M/s Khuntale Brothers, Karad v. Dy. CIT Cir Satara., Satara

ITA 1670/PUN/2012 | 2006-2007
Pronouncement Date: 29-04-2015 | Result: Allowed

Appeal Details

RSA Number 167024514 RSA 2012
Assessee PAN AABFK6325P
Bench Pune
Appeal Number ITA 1670/PUN/2012
Duration Of Justice 2 year(s) 8 month(s) 20 day(s)
Appellant M/s Khuntale Brothers, Karad
Respondent Dy. CIT Cir Satara., Satara
Appeal Type Income Tax Appeal
Pronouncement Date 29-04-2015
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 29-04-2015
Date Of Final Hearing 08-01-2015
Next Hearing Date 08-01-2015
Assessment Year 2006-2007
Appeal Filed On 09-08-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A PUNE BEFORE MS SUSHMA CHOWLA JUDICIAL MEMBER AND SHRI R.K. PANDA ACCOUNTANT MEMBER ITA NO.1670/PN/2012 ASSESSMENT YEAR: 2006-07 M/S. KHUNTALE BROTHERS 241 SHANIWAR PETH KARAD. . APPELLANT PAN: AABFK6325P VS. THE DY. COMMISSIONER OF INCOME TAX SATARA CIRCLE SATARA . RESPONDENT APPELLANT BY : SHRI M.K. KULKARNI RESPONDENT BY : SHRI PRADEEP KUMAR DATE OF HEARING : 20-04-2015 DATE OF PRONOUNCEMENT : 29-04-2015 ORDER PER SUSHMA CHOWLA JM: THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE OR DER OF CIT(A)-III PUNE DATED 31.01.2012 RELATING TO ASSESSMENT YEAR 2006-0 7 PASSED UNDER SECTION 143(3) OF THE INCOME-TAX ACT 1961. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LD. CIT(A) ERRED IN NOT APPRECIATING THE GROUNDS OF APPEAL RAI SED BEFORE HIM AND INSTEAD TRAVELED BEYOND THE SUBJECT MATTER OF APPEA L RESULTING INTO ENHANCEMENT OF INCOME BY AN AMOUNT OF RS.23 60 035/ - WHICH IS WITHOUT FOLLOWING THE DUE PROCESS OF LAW. THE ADDIT ION BE QUASHED. 2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE LD.CIT(A) HAVING ACCEPTED THAT THE APPELLANT-ASSESSEE DID NOT RETRACT FROM THE DECLARATION MADE IN SURVEY ACTION CONDUCTED U/S 13 3A OF THE ACT WHICH WAS PROPERLY ACCOUNTED FOR IN THE ACCOUNTS TH EN LD. CIT(A) ERRED IN MAKING ADDITION OF RS.23 60 035/- ON ACCOU NT OF ESTIMATION OF GROSS PROFIT PERCENTAGE. THE ADDITION BEING BAD IN LAW AND WITHOUT JURISDICTION BE QUASHED. 3) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE ASSESSEE DENIES ITS LIABILITY TO PAY INTEREST U/S. 234-A 23 4-B AND 234-C OF THE ACT AND THE SAME BE DELETED. ITA NO.1670/PN/2012 M/S. KHUNTALE BROTHERS 2 4) THE APPELLANT CRAVES LEAVE TO ADD/AMEND OR ALTER ANY OF THE ABOVE GROUNDS OF APPEAL. 3. THE ISSUE RAISED BY THE ASSESSEE IN THE PRESENT APPEAL IS AGAINST THE ENHANCEMENT OF INCOME BY THE CIT(A) BY A SUM OF RS. 23 60 035/-. THE ASSESSEE IS AGGRIEVED BY THE ORDER OF THE CIT(A) IN NOT FOLLOWING THE DUE PROCESS OF LAW AND HENCE THE GROUND OF APPEAL HAS BEEN RAIS ED FOR QUASHING THE ADDITION MADE IN THE HANDS OF THE ASSESSEE. 4. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSE SSEE WAS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF GROCERY ITEM. A SURVEY UNDER SECTION 133A OF THE ACT WAS CONDUCTED AT THE PREMISES OF THE ASSESSEE ON 08 .03.2006. DURING THE COURSE OF SURVEY INVENTORY OF STOCK AND CASH FOUND FROM THE PREMISES WAS MADE AND THE STATEMENTS OF THE PARTNER OF THE ASSESSEE F IRM WERE RECORDED ON 08.03.2006 AND 09.03.2006. FURTHER DOCUMENTS/PAPE RS FOUND DURING THE COURSE OF SURVEY WERE ALSO IMPOUNDED IN THE STATEMENT RECO RDED UNDER SECTION 131 OF THE ACT ON 09.03.2006. IN REPLY TO THE QUERIES RAI SED IN RESPECT OF UNEXPLAINED INVESTMENT AND UNACCOUNTED CASH THE PARTNER OF THE ASSESSEE WAS CONFRONTED WITH THE DISCREPANCY IN THE DOCUMENTS WHICH WERE A CCEPTED BY THE SAID PARTNER AND ADDITIONAL INCOME OF RS.31 03 462/- WAS VOLUNTA RILY OFFERED. HOWEVER IN THE RETURN OF INCOME ASSESSEE DECLARED GROSS TOTAL INC OME OF RS.7 55 000/- ONLY. THE AUDITOR IN ANNEXURE TO FORM NO.3CB ALONG WITH T HE PARTNER HAD DECLARED THAT DISCREPANCIES IN STOCK CASH IN HAND AND INVES TMENT IN GODOWN BUILDINGS WERE DETECTED DURING THE COURSE OF SURVEY AND THE S AID ADDITIONAL BUSINESS INCOME WHICH WAS OFFERED AT THE TIME OF SURVEY IS B EING CREDITED TO THE PROFIT & LOSS ACCOUNT. SINCE THE ASSESSEE HAD ONLY DECLARED TOTAL INCOME OF RS.7 55 000/- IN THE RETURN OF INCOME THE ASSESSIN G OFFICER SHOW-CAUSED THE ASSESSEE IN RESPECT THEREOF AS TO WHY THE ADDITIONA L INCOME WAS NOT DECLARED IN THE RETURN OF INCOME. IN RESPONSE THE EXPLANATION OF THE ASSESSEE WAS THAT DURING THE COURSE OF SURVEY THOUGH IT WAS SUBMITTED BY THE ASSESSEE THAT IT WOULD DECLARED ITS TOTAL INCOME AT A FIGURE OF MINIMUM OF RS.31 03 462/- BUT THE SAID ITA NO.1670/PN/2012 M/S. KHUNTALE BROTHERS 3 DISCLOSURE HAD TO BE ADDED TO THE BOOKS RESULTS AND THE RESULTANT INCOME WAS OFFERED TO THE TAX. THE ASSESSING OFFICER REJECTIN G THE SUBMISSIONS OF THE ASSESSEE AND ON PERUSAL OF THE DETAILS FURNISHED BY THE ASSESSEE HELD THAT THERE WAS NO DECLARATION OF INCOME TO THE EXTENT OF RS.31 03 462/-. THE ASSESSING OFFICER TREATED THE BUSINESS PROFITS DECLARED BY TH E ASSESSEE AT RS.7 55 000/- AS INCOME OF THE ASSESSEE AND FURTHER TREATED THE ENTI RE SUM OF RS.31 03 462/- AS ASSESSEES UNACCOUNTED INCOME ON ACCOUNT OF UNEXPLA INED INVESTMENT IN GODOWN AND STOCK UNDER SECTION 69B OF THE ACT AND U NACCOUNTED CASH UNDER SECTION 69 OF THE ACT AND MADE THE AFORESAID ADDITI ON IN THE HANDS OF THE ASSESSEE. FURTHER THE ADDITION WAS MADE ON ACCOUN T OF UNEXPLAINED INVESTMENT IN GODOWN AT RS.43 129/- IN ADDITION TO CERTAIN DIS ALLOWANCES ON ACCOUNT OF VARIOUS EXPENSES. 5. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE THAT HAD OBSERVED AS UNDER :- 2.2.6 HAVING CONSIDERED THE SUBMISSION OF THE APPE LLANT THAT IT HAD NEVER RETRACTED THE DECLARATION OF ADDITIONAL INCOME DECL ARED IN THE COURSE OF THE SURVEY ACTION AND THAT IT HAD SUFFERED A LOSS OF RS .23 55 841/- IN THE COURSE OF ITS REGULAR BUSINESS ACTIVITY THE MATTER WAS REMANDED TO THE ASSESSING OFFICER FOR FURTHER VERIFICATION OF FACTS BY THE THEN CLT (APPE ALS)-II PUNE VIDE ORDER PASSED U/S.250(4) OF THE I.T ACT 1961. IN COMPLIANCE TH E ASSESSING OFFICER FURNISHED HIS REPORT VIDE HIS FETTER NO.STR/ACLT/REMAND REPOR T/2009-10 DATED 30/09/2009 IT IS REPORTED BY THE ASSESSING OFFICER THAT TO VERIFY THE CORRECTNESS OF THE LOSS CLAIMED TRADING ACCOUNT WAS PREPARED O N THE BASIS OF THE IMPOUNDED BOOKS OF ACCOUNTS FOR THE PERIOD 01/04/2006 TO 05/0 3/2006 I.E. UP TO THE DATE TO WHICH THE BOOKS WERE WRITTEN WHICH SHOWED FOLLOWIN G POSITION :- PARTICULARS AMOUNT (RS.) PARTICULARS AMOUNT (RS.) OPENING STOCK PURCHASES GP (3.65% TO SALES) 40 28 886 9 64 79 221 SALES CLOSING STOCK GROSS LOSS 9 58 72 42842 42 10 572 4 25 107 TOTAL 10 05 08 107 TOTAL 10 05 08 107 ON FURTHER VERIFICATION OF THE BOOKS OF ACCOUNTS T HE NET PROFIT AS ON 05/03/2006 AFTER DEBITING THE OVERHEAD EXPENSES WAS FOUND TO BE AT RS.15 08 720/- AS AGAINST RS.23 55 841/- REPORTED BY THE APPELLANT. J USTIFYING THE DIFFERENCE THE APPELLANT IS STATED TO HAVE EXPLAINED THAT THE DIFF ERENCE WAS DUE TO THE FACT THAT LOSS QUANTIFIED AT RS.23 55 841/- WAS FOR THE ENTIR E YEAR WHILE THE LOSS OF RS.15 08 720/- WAS WORKED OUT AS ON 05/03/2006 I.E. THE DATE UPTO WHICH IMPOUNDED BOOKS OF ACCOUNTS WERE WRITTEN. IT IS FUR THER STATED TO HAVE EXPLAINED ITA NO.1670/PN/2012 M/S. KHUNTALE BROTHERS 4 THAT AFTER ADDING CERTAIN OTHER EXPENSES SUCH AS DE PRECIATION INTEREST ON DEPOSITS AUDIT AND VAIKIL FEE FBT ETC. WHICH COUL D NOT BE DEBITED ON THE DATE OF SURVEY THE NET LOSS GOT INCREASED TO RS.23 55 841/ -. THE APPELLANT ALSO HAS NOT MADE ANY FURTHER COMMENTS ON THE REPORT OF THE ASSE SSING OFFICER. 6. THE CIT(A) FURTHER DELIBERATED UPON THE RESULTS OF THE TRADING ACCOUNT FURNISHED BY THE ASSESSEE AS PER WHICH THE UNACCOUN TED STOCK AND CASH WAS QUANTIFIED IN THE HANDS OF THE ASSESSEE. FURTHER REFERENCE WAS MADE TO THE TRADING ACCOUNTS SUBMITTED BY THE ASSESSEE IN RESPE CT OF LOSS ON ACCOUNT OF TRADING IN JAWAR AND SUNDRY GOODS WHICH ARE REPRODU CED AT PAGES 15 16 OF THE APPELLATE ORDER UNDER WHICH THE ASSESSEE HAD SH OWN GROSS LOSS FOR PRE- SURVEY PERIOD AND ALSO FOR THE WHOLE YEAR. IN THE CASE OF RICE JAWAR AND SUNDRY GOODS THE CIT(A) OBSERVED AS UNDER :- THE LOSS SHOWN IN THESE THREE COMMODITIES MAINLY C ONTRIBUTED TO THE FALL IN G.P. IN THIS YEAR. FROM ANNEXURE D ENCLOSED TO THE ORDER IT COULD BE NOTICED THAT IN CASE OF JAWAR THE G.P. WAS 19.26% IN THE ASSESSMEN T YEAR 2003-04 0.33% IN THE YEAR 2004-05 AND 5.43% IN THE YEAR 2005-06. IN CASE OF RICE THE G.P. WAS 8.03% IN THE ASSESSMENT YEAR 2003-04 8.79% IN THE A.Y. 2004-05 AND 5.35% IN THE A.Y. 2005-06. THUS IN THE CASE OF RICE AND JA WAR THE GROSS PROFIT IN THE LAST THREE YEARS WAS HIGHLY FLUCTUATING AND THEREFORE I N RESPECT OF THESE TRADING GOODS ONE CANNOT ADOPT UNIFORM G.P. RATE FOR EVERY YEAR IGNORING THE BOOK RESULTS AND MARKET FACTORS. IT IS ALSO IMPORTANT TO NOTE THAT IN CASE OF RICE AND JAWAR THE APPELLANT HAS ALSO MAINTAINED QUANTITATI VE DETAILS AND THEREFORE IT IS NOT CORRECT TO IGNORE THE ACTUAL TRADING LOSS SHOWN BY THE APPELLANT IN RESPECT OF THESE TWO COMMODITIES IN THE ABSENCE OF ANY OTHER M ATERIAL TO INDICATE THAT THERE IS SUPPRESSION OF SALES OR INFLATION OF PURCHASES. BUT THE SAME IS NOT THE POSITION IN THE CASE OF 'SUNDRY GOODS' WHERE THE APPELLANT H AD SHOWN LOSS OF RS.17 47 895/- FOR THE PRE-SURVEY PERIOD (EXCLUDING EXCESS STOCK) AND THE LOSS OF RS.7 34 454/- FOR THE ENTIRE YEAR (INCLUDING EXCESS STOCK FOUND DURING THE SURVEY). THE LOSS CLAIMED BY THE APPELLANT IN CASE OF SUNDRY GOODS ONLY FOR THE PRE-SURVEY PERIOD IS NOT AT ALL APPEALING WHEN THE APPELLANT ITSELF DECLARED GROSS PROFIT OF 3.92% FOR THE A.Y. 2003-04 4.72% FOR THE A.Y. 2004-05 AND 4.05% FOR THE A.Y. 2005-06 I.E. THE GROSS PROFIT RATE IS ALMO ST CONSTANT FOR THE LAST THREE YEARS. 7. THE CIT(A) NOTED THAT THE LOSS CLAIMED BY THE AS SESSEE IN SUNDRY GOODS CANNOT BE SUBSTANTIATED SINCE THE SUNDRY GOODS DEA LT IN BY THE ASSESSEE WERE SMALL ITEMS WHICH NORMALLY HAD TO BE SOLD AT MRP AN D THERE WAS NO POSSIBILITY OF INCURRING HUGE LOSSES. FURTHER THE RESULTS SHOWN BY THE ASSESSEE WERE NOT SUPPORTED BY QUANTITATIVE STOCK ACCOUNT AND WITH PU RCHASE AND SALES BILLS. IN THE ABSENCE OF QUANTITATIVE TALLY IT WAS NOT POSSI BLE TO VERIFY THE ITEM-WISE ITA NO.1670/PN/2012 M/S. KHUNTALE BROTHERS 5 PURCHASES AND SALES OF GOODS AND HENCE THE CLAIM OF THE ASSESSEE THAT ALL THE PURCHASES AND SALES WERE RECORDED IN THE IMPOUNDED BOOKS OF ACCOUNT AND THEREFORE THE TRADING LOSS COULD NOT BE DOUBTED WA S HELD TO BE DEVOID OF ANY MERIT. RELIANCE IN THIS REGARD WAS