BALARAMSA.S.BASAVA,GADAG vs. INCOME TAX OFFICER WARD-1, GADAG

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ITA 3139/BANG/2018Status: DisposedITAT Bangalore21 December 2018AY 2014-152 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that while the assessee did not provide sufficient evidence, the CIT(A) failed to issue a show-cause notice before enhancing the addition. Therefore, the matter was restored to the CIT(A) for a fresh decision.

What were the facts?

The assessee's appeal concerns additions made by the AO and confirmed/enhanced by the CIT(A) regarding salary paid to relatives and tanker freight/unloading charges. The assessee contended that the CIT(A) enhanced the addition without providing an opportunity to show cause.

What were the issues?

Whether the CIT(A) erred in enhancing an addition without issuing a show-cause notice, and whether adequate opportunities were provided to the assessee for presenting evidence.

Which sections of the Income-tax Act were involved?

Section 40A(2)(b),Section 251(2)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC-B” BENCH : BANGALORE

Before: SHRI A.K.GARODIA, ACCOUNANT MEMBER

For Appellant: Ms. Mrinalini R., Advocate
For Respondent: Smt. Padmameenakshi, JCIT (DR)

Shri Balaramsa S. Basava, Appellant C/o. Basava Petroleums, Pala Badami Road, Betgeri – Gadag – 582102. PAN. ABXPB1969K Vs The ITO, Ward – I, Gadag. Respondent Assessee by : Ms. Mrinalini R., Advocate Revenue by : Smt. Padmameenakshi, JCIT (DR) Date of hearing : 06-12-2018 Date of pronouncement : 21-12-2018 O R D E R PER A. K. GARODIA, A.M.: This appeal is filed by the assessee and it is directed against the order of CIT (A) – Hubballi dated 23.10.2018 for A. Y. 2014 – 15.

2.

The grounds raised by the assessee are as under:- Tax Effect relating to each Ground of Grounds of Appeal appeal (see note below) The order passed by the Learned Commissioner of Income Tax (Appeals) is 1. illegal, baseless and opposed to the facts of the case. The learned Commissioner of Income Tax (Appeals) has erred in confirming the addition of salary paid in excess to 2. relatives of Rs. 1,20,000 and further Rs. 84,000 making addition of Rs. 2,80,000 to the returned income by disallowing entire salary paid to relatives The learned Commissioner of Income Tax (Appeals) has erred in confirming Rs. 163,200 3. addition of Rs. 54,500 out of Tanker Freight and unloading charges besides

disallowing the entire expenditure under the head Tanker Freight and Unloading expenses of Rs. 5,44,000. The assessee prays leave to add any more 4. grounds of appeal before or at the time of hearing. Total tax effect (see note below) Rs. 247,200 Plus Interest

3. Learned AR of the assessee submitted that as per the assessment order, the AO made a disallowance of Rs. 120,000/- out of salary of Rs. 4 lacs paid by the assessee to four family members of the assessee u/s 40A (2) (b) and learned CIT (A) has not only confirmed the same but enhanced it to Rs. 4 lacs without providing an opportunity to show cause u/s 251 (2) of I. T. Act. He also submitted that learned CIT (A) has decided this issue in a cryptic manner without providing adequate opportunity of being heard and therefore, the matter may be restored to his file for a fresh decision on both issues after providing adequate opportunity of being heard. Learned DR of the revenue supported the order of CIT (A). She also submitted that various opportunities were provided by CIT (A) as noted in Para 3 of his order and therefore, this is not correct to say that adequate opportunities were not provided by CIT (A).

4. I have considered the rival submissions and I find that this is true that as noted by CIT (A) in Para 3 of his order, several dates were fixed for hearing i.e. 01.05.2018, 22.05.2018, 01.06.2018, 20.06.2018, 11.07.2018 and 24.07.2018 but the required details and evidences were not brought on record by the assessee. But still I feel it proper to restore the matter back to CIT (A) for a fresh decision after providing reasonable opportunity of being heard to both sides mainly because of this fact that for making the enhancement, learned CIT (A) has not issued notice as required u/s 251 (2) of I. T. Act. I set aside the order of CIT (A) and restore the entire matter back to his file for a fresh decision on both issues after providing adequate opportunity of being heard to both sides. In view of this decision, I do not make any comment on the merit of any issue.

5. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on the date mentioned on the caption page.

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