M/s. Vandana Hotel, Sagar V. The ACIT, Sagar

ITA 135/JAB/2008

• Counselvise Citation: 13522714 RSA 2008
• Duration Of Justice: 3 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 24-01-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 12-05-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KESHAVE SAXENA
• Assessee Lawyers: H P VERMA; GIRISH AGRAWAL
• Keywords: Depreciation
• Section: 153A; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JM AND SHRI R.C. SHARMA , AM ITA NOS.135 & 136/JAB/2008 A.YS. 2003-04 & 2004-05 M/S. VANDANA HOTEL, SAGAR AACFH 5118 A APPELLANT VS. ACIT, CIRCLE, SAGAR RESPONDENT ASSESSEE BY S/SHRI H.P. VERMA & GIRISH AGRAWAL DEPARTMENT BY SHRI KESHAVE SAXENA, CIT(DR) O R D E R PER BENCH BOTH THESE APPEALS ARE FILED BY THE ASSESSEE AGAIN ST THE CONSOLIDATED ORDER OF LD. CIT(A)-I, JABALPUR, DATED 28.2.2008 FOR THE AY 2003-04 & 2004-05 IN THE MATTER OF ORDER PASSED U/S 153 R.W.S.143(3) OF THE I.T. ACT, 1961. 2. IN ITA NO.135/JAB/2008 FILED BY THE ASSESSEE (AY: 2003-04), THE FOLLOWING GROUNDS HAVE BEEN RAISED: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN HOLDING -: 2: - 2 THAT THE CUMULATIVE NET PROFIT OF THE APPELLANT ALONE FOR THE PERIOD 1.4.2001 TO 10.12.2003 WAS RS.76,10,651/- ON THE BASIS OF ONE SET OF ACCOUNTS OUT OF SEVERAL SETS OF ACCOUNTS GENERATED FORM THE SEIZED HARD DISC OF THE COMPUTER. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN ESTIMATING THE NET INCOME OF THE APPELLANT AT RS.55,20,618/- ON THE BASIS OF SO CALLED COMPUTER GENERATED DATA AS AGAINST THE RETURNED INCOME OF THE APPELLANT AT RS.2,23,750/-. 3. IN ITA NO.136/JAB/2008 FILED BY THE ASSESSEE (AY: 2004-05), THE FOLLOWING GROUNDS HAVE BEEN RAISED: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN HOLDING THAT THE CUMULATIVE NET PROFIT OF THE APPELLANT ALONE FOR THE PERIOD 1.4.2001 TO 10.12.2003 WAS RS.76,10,651/- ON THE BASIS OF ONE SET OF -: 3: - 3 ACCOUNTS OUT OF SEVERAL SETS OF ACCOUNTS GENERATED FORM THE SEIZED HARD DISC OF THE COMPUTER. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.5,67,609/- ON THE BASIS OF SO CALLED COMPUTER GENERATED DATA TO THE INCOME RETURNED BY THE APPELLANT. 4. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS PERUSED. 5. THE FACTS, IN BRIEF, ARE THAT THERE WAS SEARCH AT T HE BUSINESS PREMISES OF SANTOSH SAHU, GROUP OF SAGAR, ON 10 TH DECEMBER, 2003. DURING THE SEARCH PROCEEDING CONDUC TED AT THE OFFICE AND BUSINESS PREMISES OF THE ASSESSEE IN THE CASE OF SANTOSH SAHU, THE HARD DISC WAS SEIZED, WHICH YIELD ED THE PRINT OUTS OF THE COMPLETE CASH BOOKS & LEDGERS AND THE FINAL ACCOUNTS FOR THE PERIOD 1.4.2001 TO 31.3.2002, 1.4. 