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2016 (12) TMI 49 - ITAT DELHI

2016 (12) TMI 49 - ITAT DELHI - TMI - Enhancement of income - powers of CIT(A) - Held that:- As far as the issue of enhancement of income by the Ld. CIT (A) is concerned, as in the case of CIT vs. Sardari Lal & Company [2001 (9) TMI 1130 - Delhi High Court] has held that CIT (A) has no power to direct the AO to bring to tax a new source of income, which is not considered by the AO in the order appealed against him. The Hon’ble Delhi High Court observed that wherever the question of taxability of .....

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finding the Hon’ble Delhi High Court approved its own decision in the case of CIT vs. Union Tyre (1999 (9) TMI 81 - DELHI High Court) and CIT vs. Shapoorji Pallonji Mistry (1962 (2) TMI 12 - SUPREME Court ) and CIT vs. Rai Bahadur Hardutroy Motilal Chamaria (1967 (4) TMI 8 - SUPREME Court). - Thus we hold that the Ld. CIT (A) did not have the power to enhance the income of the assessee in the instant case and the enhancement made by him is beyond the powers conferred upon him by the statut .....

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ing of Cloth. During the year under consideration, the assessee firm had disclosed a turnover of ₹ 21,08,032/- and income from job work and fabrication at ₹ 1,62,93,530/-. Thus, the aggregate turnover was ₹ 1,84,01,562/- on which a net profit of ₹ 1,55,326/- was declared. During the course of assessment proceedings, the assessee firm failed to submit the books of accounts and other bills/vouchers. The assessee also did not submit any details regarding TDS on salary, fabri .....

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evidence of deduction of tax at source, but the AO did not bring any material on record to justify the application of net profit rate of 8%. The Ld. CIT (A) further observed that the assessee had itself admitted that there had been a delay in making the payment of TDS to the account of the Government. The Ld. CIT (A) gave a finding that TDS amounting to ₹ 94,638/- had been deducted on job work charges of ₹ 97,68,528/- for the period April, 2004 to February, 2005 but the payment was .....

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, the Ld. CIT (A) enhanced the income of the assessee by ₹ 97,68,528/- while deleting the addition of ₹ 14,72,124/-. 2.2 Aggrieved the assessee has preferred an appeal before the ITAT and the revised grounds of appeal read as under: 1. That on the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in illegally enhancing the taxable income of appellant by first time invoking section 40(a)(ia) of the Act by ignoring the factual realities where only one contrac .....

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in law, the ld. CIT (A) erred in making disallowance u/s 40(a)(ia) of the Act amounting to ₹ 97,68,528/- without appreciating that section 40(a)(ia) being punitive in character needs strict interpretation and as held is subject to theory of doubtful penalization and cannot convert gross receipts to assessee s taxable income . 4. That on the facts and in the circumstances of the case and in law, the Ld. CIT (A) erred in making disallowance u/s 40(a)(ia) of the Act amounting to ₹ 97,6 .....

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of taxes in its hands no default remains. Prayer: i) To hold enhancement made is beyond the powers of CIT (A). ii) To delete disallowance u/s 40(a)(ia) of the Act. iii) To make the reasonable estimate of profits. iv) Any other condign relief as per facts of instant case. That the appellant craves leave to add, to amend, modify, rescind, supplement or alter any of the grounds stated herein above, either before or at the time of hearing of this appeal. 3. The Ld. AR submitted that the Ld. CIT (A) .....

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e the payee has offered the disputed amount in its return of income, no disallowance shall be made and, therefore, the AO may be directed to verify the status of the payment in the hands of the payee and then make a disallowance, if so required by law. On the issue of estimation of profits, the Ld. AR submitted that the net profit rate of 8% had been applied without giving any reasonable basis and, therefore, the same was not sustainable. 4. The Ld. DR relied heavily on the order of the Ld. CIT .....

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