PLACED ON THE R ATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN NATIONAL PLASTIC INDUSTRIES VS . ITO REPORTED IN 309 ITR 191 (BOM) WHEREIN IT WAS HELD THAT IN THE ABSENCE OF ST OCK REGISTER AS ALSO QUANTITATIVE DATA OF STOCK OF FINISHED GOODS IT WA S NOT POSSIBLE TO VERIFY THE CORRECTNESS OF STOCK SHOWN BY THE ASSESSEE. THE CI T(A) IN VIEW THEREOF OBSERVED THAT IN THE ABSENCE OF ANY QUANTITATIVE AN D QUALITATIVE TALLY ABOUT STOCKS COUPLED WITH STEEP DECLINE IN GROSS PROFIT WAS SUFFICIENT GROUND TO REJECT THE GROSS LOSS DISCLOSED BY THE ASSESSEE IN SUNDRY GOODS ACCOUNT AND ESTIMATED THE PROFITS AS THERE WAS A STEEP PROFIT IN THE GROS S PROFIT AS COMPARED TO GROSS PROFIT IN THE EARLIER YEARS AND WHERE THE ASSESSEE FAILED TO JUSTIFY THE DECLINE IN THE SAID PROFITS WITH COGENT EVIDENCE THE CIT(A) O BSERVED THAT IN SUCH CIRCUMSTANCES AND HAVING REGARD TO THE GROSS PROFIT S DECLARED CONSISTENTLY BY THE ASSESSEE IN THE RANGED OF 4% OF THE EARLIER YEARS A ND 3.7% OF THE POST-SURVEY PERIOD THE GROSS PROFIT FOR THE PRE-SURVEY PERIOD WAS ALSO ADOPTED AT 3.7% OF THE TURNOVER OF THE PRE-SURVEY PERIOD. THE CIT(A) THU S RECOMPUTED THE GROSS PROFIT IN THE HANDS OF THE ASSESSEE AS UNDER :- IF THE G.P. RATE OF 3.7% IS APPLIED OVER THE TURNO VER OF SUNDRY GOODS OF RS.1 65 44 344/- EFFECTED DURING THE PRE-SURVEY PER IOD THE GROSS PROFIT WORKS OUT TO RS.6 12 140/- AS AGAINST THE LOSS OF RS.17 47 89 5/- CLAIMED BY THE APPELLANT IN ITS SUBMISSIONS DATED 09.09.2008. (THE LOSS IN SUND RY GOODS AS PER ANNEXURE 'B' ENCLOSED TO THE ORDER IS RS.17 50 570/- AND THE MIN OR VARIATION OF ABOUT RS.2 675/- IS IGNORED.) IN CASE OF OTHER GOODS DEAL T IN BY THE APPELLANT DURING THE YEAR THE GROSS PROFIT OR LOSS SHOWN BY THE APPELLA NT IS NOT ONLY SUPPORTED BY THE ENTRIES IN THE IMPOUNDED BOOKS OF A/C BUT ALSO CORR OBORATED BY QUANTITATIVE TALLY OF PURCHASES AND SAFES AND THEREFORE NO ADJUSTMENT IS CONSIDERED NECESSARY IN RESPECT OF GROSS PROFIT/LOSS DECLARED IN CASE OF TH OSE ITEMS. AS THE TRADING LOSS CLAIMED IS CONVERTED INTO POSITIVE PROFIT IN CASE O F TRADING OF SUNDRY GOODS' THE OVERALL IMPACT ON THE GP OF THIS YEAR WOULD BE RS.2 3 60 035/- (RS.1 12 140 + 17 47 895/-). 8. THE CIT(A) FURTHER OBSERVED THAT THERE WAS NO ME RIT IN THE OBSERVATIONS OF THE ASSESSING OFFICER THAT THE ASSESSEE HAD RETRACT ED FROM THE DECLARATION OF ITA NO.1670/PN/2012 M/S. KHUNTALE BROTHERS 6 ADDITIONAL INCOME MADE DURING THE SURVEY OPERATION AND IT WAS OBSERVED VIDE PARA 2.3.5 AS UNDER :- 2.3.5 FOR THE FOREGOING REASONS THE ADDITION MADE BY THE ASSESSING OFFICER OF RS.31 03 462/- ON ACCOUNT