MINTU LAL,RANCHI vs. ASSESSING OFFICER, RANCHI

ITA 140/RAN/2026Status: DisposedITAT Ranchi30 September 2026AY 2016-175 pages
AI SummaryRemanded

What were the facts?

The assessee, Mintu Lal, filed an appeal before the Income Tax Appellate Tribunal (ITAT), Ranchi Bench, against the order of the National Faceless Appeal Centre (NFAC), Delhi, for Assessment Year (AY) 2016-17. The appeal was filed with a delay of over two years. The Assessing Officer (AO) made an addition of ₹14,98,719 (later reduced to ₹12,98,719 by the CIT(A)) based on estimated sales during the demonetization period. The AO had received information about a cash deposit of ₹47,81,800 in the assessee's savings bank account during FY 2016-17 (AY 2017-18). To substantiate the source, the assessee provided sales for November 2016. The AO extrapolated sales for November and December 2016 to arrive at total sales of ₹32,83,031, adding the difference of ₹14,98,719 as unexplained cash. The assessee contended that the estimation was arbitrary, the demonetization period did not fall within AY 2016-17, and the books of accounts were not rejected under Section 145.

What did the Tribunal hold?

The Tribunal considered the submissions, particularly the concession made by the learned Sr.DR. The Tribunal agreed with the submission that the period of demonetization, which occurred in FY 2016-17, is relevant to Assessment Year 2017-18 and not AY 2016-17. Consequently, the Tribunal held that the matter needed to be restored back to the file of the Assessing Officer to take necessary steps as per law to correct the remedy. The Tribunal condoned the delay in filing the appeal, finding sufficient reasons for the delay caused by the assessee's lack of familiarity with electronic and faceless proceedings. The appeal was allowed for statistical purposes with the direction to the Assessing Officer to rectify the assessment year.

What were the issues?

1. Whether the addition based on ad-hoc estimation of sales is sustainable in law, considering the seasonal nature of the wholesale egg business and the alleged arbitrary calculation by the authorities below (Section 145)? 2. Whether the addition made by the Assessing Officer, relying on facts relating to the demonetization period of November and December 2016, is valid for Assessment Year 2016-17, when demonetization occurred in Financial Year 2016-17 (AY 2017-18)? 3. Whether the addition made on an estimated basis is legal and arbitrary without the rejection of the assessee's books of accounts under Section 145(3) of the Income Tax Act, 1961? Assessee's Contentions: - The estimation of sales was arbitrary and contrary to the seasonal demand for eggs. - The demonetization period (November-December 2016) falls under AY 2017-18, not AY 2016-17. - The addition was made without rejecting the books of accounts under Section 145, which is settled law. Revenue's Contentions: - The Revenue, through the learned Senior Departmental Representative (Sr.DR), conceded that the demonetization period falls under AY 2017-18 and not AY 2016-17.

Which sections of the Income-tax Act were involved?

Section 145,Section 143(2),Section 142(1),Section 250

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, RANCHI BENCH, RANCHI

Before: SHRI RATNESH NANDAN SAHAY & SMT. RAJANI GUDURI

For Respondent: Shri Sandipan Khan, Sr.DR
Hearing: 30/09/2026Pronounced: 30/09/2026

PER: BENCH

1.

This appeal by the assessee is directed against the order of the National Faceless Appeal Centre (NFAC), Delhi, [in short, the ld. CIT(A)] dated 21/08/2024 for the Assessment Year (AY) 2016-17 wherein the assessee has raised following grounds of appeal: "Ground No. 1: Addition based on ad-hoc estimation of sales The learned Assessing Officer as well as the learned Commissioner of Income Tax (Appeals) erred in sustaining the addition by estimating sales on an arbitrary and ad-hoc basis. The authorities below calculated sales by proportionately dividing the monthly sales of November and December on a per-day basis, assuming that the sales remain uniform throughout t

The order continues below.

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