2002K TO 3.3.2003 & 1.4.2003 TO 5.12.2003 ON THE DATE OF SEA RCH ON 11.12.2003 WHICH REFLECTED THE SALES FOR RESTAURANT ONLY. ON THE BASIS OF THE SAME, THE ASSESSEE FILED THE RETUR NS IN -: 4: - 4 COMPLIANCE TO THE NOTICE U/S 153A AFTER CLAIMING TH E DEDUCTION FOR DEPRECIATION AND INTEREST PAYMENT WHI CH WERE NOT REFLECTED IN THE SAID FINAL ACCOUNTS. HOWEVER, THE HARD DISC ALSO YIELDED OTHER SET OF CONSOLIDATED PROFIT AND L OSS ACCOUNT AND BALANCE SHEET ONLY WITHOUT ANY SUPPORTING CASH BOOK ETC. FOR THE PERIOD (A) 1.4.2001 TO 31.3.2002, (B) 1.4.2 001 TO 3.3.2002 & (C) 1.4.2001 TO 5.12.2003 AND THE PROFIT AND LOSS ACCOUNT AND BALANCE SHEET WHICH INCLUDED THE SALE O F LIQUOR AND CIGARETTE SALES APART FROM THE ABOVE SAID SALES FOR RESTAURANT. THE AO ASSESSED THE INCOME FOR THE ASSE SSMENT YEARS 2002-03, 2003-04, 2004-05 ON THE BASIS OF THE SAID CONSOLIDATED PROFIT AND LOSS ACCOUNT AND BALANCE AF TER REJECTING THE CLAIM OF THE ASSESSEE THAT THE BAR SA LES FOR THE PERIOD 1.4.2002 TO 31.3.2003 (31.3.2004) RELATED TO THE M/S. SAGAR WINES, THE SISTER CONCERNS OF THE ASSESSEE. T HIS RESULTED IN DETERMINATION OF INCOME FOR PERIOD OF 1.4.2001 T O 31.3.2003 IN THE ASSESSMENT YEAR 2003-04 AND FOR THE PERIOD 1 .4.2001 TO 5.12.2003 (31.3.2004) FOR THE ASSESSMENT YEAR 2004- 05. 6. IN THE APPEAL, THE CIT(A) ACCEPTED THE RETURNED INCOME FOR THE ASSESSMENT YEAR 2002-03. HOWEVER, FO R THE -: 5: - 5 ASSESSMENT YEARS 2003-04 & 2004-05, HE DETERMINED T HE INCOME ON THE BASIS OF THE CONSOLIDATED PROFIT AND LOSS ACCOUNT AND BALANCE SHEET, WHICH INCLUDED BAR SALES AND CIGARETTE SALES. THE CIT(A) DETERMINED THE INCOME O F THE ASSESSMENT YEAR 2003-04 AT RS. 55,20,618/- AFTER MA KING REDUCTION OF PROFIT OF RS. 12,36,062/- IN THE ASSES SMENT YEAR 2002-03 AND LOSS AT RS. 92,011/- IN THE ASSESSMENT YEAR 2003-04 SHOWN IN THE PROFIT AND LOSS ACCOUNT ACCEPT ED BY THE ASSESSEE FROM THE PROFIT AND LOSS ACCOUNT FROM THE CONSOLIDATED PROFIT AND LOSS ACCOUNT AT RS. 66,64,6 69/- FOR THE PERIOD 1.4.2001 TO 31.3.2003 UNSUPPORTED BY ANY CAS H BOOK ETC. SIMILARLY, HE ASSESSED THE INCOME FOR THE ASS ESSMENT YEAR 2004-05 (PERIOD 1.4.2003 TO 5.12.2003) AT RS. 11,20 ,526/- AFTER REDUCING THE NET PROFIT SHOWN AT RS. 66,64,66 9/- FROM THE NET PROFIT SHOWN IN THE CONSOLIDATED PROFIT AN D LOSS ACCOUNT FOR THE PERIOD 1.4.2001 TO 31.3.2003 FROM T HE NET PROFIT SHOWN IN THE CONSOLIDATED PROFIT AND LOSS A CCOUNT FOR THE PERIOD 1.4.2001 TO 5.12.2003 AT RS. 77,85,195/- (CORRECTLY RS. 76,10,651/-). SINCE THE ASSESSEE HAD SHOWN THE SAID INCOME AT RS. 5,52,917/-, THE CIT(A) CONFIRMED THE ADDITION OF -: 6: - 6 RS. 5,676,609/-. THE CIT(A) GAVE HIS REASONS FOR TH E SAME IN PARA 3. 7. THE CONTENTION OF THE LD. AUTHORIZED REPRESENTATIVE WAS THAT THE BOOK RESULT INCOME HAS BEEN ACCEPTED. THE OTHER CONCERNS M/S. S. S. ENTERPRISES & M./S. SAGAR LIQUO R ARE SEPARATELY ASSESSED TO TAX BY THE SAME LD. AO. THE ASSESSEE DID NOT HAVE LICENSE TO RUN THE BAR. THE BAR WAS RU N BY M/S. S. S. ENTERPRISES UP TO 31.3.2003 AND THEREAFTER M/ S. SAGAR WINE RUN THE BAR. HE FURTHER CONTENDED THAT THE CIT (A) IN HIS ORDER AT PAGE 2 CLEARLY OBSERVED THAT THE ASSESSEE HAS MAINTAINED PROFIT AND LOSS ACCOUNT SEPARATELY FOR E ACH YEAR, WHICH DID NOT REFLECT THE BAR SALES. WITH REGARD TO THE OBSERVATION OF CIT(A) THAT THE ASSESSEE HAS SHOWN P URCHASE OF LIQUOR AND CIGARETTE INDICATE THAT THE ASSESSEE WAS CARRYING ON BUSINESS OF LIQUOR AND CIGARETTE ALSO, IT WAS SUBMI TTED BY LD. AUTHORIZED REPRESENTATIVE THAT THE PURCHASES OF LIQ UOR ARE MADE BY THE LICENCEE ( ASSESSEE WAS NOT A LICNECEE) AND FROM THE DISTRIBUTORS AND THE COST IS PAID TO THE DISTRI BUTOR. THE ASSESSEE COULD NOT PURCHASE THE LIQUOR. -: 7: - 7 8. IT WAS ALSO SUBMITTED THAT A LIQUOR CONTRACTOR DOES NOT DEAL IN CIGARETTE AND IT IS AN ANCILLARY/INCIDE NTAL EVIL TO THE LIQUOR CONSUMPTION. HE FURTHER SUBMITTED THAT THE A SSESSEE HAS ALLOWED SALE OF LIQUOR AND CIGARETTE AT ITS RES TAURANT JUST TO INCREASE THE SALE OF ITS FOOD ITEMS AND NO RENT WAS CHARGED FROM THE BAR. HE FURTHER INVITED OUR ATTENTION TO A OS ORDER PAGE 28, WHEREIN IT WAS MENTIONED THAT BALWANT THAK UR WAS WORKING AS MANAGER OF SAGAR WINES AND EARLIER WAS W ORKING AS MANAGER OF S. S. ENTERPRISES. HE FURTHER CONTEND ED THAT THE PRIMARY EVIDENCE IS IN THE FORM OF SEPARATE FINAL A CCOUNTS FOR EACH YEAR. THE ASSESSMENT WAS NOT BASED ON THOSE DOCUMENTS. THE CONSOLIDATED ACCOUNT SUFFERED FROM D EFECTS AS SUBMITTED EARLIER. ASSESSMENT BASED ON IT IS NOT TA XABLE IN LAW. FURTHER SUBMISSION IN THIS REGARD WAS AS UNDER :- 1. M/S. VANDANA HOTEL IS THE OLD PARTNERSHIP FIRM WITH THREE PARTNERS AS UNDER :- A) SHRI SANTOSH KUMAR SAHU. B) SHRI SATISH KUMAR SAHU C) SHRI KAMLESH KUMAR SAHU -: 8: - 8 2. M/S. S. S. ENTERPRISES WAS ALSO THE OLD FIRM HAVING THREE PARTNERS I.E. SHRI BRIJ JAISWAL, SMT. PRAMILA JAISWAL &SHRI KAMLESH NARAYAN JAISWAL, WHO WAS CLOSE FRIENDS OF SHRI SANTOSH KUMAR SAHU. IT HAD OBTAINED THE EXCISE CONTRACT FOR THE PERIOD 1.4.2002 TO 31.3.2003 FOR THE SALE OF COUNTRY AND FOREIGN LIQUOR IN THE WHOLE DISTRICT OF SAGAR. 3. M/S. SAGAR WINES WAS CONSTITUTED ON 24.2.2003 WITH 17 PARTNERS INCLUDING SHRI SANTOSH KUMAR SAHU AND SHRI SATISH KUMAR SAHU WITH SHARES OF 27 % & 20 % RESPECTIVELY. THIS FIRM WAS HAVING THE EXCISE CONTRACT FOR THE PERIOD 1.4.2003 TO 31.3.2004 FOR THE SALE OF COUNTRY AND FOREIGN LIQUOR IN THE WHOLE DISTRICT OF SAGAR. IN THIS CONNECTION, IT IS SUBMITTED THAT M/S. S. S. ENTERPRISES HAD SHOWN THE SALES OF RS. 38.36 CRORES IN THE ASSESSMENT YEAR 2003-04 & M/S. SAGAR WINES HAVE SHOWN THE SALES OF RS. 37.76 CRORES IN THE ASSESSMENT YEAR 2004-05. THESE -: 9: - 9 SALES INCLUDE THE BAR SALES FROM THE PREMISES OF THE ASSESSEE. AS THESE FIRMS WERE HAVING THE LICENCE FOR SALE OF COUNTRY AND FOREIGN LIQUOR IN THE WHOLE OF DISTRICT OF SAGAR FOR THE RESPECTIVE ASSESSMENT YEARS, IT WAS A CASE OF SIMPLE IRREGULARITY FOR THEM TO MAKE THE SALES FROM THE PREMISES NOT NOTIFIED TO THE EXCISE DEPARTMENT WHILE IT WAS A BIG OFFENCE FOR THE ASSESSEE TO MAKE THE LIQUOR SALES WITHOUT LICENSE. HOWEVER, M/S. SAGAR LIQUORS OBTAINED THE SEPARATE LICENCE ON 22.09.2003 TO MAKE THE BAR SALES IN M/S. VANDANA HOTEL AND PAID THE LICENSE FEE OF RS. 3,00,000/- AND CLAIMED THE SAME IN THE PROFIT AND LOSS ACCOUNT. 