Ltd. were found to be genuine, therefore, on the said count itself the adverse inferences drawn by the A.O as regards the authenticity of the loan transaction in question in the present case is liable to be vacated, I am unable to concur with the said claim of the Ld. AR. I, say so, for the reason that as per the mandate of Section 68 of the Act, as the assessee is statutorily obligated to put forth an explanation as regards the “nature” and “source” of the sum credited in its books of account, therefore, the said statutory obligation cannot be dispensed with merely on the basis that the a loan transaction between the same lender company and a third party had been held to be genuine by the Co-ordinate Benches of the Tribunal. As the facts of every case stands on an independent footing, therefore, the Ld. AR’s contention that no adverse inferences qua the loan transaction in question could have been drawn, for the reason that the loan transaction between the lender and a third party had been accepted as genuine by the co- ordinate benches of the Tribunal do not find favor with me. Thus, the Ground of appeal No.1 raised by the revenue is allowed for statistical purposes in terms of the aforesaid observations. 32. I shall now deal with the grievance of the department that the CIT (Appeals) had erred in vacating the addition of Rs.4,82,318/-, that was made by the A.O by treating the cash payment by the assessee towards home loan account during the year under consideration as an unexplained expenditure u/s. 69C of the Act. 33. As observed by me hereinabove, the assessee had furnished with the A.O copy of her home loan account 8 MA No.12/RPR/2025 No.20049094187 with Allahabad Bank, Vyapar Vihar, Ring Road, Bilaspur, which revealed cash repayments of Rs.4,82,318/- during the subject year. On being queried, the assessee submitted ad at the fag end of the assessment proceedings placed on the AO’s record a cash flow statement. As source of the cash repayment of housing loan was not sufficiently explained by the assessee who had claimed that the same was sourced out of an unsecured loan of Rs.20 lac, therefore, the A.O in the backdrop of the dubious pattern of deposits and withdrawals had rejected the assessee’s explanation and added the aforementioned amount of Rs.4,82,318/- by treating the same as an unexplained expenditure u/s. 69C of the Act. 34. On a perusal of the order of the CIT(Appeals), I find that he had summarily relied upon the cash flow statement that was filed by the assessee, and without giving any cogent reason had hushed through the matter, and observed, that as the assessee had sufficiently explained the source of the repayment of Rs.4,82,318/-, therefore, the addition made by the A.O was liable to be vacated. The CIT(A) had observed as under: “5. As regards the re-payment of Rs.4,82,318/- made during the financial year 2012-13 made by the A.O u/s. 69C is concerned. In the case flow statement for FY 2012-13 submitted by the assessee, the following has been explained. 35. I have thoughtfully considered the aforesaid issue in the backdrop of the contentions advanced by the Ld. Authorized Representatives of both the parties. After perusing the observation of the CIT(Appeals), I am of a firm conviction that he had without properly dealing with the facts vacated the addition of Rs.4,82,318/- (supra) without bringing on record 9 MA No.12/RPR/2025 any reason for dislodging the view taken by the A.O. Considering the fact that the CIT(Appeals) had by way of a non-speaking order vacated the aforesaid addition, I am of the view that the matter in all fairness requires to be restored to his file with a direction to re-adjudicate the same after affording a reasonable opportunity of being heard to the assessee. Thus, the Ground of appeal No.2 raised by the revenue is allowed for statistical purposes in terms of the aforesaid observations. 36. Apropos the grievance of the department that the CIT(Appeals) was not justified in vacating the addition of Rs.22,96,000/- made by the A.O u/s. 69C of the Act without any discussion on the said issue by way of a speaking order, I am of the view that the said claim of the revenue is in itself based on incorrect observation. I, say so, for the reason that there is no whisper in the body of the CIT(Appeals)’s order as regards the deletion of addition of Rs.22.96 lacs (supra) that was made by the A.O u/s. 69A of the Act. As the aforesaid issue does not emanate from the order of the CIT(Appeals), therefore, there is no occasion for me to deal with the said grievance of the department, which, in my view, is in itself based on misconceived observations. Accordingly, I refrain from dealing with the Grounds of appeal Nos. 3 & 4 raised by the revenue for the reason that the same does not emanate from the order passed by the CIT(Appeals). 37. In the result, the appeal of the revenue in ITA No.187/RPR/2024 is partly allowed for statistical purposes in terms of the aforesaid observations. 38. Resultantly, the appeal of the revenue is partly allowed for statistical purposes while for the cross-objection filed by the assessee is dismissed in terms of the aforesaid observations.” 6. I am of the considered view that the revenue had failed to point out any mistake apparent from the record in the aforestated order of the Tribunal and in the garb of the present miscellaneous application, it is seeking review of the order passed by the Tribunal in ITA No.187/RPR/2024 & CO No.11/RPR/2024, dated 28.10.2024, which is 10 MA No.12/RPR/2025 beyond the scope of jurisdiction as envisaged u/s. 254(2) of the Act. The Tribunal in its own wisdom relying on the judgment of the Hon’ble Supreme Court in the case of M/s. Andaman Timber Industries Vs. Commissioner of Central Excise, Kolkata-II, C.A. No.4228 of 2006 (SC), dated 02.09.2015 had adjudicated the matter. The Ld. Sr. DR failed to point out any mistake which is apparent, obvious, patent and glaring. 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. I 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. 7. My 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 11 MA No.12/RPR/2025 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 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\" 8. 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 12 MA No.12/RPR/2025 that the scope of section 254(2) is limited to rectification of mistake 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.” 9. Accordingly, the miscellaneous application filed by the revenue u/s.254(2) of the Act is dismissed as devoid and bereft of any merit. 10. In the result, miscellaneous application filed by the revenue is dismissed. Order pronounced in open court on 17th day of July, 2025. Sd/- (PARTHA SARATHI CHAUDHURY) ÛयाǓयक सदèय/JUDICIAL MEMBER रायपुर / Raipur; Ǒदनांक / Dated : 17th July, 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 Pr. CIT-1, Raipur (C.G.) 4. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण, “एक-सदèय” बɅच, रायपुर / DR, ITAT, “SMC” Bench, Raipur. 5. गाड[ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, 13 MA No.12/RPR/2025 // True Copy // Senior Private Secretary आयकर अपीलȣय अͬधकरण, रायपुर / ITAT, Raipur "