ASWINI KUMAR SARANGI,AT-KOTABIDYADHARPUR vs. INCOME TAX OFFICER KHURDA WARD, SRI RAM NAGAR

Shri Rajat ajat Kar, ld AR appeared for the assessee. Shri Charan Dass the assessee. Shri Charan Dass, ld Sr DR represented on behalf of the revenue. represented on behalf of the revenue.

3. It was submitted by ld It was submitted by ld AR that the assessee had declared the income the assessee had declared the income on presumptive presumptive basis u/s.44AD. The Assessing Officer has completed the basis u/s.44AD. The Assessing Officer has completed the assessment u/s.143(3) of the Act by estimating the income of the assess assessment u/s.143(3) of the Act by estimating the income of the assess assessment u/s.143(3) of the Act by estimating the income of the assessee at 6% on a turnover of Rs.2,18,62,330/ at 6% on a turnover of Rs.2,18,62,330/-. It was his submission that, . It was his submission that, P a g e 1 | 3 however, on appeal, the ld CIT(A) enhanced the assessment and directed estimation of profit at 8% without affording any opportunity in violation of section 251(2) of the Act. It was his submission that the assessee being a distributor of Hindustan Coca Cola Products, the net profit margin is about 2-3%. It was submitted that the profit may be restricted to 3%.

In reply, ld Sr DR supported the order of the ld CIT(A).

I have considered the rival submissions. A perusal of the impugned order clearly shows that the ld CIT(A) has enhanced the profit to 8% as against the profit determined by the AO at 6% on the basis of written submission filed by the assessee. For the enhancement carried out by the CIT(A), I observe that it is incumbent upon the CIT(A) under Section 251(2) to provide reasonable opportunity of showing cause against any proposed enhancement to the assessee. Thus, the CIT(A) is prevented from making enhancement to the assessed income without opportunity to the assessee. In view of the explicit provision in this regard, it is mandatory requirement of law to necessarily provide opportunity failing which the enhancement carried out is unsustainable in law. A perusal of the order of the CIT(A), shows nowhere reference to such show cause or opportunity to assessee for carrying out enhancement is found. Therefore, the enhancement made by the CIT(A) is unsustainable in law. Therefore, in the interest of justice, I set aside the order of the ld CIT(A) and remit the matter back to file file

In the result, appeal of the assessee stands partly allowed for statistical purposes.