NAVDESH INFRATECH,PANCHKULA V. INCOME TAX OFFICER, WARD -5, PANCHKULA, AAYAKAR BHAWAN, SECTOR-, PANCHKULA

MA 2/CHANDI/2025

AI Insights

The case involves Navdesh Infratech, which filed a return of income declaring 'nil' income for the assessment year 2018-19. The Income Tax Officer (ITO) made an ex-parte assessment, adding substantial amounts as partners' capital contribution and unsecured loans. The CIT(A) deleted these additions after considering additional evidence, which the Tribunal later set aside, remanding the matter back to CIT(A) for a thorough examination. The Tribunal's decision was based on the need for a detailed and meritorious examination of the sources of income and compliance with procedural laws under sections 142(1) and 143(2) of the Income Tax Act.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 669476 (ITAT-CHANDIGARH)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 26-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2018-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANJIT KAUR
• Assessee Lawyers: ROHIT GOEL; DHRUV GOEL
• Keywords: Set aside; Additional evidence
• Section: 144; 142(1)

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 M.A. No. 2/CHD /2025 in आयकर अपील सं./ ITA No. 124/CHD/2024 िनधाªरण वषª / Assessment Year: 2018-19 Navdesh Infratech, Panchkula. Vs The ITO, Ward-5,Panchkula. Öथायी लेखा सं./PAN NO: AAOFN9989K अपीलाथê/Appellant ÿÂयथê/Respondent Assessee by : Shri Rohit Goel, CA and Shri Dhruv Goel, CA Revenue by : Dr. Ranjit Kaur, Addl. CIT, Sr.DR Date of Hearing : 25.04.2025 Date of Pronouncement : 26.06.2025 HYBRID 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 29.10.2024 passed in ITA No.124/CHD/2024. 2. The brief facts of the case are that assessee has filed its return of income on 24.07.2018 declaring total income as ‘nil’. The case of the assessee was selected for scrutiny assessment MA-2/CHD/2025 In ITA 124/CHD/2024 A.Y. 2018-19 2 and notices u/s 143(2) and 142(1) were issued and served. The ld. AO has passed an ex-parte assessment order u/s 144 read with Section 144B of the Income Tax Act. In other words, it is an assessment order according to the best judgement of the AO. The AO has assessed the income at Rs.14,71,21,500/-. He made two additions, namely, Rs.5,01,08,500/- on account of partners’ capital contribution and Rs.9,70,13,000/- as unsecured loans taken by the assessee. 3. On appeal, ld. CIT (Appeals) entertained the additional evidence, called for remand report from the AO and thereafter deleted the addition. The basic reason for the deletion was that it is the first year of business. It cannot be assumed that assessee firm must have earned unexplained income. It is only the partners’ capital which has been introduced and if some source is doubtful, then it is to be considered in the hands of the partners. Similarly, ld. CIT (Appeals) was satisfied with regard to the loan availed by the assessee firm. 4. The Revenue came up in appeal before the Tribunal and the Tribunal has set aside the issue to the CIT (Appeals). The finding MA-2/CHD/2025 In ITA 124/CHD/2024 A.Y. 2018-19 3 of the Tribunal, which has been alleged to be suffering from patent error reads as under : “24. We now have to examine legality, validity and proprietary of impugned order in light of premises which has been drawn up (supra). We hold that in the impugned order Id. CIT(A) in para 5.3 by having held that-assessment is as per due procedure of law ought not to have set aside the impugned assessment order dated 19.04.2021. We hold that-provisions of section 142(1) and 143(2) are mandatory provisions of law and no one can escape this rigorous of law be it assessee or Dept. officials. These are not general provisions of law but are mandatory provisions of law. We therefore hold that it was but incumbent upon the assessee firm to have gone through rigorous of law as no one car. escape especially at the original stage of the assessment that to when case is selected for complete scrutiny in CASS for verification of investments/Advances/loans and share capital/other capital. 24.1 We also hold that in guise of rule 46A a clever attempt has been made to escape this rigorous of law which is not permissible in law. We hold that rule 46A of Income Tax Rules deals with production of additional evidence before the CIT(A). It says expressly that-appellant shall not be entitled to produce before CIT(A) any evidence, whether oral or documentary other than evidence produced by him during the course of proceedings before the Assessing Officer except in the following circumstances namely: (a) Where the [Assessing Officer] has refused to admit evidence which ought to have been admitted or; (b) Where the appellant was prevented by sufficient cause from producing the evidence which he was called upon to produce by the Assessing Officer]; or (c Where the appellant was prevented by sufficient cause from producing before the [Assessing Officer] any evidence which is relevant to any round of appeal ; or (d) Where the [Assessing Officer] has made the order appealed against without giving sufficient opportunity to the appellant to adduce evidence relevant to any ground of appeal.