MAHINDER PAL,MANDI V. INCOME TAX OFFICER, MANDI

ITA 916/CHANDI/2024

AI Insights

The case involves Shri Mahinder Pal, who is engaged in trading vegetables and fruits, appealing against the order of the Commissioner of Income Tax (Appeals) which upheld the re-opening of his assessment for the year 2018-19. The AO had noted a substantial deposit of Rs.2,10,05,007 in the assessee's bank account, leading to a re-assessment under Section 147 read with Section 144 of the Income Tax Act, 1961. The Tribunal found procedural lapses in the rejection of additional evidence by the CIT (Appeals) and deemed the imposition of a tax liability on the basis of minor procedural negligence as disproportionate.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 772816 (ITAT-CHANDIGARH)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2018-2019
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANJIT KAUR
• Assessee Lawyers: VISHAL MOHAN
• Keywords: Set aside; Additional evidence; Reopening of assessment
• Section: 147; 144

Judgement Text

"आयकर अपीलȣय अͬधकरण,चÖडीगढ़ Ûयायपीठ, चÖडीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, ‘B’ CHANDIGARH BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT AND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER आयकर अपील सं./ ITA No. 916/CHD/2024 Ǔनधा[रण वष[ / Assessment Year: 2018-19 Shri Mahinder Pal, Mahinder Fruit Company, Chail Chowk, Mandi. Vs The ITO, Mandi. èथायी लेखा सं./PAN NO: AVGPP5393J अपीलाथȸ/Appellant Ĥ×यथȸ/Respondent Assessee by : Shri Vishal Mohan, Sr. Advocate with Ms. Isha Sharma, Advocate Revenue by : Dr. Ranjit Kaur, Addl. CIT Sr.DR Date of Hearing : 17.07.2025 Date of Pronouncement : 28.08.2025 HYBRID HEARING O R D E R PER RAJPAL YADAV, VP The assessee is in appeal before the Tribunal against the order of the ld. Commissioner of Income Tax (Appeals) [in short ‘the CIT (A)’] dated 23.07.2024 passed for assessment year 2018-19. 2. The assessee has taken six grounds of appeal, however, his grievance revolves around two issues, namely, ld. CIT Printed from counselvise.com ITA No.916/CHD/2024 A.Y.2018-19 2 (Appeals) has erred in upholding the re-opening of assessment and confirming the additions made by the AO with the aid of Section 69A of the Income Tax Act amounting to Rs.2,10,05,007/-. 3. The brief facts of the case are that assessee, at the relevant time was trading in vegetables and fruits. According to the AO, he did not file regular return of income for assessment year 2018-19 and a deposit of Rs.2,10,05,007/- has been made in the bank account with the Punjab National Bank. Therefore, he recorded reasons and reopened the assessment. The assessment has been framed u/s 147 read with Section 144 of the Act on 18.01.2023. In other words, it is an ex-parte assessment according to the best judgement of the AO. 4. Dissatisfied with the assessment order, the assessee carried the matter in appeal before the CIT (Appeals). He has raised certain additional grounds of appeal which were admitted by the CIT (Appeals), however, assessee sought to file certain additional evidence which was rejected by the First Appellate Authority on the ground that assessee did not file a Printed from counselvise.com ITA No.916/CHD/2024 A.Y.2018-19 3 proper application under Rule 46A of the Income Tax Act. The ld. CIT (Appeals) took note of this aspect in paragraph No. 5.4 page 21 to 26 of the impugned order. 5. Before us, assessee has filed an application under Rule 29 of the ITAT Rules, 1963 for permission to adduce additional evidence. By way of this application, assessee sought to place on record audited accounts, trading accounts and Profit & Loss Accounts. He also wants to place on record certain bank accounts to demonstrate that his net income is far less than the gross deposits made in cash in the bank account. According to him, these deposits are trading turnover of the assessee and not the income. The ld. counsel for the assessee prayed that impugned orders be set aside and this issue be relegated for fresh adjudication to the file of AO. 6. The ld. DR, on the other hand, contended that assessee did not follow the procedure. He has been given due opportunity of hearing. The ld. CIT (Appeals) has examined the issue with all possible angles and thereafter affirmed the assessment order. Printed from counselvise.com ITA No.916/CHD/2024 A.Y.2018-19 4 7. We have duly considered the rival contentions and gone through the record carefully. We find that according to the assessee, he was trading in vegetables and fruits since 2010. He has been filing return of income in the past. The gross deposits in the Punjab National Bank Account were trading turnover and not net income as assumed by the AO u/s 69A of the Income Tax Act. The assessee belongs to an unorganized sector, working in the interiors of Himachal Pradesh. The e-mail of his Tax Consultant was alleged to have been registered on the Portal of the Income Tax Department and hence, he could not have complete knowledge of the proceeding. He could not produce the relevant evidence before the AO. In our opinion, the ld. CIT (Appeals) ought to have taken on record the evidences sought to be produced by the assessee and thereafter, these evidences ought to have been examined on merit. The ld. CIT (Appeals) has just rejected the contention of the assessee only for the reason that there was no proper application by the assessee under Rule 46A. If there was some procedure lacuna, then that ought to be confronted to the assessee, so that this ambiguity could be removed but for minor negligence, punishment in the shape of tax liability Printed from counselvise.com ITA No.916/CHD/2024 A.Y.2018-19 5 of an addition of Rs.2 Crore is disproportionate, looking to the background of the assessee and nature of his business he was undertaking, we set aside both the orders and restore all the issues to the file of AO for fresh adjudication. The assessee will be at liberty even to raise objection against re-opening of the assessment. 8. In the result, appeal of the assessee is allowed for statistical purposes. Order pronounced on 28.08.2025. Sd/- Sd/- (MANOJ KUMAR AGGARWAL) (RAJPAL YADAV) ACCOUNTANT MEMBER VICE PRESIDENT “Poonam” 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 सहायक पंजीकार/ Assistant Registrar Printed from counselvise.com "