A.P.Ramasamy, Karur V. DCIT Circle 2, Trichy

ITA 843/CHNY/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1938 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 28-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V M MAHIDAR
• Assessee Lawyers: N QUADIR HOSEYN
• Keywords: Set aside

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , ! ' # , % #& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ./ ITA NO.843/CHNY/2019 ) *) / ASSESSMENT YEAR : 2004-05 SHRI A.P. RAMASAMY, PROP: M/S SREE ANGALAMMAN EXPORTS, NO.5, GOWRIPURAM EAST, ANNA NAGAR 3 RD CROSS, KARUR. PAN : AAEPR 0922 L V. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 2, TRICHY. (,-/ APPELLANT) (./,-/ RESPONDENT) ,- 0 1 / APPELLANT BY : SHRI N. QUADIR HOSEYN, ADVOCATE ./,- 0 1 / RESPONDENT BY : SHRI V.M. MAHIDAR, JCIT 2 0 3% / DATE OF HEARING : 07.08.2019 45* 0 3% / DATE OF PRONOUNCEMENT : 03.09.2019 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -1, TRICHY , DATED 04.02.2019 AND PERTAINS TO ASSESSMENT YEAR 2004-05. 2. SHRI N. QUADIR HOSEYN, THE LD.COUNSEL FOR THE AS SESSEE, SUBMITTED THAT THE CIT(APPEALS) ENHANCED THE DISALL OWANCE 2 I.T.A. NO.843/CHNY/19 TOWARDS EXPENDITURE RELATING TO CLOTH PRODUCTION, P ACKAGING CHARGES, ETC. FROM 2% TO 20% WITHOUT ISSUING THE ST ATUTORY NOTICE AS REQUIRED UNDER SECTION 251(2) OF THE INCOME-TAX ACT , 1961 (IN SHORT 'THE ACT'). ACCORDING TO THE LD. COUNSEL, THE EXPE NDITURE WAS ACTUALLY INCURRED ONLY AT 2%. THEREFORE, THE CIT(A PPEALS) IS NOT JUSTIFIED IN ENHANCING THE DISALLOWANCE TO 20%. AC CORDING TO THE LD. COUNSEL, FAILURE OF THE ASSESSEE TO PRODUCE THE DET AILS AFTER A LAPSE OF 14 YEARS CANNOT BE A REASON TO ENHANCE THE ASSES SMENT. THE LD.COUNSEL SUBMITTED THAT THE MATTER MAY BE DECIDED BY THE TRIBUNAL BY ESTIMATING THE EXPENSES AT 2% INSTEAD O F REMANDING THE MATTER TO THE FILE OF CIT(APPEALS). 3. WE HEARD SHRI V.M. MAHIDAR, THE LD. DEPARTMENTAL REPRESENTATIVE ALSO. IT IS NOT IN DISPUTE THAT THE ASSESSING OFFICER DISALLOWED EXPENSES TOWARDS CLOTH PRODUCTION AND PA CKAGING CHARGES AT 2%. HOWEVER, THE CIT(APPEALS) ENHANCED THE SAME TO 20% FOR NON-PRODUCTION OF VOUCHERS. SECTION 251(2) OF THE ACT MANDATES THE CIT(APPEALS) TO ISSUE SHOW CAUSE NOTIC E BEFORE ENHANCING THE ASSESSMENT. UNFORTUNATELY, THE CIT(A PPEALS) HAS NOT ISSUED ANY NOTICE. THE ASSESSMENT WAS ENHANCED BY INCREASING THE DISALLOWANCE FROM 2% TO 20% WITHOUT ISSUING 3 I.T.A. NO.843/CHNY/19 MANDATORY STATUTORY NOTICE. THIS TRIBUNAL IS OF TH E CONSIDERED OPINION THAT THE FAILURE OF THE CIT(APPEALS) TO ISS UE NOTICE FOR ENHANCEMENT AS REQUIRED UNDER SECTION 251(2) OF THE ACT IS A RECTIFIABLE ERROR. THEREFORE, THE APPEAL HAS TO BE RE-EXAMINED BY THE CIT(APPEALS) BY ISSUING A SHOW CAUSE NOTICE FOR ENHANCEMENT AS REQUIRED UNDER SECTION 251(2) OF THE ACT. THE A PPREHENSION OF THE LD.COUNSEL FOR THE ASSESSEE THAT THE MATTER WAS PENDING FOR A LONG TIME ALSO NEEDS TO BE TAKEN INTO CONSIDERATION BY THE CIT(APPEALS) WHILE DISPOSING THE APPEAL. ACCORDING LY, THE ORDER OF THE CIT(APPEALS) IS SET ASIDE AND REMITTED BACK TO HIS FILE. THE CIT(APPEALS) SHALL ISSUE THE STATUTORY NOTICE AS RE QUIRED UNDER SECTION 251(2) OF THE ACT FOR THE PROPOSED ENHANCEM ENT BY INCREASING THE DISALLOWANCE FROM 2% TO 20% AND THER EAFTER DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW, AFTER GIVI NG A REASONABLE OPPORTUNITY TO THE ASSESSEE. 4. SINCE THE ASSESSMENT YEAR INVOLVED IS 2004-05, T HE CIT(APPEALS) SHALL DISPOSE THE APPEAL WITHIN FOUR M ONTHS FROM THE DATE OF RECEIPT OF THE COPY OF THIS ORDER. 5. WITH THE ABOVE OBSERVATION, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. 4 I.T.A. NO.843/CHNY/19 ORDER PRONOUNCED IN THE COURT ON 3 RD SEPTEMBER, 2019 AT CHENNAI. SD/- SD/- ( ! ' # ) ( . . . ) (INTURI RAMA RAO) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 7 /DATED, THE 3 RD SEPTEMBER, 2019. KRI. 0 .389 :9*3 /COPY TO: 1. ,- /APPELLANT 2. ./,- /RESPONDENT 3. 2 ;3 () /CIT(A)-1, TRICHY 4. PRINCIPAL CIT- 1, TRICHY 5. 9< .3 /DR 6. =) > /GF.