HOTEL SAI SIDDHI PVT. LTD.,NASHIK V. ACIT, CENTRAL CIR-1, NASHIK, NASHIK

ITA 941/PUN/2015

AI Insights

The case involves Hotel Sai Siddhi Pvt. Ltd., which appealed against the order of the CIT(A) confirming the income assessed by the Assessing Officer for the assessment year 2011-12. The primary contention was the improper estimation of income and disallowances made by the Assessing Officer, which were upheld by the CIT(A). The Tribunal noted procedural deficiencies in how the Assessing Officer handled the assessment, particularly the lack of adequate opportunity for the assessee to present its case and the rapid progression from notice to assessment without sufficient dialogue. The Tribunal referenced its earlier decisions for the assessment years 2009-10 and 2010-11, where similar issues were restored to the Assessing Officer for a detailed examination.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 705955 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2011-2012
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMOL KHAIRNAR
• Assessee Lawyers: SANKET JOSHI; WAY OF SHOW CAUSE
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 148; 143(3); 142(1); 43B

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI R. K. PANDA, VICE PRESIDENT AND MS. ASTHA CHANDRA, JUDICIAL MEMBER ITA No.941/PUN/2015 Assessment year : 2011-12 Hotel Sai Siddhi Pvt. Ltd. Plot No.3/4, Poush Sector-A, Agra Road, Lekhanagar, Nashik – 422009 Vs. ACIT, Central Circle – 1, Nashik PAN: AABCH4310G (Appellant) (Respondent) Assessee by : Shri Sanket Joshi Department by : Shri Amol Khairnar, CIT-DR Date of hearing : 30-06-2025 Date of pronouncement : 04-07-2025 O R D E R PER R.K. PANDA, VP: This appeal filed by the assessee is directed against the order dated 18.03.2015 of the Ld. CIT(A)-12, Pune relating to assessment year 2011-12. 2. This appeal was earlier dismissed by the Tribunal for want of prosecution. Subsequently the Tribunal vide Miscellaneous Application No.53/PUN/2022, order dated 07.02.2025 recalled its earlier order. Hence, this is a recalled matter. 3. Facts of the case, in brief, are that the assessee is a company engaged in running hotels at Nashik and Goa. Since the assessee had not filed the return of income, a notice u/s 142(1) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) was issued and served on the assessee calling for the return of income within 30 days from the service of notice. Since there was no compliance from the 2 ITA No.941/PUN/2015 side of the assessee, again another notice was issued which was duly served on the assessee. Again there was no compliance for which another notice was issued. Finally, the assessee furnished the return of income in Form ITR-6 on 22.03.2013 claiming loss of Rs.16,27,84,295/-. Subsequently notices u/s 143(2) and 142(1) of the Act were issued and served on the assessee on 22.03.2013 directing the assessee to produce the details of documents, accounts and other evidences on which it may rely in support of the return of income filed. The assessee filed its submissions as per the letter dated 25.03.2013. The assessee in the said letter has filed a copy of the Profit & Loss Account and Balance Sheet along with the computation of income, the details of disallowance u/s 43B of the Act in respect of interest payable on term loans from TFCI, Corporation Bank and SBI. The assessee also furnished the details of interest allowable u/s 43B of the Act on term loans from TFCI, Corporation Bank and SBI. 4. The Assessing Officer on perusal of the Profit & Loss Account noted that the assessee’s gross receipts from rooms, restaurants, F & B and other sales amount to Rs.1,34,79,507/-. The Assessing Officer observed from the Profit & Loss Account that the assessee has shown business loss of Rs.1,81,87,652/-. Since the assessee failed to produce the books of accounts to establish and prove the book results presented in the Profit & Loss Account, he rejected the book results and estimated the net profit at Rs.20 lakhs. 5. Similarly, on perusal of computation of income the Assessing Officer noted that the assessee has shown short term capital gain at Rs.3,48,89,261/- which was 3 ITA No.941/PUN/2015 subsequently revised to Rs.12,90,22,583/-. He observed that the hotel at Goa was auctioned by the Debt Recovery Tribunal, Mumbai as the assessee had defaulted on repayment of loan taken from consortium of banks being State Bank of India, Corporation Bank and TFCI. The Debt Recovery Tribunal sold the hotel at Goa to M/s. Oberoi Realty Limited for a sum of Rs.61.40 crores. He observed that the assessee has computed the short term capital gain at Rs.12,90,22,583/-. The Assessing Officer while computing the short term capital gain considered the WDV of the assets at Rs.40,31,47,921/- as against Rs.48,49,77,417/- claimed by the assessee resulting an addition of Rs.8,18,29,496/-. While doing so the Assessing Officer noted that the details of WDV in respect of Goa hotel separately are not available for earlier years. He, therefore, doubted the deduction claimed of WDV on assets in respect of Goa hotel and treated 50% of the consolidation of the total assets of the assessee company as pertaining to Goa hotel which is at Rs.18,84,56,836/-. He further considered the work-in-progress of Rs.21,46,86,742/- and office equipment at Rs.4,343/- as pertaining to Goa hotel. He accordingly determined the WDV of assets sold at Rs.40,31,47,921/-. The Assessing Officer accordingly determined the total income of the assessee at Rs.5,91,03,330/- in the order passed u/s 143(3) d 28.03.2013. 6. In appeal, the Ld. CIT(A) upheld the action of the Assessing Officer by observing as under: “2.1:12 During the appellate proceedings, the Appellant has furnished copy of the balance sheet and profit and loss accounts filed by the Directors and Chartered Accountant along with the letter dated 12.11.2013. However, in addition to these documents, the Appellant has not furnished any other details. 4 ITA No.941/PUN/2015 2.1.13 During the hearing held on 05.03.2015, the learned Authorized Representative of the Appellant Shri Ajay Nagdev, CA was asked to furnish all the details in support of the Appellant's Grounds of Appeal, which could be forwarded to the learned AO for the verification and comments as the Appellant has not furnished before the learned AO any information in support of the income declared by it in the return of income. However, the Appellant has not furnished any details so far. As stated above, the Appellant has been granted number of opportunities to prosecute its own appeal. However, the Appellant has chosen not to avail the opportunities provided by my predecessor and me. 2.1.14 The Appellant has merely furnished the profit and loss account balance sheet and statement of computation of total income. However, these documents are only a starting point for verification of the income declared by the Appellant in the return of income. In absence of verification, the Appellant's contentions cannot be accepted by assuming its version to be correct. 2.1.15 The Appellant has argued on the basis of several court decisions as to the learned AO's action of disallowance of losses and estimating its income is improper, it has contended that it did not produce books of accounts as the learned AO did not ask it to produce before him. It has also argued that the learned AO is not justified in reworking the short term capital gain realised on sale of hotels. It has argued without substantiating its argument with evidence that it had submitted assets bifurcation between Goa and Nashik Hotels before the learned AO. Similarly, it has stated without establishing that the waiver of VAT pertained to FY 2010-11. 2.1.16 I have considered the Appellant's arguments. I find that the Appellant's arguments are more of academic in nature. I have no dispute with the legal discourse rendered by the Appellant. However, the Appellant needs to prove the facts before the learned AO. The Appellant has not neither produced its books of accounts before the learned AO nor it has produced basic documents, such as bills, invoices vouchers etc on the basis of which, entries in the books of accounts can be justified. The Appellant's argument that the AO did not ask for production of books of accounts before him as a reason for non-production is ridiculous as learned AO had asked the Appellant to substantiate loss returned by him. In any case, it is responsibility of the Appellant to support its Grounds of Appeal with necessary evidence. If the Appellant is challenging the learned AO's action of rejection of its books of accounts it ought to produce the same for getting it verified from the AO under Rule 46A. The Appellant's legal arguments are not relevant unless the facts are established. During appellate proceedings also, the Appellant has not shown any keenness to get its affairs verified from either the learned AO or by the office of the CIT(A) 2.1.17 The Appellant may have incurred losses in these years as the Goa Hotel was auctioned by the Debt Recovery Tribunal. However, the learned AO needs material before him so as to assist the Appellant in determining its correct income or loss. The Appellant has neither filed Original return, nor filed return u/s 148 in time after it was provided many opportunities, nor did produce books of accounts before the learned AO. The Appellant has followed same approach even 5 ITA No.941/PUN/2015 during the appellate proceedings. It is settled that law favours vigilant and not indolent. Therefore, the Appellant's case cannot be considered on sympathetic grounds. 2.1.18 In absence of any material to decide any Ground of Appeal in favour of the Appellant and in view of the above discussion, I confirm the total income assessed by the learned AO for all three assessment years. Accordingly, additions made of Rs.4,92,05,599 for AY 2009-10, Rs.6,18,23,291 for AY 2010-11 and of Rs.19,46,91,052 [(8,71,24,405 + 21,08,52,079 + 2,57,37,151) -12,90,22,583] for AY 2011-12 are confirmed. 3. With the result, appeals are dismissed for all three AYs.” 7. Aggrieved with such order of the Ld. CIT(A), the assessee is in appeal before the Tribunal by raising the modified / revised grounds of appeal: 1. On the facts and in the circumstances of the case, the assessment order passed by the Assessing Officer u/s 143 r.w.s. is bad in law in as much as the Assessing Officer has neither mentions the reasons for issue of notice in the assessment order nor intimated to the assessee by way of show cause notice thereby disenabling the appellant to know the justification of issuing the notice u/s 148. 