OF UNEXPLAINED INVESTMENT IN STOCK GO-DOWN CONSTRUCTION AND UNACCOUNTED CASH IS DELETED AS THE ENTIRE ADDITIONAL INCOME DECLARED ON THAT ACCOUNT WAS ALREADY CREDITED TO TH E PROFIT & LOSS A/C. AT THE SAME TIME THE ASSESSING OFFICER IS DIRECTED TO ADD THE AMOUNT OF RS.23 60 035/- TO THE TOTAL INCOME ARISING ON ACCOUNT OF DISALLOW ANCE OF GROSS LOSS AND APPLICATION OF GROSS PROFIT AT 3.7% IN RESPECT OF T URNOVER OF 'SUNDRY GOODS' AS DISCUSSED HEREINABOVE. THE APPELLANT GETS NET RELIE F OF RS.7 43 426/- (RS.31 03 462 - 23 60 035/-) ON THIS GROUND. 9. THE ASSESSEE IS IN APPEAL AGGRIEVED BY THE SAID ORDER OF THE CIT(A). THE PLEA OF THE LD. AUTHORIZED REPRESENTATIVE FOR THE A SSESSEE WAS THAT AS AGAINST THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOU NT OF UNEXPLAINED INVESTMENT IN STOCK GODOWN CONSTRUCTION AND UNACCO UNTED CASH AT RS.31 03 462/- THE CIT(A) HAS RE-COMPUTED THE GROS S PROFITS IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF SUNDRY GOODS RESULTING IN EN HANCEMENT OF INCOME IN THE HANDS OF THE ASSESSEE ON AN ISSUE WHICH WAS NOT ADJ UDICATED BY THE ASSESSING OFFICER. FURTHER NO NOTICE OF ENHANCEMENT WAS GIV EN BY THE CIT(A). 10. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REV ENUE ON THE OTHER HAND PLACED RELIANCE ON THE ORDER OF THE CIT(A). 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE LIMITED ISSUE ARISING IN THE PRESENT APPEAL IS AGAINST THE ORDER OF THE CIT(A) IN ASSESSING THE INCOME IN THE HANDS OF THE ASSESSEE BY APPLYING GROSS PROFIT RATE OF 3.7% IN RESPECT OF TURNOVER OF SUNDRY GOODS AND ON THE OTHE R HAND DELETING THE ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT UNEXPLAINE D INVESTMENT IN STOCK GODOWN CONSTRUCTION AND UNACCOUNTED CASH AMOUNTING TO RS.31 03 462/-. THE ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDE R IN THE CASE OF ASSESSEE HAD MADE AN ADDITION ON ACCOUNT OF ITEMS FOUND DURI NG THE COURSE OF SURVEY AGAINST WHICH THE ASSESSEE HAD ADMITTED THE SAME WE RE NOT RECORDED IN THE ITA NO.1670/PN/2012 M/S. KHUNTALE BROTHERS 7 BOOKS OF ACCOUNT. THE SAID ADDITIONAL INCOME WAS A SSESSED IN THE HANDS OF THE ASSESSEE BY THE ASSESSING OFFICER UNDER SECTION 69/ 69B OF THE ACT. AGAINST WHICH THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A ). THE CIT(A) AFTER TAKING NOTE OF THE VARIOUS ASPECTS OF THE TRADING OF THE A SSESSEE IN DIFFERENT ITEMS HELD THAT THE LOSS SHOWN BY THE ASSESSEE IN THE PRE-SURV EY PERIOD IN TRADING OF SUNDRY GOODS COULD NOT BE ACCEPTED FOR VARIOUS REASONS AND HE COMPUTED THE ADDITIONAL INCOME IN THE HANDS OF THE ASSESSEE BY APPLYING THE RATE