M/s. Hotel Damini, Kolhapur V. ITO, Wd 2(4), Kolhapur, Kolhapur

ITA 1185/PUN/2006

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7644 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2002-2003
• Appeal Filed On: 20-11-2006
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: HEMANTKUMAR C LEUVA
• Keywords: Unexplained investment; Income from undisclosed sources
• Section: 143(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI I C SUDHIR, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO. 1185/PN/06 (ASSTT YEAR: 2002-03) M/S HOTEL DAMINI, 221/E TARABAI PARK, KOLHAPUR APPELLANT PAN AAAPH8917R VS. INCOME-TAX OFFICER, RESPONDENT WARD-2(4), KOLHAPUR APPELLANT BY : SHRI M.K. KULKARNI RESPONDENT BY : SHRI HEMANT KUMAR C LEUVA ORDER PER G.S. PANNU, A.M: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS), KOLHAP UR DATED 26.9.2006 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 28.3.2005 PASSED BY THE ASSESSING OFFICER UNDER SEC . 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) PERTA INING TO THE ASSESSMENT YEAR 2002-03. 2. GROUND NO 1 RAISED BY ASSESSEE READS AS UNDER: ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LD CIT(A) KOLHAPUR WAS NOT JUSTIFIED IN SUSTAIN ING THE ADDITION OF RS 4,03,347/- MADE BY THE AO TO THE EXT ENT OF RS 6,97,350/- ON ACCOUNT OF INCOME FROM ALLEGED UNRECO RDED SALES. THE ADDITION BE DELETED . 3. THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN TH E BUSINESS OF RESTAURANT AND CATERING. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED ON 31.3.2003 DEC LARING A TOTAL ITA 1185/PN/06 HOTEL DAMINI, KOLHAPUR 2 INCOME OF RS 6,21,330/-. IN SO FAR AS IT IS RELEVAN T FOR PRESENT PURPOSES, IT IS TO BE NOTED THAT IN THE ASSESSMENT FINALIZED UNDER SECTION 143(3) OF THE ACT ON 28.3.2005, AN ADDITION OF RS 6,97,350/- REPRESENTING INCOME ON ACCOUNT OF UNRECO RDED SALES WAS MADE BY THE ASSESSING OFFICER. THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS ALLOWED PARTIAL RELIEF BY REDUCING THE ADDITION TO RS 4,03,547/- AGAINST WHICH ASSESSEE IS IN APPEAL BEFORE US. 4. BRIEFLY PUT THE RELEVANT FACTS ARE THAT A SURVEY ACTION UNDER SECTION 133A OF THE ACT WAS CONDUCTED ON THE PREMIS ES OF THE ASSESSEE ON 8.8.2001 WHEREBY IT WAS FOUND THAT ASSE SSEE DID NOT MAINTAIN REGULAR BOOKS OF ACCOUNT. THE ASSESSEE FIRM ADMITTED THAT SALES AS FOUND NOTED IN A FILE FOUND DURING THE SURVEY WERE NOT COMPLETELY SHOWN IN THE RETURNS OF INCOME FILED FOR THE EARLIER YEARS. ACCORDINGLY, ASSESSEE MADE A DECLARATION OF RS 13 LAKHS FOR THE YEAR UNDER CONSIDERATION, WH ICH INCLUDED RS 6 LAKHS ON ACCOUNT OF EXCESS CASH AND RS 7 LAKHS IN RESPECT OF UNRECORDED SALES. APART THEREFROM, ASSESSEE ALSO MADE DECLARATIONS OF RS 3 LAKHS AND RS 7 LAKHS FOR ASSES SMENT YEAR 2001-02. THE ASSESSEE FILED RETURNS OF INCOME FOR T HE EARLIER YEAR IN TERMS OF THE DECLARATIONS MADE, BUT FOR THE YEAR UNDER APPEAL, THE ADDITIONAL INCOME OF RS 7 LAKHS DECLARE D ON ACCOUNT OF UNRECORDED SALES, WAS NOT REFLECTED IN THE RETUR N OF INCOME. THE ASSESSING OFFICER DID NOT ACCEPT THE TRADING RE SULTS AS DEPICTED IN THE RETURN OF INCOME, WHICH WAS BASED O N THE BOOKS OF ACCOUNT. THE ASSESSING OFFICER HELD THE ACCOUNT BOOKS AS UNRELIABLE. THE ASSESSING OFFICER COMPUTED THE INCO ME FROM ITA 1185/PN/06 HOTEL DAMINI, KOLHAPUR 3 UNRECORDED SALES FOR THE PRE-SURVEY PERIOD AT RS 3, 29,624/-. HE ALSO NOTED THAT OTHER THAN UNACCOUNTED EXCESS CASH OF RS 6 LAKHS DECLARED AS ON THE DATE OF SURVEY, FURTHER UN ACCOUNTED INVESTMENTS/ASSETS TILL THE DATE OF SURVEY WERE RS 1,42,620/- AS PER DETAILS IN PARA 7(1) OF THE ASSESSMENT ORDER. T HUS, THE TOTAL CAME TO RS 7,08,200/-. HE COMPARED THE SAME WITH TH E INCOME FROM UNRECORDED SALES UPTO THE DATE OF SURVEY AND A DOPTED THE HIGHER OF THE TWO, I.E. RS 7,08,200/- AS THE INCOME FOR THE PRE- SURVEY PERIOD. SINCE THE ASSESSEE HAD ALREADY SHOWN RS 6 LAKHS ON ACCOUNT OF EXCESS CASH, THE ADDITION FOR THE PR E-SURVEY PERIOD WAS LIMITED TO RS 1,08,200/-. IN THE POST-SU RVEY PERIOD, UNACCOUNTED INCOME ON ACCOUNT OF UNRECORDED SALES W AS ESTIMATED BY THE ASSESSING OFFICER AT RS 5,89,150/- . ACCORDINGLY, TOTAL ADDITION OF RS 6,97,350/- WAS MADE TO THE RET URNED INCOME. THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS ALLOWE D RELIEF TO THE EXTENT OF RS 1,08,200/- BY REDUCING THE UNACCOU NTED INVESTMENT COMPUTED BY THE ASSESSING OFFICER OVER A ND ABOVE RS 6 LAKHS DISCLOSED BY THE ASSESSEE. AS PER THE CO MMISSIONER OF INCOME-TAX (APPEALS), THE ACTUAL CASH FOUND DURI NG THE COURSE OF SURVEY WAS ONLY RS 10,170/- AND, THEREFORE, IT P ROVED THAT THE AMOUNT OF RS 6 LAKHS IN CASH DECLARED AT THE TIME O F SURVEY WAS NOT ACTUALLY EXISTING WITH THE ASSESSEE. IT WAS, TH EREFORE, CONCLUDED BY THE COMMISSIONER OF INCOME-TAX (APPEAL S) THAT THERE WAS NOTHING TO PROVE THAT THE INVESTMENTS OF RS 1,08,200/- WERE NOT MADE OUT OF THE AMOUNT OF RS 6 LAKHS DECLA RED BY THE ASSESSEE. HE, THEREFORE, HELD THAT SUCH UNACCOUNTED INVESTMENT OF RS 1,08,200/- WAS A PART OF RS 6 LAKHS DECLARED BY THE ITA 1185/PN/06 HOTEL DAMINI, KOLHAPUR 4 ASSESSEE AND NO SEPARATE ADDITION WAS REQUIRED. ACC ORDINGLY, THE ADDITION WAS SCALED DOWN TO RS RS 4,03,347/- (R S 6,97,350 MINUS RS 1,08,200/-). 5. NOT BEING SATISFIED WITH THE AFORESAID, ASSESSEE IS IN APPEAL BEFORE US. BEFORE US, THE LEARNED COUNSEL FO R THE ASSESSEE POINTED OUT THAT THERE IS NOTHING TO CONTR OVERT THE OBSERVATION OF THE COMMISSIONER OF INCOME-TAX (APPE ALS) IN PARA 19 TO THE EFFECT THE ACTUAL CASH INVENTORY TAKEN BY THE SURVEY TEAM REVEALED CASH OF ONLY RS 10,170/-, AND THEREFO RE, ACCORDING TO HIM, EVEN THE BALANCE OF THE ADDITION SUSTAINED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) IS NOT JUSTIFI ABLE. 6. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDER OF THE COMMISS IONER OF INCOME-TAX (APPEALS). 7. HAVING CONSIDERED THE RIVAL SUBMISSIONS, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS), INASMUCH AS THE UNACCOUNTED INVESTMENTS AND EARNING OF PROFITS ON UNRECORDED SALES STANDS ESTAB LISHED AND HAS BEEN ADMITTED BY THE ASSESSEE DURING THE SURVEY PROCEEDINGS, NOTABLY, A SUM OF RS 6 LAKHS HAS ALSO BEEN DECLARED IN THE RETURN OF INCOME ON ACCOUNT OF EXCE SS CASH. THOUGH ASSESSEE ADMITTED ADDITIONAL INCOME ON ACCOU NT OF UNRECORDED SALES DURING SURVEY AT RS 7 LAKHS, BUT N O SUCH INCOME WAS RETURNED. THE ADDITION MADE ON THIS COUN T, FOR THE POST-SURVEY PERIOD IS WELL FOUNDED AS PER THE DISCU SSION IN THE ASSESSMENT ORDER. MOREOVER, THE PLEA OF THE LEARNED COUNSEL TO DELETE THE ADDITION ON THE BASIS OF THE EXCESS CASH DECLARED IS ITA 1185/PN/06 HOTEL DAMINI, KOLHAPUR 5 NOT TENABLE BECAUSE THE ADDITION IS IN QUESTION PER TAINS TO POST- SURVEY PERIOD, WHEREAS THE EXCESS CASH OF RS 6 LAKH S IS ON ACCOUNT OF UNRECORDED INCOME FOR THE PRE-SURVEY PER IOD. THEREFORE, THE ADDITION SUSTAINED BY THE COMMISSION ER OF INCOME-TAX (APPEALS) IS HEREBY AFFIRMED. THUS, ON T HIS ASPECT, THE ASSESSEE FAILS. 8. GROUND NO. 2 RELATING TO THE CLAIM OF THE ASSESS EE UNDER SECTION 40(B) OF THE ACT WAS NOT PRESSED BY THE LEA RNED COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING AND, THEREF ORE, THE SAME STANDS DISMISSED. 9. GROUND NO. 3 RELATING TO LEVY OF INTEREST UNDER SECTIONS 234A/234B/234C OF THE ACT IS CONSEQUENTIAL IN NATUR E AND NEEDS NO ADJUDICATION. 10. IN THE RESULT, APPEAL OF THE ASSESSEE FAILS AND IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS 21ST DAY OF JANUARY, 2011. SD/- SD/- (I C SUDHIR) (G.S. PA NNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 21ST JANUARY, 2011 COPY TO:- 1) M/S HOTEL DAMINI, KOLHAPUR 2) THE ITO, WD-2(4), KOLHAPUR 3) THE CIT (A) KOLHAPUR 4) THE CIT-I KOLHAPUR 5) THE D R, B BENCH, ITAT, PUNE. BY ORDER TRUE COPY ASSTT. REGISTRAR, I.T.A.T., PUNE B