TaxTMI 
TaxTMI 
2026 (7) TMI 1630
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....assessee made two-fold submissions assailing the impugned order passed by the CIT(A). The ld. Counsel submits that in ground No.3 of appeal the assessee has assailed the action of CIT(A) in re-characterization of the addition. The AO had made addition of Rs. 26,58,269/- u/s. 69C of the Act, the CIT(A) without issuing specific notice to the assessee directed the AO to treat the said addition u/s. 68 of the Act. The submissions on second addition assailed in ground no.4 of appeal are against ad-hoc disallowance of expenditure Rs. 20,16,315/-. 2.1 In respect of first addition the ld. Counsel submits that the assessee is an agriculturist and owns 40 acres (approx.) of agricultural land at Village Bhullarwala, Tehsil Lambi, Distt. Muktsar,....
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....n.com 429 (Delhi Trib.); 2. Smt. Sekar Jayalakshmi Vs. ITO, 150 taxmann.com 120 (Chennai Trib.) 2.3 In respect of second addition of Rs. 20,16,315/- the Ld. Counsel submits that the assessee is also engaged in the business of manufacturing readymade garments. The assessee has declared turnover of Rs. 89,66,615/- and has declared Net Profit of Rs. 24,88,177/- from the said business. Admittedly, during assessment the assessee could not produce some of the vouchers to substantiate expenditure, the AO disallowed expenditure by making ad-hoc disallowance @ 20% of the expenditure claimed. The ld. Counsel submits that the AO in a mechanical manner and without appreciating facts has made adhoc disallowance @ 20% which is very much on th....
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.... of the Act. The assessee carried the issue in appeal before the Tribunal. The Tribunal deleted the addition inter-alia holding as under: "6. Now coming to the question regarding action of the learned CIT(Appeals) to treat the reference u/s. 142 for the purpose of section 69B, I find merit into the contention of the assessee that there is no power conferred upon the learned CIT(Appeals) to assess a particular item under different provision of the Act what the Assessing Officer had done without giving a specific notice to the assessee regarding such action. The Revenue has not brought any material to suggest that the assessee was put to notice by the learned CIT(Appeals) before taking such action. I am of the considered view that la....
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....arned CIT(Appeals) in treating the addition made by the Assessing Officer u/s. 69C as have been made u/s. 69B is contrary to the law laid down by the Hon'ble Jurisdictional High Court. I, therefore, respectfully following the decision of the Hon'ble Jurisdictional High Court in the case of Aar Pee Apartments (P.) Ltd. (supra), the impugned order is therefore set aside. The addition made u/s. 69C on the basis of the report of the DVO by the Assessing Officer deserves to be deleted. Hence, impugned addition is hereby deleted. Grounds of appeal taken by the assessee are allowed accordingly." 5. Similarly, in the case of Smt. Sekar Jayalakshmi Vs. ITO (supra) the coordinate Bench deleted the addition that was originally made u/s. 68 ....
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.... section for making the addition. Thus, in light of facts of the case and the decisions discussed above, I find merit in the submission of the assessee. Accordingly, findings of the First Appellate Authority on this issue are quashed. The assessee succeeds on ground no.3 of appeal. 7. In respect of ground No. 4 of appeal relating to ad-hoc disallowance of 20% of expenditure claimed by the assessee, it is observed that in the P & L account the assessee has declared total sales turnover of Rs. 89.66 lacs. The assessee has declared net profit of Rs. 24.88 lacs, whereas, in assessment order the AO has wrongly recorded that the assessee has declared loss of Rs. 30 lacs. This shows that neither the AO, nor the CIT(A) has examined the facts cor....