IN INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-II , NEW DELHI Before Sh. N. K. Saini, Accountant Member ITA No. 3693/Del/2016 : Asstt. Year : 2005-06 Sh. Arun Kumar Jain, Vs Income Tax Officer, R-5/25, Raj Nagar, Ward-1(1), Ghaziabad (UP)-201002 Ghaziabad (UP) (APPELLANT) (RESPONDENT) PAN No. ADDPJ5103B Assessee by : Sh. Anoop Sharma, Adv. & Sh. Sanjay Parashar, Adv. Revenue by : Sh. Rajesh Kumar, Sr. DR Date of Hearing : 17.10.2016 Date of Pronouncement : 19.10.2016 ORDER This is appeal by assessee against order dated 22.03.2016 of ld. CIT(A), Muzaffarnagar. 2. Following grounds have been raised in this appeal: 1. That Ld. CIT(A),erred on facts, in law and in surrounding circumstances in sustaining whopping addition of Rs 47,50,000/- in arbitrary manner on basis of assumptions, presumptions, surmises, conjectures and speculations. 2. That in doing so, both Ld. CIT(A) as well as Ld. AO, erred in law, on facts, and in surrounding circumstances, in failing to give credit of Rs. 22,24,676 by way of turnover allowable u/s 44AF of IT Act as also Rs.10,00,100 as shown by transfer on 20-04-2004 in Bank as well as Rs, 15,25,424 being 2 ITA No. 3693/Del/2016 Arun Kumar Jain advance from customers, without assigning any justification for such sweeping disallowances. 3. That knowingly well that addition u/s 68 of IT Act being unsustainable in light of various case law including verdict of Hon'ble Supreme court relied upon by appellant that Ld. CIT(A), with due apology, in zeal to sustain impugned additions, by invoking plenary powers vested with CIT(A), converted section 68 of IT Act into Section 69A of IT Act in abrupt manner, without providing opportunity of being heard, to appellant on this crucial and crux issue. 4. That Ld CIT(A) as well as AO, erred in law, on facts and in surrounding circumstances, in failing to follow principle of "Audi Alteram Partem" thereby rendering assessment- cum appellate proceeding, unsustainable in law, ab-intio. 5. That without prejudice to above, Ld CIT(A) as well as AO both erred in law, on facts and in surrounding circumstances, in failing to appreciate that under retail traders beneficial section 44AF of IT Act, no documentations of any transactions is mandatory and so called inability of appellant to file any documentary evidence being uncalled for, is not liable for damaging comments. 6. appellant craves leave to add, to alter, amend or modify ground/grounds of appeal. 3. main grievance of assessee in this appeal relates to proper opportunity not being provided by AO/CIT(A) while making/sustaining addition. 3 ITA No. 3693/Del/2016 Arun Kumar Jain 4. Facts of case in brief are that assessee filed return of income on 30.03.2006 declaring income of Rs.1,33,481/-. Later on, case was selected for scrutiny. AO framed assessment at income of Rs.49,73,811/- by making addition of Rs.47,50,100/- on account of unexplained cash deposits. 5. Being aggrieved assessee carried matter to ld. CIT(A) who sustained addition made by AO. However, ld. CIT(A) sustained addition u/s 69 of Income Tax Act, 1961 (hereinafter referred to as Act) instead of Section 68 of Act invoked by AO. 6. Now assessee is in appeal. ld. Counsel for assessee reiterated submissions made before authorities below and further submitted that AO asked assessee to furnish various details relating to cash credits which were furnished on 25.03.2013 but AO without giving proper opportunity of being heard to explain case framed assessment within period of 3 days on 28.03.2013, so, there was violation of principle of natural justice. It was further submitted that ld. CIT(A) changed section under which addition was made by AO i.e. from Section 68 to Sec. 69 of Act but no opportunity was given to assessee to 4 ITA No. 3693/Del/2016 Arun Kumar Jain explain cases. Therefore, action of ld. CIT(A) in sustaining addition u/s 69 of Act when AO originally made addition u/s 68 of Act was not justified. He requested to set aside issue back to file of AO to be decided after providing proper and due opportunity of being heard to assessee. 7. In his rival submissions ld. DR strongly supported orders of authorities below and further submitted that AO as well as ld. CIT(A) had given ample opportunities of being heard to assessee. Therefore, addition made by AO and sustained by ld. CIT(A) was fully justified, particularly when, assessee had not given proper explanation in support of his claim. 8. I have considered submissions of both parties and perused material available on record. In present case, it is noticed that assessee furnished details asked by AO vide reply dated 25.03.2013. However, AO without pointing out any shortcoming in reply of assessee and without pointing out to assessee that reply was not satisfactory made addition by framing assessment on 28.03.2013. It, therefore, appears that proper opportunity of being heard was not given to assessee while making addition u/s 68 of Act. It is also noticed that 5 ITA No. 3693/Del/2016 Arun Kumar Jain ld. CIT(A) sustained addition by invoking provisions of Section 69 of Act while addition made by AO was u/s 68 of Act. At sametime, no opportunity was given to assessee to explain his case and no intention was shown by ld. CIT(A) that addition would be made u/s 69 of Act instead of Section 68 of Act. I, therefore, by considering peculiar facts of this case, deem it appropriate to set aside issue back to file of AO to be decided afresh in accordance with law after providing due and reasonable opportunity of being heard. assessee is also directed to cooperate and not to seek undue and unwarranted adjournments. 9. In result, appeal of assessee is allowed for statistical purposes. (Order Pronounced in Court on 19/10/2016) Sd/- (N. K. Saini) ACCOUNTANT MEMBER Dated: 19/10/2016 *Subodh* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5.DR: ITAT ASSISTANT REGISTRAR Arun Kumar Jain v. Income-tax Officer, Ward-1(1), Ghaziabad