OF 3.7% ON THE TURNOVER OF SUNDRY GOODS OF RS.1.65 CRORE ACCEPTED DURING TH E PRE-SURVEY PERIOD WHICH RESULTED IN ADDITION OF RS.23 60 035/- IN THE HANDS OF THE ASSESSEE I.E. ON ACCOUNT OF THE SAID GROSS PROFIT DETERMINED AND THE DISALLOWANCE OF THE LOSS CLAIMED BY THE ASSESSEE IN THIS REGARD. THE CIT(A) DELETED THE ADDITION MADE UNDER SECTION 69/69B OF THE ACT. 12. THE CIT(A) WHILE EXERCISING THE JURISDICTION OF DISPOSING OF AN APPEAL HAS POWER TO CONFIRM REDUCE ENHANCE OR ANNUL THE ASSE SSMENT PROVIDED IN SECTION 251(1)(A) OF THE ACT. SUB-SECTION (2) OF SECTION 2 51 OF THE ACT PROVIDES THAT THE COMMISSIONER (APPEALS) SHALL NOT ENHANCE AN ASSESSM ENT OR A PENALTY OR REDUCE THE AMOUNT OF REFUND UNLESS THE APPELLANT HA S A REASONABLE OPPORTUNITY OF SHOW CAUSING AGAINST SUCH ENHANCEMENT OR REDUCTI ON. THOUGH VIDE EXPLANATION UNDER SUB-SECTION (2) OF SECTION 251(1) OF THE ACT IT IS PROVIDED THAT THE COMMISSIONER (APPEALS) IN DISPOSING OF AN APPEA L MAY CONSIDER AND DECIDE ANY MATTER ARISING OUT OF THE PROCEEDINGS IN WHICH THE ORDER APPEALED AGAINST WAS PASSED NOTWITHSTANDING THAT SUCH MATTER WAS NO T RAISED BEFORE THE COMMISSIONER (APPEALS) BY THE APPELLANT. BUT THE M AIN SUB-SECTION (2) OF SECTION 251 PROVIDES THAT NO ENHANCEMENT OR AN ASSE SSMENT/PENALTY SHALL BE CARRIED OUT BY THE CIT(A) UNLESS THE ASSESSEE HAD A REASONABLE OPPORTUNITY OF SHOW CAUSING AGAINST SUCH ENHANCEMENT. THE CASE OF THE ASSESSEE BEFORE US IS THAT THE CIT(A) HAS FAILED TO ISSUE A NOTICE OF ENH ANCEMENT BEFORE COMPUTING THE INCOME IN THE HANDS OF THE ASSESSEE. THE LD. DEPAR TMENTAL REPRESENTATIVE FOR THE REVENUE HAS FAILED TO CONTROVERT THE SAID SUBMI SSION OF THE ASSESSEE. IN THE ITA NO.1670/PN/2012 M/S. KHUNTALE BROTHERS 8 ABSENCE OF ANY NOTICE HAVING BEEN ISSUED BY THE CIT (A) BEFORE ENHANCING THE ASSESSMENT AGAINST THE ASSESSEE WE HOLD THAT THE C IT(A) HAS EXCEEDED HIS JURISDICTION IN DECIDING THE PRESENT APPEAL AND THE SAME MERITS TO BE CANCELLED. IN VIEW THEREOF WE FIND MERIT IN THE GROUNDS OF AP PEAL RAISED BY THE ASSESSEE AND WE CANCEL THE ENHANCEMENT MADE BY THE CIT(A). THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS ALLOWED. 13. IN THE RESULT THE APPEAL OF THE ASSESSEE IS AL LOWED AS ABOVE. ORDER PRONOUNCED ON THIS 29 TH DAY OF APRIL 2015. SD/- SD/- (R.K. PANDA) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE DATED: 29 TH APRIL 2015 SUJEET COPY OF THE ORDER IS FORWARDED TO: - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-III PUNE; 4) THE CIT-III PUNE; 5) THE DR A BENCH I.T.A.T. PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T. PUNE