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

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ITA 157/CTK/2024Status: DisposedITAT Cuttack30 May 2024AY 2017-183 pages
AI SummaryRemanded

What did the Tribunal hold?

The tribunal held that the CIT(A) erred by enhancing the assessment without affording the assessee a reasonable opportunity to show cause, as mandated by Section 251(2). The enhancement made by the CIT(A) was therefore unsustainable in law.

What were the facts?

The assessee declared income on a presumptive basis under Section 44AD. The Assessing Officer estimated income at 6% on turnover. The CIT(A) enhanced the profit estimation to 8% without providing an opportunity to the assessee.

What were the issues?

Whether the CIT(A) can enhance the assessment without providing an opportunity to the assessee. The validity of an enhancement made in violation of the principles of natural justice.

Which sections of the Income-tax Act were involved?

Section 44AD,Section 143(3),Section 251(2)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, IN THE INCOME TAX APPELLATE TRIBUNAL,

For Appellant: Shri Rajat Kar, Adv
For Respondent: Shri Charan Dass, ld Sr DR
Hearing: 30/0Pronounced: 30/0

O R D E R This is an appeal filed by the assessee aga This is an appeal filed by the assessee against the order of the ld inst the order of the ld Addl./JCIT(A)- -1, Visakhapatnam dated 31.1.2024 31.1.2024 in Appeal No.CIT(A),Bhubaneswar Bhubaneswar-1/14518/2019-20 for the assessment year for the assessment year 2017- 18.

2.

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.

1.

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%.

4.

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

5.

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

P a g e 2 | 3 to provide an opportunity to the assessee, if any enhancement is required and thereafter adjudicate the issue.

3.

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

Order dictated and pronounced in the open court on 30/05/2024.

Sd/- (George Mathan) JUDICIAL MEMBER Cuttack; Dated 30/05/2024 B.K.Parida, SPS (OS) Copy of the Order forwarded to : 1. The appellant: Aswini Kumar Sarangi, AT: Kotabidyadharpur, PO: Banpur, Dist: Khorda 2. The Respondent: Income Tax Officer, Khorda Ward, Sri Ram Nagar, Khorda 3. The Addl.JCIT(A)- 1, Visakhapatnam 4. Pr.CIT, Bhubaneswar 5. DR, ITAT, Cuttack 6. Guard file. //True Copy// By order

Sr.Pvt.secretary ITAT, Cuttack

P a g e 3 | 3

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