Validity of additions made without issuing show cause notice
- The Assessee Firm had filed the return of income for the AY.2016-17 on 20.09.2016, admitting total income of Rs.13.04 lakhs. During the assessment proceedings under section 143(3) of the Income Tax Act, the Assessing Officer had noticed that there was a difference between the total receipts offered to tax by the Assessee and the receipts reflected in Form-26AS. The Assessing Officer after hearing the Assessee, considered the turnover as per Form 26AS as the gross receipts of the Assessee and estimated the Net Profit at the rate of 8% of such turnover and brought it to tax. Aggrieved, the Assessee filed an appeal before the Commissioner of Income Tax (Appeals), who had enhanced the income of the Assessee. However, it was the case of the assessee that before enhancement of the income, the Commissioner of Income Tax (Appeals) had not given any notice to the Assessee.
- From the recordings in the order of the Commissioner of Income Tax (Appeals), it was clear that no show cause notice was issued by the Commissioner of Income Tax (Appeals) to the Assessee pertaining to enhancement of income and the same was also confirmed by the Departmental Representative.
- Hence, it was deemed fit and proper to remit the issue to the file of Commissioner of Income Tax (Appeals) for re-consideration of the issue in accordance with the law and if the Commissioner of Income Tax (Appeals) feels that the assessment has to be enhanced, then a notice shall be issued to the Assessee and after considering the Assessee’s objections, if any, filed by the Assessee in writing.