ACIT 16(1), MUMBAI V. SHET MUTHPPA & SONS, MUMBAI

ITA 1258/MUM/2013

• Counselvise Citation: 125819914 RSA 2013
• Duration Of Justice: 1 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-05-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2008-2009
• Appeal Filed On: 14-02-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JAYKARAN
• Keywords: Business income
• Section: 133A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE S/SHRI P.M.JAGTAP (AM) AND DR. S. T. M.PAVALAN (JM) ./I.T.A.NO.1258/MUM/2013 ( / ASSESSMENT YEAR: 2008-09) ASSISTANT C OMMISSIONER OF INCOME TAX, 16(1), MATRU MANDIR, TARDEO ROAD, MUMBAI-400007 / VS. M/S SHET M U THPPA & SONS, 335, BELLASIS BRIDGE, JEHANGIR BOMAN, BEHRAM MARG, TARDEO, MUMBAI-4000034 ( / APPELLANT) ( / RESPONDENT) ./ ./PAN/GIR NO. : AAAFS5979E / APPELLANT BY : SHRI JAYKARAN /RESPONDENT BY SHRI MANDAR VAIDYA # / DATE OF HEARING : 8.5.2014 # /DATE OF PRONOUNCEMENT : 28.5.2014 / O R D E R PER P.M.JAGTAP,AM: THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A)-27 MUMBAI DATED 29.11.2012 AND IN THE SOLITARY GROUND RAISED THEREIN, THE REVENUE HAS CHALLENGED THE ACTION OF THE LD.CIT(A) IN REDUCING THE INCOME OF THE ASSESSEE AS ASSESSED BY THE AO BY RS.25,25,011/- BY GIVING TELE SCOPIC EFFECT ON ACCOUNT OF ADDITIONAL INCOME OFFERED BY THE ASSESSEE DURING TH E COURSE OF SURVEY. 2. THE ASSESSEE IN THE PRESENT CASE IS A PARTNERSHI P FIRM WHICH IS ENGAGED IN THE BUSINESS OF RUNNING A HOTEL BY THE NAME OF HOTEL HINDMATA. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED BY IT ON 26 .3.2009 DECLARING TOTAL INCOME 25,52,684/-. SURVEY U/S 133A OF THE INCOME TAX A CT, 1961 (THE ACT) WAS CARRIED OUT IN THE HOTEL PREMISES ON 13.3.2008. ON THE BASI S OF ADVERSE FINDING OF THE SURVEY, I.T.A.NO.7738/MUM/2011 2 ADDITIONAL INCOME OF RS.25,25,011/- WAS DECLARED B Y THE ASSESSEE FIRM AND THE SAME WAS DULY OFFERED TO TAX IN THE RETURN OF INCOME FI LED IN THE YEAR UNDER CONSIDERATION UNDER THE HEAD INCOME FROM OTHER SOURCES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE BOOKS OF ACCOUNT AND OTHER RECORD PRODUCED BY THE ASSESSEE WERE EXAMINED BY THE AO AND ON THE BASIS OF SAID EXAMI NATION AS WELL AS KEEPING IN VIEW ADVERSE FINDINGS OF THE SURVEY OPERATION, THE BOOK RESULTS DECLARED BY THE ASSESSEE WERE REJECTED BY THE AO. AFTER REJECTION OF BOOK R ESULTS, THE INCOME OF THE ASSESSEE FROM HOTEL BUSINESS WAS ESTIMATED BY THE AO AT RS .41,51,327/- AS AGAINST RS.72,312/- DECLARED BY THE ASSESSEE. THE SAID ESTIMATE WAS MADE BY THE AO BY TAKING THE TURNOVER OF THE ASSESSEE AT RS.1,12,00,000/- (35 0 X 32000) AND ALLOWING TOTAL EXPENSES OF RS.70,48,673/- . ON