2. On the facts and in the circumstances of the case, CIT(A) has erred in passing the order without affording an adequate opportunity despite the request made by the appellant of its inability to file the relevant evidences by reason of its authorized representative hard pressed with the time barring scrutiny proceedings at Nashik. 3. On the facts and in the circumstances of the case and without prejudice to above grounds, the CIT(A) has erred in sustaining the estimation of income by the Assessing Officer at Rs.20,00,000 without there being any basis. 4. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in sustaining the disallowance of Rs.8,51,24,405 and further making deduction of Rs.26,46,10,310/- relying on the computation of total income filed by the appellant overlooking the fact that once overall estimation of net profit is made by rejecting the books of accounts and therefore the computation of income based on said books of accounts there is no scope for lower authorities to make such disallowance & additions. 5. On the facts and in the circumstances of the case, the Id. CIT(A) has erred in sustaining Capital Gain at Rs.12,90,22,583/- which is not as per law. The above grounds of appeal may kindly be allowed to be altered, amended modified etc in the interest of natural justice. 6 ITA No.941/PUN/2015 8. The Ld. Counsel for the assessee at the outset submitted that sufficient opportunity was not granted by the Assessing Officer while completing the assessment. Since the notice u/s 143(2) of the Act was issued on 22.03.2013 and the order was passed on 28.03.2013, he submitted that after the assessee filed the requisite details the Assessing Officer has not asked for any further details but completed the assessment by substituting his own method disregarding the computation filed by the assessee. He submitted that the Ld. CIT(A) also has not appreciated the facts of the case properly and upheld the action of the Assessing Officer. 9. Referring to the order of the Tribunal in assessee’s own case for assessment years 2009-10 and 2010-11, copy of which is placed at pages 1 to 9 of the paper book, he submitted that the Tribunal in the preceding two assessment years has restored the issue to the file of the Assessing Officer for fresh adjudication of the issue. He accordingly submitted that he has no objection if the matter is restored to the file of the Assessing Officer since the Ld. CIT(A) has passed a consolidated order for all the three years. 10. The Ld. DR on the other hand heavily relied on the orders of the Assessing Officer and the Ld. CIT(A). 11. We have heard the rival arguments made by both the sides and perused the orders of the Assessing Officer and Ld. CIT(A). It is an admitted fact that the Assessing Officer issued notices u/s 143(2) and 142(1) of the Act to the assessee 7 ITA No.941/PUN/2015 on 22.03.2013 asking the assessee to submit the details on 25.03.2013. We find after the assessee submitted the details the Assessing Officer without asking for any further details from the side of the assessee passed the order on 28.03.2013. Further, we find the Ld. CIT(A) has passed a consolidated order for assessment years 2009-10, 2010-11 and 2011-12. The Tribunal in ITA Nos.827 & 828/PUN/2015 vide order dated 23.06.2017 for assessment years 2009-10 and 2010-11 has restored the issue to the file of the Assessing Officer with certain directions. Since the Ld. CIT(A) in the instant case has passed a consolidated order for assessment years 2009-10, 2010-11 and 2011-12 and since the Assessing Officer has given very little time to the assessee for submitting the details and has not asked for any further clarification after the assessee filed the requisite details, therefore, considering the totality of the facts of the case and in the interest of justice and in light of the decision of the Tribunal in assessee’s own case for assessment years 2009-10 and 2010-11 which has a bearing on this appeal, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to adjudicate the issue afresh and in accordance with law after giving due opportunity of being heard to the assessee. The assessee is also hereby directed to appear before the Assessing Officer on the appointed date and make his submissions, if any, without seeking any adjournment under any pretext failing which the Assessing Officer shall be at liberty to pass appropriate order as per law. We hold and direct accordingly. The grounds raised by the assessee are accordingly allowed for statistical purposes. 8 ITA No.941/PUN/2015 12. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open Court on 4th July, 2025. Sd/- Sd/- (ASTHA CHANDRA) (R. K. PANDA) JUDICIAL MEMBER VICE PRESIDENT पुणे Pune; दिन ांक Dated : 4th July, 2025 GCVSR आदेश की प्रतितिति अग्रेतिि/Copy of the Order is forwarded to: 1. अपीलार्थी / The Appellant; 2. प्रत्यर्थी / The Respondent 3. 4. The concerned Pr.CIT, Pune DR, ITAT, ‘A’ Bench, Pune 5. गार्ड फाईल / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अधिकरण ,पुणे / ITAT, Pune S.No. Details Date Initials Designation 1 Draft dictated on 02.07.2025 Sr. PS/PS 2 Draft placed before author 03.07.2025 Sr. PS/PS 3 Draft proposed & placed before the Second Member JM/AM 4 Draft discussed/approved by Second Member AM/AM 5 Approved Draft comes to the Sr. PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr. PS/PS 7 Date of uploading of Order Sr. PS/PS 8 File sent to Bench Clerk Sr. PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R. 11 Date of Dispatch of order "