M/s.Bimbis south star, Cochin V. ACIT, Ernakulam

CO 11/COCH/2007

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8518 (ITAT-COCHIN)
• Duration Of Justice: 6 year(s) 18 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 29-05-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 21-05-2013
• Assessment Year: misc
• Appeal Filed On: 11-05-2007
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M ANIL KUMAR
• Assessee Lawyers: T M SREEDHARANSR
• Keywords: Business income

Judgement Text

1 IT(SS)A NO. 215/COCH/2005 CO 11/COCH/2007 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI B.R. BASKA RAN(AM) I.T(SS)A NO. 215/COCH/2005 (BLOCK PERIOD 01-04-1988 TO 26-03-1999) A.C.I.T., CENT.CIR.1 VS M/S BIMBIS SOUTH STAR ERNAKULAM SHANMUGHAN ROAD MARINE DRIVE, COCHIN-31 PAN : NOT AVAILABLE (APPELLANT) (RESPONDENT) C.O. NO.11/COCH/2007 (ARISING OUT OF I.T(SS)A NO. 215/COCH/2005) (BLOCK PERIOD 01-04-1988 TO 26-03-1999) M/S BIMBIS SOUTH STAR VS A.C.I.T., CENT.CIR.1 MARINE DRIVE, COCHIN-31 ERNAKULAM (APPELLANT) (RESPONDENT) ASSESSEE BY :SHRI T.M. SREEDHARAN, SR.COUNSEL REVENUE BY : SHRI M ANIL KUMAR DATE OF HEARING : 21-05-2013 DATE OF PRONOUNCEMENT : 29-05-2013 2 IT(SS)A NO. 215/COCH/2005 CO 11/COCH/2007 O R D E R PER N.R.S. GANESAN (JM) THIS APPEAL OF THE REVENUE IS DIRECTED AGAINST THE ORDER OF CIT(A)-II, COCHIN DATED 28-09-2005. 2. THIS APPEAL OF THE REVENUE WAS DISPOSED OF BY TH IS TRIBUNAL BY AN ORDER DATED 09-05-2008 HOLDING THAT THE ASSESSMENT MADE U/S 158BC OF THE ACT IS VOID SINCE THE WARRANT OF AUTHORIZATION WAS NOT ISSUED IN THE NAME OF THE ASSESSEE. HOWEVER, ON APPEAL BY THE RE VENUE, THE HIGH COURT SET ASIDE THE ORDER OF THE TRIBUNAL DATED 09-05-200 8 AND RESTORED THE APPEAL BACK TO THE TRIBUNAL FOR DECISION ON MERIT. ACCORDINGLY, THE APPEAL AND THE CROSS OBJECTION WERE FIXED FOR HEARING BEFO RE THIS BENCH. 3. SHRI A.K. ANILKUMAR, THE LD.DR SUBMITTED THAT TH E ASSESSING OFFICER PASSED THE ASSESSMENT ORDER BASED UPON THE EVIDENCE AVAILABLE ON RECORD WHICH WAS FOUND DURING THE COURSE OF SEARCH OPERATI ON AND ESTIMATED THE PROFIT ON THE BASIS OF THE SUPPRESSION OF SALES. R EFERRING TO THE ORDER OF ASSESSMENT, THE LD.DR SUBMITTED THAT THE PARTNERS O F THE FIRM ADMITTED THAT THERE WAS SUPPRESSION OF SALES. THE LD.DR FUR THER SUBMITTED THAT ONE 3 IT(SS)A NO. 215/COCH/2005 CO 11/COCH/2007 OF THE PARTNERS ADMITTED BEFORE THE AUTHORITIES THA T WITH THE APPROVAL OF ALL THE PARTNERS, THE SUPPRESSION OF RECEIPTS WERE MADE . THE ASSESSING OFFICER HAS ALSO ESTIMATED THE INCOME FOR THE PERIOD 01-04- 1998 TO 10-03-1999 SINCE THE SEIZED MATERIAL INDICATES SUPPRESSION OF TURNOVER OF BUSINESS. ACCORDING TO THE LD.DR, THE SUPPRESSION OF SALES MA DE BY THE ASSESSEE WAS NOT RECORDED IN THE BOOKS OF ACCOUNT, THEREFORE, IT COULD NOT HAVE BEEN DISCLOSED IN THE REGULAR COURSE. HENCE, THE ASSESS ING OFFICER HAS RIGHTLY ESTIMATED THE PROFIT ON THE SUPPRESSED TURNOVER. H OWEVER, ON APPEAL BY THE ASSESSEE BEFORE THE CIT(A), THE CIT(A) DELETED THE ADDITION ON THE GROUND THAT THE ASSESSING OFFICER HAS NOT USED ANY MATERIAL FOUND DURING THE COURSE OF SEARCH OPERATION. ACCORDING TO THE L D.DR, THE ASSESSING OFFICER, IN FACT, PLACED RELIANCE ON ALL MATERIALS FOUND DURING THE COURSE OF SEARCH OPERATION. THEREFORE, THE OBSERVATION MADE BY THE CIT(A) IS NOT CORRECT. 4. ON THE CONTRARY, SHRI T.M. SREEDHARAN, THE LD.SE NIOR COUNSEL SUBMITTED THAT THE ASSESSEE IS A PARTNERSHIP FIRM C ONSISTING OF THREE PARTNERS. THE BUSINESS OF THE FIRM WAS STARTED ON 31-02-1995. THE 4 IT(SS)A NO. 215/COCH/2005 CO 11/COCH/2007 ASSESSEE SLOWLY TOOK UP THE BUSINESS YEAR BY YEAR. ACCORDING TO THE LD.SENIOR COUNSEL, THE ASSESSING OFFICER ESTIMATED THE UNDISCLOSED INCOME AT RS.9,64,580 BY ESTIMATING THE SALES TURNOVER FROM T HE DATE OF COMMENCEMENT OF THE BUSINESS. THE MONTHLY TURNOVER OF THE ASSESSEE FIRM WAS ESTIMATED BY THE ASSESSING OFFICER. ACCOR DING TO THE LD.SENIOR COUNSEL, THE ASSESSEE DEMONSTRATED BEFORE THE FIRST APPELLATE AUTHORITY THAT THE ESTIMATION OF UNDISCLOSED INCOME FOR THE A SSESSMENT YEARS 1995- 96 AND 1999-2000 IS NOT CORRECT. SIMILARLY, ESTIMA TION OF UNDISCLOSED INCOME OVER AND ABOVE WHAT WAS DISCLOSED FOR ASSESS MENT YEARS 1996-97, 1997-98 AND 1998-99 SHOULD ALSO BE DELETED. ACCORD ING TO THE LD.SENIOR COUNSEL, ESTIMATION OF UNDISCLOSED INCOME FOR CONTI NUOUS PERIOD OF 47 MONTHS AND 9 DAYS FOR THE BLOCK PERIOD WAS NOT ONLY ARBITRARY BUT ALSO MECHANICAL. RELYING UPON THE DOCUMENT AVAILABLE FO R ASSESSMENT YEAR 1996-97, THE ASSESSING OFFICER HAS ESTIMATED THE SA LES TURNOVER FOR ASSESSMENT YEAR 1997-98. ACCORDING TO THE LD.SENIO R COUNSEL, BASED ON THE ENTRIES AVAILABLE FOR 24 DAYS, THE TURNOVER WAS MEC HANICALLY ESTIMATED FOR 360 DAYS. THE LD.SENIOR COUNSEL FURTHER POINTED OU T THAT THE ASSESSING OFFICER HAS NOT TAKEN INTO CONSIDERATION SEVERAL UN FORESEEN HOLIDAYS LIKE 5 IT(SS)A NO. 215/COCH/2005 CO 11/COCH/2007 GENERAL STRIKE, BANDH, HARTAL AND ALSO RELIGIOUS AN D FESTIVAL HOLIDAYS. ACCORDING TO THE LD.SENIOR COUNSEL, AT THE BEST, TH E RESTAURANT WOULD HAVE BEEN WORKING ONLY FOR 300 DAYS. THEREFORE, ACCORDI NG TO THE LD.SENIOR COUNSEL, THE CIT(A) HAS RIGHTLY DELETED THE ADDITIO N MADE BY THE ASSESSING OFFICER. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. ADMITTED LY, THERE WAS A SEARCH OPERATION AT THE RESIDENTIAL PREMISES OF THE ASSESS EE ALONGWITH OTHER RESTAURANT AND HUGE SUPPRESSION OF SALES WAS FOUND. IN FACT, THE PARTNERS ADMITTED DURING THE COURSE OF SEARCH OPERATION THAT THERE WAS SUPPRESSION OF RECEIPTS AND ONE OF THE PARTNERS, SHRI A.E. NARA YANAN APPEARS TO HAVE ADMITTED BEFORE THE AUTHORITIES THAT WITH THE APPRO VAL OF ALL THE PARTNERS, THE BOOKS OF ACCOUNT WAS PREPARED SUPPRESSING THE A CTUAL RECEIPTS. A