M/S.BOMBAY HOTEL V. COMMISSIONER OF I.T.

SJC/14/1992

AI Insights

The case revolves around a dispute concerning the assessment year 1982-83, where the Income Tax Officer added Rs.60,540 to the petitioner's income, citing a reduction in turnover compared to the previous year. The Commissioner of Income Tax (Appeals) partially allowed the petitioner's appeal, noting that similar expenses had been accepted in the past. However, the Income Tax Appellate Tribunal reversed this decision, leading to the petitioner's challenge in the High Court. The High Court found that the Tribunal had not adequately addressed the issues raised and had merely reproduced the CIT (Appeals)'s language without substantive analysis.

• Counselvise Citation: [2019] 140 COUNSELVISE.COM (IT) 726021 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 24-07-2019
• Assessment Year: misc
• Laws Referred To: Income Tax Act
• Result in Favour of: Applicant
• Court: HIGH COURT
• Keywords: Assessment Year 1982-83; Cuttack Bench; Hotel Business; Income Tax; Income tax appellate tribunal; Turnover Reduction
• Section: 143(3)

Judgement Text

" 11. 24.07.2019 Heard learned counsel for the petitioner and learned Sr. Standing Counsel for the Revenue Department- opposite party. 2. By way of this petition, the petitioner-assessee has challenged the order of the Income Tax Appellate Tribunal, Cuttack Bench, Cuttack in I.T.A. No.76(CTK) of 1986, dated 14.04.1989, whereby learned Tribunal has reversed the finding arrived at by the learned Commissioner of Income Tax (Appeals), Cuttack. 3. On perusal of record, we have seen that while considering the matter, this Court vide order dated 04.05.2000 framed the following question of law, which reads as under: “Whether on the facts and circumstances of the case, the restoration of the addition of Rs.60,540/- is based on any irrelevant material, or on partly relevant and partly irrelevant materials or has been arrived at by ignoring or mis-reading relevant evidence on record, or otherwise, illegal or perverse?” 4. Learned counsel for the petitioner-assessee has taken us to the order of the Income-tax Officer (“Assessing Officer” for short) at Annexure-1 for the assessment year 1982-83, where Rs.60,540/- was added on the ground that the turnover of the petitioner-assessee has been reduced in comparison to the previous year, where it was shown Rs.4,16,866/- and in the present year it has been shown Rs.3,39,460.05. On that basis, the Assessing Officer at page-17-18 has observed as under: “xxx. Hence, there is no denying in the fact that the assessee used to keep money of the boarders in its safe custody and refund the same. S.J.C. No. 14 of 1992 -2- This has been found on the date of search. Hence, there is nothing to doubt that the assessee did not engage in providing this facility to the boarders. Further, it is clear that the people have not been borne in the booking register. This is so because the assessee is a reputed hotelier in Cuttack having goodwill and regular customers. Hence, some of the customers can stay in the hotel without bothering to get their names entered in the booking register. In view of the above it is held that the booking register produced does not show a true picture of the occupancy in the hotel. Moreover, since the assessee has not furnished any suitable explanation in fall in lodging receipts I reject the figures submitted by the assessee on account of receipt from lodging and estimate the receipt from lodging at a round sum of Rs.4,00,000/- lakhs. Addition on this account to the declared income will be Rs.60.540/-.” (emphasis supplied) 5. However, learned Commissioner of Income Tax (Appeals), Cuttack, (‘CIT (Appeals)’ for short) vide its order dated 20.11.1985, passed in I.T. Appeal No.155/ORA/85/86 (Annexure-2), while partly allowing the appeal preferred by the assessee has given a reasoning that earlier the same practice was accepted. Relevant portion of the said order of CIT (Appeals) at page 24 reads as under: “It is noticed that the assessee used to incur similar expenses in the past; such expenses before 24.8.81 were included in the purchase of other items and debited to the trading accounts while after 24.8.81 when regular accounts were kept, these expenses were separately accounted for and claimed as deduction. Since similar expenses in the past have been accepted by the Income-Tax Officer, there is no justification in disallowing the claim this year, particularly when the nature of the business remained the same and claim is not in any way unreasonable.” 6. Being aggrieved by the order of CIT (Appeals), the Revenue Department filed appeal before the Income Tax -3- Appellate Tribunal, Cuttack Bench, Cuttack vide I.T.A. No.76(CTK) of 1986, which was allowed on 14.04.1989, as per Annexure-3. 7. Perused the order of the Tribunal in detail. On perusal of the order of the Tribunal it is seen that considering the view taken that the turnover of the assessee has gone down, the Tribunal without reversing the view taken by the CIT (Appeals) has adopted the same language and reproduced the same in its order. 8. In our considered opinion, the Tribunal has seriously erred in not reversing the view taken by the CIT (Appeals) and therefore, the order of the Tribunal dated 14.04.1989 passed in I.T.A. No.76(CTK) of 1986 is required to be quashed and set aside and the same is accordingly set aside. 9. In view of the above, the issue is answered in favour of the assessee against the Department. The petition stands disposed of accordingly. All connected Misc. Cases/I.As. if any, are accordingly disposed of. Issue urgent certified copy of this order as per rules. mp .…….......……………… ( K.S. Jhaveri ) Chief Justice …………………..……… (K.R. Mohapatra) Judge "