\" A bare and simple perusal of aforesaid means those evidence whether oral or documentary other than evidence produced by him during the course of proceedings before Assessing Officer. In the instant case nothing was produced before Id. AO as evidence in original assessment proceedings. The Id. CIT(A) ought to have also followed due process in this regard which has not happened which is contemplated under Rule 46A (1) (2) (3) & (4) of Income Tax Rules, MA-2/CHD/2025 In ITA 124/CHD/2024 A.Y. 2018-19 4 1962 which are statutorily framed under Income Tax Act, 1961. Admission of additional evidence is thus not an empty formality. We exercise restrain from further observing under rule 46A. 24.2 Be that as it may, we are of the considered view that the Id.CIT(A) ought not to have partly allowed the assessee's firm appeal by deleting the amounts of Rs.5,01,08,500/- and Rs.9,70,13,000/-. aggregating to Rs. 14,71,21,500/- merely because in remand proceedings pursuant to additional evidence under Rule 46A he the Id. AO failed to carry out any inquiries, examination, verification etc. on material so placed, as we are of the considered view that nothing prevents the Id. CIT(A) to carry out such exercise all by himself as he has all the powers including coercive powers at his commands. Needless to state that the powers of Id. CIT(A) are co-terminus with that of Id. AO upon cumulative reading of all the provisions of the Income Tax Act and rules. The Id. CIT(A) ought not have found fault on part of Id. AO but ought to exercise his persuasive mind on Id. AO officially in order to meet his requirements in order to achieve the ends of justice. In result of blame culture; the income/money/amount has come to be deleted on other parameters/ considerations short of meritorious grounds. Income computation and its sources must be determined meritoriously and not by drawing adverse inferences. ORDER In result, we set aside the impugned order and remit back the matter back to the file of CIT(A) to pass an order afresh on denovo basis after making all due diligence, verification, checks, examination of persons/documents by himself or through Id. AO or both so that amounts (supra) sources are clearly examined in a meritorious way and not as and by way of default as disposal of appeal should be fair, logical, and meritorious. It should not be decided in a short-cut manner or in summary manner as is sought to be done. We hope and trust-assessee firm too would cooperate with Dept. in disposing off the appeal in meritorious way. We hope and trust that appeal would be decided as expeditiously as possible probably within six months from date of receipt of this order. 25. Revenue's appeal is allowed as and by way of remand. 26. Appeal allowed for statistical purposes. Order pronounced as on 29.10.2024. Sd/- Sd/- (VIKRAM SINGH YADAV) (PARESH M. JOSHI) ACCOUNTANT MEMBER JUDICIAL MEMBER MA-2/CHD/2025 In ITA 124/CHD/2024 A.Y. 2018-19 5 5. With the assistance of ld. Representative, we have gone through the record carefully. 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. 6. A perusal of the Tribunal’s order would reveal that an apparent error has crept in because Revenue has not taken any ground pleading therein that CIT (Appeals) has erred in entertaining additional evidence under Rule 46A. The Revenue has not pleaded that CIT (Appeals) failed to follow the outcome of the procedure contemplated under Rule 46A by not providing opportunity of hearing to the ld.A.O. Apart from the above, we are of the view that discussion in paragraph No. 24 extracted supra has no coherence with the dispute in hand. It does not goad adjudicator to reach at any conclusion because it has no connection with the issue involved in the appeal. The simple MA-2/CHD/2025 In ITA 124/CHD/2024 A.Y. 2018-19 6 issue before the Tribunal was whether assessee explained the source of loan taken by it and capital contribution by the partners which have not been addressed in the order. Therefore, considering the apparent error crept in the order of the Tribunal, we recall it and restore the file to its original number for fresh hearing. The Registry is directed to list the appeal in due course. 7. In the result, Miscellaneous Application is allowed. Order pronounced on 26th June,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 आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar "