ACIT, Kannur V. M/s.Highway Inn(Chembarathy Garden), Kannur

ITA 106/COCH/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96787 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2015
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 24-11-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 17-03-2014
• Court: TRIBUNAL
• Department Lawyers: K K JOHN
• Keywords: Revised return
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND B.R.BASKAR AN, AM I.T.A. NO. 106/COCH/2014 ASSESSMENT YEAR : 2009-10 THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-1, KANNUR RANGE, KANNUR. VS. M/S. HIGHWAY INN, (CHEMBARATHY GARDEN) 7 TH MILE, TALIPARAMBA, KANNUR. [PAN: AABH 9923Q] (REVENUE -APPELLANT) (ASSESSEE-RESPONDEN T) REVENUE BY SHRI K.K. JOHN SR. DR ASSESSEE BY NONE DATE OF HEARING 08/05/2014 DATE OF PRONOUNCEMENT 06/06/2014 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 19-12- 2013 PASSED BY THE LD. CIT(A), KOZHIKODE AND IT REL ATES TO THE ASSESSMENT YEAR 2009-10. NONE APPEARED ON BEHALF OF THE ASSESSEE, THOUGH THE DATE OF HEARING WAS INTIMATED TO THE ASSESSEE AT THE TIME OF FILING OF APPEAL ITSELF. HENCE THE APPEAL IS BEING DISPOSED OF EX PARTE, WITHOUT THE P RESENCE OF THE ASSESSEE. 2. THE REVENUE IS AGGRIEVED BY THE DECISION OF THE LD. CIT(A) IN GRANTING PARTIAL RELIEF TO THE ASSESSEE IN RESPECT OF THE AD DITION MADE TOWARDS SUPPRESSION OF INCOME. I.T.A. NO.106 /COCH/2014 2 3. THE FACTS RELATING TO THE ISSUE UNDER CONSIDERAT ION ARE STATED IN BRIEF. THE ASSESSEE IS A PARTNERSHIP FIRM RUNNING A BAR HOTEL AT A PLACE CALLED TALIPARAMBA. THE DEPARTMENT CARRIED OUT A SURVEY OPERATION U/S. 133A OF THE ACT AT THE BUSINESS PREMISES OF THE ASSESSEE ON 26/03/2009. A T THE TIME OF SURVEY PROCEEDING, THE ASSESSEE AGREED TO OFFER ADDITIONAL INCOME OF RS. 40.00 LAKHS FOR THE ASSESSMENT YEAR 2009-10. HOWEVER, THE ASSESSEE -FIRM FILED THE RETURN OF INCOME FOR THE ABOVE SAID YEAR BELATEDLY ON 31/08/2 010 DECLARING AN INCOME OF RS. 36.63 LAKHS, WHICH INCLUDED ADDITIONAL INCOME O F RS. 30.00 LAKHS AS AGAINST THE OFFER OF RS. 40.00 LAKHS MADE DURING THE COURSE OF SURVEY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE FILE D ANOTHER RETURN DECLARING TOTAL INCOME OF RS. 46.63 LAKHS, I.E., THE ADDITION AL INCOME WAS OFFERED AT RS.40.00 LAKHS, AS AGREED TO DURING THE COURSE OF S URVEY. SINCE THE REVISED RETURN WAS FILED ON 14-07-2011, WHICH WAS BEYOND TH E DUE DATE PRESCRIBED FOR FILING REVISED RETURN, THE ASSESSING OFFICER TREATE D THE SAME AS INVALID. 4. DURING THE COURSE OF SURVEY, IT WAS NOTICED THAT THE ASSESSEE WAS NOT MAINTAINING ANY BOOKS OF ACCOUNTS AND IT WAS MAINTA INING DAILY STATEMENTS OF SALE AND STOCK, AS PRESCRIBED UNDER AKBARI RULES. FROM THE IMPOUNDED RECORDS, THE AO NOTICED THAT THE ASSESSEE WAS HAVING SALES T O THE TUNE OF RS.4.59 CRORES FOR THE PERIOD 01-04-2008 TO 28/02/2009. ACCORDING LY THE AO WORKED OUT THE AVERAGE MONTHLY SALE AT RS. 41.80 CRORES. EXTRAPOLA TING THE SAME, THE AO I.T.A. NO.106 /COCH/2014 3 ESTIMATED THE ANNUAL SALES AT RS. 5.01 CRORES. HOWE VER, IT WAS NOTICED THAT THE ASSESSEE HAD DECLARED SALES OF RS. 3.88 CRORES ONLY IN THE PROFIT AND LOSS ACCOUNT. THUS THERE WAS A DIFFERENCE OF RS.1.13 CR ORES BETWEEN THE SALES ESTIMATED BY THE AO AND THAT DECLARED BY THE ASSESS EE. HENCE THE ASSESSING OFFICER PROCEEDED TO WORK OUT THE GROSS PROFIT BY A DOPTING THE SALES VALUE ESTIMATED BY HIM. THE GROSS PROFIT SO WORKED OUT W ORKED OUT TO 46.6% OF SALES, WHICH WAS CONSIDERED BY THE AO TO BE NORMAL GROSS P ROFIT IN BAR HOTELS. THE SUPPRESSED INCOME WAS WORKED OUT BY THE AO AT RS.1. 13 CRORES. 5. THE ASSESSEE SUBMITTED BEFORE THE ASSESSING OFFI CER THAT THE CERTAIN EXPENSES, CONCESSIONS ON SALES, LOSS ON ACCOUNT OF BREAKAGE AND PILFERAGE, INTEREST ON UNSECURED LOANS AND OTHER EXPENSES WERE OMITTED IN THE ACCOUNTS. CONSIDERING THE SAID EXPENSES, THE ASSESSING OFFICE R ESTIMATED THE SUPPRESSED INCOME AT RS. 65.00 LAKHS AND ASSESSED THE SAME. 6. IN THE APPELLATE PROCEEDINGS, THE ASSESSEE CONTE NDED THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN ESTIMATING THE INCOME WITHOUT REJECTING THE BOOKS OF ACCOUNTS. IT WAS FURTHER SUBMITTED THAT THE GROSS PROFIT DECLARED IN THE BOOKS TOGETHER WITH THE ADDITIONAL INCOME OF RS. 40.00 LA KHS OFFERED GAVE A G.P RATE OF 41.3% AND ACCORDINGLY CONTENDED THAT THE SAID RATE OF G.P IS FAIR AND REASONABLE. HENCE, THE LD. CIT(A) CALLED FOR A REM AND REPORT FROM THE ASSESSING OFFICER. IN THE REMAND REPORT, THE ASSESSING OFFIC ER SUBMITTED THAT THE SALES I.T.A. NO.106 /COCH/2014 4 FIGURES REPORTED IN THE IMPOUNDED MATERIAL WERE AGR EED TO BE CORED BY THE MANAGING PARTNERS SHRI N.M.MANI AND OTHER PARTNER S HRI K.V.KARUNAKARAN. ACCORDINGLY, THE ASSESSING OFFICER STOOD BY THE ADD ITION MADE BY HIM. THE LD. CIT(A) TOOK THE VIEW THAT THE ADDITION OF RS. 65.00 LAKHS MADE BY THE ASSESSING OFFICER OVER AND ABOVE THE ADDITIONAL INCOME OF RS. 40.00 LAKHS DECLARED BY THE ASSESSEE IS ON THE HIGHER SIDE. THE LD. CIT(A) NOT ICED THAT THE NET PROFIT ESTIMATED FOR THE YEAR UNDER CONSIDERATION WAS 22.4 % AGAINST THE PROFIT RATE OF 4.17% DECLARED IN THE IMMEDIATELY PRECEDING YEAR. ACCORDINGLY, HE DIRECTED THE ASSESSING OFFICER TO ESTIMATE THE INCOME BY DETERMI NING THE NET PROFIT RATE AT 15% OF SALES. AGGRIEVED, THE REVENUE HAS FILED THI S APPEAL BEFORE US. 7. WE HAVE HEARD THE LD. DR AND PERUSED THE RECORD. WE NOTICE THAT THE ASSESSING OFFICER HAS PROCEEDED TO DETERMINE THE SU PPRESSED GROSS PROFIT AND ACCORDINGLY PROCEEDED TO ESTIMATE THE ADDITION OF R S. 65.00 LAKHS ON THE BASIS OF IMPOUNDED MATERIALS, WHICH WERE AGREED TO BE CORREC T BY THE PARTNERS OF THE ASSESSEE-FIRM. HOWEVER, THE LD. CIT(A) HAS PROCEED ED TO DETERMINE THE INCOME INDEPENDENTLY ON SOME OTHER BASIS, I.E., THE LD CIT (A) DID NOT EXAMINE THE METHOD ADOPTED BY THE ASSESSING OFFICER FOR DETERMI NING THE SUPPRESSED INCOME, BUT DIRECTED THE ASSESSING OFFICER TO ESTIMATE THE INCOME BY ADOPTING THE NET PROFIT RATE OF 15%. IT IS SEEN THAT THE LD. CIT(A) HAS IGNORED THE IMPOUNDED MATERIALS. BEFORE US, THE ASSESSEE HAS FAILED TO F URNISH ANY MATERIAL TO CONTROVERT THE FINDINGS OF THE ASSESSING OFFICER TO SUPPORT THE DECISION TAKEN BY I.T.A. NO.106 /COCH/2014 5 THE LD. CIT(A). UNDER THESE CIRCUMSTANCES, WE ARE UNABLE TO SUSTAIN THE DECISION OF THE LD. CIT(A). ACCORDINGLY, WE REVERS E THE ORDER OF THE LD. CIT(A) AND RESTORE THAT OF THE ASSESSING OFFICER. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S ALLOWED. PRONOUNCED ACCORDINGLY ON 06-0 6-2014. SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 6 TH JUNE, 2014 GJ COPY TO: 1. M/S. HIGHWAY INN, (CHEMBARATHY GARDEN), 7 TH MILE, TALIPARAMBA, KANNUR. 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE -1, KANNUR RANGE, KANNUR. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS),KOZHIKOD E. 4. THE COMMISSIONER OF INCOME-TAX, KOZHIKOE. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T, COCHIN