What did the Tribunal hold?

The Tribunal found that the CIT(A) enhanced the disallowance without providing the assessee with an opportunity to be heard. Therefore, the matter was remitted back to the CIT(A) for readjudication.

The AO disallowed 1/10th of the assessee's expenditure. The CIT(A) confirmed 1/5th of the disallowance, thereby enhancing the disallowance without issuing a show cause notice.

What were the issues?

Whether the CIT(A) can enhance the disallowance without issuing a show cause notice to the assessee.

Sri Ramaa Cotton Ginning & Oil… vs ITO | ITAT Visakhapatnam 2019

Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM

Before: SHRI V. DURGA RAO& SHRI D.S. SUNDER SINGH

For Appellant: Shri G.V.N.Hari, AR

Hearing: 05.11.2019Pronounced: 15.11.2019

Per Shri D.S.Sunder Singh, Accountant Member : This appeal is filed by the assessee against the order of the Commissioner of Income Tax (Appeals)-2, Guntur in I.T.A.No.10551/GNT/CIT(A)-2/2017-18 dated 12.03.2019 for the Assessment Year (A.Y.) 2015-16.

2 I.T.A. No.346/Viz/2019, A.Y.2015-16 M/s Sri Ramaa Cotton Ginning & Oil Mills, Guntur 2. All the grounds of appeal are related to the disallowance of 1/10th of expenditure of Rs.1,17,36,838/- made by the AO and the Ld.CIT(A) confirmed 1/5th of disallowance. The assessee had claimed the total expenditure of Rs.1,17,36,838/- towards Hamali, freight inwards, repairs and maintenance, wages etc. out of which AO made the disallowance of Rs.11,73,684/- which works out to 1/10th of the total expenditure.

Against the disallowance made by the AO, the assessee went on appeal before the Ld.CIT(A) and the Ld.CIT(A) directed the AO to restrict the disallowance to 1/5th of the expenditure which works out to 20% as against the actual disallowance of 10% made by the AO. Against which the assessee filed appeal before this Tribunal.

We have heard both the parties and perused the material placed on record. In the instant case, the AO disallowed 1/10th of total expenditure of Rs.1,17,36,838/-in respect of hamali, freight, repairs and maintenance etc. against which the Ld.CIT(A) directed the AO to make the disallowance of 1/5th of the expenditure which works out to 20% which amounts to enhancement of income without giving the enhancement notice, hence, the Ld.AR argued that enhancement by the Ld.CIT(A) without giving the notice is unjustified and accordingly requested to remit the matter back to the file

3 I.T.A. No.346/Viz/2019, A.Y.2015-16 M/s Sri Ramaa Cotton Ginning & Oil Mills, Guntur of the Ld.CIT(A) to readjudicate the issue. We observe from the orders of the Ld.CIT(A) that there appears to be a mistake in the order in enhancing the disallowance of expenditure without giving show cause notice to the assessee. Therefore, we consider it is justified to remit the matter back to the file of the Ld.CIT(A) to readjudicate the issue after giving opportunity to the assessee. Accordingly, appeal of the assessee is allowed for statistical purpose.

In the result, appeal of the assessee is allowed for statistical purpose.

Order pronounced in the open court on 15th November, 2019.

Sd/- Sd/- (िी.दुगाा राि) (धड.एस. सुन्दर धसंह) (V. DURGA RAO) (D.S. SUNDER SINGH) न्याधयक सदस्य/JUDICIAL MEMBER लेखा सदस्य/ACCOUNTANT MEMBER नवशधखधपटणम /Visakhapatnam नदनधंक /Dated : 15.11.2019 L.Rama, SPS

4 I.T.A. No.346/Viz/2019, A.Y.2015-16 M/s Sri Ramaa Cotton Ginning & Oil Mills, Guntur

आदेश की प्रतितिति अग्रेतिि/Copy of the order forwarded to:- 1. ननधधाऩरती/ The Assessee - M/s Sri Ramaa Cotton Ginning & Oil Mills, D.No.1080/1, Koyavari Palem, Prathipadu Mandal, Guntur 2. रधजस्व/The Revenue - Income Tax Officer, Ward-2(3), Guntur 3. The Principal Commissioner of Income Tax-2, Guntur 4. The Commissioner of Income Tax (Appeals)-2, Guntur 5. तिभागीय प्रतितिति, आयकर अिीिीय अतिकरण, तिशाखािटणम/DR, ITAT, Visakhapatnam 6.गार्ड फ़ाईि / Guard file

आदेशािुसार / BY ORDER // True Copy //

Sr. Private Secretary ITAT, Visakhapatnam

SRI RAMAA COTTON GINNING & OIL MILLS,KOYAVARIPALEM vs. THE INCOME TAX OFFICER, WARD-2(3), GUNTUR

What did the Tribunal hold?

What were the facts?

What were the issues?

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