APPEAL, THE LD. CIT(A) RESTRICTED THE ESTIMATE OF ASSESSEES INCOME FROM HOTEL BUSINESS TO RS.35,46, 000/-. HE ALSO ALLOWED THE CLAIM OF THE ASSESSEE FOR TELESCOPIC BENEFIT IN RESPECT OF ADDITIONAL INCOME OF RS.25,25,011/- DECLARED BY THE ASSESSEE DURING THE COURSE OF SURV EY AND FURTHER RESTRICTED THE ADDITION MADE BY THE AO ON ACCOUNT OF ESTIMATED I NCOME FROM HOTEL BUSINESS TO THAT EXTENT. IN THE PRESENT APPEAL FILED AGAINST THE O RDER OF LD. CIT(A), REVENUE HAS CHALLENGED THE ACTION OF THE LD. CIT(A) IN ALLOWING TELESCOPIC BENEFIT TO THE ASSESSEE IN RESPECT OF ADDITIONAL INCOME OFFERED DURING THE CO URSE OF SURVEY. 3. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. AS POINTED OUT BY THE LD. DR FROM THE STATEMENT OF TOTAL INCOME OF THE ASSESSEE PLACED AT PAGE NO.1 OF THE PAPER BOOK, THE ADDITIONAL INCOME OF RS.25,25,011/- WAS OFFERED BY THE ASSESSEE BY WAY O F SHARES HELD IN THE NAME OF SHRI SUKHESH SHETTY, SON OF THE PARTNER SHRI SRIDHAR SH ETTY. ALTHOUGH THE DETAILS OF THESE SHARES ARE GIVEN BY THE ASSESSEE AT PAGE N0.12 OF THE PAPER BOOK, THE EXACT DATES OF PURCHASE OF THESE SHARES ARE NOT FURNISHED BY THE ASSESSEE. IN ORDER TO GIVE TELESCOPING EFFECT/BENEFIT, IT IS NECESSARY TO ASCE RTAIN AS TO WHETHER THE AMOUNT OF ADDITION MADE TO THE TOTAL INCOME OF THE ASSESSEE B Y ESTIMATING ITS INCOME FROM HOTEL I.T.A.NO.7738/MUM/2011 3 BUSINESS WAS AVAILABLE AT THE RELEVANT POINT OF TIM E TO MAKE INVESTMENT IN SHARES IN THE NAME OF SHRI SUKHESH SHETTY. IT APPEARS THAT THE L D. CIT(A), HOWEVER HAS OVERLOOKED THIS VITAL ASPECT WHILE ALLOWING THE BENEFIT OF TEL ESCOPY TO THE ASSESSEE. WE, THEREFORE, CONSIDER IT JUST AND PROPER TO SET ASIDE THE IMPUGN ED ORDER PASSED BY LD. CIT(A) GIVING BENEFIT OF TELESCOPY TO THE ASSESSEE AND RESTORE TH E MATTER TO THE FILE OF THE AO WITH A DIRECTION TO CONSIDER AND ALLOW THE CLAIM OF THE A SSESSEE FOR TELESCOPY BENEFIT AFTER VERIFYING THAT THE FUNDS GENERATED AS A RESULT OF ESTIMATION OF HIGHER BUSINESS INCOME WERE AVAILABLE WITH THE ASSESSEE TO MAKE INVESTMENT IN SHARES IN THE NAME OF SHRI SUKESH SHETTY. 4. IN THE RESULT, THE APPEAL OF THE REVENUE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES.. ORDER PRONOUNCED IN THE OPEN COURT ON 2 8TH MAY, 2014 ( * + 28TH MAY, 2014 SD SD (DR. S. T. M.PAVALAN) (P.M.JAGTAP) ( / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI: ON THIS 28TH DAY OF MAY, 2014 . . ./ SRL , SR. PS ! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT /APPLICANT 2. / THE RESPONDENT. 3. 0 ( ) / THE CIT(A)- 4. 0 / CIT 5. 1 3 , # 3 , / DR, ITAT, MUMBAI 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) # 3 , /ITAT, MUMBAI