BARE READING OF THE ASSESSMENT ORDER CLEARLY SHOWS THAT THE ASSESSING OFFICER PLACED HIS RELIANCE NOT ONLY ON THE SEIZED MATERIAL S BUT ALSO ON THE ADMISSIONS MADE BY THE PARTNERS REGARDING SUPPRESSI ON OF SALES. THEREFORE, THE CIT(A) IS NOT JUSTIFIED IN SAYING TH AT THE ASSESSING OFFICER HAS 6 IT(SS)A NO. 215/COCH/2005 CO 11/COCH/2007 NOT USED ANY EVIDENCE FOUND DURING THE COURSE OF SE ARCH OPERATION. THE CIT(A) DELETED THE ADDITION MADE BY THE ASSESSING O FFICER ONLY ON THE GROUND THAT THE ASSESSING OFFICER HAS NOT MADE ANY RELIANCE ON THE EVIDENCE FOUND DURING THE COURSE OF SEARCH OPERATIO N WHICH IS CONTRARY TO THE FACTS ON RECORD. IN FACT, THE ASSESSING OFFICE R HAS USED ALL THE MATERIALS INCLUDING THOSE FOUND DURING THE COURSE OF SEARCH O PERATION FOR THE PURPOSE OF ESTIMATING THE PROFIT. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CIT(A) OUGHT TO HAVE RE APPRECIATED THE SEIZED MATERIALS FOUND ON RECORD WHICH WERE RELIED UPON BY THE ASSESSING OFFICER. THE CIT(A) COMMITTED AN ERROR IN DELETING THE ADDIT ION WITHOUT CONSIDERING THE SEIZED MATERIALS WHICH WERE AVAILABLE ON RECORD . THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE CIT( A) HAS TO RECONSIDER THE ISSUE AFRESH IN THE LIGHT OF SEIZED MATERIAL AND TH E STATEMENT RECORDED DURING THE COURSE OF SEARCH OPERATION. ACCORDINGLY , THE ORDER OF THE CIT(A) IS SET ASIDE AND THE ISSUE IS RESTORED TO HIS FILE. THE CIT(A) SHALL RECONSIDER THE ISSUE AFRESH AFTER CONSIDERING THE SEIZED MATER IAL INCLUDING THE STATEMENT RECORDED DURING THE COURSE OF SEARCH OPER ATION. THE CIT(A), 7 IT(SS)A NO. 215/COCH/2005 CO 11/COCH/2007 THEREAFTER SHALL DECIDE THE ISSUE IN ACCORDANCE WIT H LAW AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 6. NOW COMING TO THE CROSS OBJECTION OF THE ASSESSE E, THE LD.SENIOR COUNSEL FOR THE ASSESSEE FAIRLY SUBMITTED THAT THE CROSS OBJECTION WAS FILED ONLY TO SUPPORT THE ORDER OF CIT(A). IT IS WELL SE TTLED PRINCIPLES OF LAW THAT CROSS OBJECTION IN SUPPORT OF THE ORDER OF THE CIT( A) IS NOT MAINTAINABLE. IN OTHER WORDS, THE ORDER OF THE CIT(A) COULD BE SUPPO RTED WITHOUT FILING THE CROSS OBJECTION. THEREFORE, THE CROSS OBJECTION IS NOT MAINTAINABLE. EVEN OTHERWISE, WE HAVE ALREADY SET ASIDE THE ORDER OF T HE CIT(A) AND REMITTED THE MATTER BACK TO HIS FILE FOR RECONSIDERATION. I N VIEW OF THE ABOVE, THE CROSS OBJECTION BECOMES INFRUCTUOUS. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSE AND THE CROSS OBJECTION FILED BY THE ASSESS EE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 29 TH MAY, 2013. SD/- SD/- (B.R. BASKARAN) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 29 TH MAY, 2013 PK/- 8 IT(SS)A NO. 215/COCH/2005 CO 11/COCH/2007 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE COMMISSIONER OF INCOME-TAX 4. THE COMMISSIONER OF INCOME-TAX(A) 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH