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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
This appeal by the assessee is arising out of the order of Commissioner of Income Tax (Appeals)-32, Mumbai [in short CIT(A)], in appeal No. CIT(A)-32/IT-26/ACIT-17(3)/14-15 dated 10.02.2016. The Assessment was framed by the Asst. Commissioner of Income Tax, Circle 17(3), Mumbai (in short ‘ACIT’) for the A.Y. 2011-12 vide order dated 25.03.2014 under section 143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’).
At the outset, it is noticed that the assessee has raised the following grounds: - “1. On the facts and circumstances of the case and in law, the Hon'ble CIT(A) erred in wrongly upholding the addition in Gross Profit by rejecting books amounting to Rs. 87, 05,880/- whereas as per the facts & circumstances the additions should not be made.
2. On the facts and circumstances of the case and in law) the Hon'ble CIT(A) erred in wrongly upholding the notional cash balance as income and made additions of Rs, 12, 34, 245/- whereas as per the facts & circumstances the additions should not be made.
3. On the facts and circumstances of the case and in law, the Hon'ble CIT(A) erred in wrongly upholding the notional Creditors as Income and made additions of Rs. 25, 10, 250/- whereas as per the facts & circumstances the additions should not be made.
4. On the facts and circumstances of the case and in law, the Hon'ble CIT(A) erred in wrongly upholding the notional Expenses as Income and made additions of Rs. 7, 24. 505/- whereas as per the facts & circumstances the additions should not be made.
5. On the facts and circumstances of the case and in law, the Hon'ble CIT(A) erred in wrongly upholding the additions in Freight Expenses and Purchases amounting to Rs. 4, 19, 481/- whereas as per the facts & circumstances the additions should not be made.
6. On the facts and circumstances of the case and in law, the Hon'ble CIT(A) erred in wrongly upholding the additions in Purchases/ labour charges/Freight amounting to Rs. 5, 25, 737/- whereas as per the facts & circumstances the additions should not be made.”
We have gone through the order of CIT(A), which is totally ex-parte order and even going through the decision against each of the addition it is noticed that the CIT(A) has passed a very cryptic and non-speaking order. The relevant ground dealt by CIT(A) is as under: - “10. DECISION: I have carefully considered the facts of the case, grounds of appeal Land statement of facts submitted by the appellant.
10.1 Ground 1: This is against the action of the AO in adopting the GP rate of 13.36% and estimating income. The AO has given sufficient reasons for adopting the OP rate. The AO observed that the GO rate of 13.36% is as per the books of the appellant post survey period and pre survey there was a Gross Loss of 3.3%. The AO thus made an addition of Rs 87.05 880 over and above the returned income. In light of the fact that no material has been presented before me in spite of granting sufficient opportunities, I uphold the action of the AO in estimating the profit at Rs 8705,880.
10.2 Ground 2: The appellant has admitted difference in cash of Rs 12,34,245 at the time of survey. In absence of any material before me. the findings of the AO are not controverted. In the circumstances, I uphold the action of the AO in adding Rs 12,34 425 to the total income of the appellant.
10.3 Ground 3: The AO observed that during the survey, it was observed that the actual creditors were at a lower figure than those recorded in the books of accounts by Rs 25.10.250. Therefore, it is amply clear that the appellant has overstated the creditors in his books of accounts by Rs 25,10.250. This is an overstated liability which admittedly does not exist. In absence of any reconciliation on part of the appellant. I am constrained to uphold the action of the AO in adding Rs 2510,250 to the income of the appellant.
10.4 Ground 4: The AO added Rs 5,05,300 being the difference in debtors. While doing so, the AO has overlooked the fact that the actual debtors are lower that those recorded in the books. Thus the debtors have been overstated in the books and therefore the difference cannot be added as debtors outside the books. The addition is misconceived and therefore deleted.
10.5 Ground 5: The AO added the difference in expenses noticed at the time of the survey. The actual expenses of the appellant stood at Rs 86,89708 while those recorded in - the books at the time of the survey were Rs 94,14213. Thus, the AO added the difference of Rs 7,24,505. Before me there is no reconciliation and therefore the findings of the AO are not controverted The disallowance made by the AO is therefore upheld.
10.6 Ground 6&7: The AO added the unreconciled differences in expenses to the tune of Rs 4,19,481 on account of freight and purchases and Rs 5,25,737 on account of purchases, labor charges, and freight. Before me also no reconciliation has been filed and therefore the findings of the AO remain uncontroverted. I therefore uphold the disallowances made by the AO.”
As is seen from the above findings of the CIT(A) on each of the ground which clearly depicts that there is no application of mind to the facts of the case. Even the order is ex-parte. In such circumstances, we are of the view that let the appeal in entirety be set aside to the file of the CIT(A) for fresh adjudication. The CIT(A) is directed to allow reasonable opportunity of being heard to the assessee and also pass a speaking order on each of the addition. Appeal of the assessee is set aside to the file of the CIT(A) and allowed for statistical purposes.
In the result, the appeal assessee is allowed for statistical purposes.
Order pronounced in the open court on 11-05-2018. AadoSa kI GaaoYaNaa Kulao mao idnaMk 11.05.2018 kao kI ga[- .