RAJKUMAR PARSHURAM MHATRE,POYNAD V. ASSESSING OFFICER, WARD PANVEL

ITA 1764/PUN/2025

AI Insights

The case involves Rajkumar Parshuram Mhatre, the appellant, who faced an addition of Rs.20,96,225 under Section 68 of the Income Tax Act, 1961, due to unexplained cash deposits in his bank accounts during the assessment year 2016-17. The Assessing Officer made this addition after the assessee failed to explain the source of cash deposits totaling Rs.49,25,060, of which only Rs.28,28,835 was accounted as business receipts. The CIT(A)/NFAC upheld this addition, rejecting additional evidence from the assessee on procedural grounds (non-filing of a formal application under Rule 46A(1)). The assessee appealed to the ITAT, which found merit in the assessee's request to admit additional evidence and directed the matter back to the CIT(A)/NFAC for a fresh decision.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 771896 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-08-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2016-2017
• Other Referred Cases: Inder Singh Vs. The State of Madhya Pradesh
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MILIND DEBAJE
• Assessee Lawyers: RONAK H JAIN
• Keywords: Set aside; Business income; Opportunity of being heard; Additional evidence; Peak credit; Principle of natural justice
• Section: 144; 142(1); 68

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “SMC”, PUNE BEFORE JUSTICE (RETD.) C V BHADANG, PRESIDENT AND SHRI R. K. PANDA, VICE PRESIDENT ITA No.1764/PUN/2025 Assessment year : 2016-17 Rajkumar Parshuram Mhatre Poynad, Raigad – 402108, Maharashtra Vs. ITO, Ward Panvel PAN: CTJPM9421P (Appellant) (Respondent) Assessee by : Shri Ronak H Jain Department by : Shri Milind Debaje, JCIT Date of hearing : 25-08-2025 Date of pronouncement : 25-08-2025 O R D E R PER R.K. PANDA, VP: This appeal filed by the assessee is directed against the order dated 24.05.2024 of the Ld. CIT(A) / NFAC, Delhi relating to assessment year 2016-17. 2. There is a delay of 358 days in filing of the appeal before the Tribunal for which the assessee has filed a condonation application along with an affidavit explaining the reasons for such delay. It has been explained in the affidavit that during the financial year 2023-24 the assessee faced acute financial hardship and his bank account was declared as NPA by SBI and IDBI Banks due to default in repayment of cash credit facilities availed by him for which he suffered from severe mental stress and psychological trauma. Further due to financial crunch the Printed from counselvise.com 2 ITA No.1764/PUN/2025 assessee was unable to engage the services of any legal consultant or professional. It has further been stated that the delay in filing of the appeal is neither willful nor deliberate but solely attributable to the financial hardship and mental condition prevailing during the relevant period. Relying on various decisions the Ld. Counsel for the assessee submitted that the delay in filing of the appeal should be condoned. 3. The Ld. DR opposed the condonation application filed by the assessee. 4. We have heard the rival arguments made by both the sides on the issue of delay in filing of the appeal. We have also considered the contents of the condonation application filed along with the affidavit of the assessee. We find recently the Hon’ble Supreme Court in the case of Inder Singh Vs. The State of Madhya Pradesh reported in 2025 LiveLaw (SC) 339 has held as under: “14. There can be no quarrel on the settled principle of law that delay cannot be condoned without sufficient cause, but a major aspect which has to be kept in mind is that, if in a particular case, the merits have to be examined, it should not be scuttled merely on the basis of limitation.” 5. Considering the totality of the facts of the case and in the light of the decision of Hon’ble Supreme Court cited (supra), the delay in filing of the appeal is condoned and the appeal is admitted for adjudication. 6. Facts of the case, in brief, are that the assessee is an individual and filed his return of income on 08.03.2017 declaring total income of Rs.3,15,020/-. The case Printed from counselvise.com 3 ITA No.1764/PUN/2025 was selected for limited scrutiny under CASS. Accordingly statutory notices u/s 143(2) and 142(1) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) were issued and served on the assessee. During the course of assessment proceedings the assessee was asked to give the source of cash deposits made in SB account during the year under consideration and during the demonetization period. However, the assessee did not submit any documents in response to the notice issued along with questionnaire. The Assessing Officer therefore, proceeded to complete the assessment u/s 144 of the Act. On verification of ITS information available on the system and bank account statement the Assessing Officer noticed that the assessee has deposited total cash of Rs.49,25,060/- in his SB / cash credit / current accounts maintained with IDBI Bank, Poynad. However, the assessee has offered a sum of Rs.28,28,835/- as business receipts. Since the assessee failed to explain the source of cash deposits of Rs.20,96,225/- (Rs.49,25,060/- (-) Rs.28,28,835/-), the Assessing Officer made addition of Rs.20,96,225/- u/s 68 of the Act. 7. Before the Ld. CIT(A) / NFAC the assessee furnished certain additional evidences. However, in absence of any formal request for admission of the additional evidences under Rule 46A(1) of the I T Rules, 1962, the Ld. CIT(A) / NFAC did not accept the same and upheld the addition made by the Assessing Officer. Printed from counselvise.com 4 ITA No.1764/PUN/2025 8. Aggrieved with such order of the Ld. CIT(A) / NFAC, the assessee is in appeal before the Tribunal by raising the following grounds: 1. The learned CIT(A)/NFAC has passed an order without considering the facts and documents already on record, which is a violation of Section 250(6) of the Income-tax Act, 1961. The failure to do so renders the order bad in law and liable to be set aside. Relief may please be granted. 2. On the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (Appeals) [CIT(A)]/NFAC has erred in upholding the addition of ₹20,96,225/- made under Section 68 of the Income-tax Act, 1961 solely on the basis of non-filing of Rule 46A to admit additional evidences hence denial of admission of evidence amounts to violation of principles of natural justice. Relief may please be granted. 3. The learned CIT(A)/NFAC has further erred in disallowing genuine business purchases, without verifying their legitimacy & also not applying \"peak credit\" principle which is arbitrary, unjustified, and bad in law. Relief may please be granted. 4. The learned Assessing Officer (AO) and CIT(A)/NFAC have erred in initiating and sustaining penalty proceedings under Sections 271(C) without proper appreciation of facts and legal position Relief may please be granted. 5. The appellant craves leave to add and or alter any of the grounds of appeal before or at the time of hearing. 9. The Ld. Counsel for the assessee submitted that various documents were filed before the Ld. CIT(A) / NFAC in the shape of additional evidence to substantiate the nature and source of cash deposit of Rs.20,96,225/-. However, he has not accepted the additional evidence on the ground that no formal application for admission of the same has been filed as per Rule 46A(1) of the IT Rules. He submitted that in the interest of justice, the matter may be restored to the file of the Ld. CIT(A) / NFAC with a direction to admit the additional evidence and decide the appeal on merit. Printed from counselvise.com 5 ITA No.1764/PUN/2025 10. The Ld. DR on the other hand heavily relied on the order of the Ld. CIT(A) / NFAC. 11. We have heard the rival arguments made by both the sides, perused the orders of the Assessing Officer and the Ld. CIT(A) / NFAC and the paper book filed on behalf of the assessee. It is an admitted fact that out of total cash deposit of Rs.49,25,060/-, the Assessing Officer after considering the business receipts of Rs.28,28,835/-, made addition of Rs.20,96,225/- u/s 68 of the Act being the unexplained cash deposit in the SB account. We find although the assessee filed various details in shape of additional evidence before the Ld. CIT(A) / NFAC, however, he did not admit the same on the ground that no formal request for admission of the same was filed before him as per the provisions of Rule 46A(1) of the IT Rules, 1962. He, therefore, upheld the addition made by the Assessing Officer. It is the submission of the Ld. Counsel for the assessee that given an opportunity, the assessee is in a position to follow the due procedure by filing an application for admission of the additional evidence and also explain the nature and source of the said cash deposit of Rs.20,96,225/-. Considering the totality of the facts of the case and in the interest of justice, we deem it proper to restore the issue to the file of the Ld. CIT(A) / NFAC with a direction to permit the assessee to file a petition for admission of the additional evidence as per Rule 46A(1) of the IT Rules and decide the issue as per fact and law after providing due opportunity of being heard to the assessee. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes. Printed from counselvise.com 6 ITA No.1764/PUN/2025 12. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open Court at the conclusion of hearing itself i.e. on 25th August, 2025. Sd/- Sd/- (JUSTICE (RETD.) C.V. BHADANG) (R. K. PANDA) PRESIDENT VICE PRESIDENT पुणे Pune; दिन ांक Dated : 25th August, 2025 GCVSR आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपीलार्थी / The Appellant; 2. प्रत्यर्थी / The Respondent 3. 4. The concerned Pr.CIT, Pune DR, ITAT, ‘SMC’ Bench, Pune 5. गार्ड फाईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अधिकरण ,पुणे / ITAT, Pune S.No. Details Date Initials Designation 1 Draft dictated on 25.08.2025 Sr. PS/PS 2 Draft placed before author 25.08.2025 Sr. PS/PS 3 Draft proposed & placed before the Second Member JM/AM 4 Draft discussed/approved by Second Member AM/AM 5 Approved Draft comes to the Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of Order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R. 11 Date of Dispatch of order Printed from counselvise.com "