4. THERE IS NO LEGAL PRESUMPTION U/S 292C THAT ONLY THE PAPER SHOWING HIGHER INCOME HAS TO BE ACCEPTED AS TRUE. 9. ON THE OTHER HAND, THE LD. SENIOR D.R. RELIED ON TH E ORDERS OF THE LOWER AUTHORITIES AND CONTENDED THAT COMPUTERS -: 10: - 10 WERE FOUND IN THE BUSINESS PREMISES OF THE ASSESSEE , THEREFORE, ONUS IS ON THE ASSESSEE TO SHOW THAT PRI NT OUT TAKEN FROM THE COMPUTER DOES NOT BELONG TO IT. AS THE ASS ESSEE HAS NOT DISCHARGED ITS ONUS, THE DEPARTMENT WAS JUSTIFI ED IN TAKING SALE OF LIQUOR AND CIGARETTES AS ASSESSEES OWN SALE FOR THE PURPOSE OF ARRIVING AT PROFIT EARNED BY THE ASS ESSEE. 10. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. I N THIS CASE, THE REGULAR BOOKS OF ACCOUNT WERE REJECTED BY THE A SSESSING OFFICER AND ON THE BASIS OF COMPUTER PRINT OUT HE H AS MADE THE ADDITION. THERE WERE TWO PRINT OUTS IN THE COMP UTER, ONE WAS RELATED TO THE BUSINESS OF RESTAURANT AND ANOTH ER WAS THE CONSOLIDATED PROFIT AND LOSS ACCOUNT WITHOUT CASH B OOK INDICATING TOTAL SALE OF RESTAURANT, LIQUOR AND CIG ARETTES. THE AO DISBELIEVED THE BOOKS OF ACCOUNT AND MADE ADDITI ON ON THE BASIS OF SALE OF LIQUOR AND CIGARETTES SHOWN IN THE PRINT OUT TAKEN FROM COMPUTERS SO FOUND IN ASSESSEES PREMISE S. . CONTENTION OF THE ASSESSEE WAS THAT IT HAS MERELY A LLOWED SALE OF LIQUOR AND CIGARETTES AT ITS RESTAURANT, SO AS T O INCREASE SALE OF RESTAURANT ITEMS, ACTUALLY THE SALE OF LIQUOR WA S BY M/S. S. -: 11: - 11 S. ENTERPRISES AND SAGAR WINES, WHO WERE LIQUOR CON TRACTORS. FURTHER CONTENTION WAS THAT THE ASSESSEE WAS NOT HA VING BAR LICENSE, THEREFORE, THERE WAS NO REASON FOR ADDING THE SALE AND INCOME FROM BAR AND CIGARETTES IN ASSESSEES TOTAL INCOME. HE FURTHER DREW OUR ATTENTION TO THE FACT THAT M/S. SA GAR WINES OBTAINED THE SEPARATE LICENCE ON 29.2.2003 TO MAKE THE BAR SALES IN ASSESSEE RESTAURANT AND ALSO PAID LICENSE FEE OF RS. 3 LAKHS AND CLAIMED THE SAME IN THEIR PROFIT AND LOSS ACCOUNT. IT WAS ALSO CONTENTION OF THE LD. AUTHORIZED REPRESENT ATIVE THAT LEGAL PRESUMPTION U/S 292-C THAT ONLY PAPERS SHOWIN G HIGHER SALES HAVE TO BE ACCEPTED IS NOT CORRECT, IN SO FAR AS BOTH THE PROFIT AND LOSS ACCOUNT WAS FOUND IN THE COMPUTER, ONE RELATING TO SALE OF RESTAURANT AND ANOTHER CONSOLID ATED INDICATING SALE OF LIQUOR AND CIGARETTES. HOWEVER, NEITHER THE ASSESSEE NOR THE REVENUE COULD SUBSTANTIATE THE FIG URES REFLECTED IN THE COMPUTER PRINT OUT NOR ANY COGENT REASONING WAS GIVEN FOR THE ADDITIONS SO MADE. 11. FROM THE RECORD, WE FOUND THAT BASICALLY ADDITION H AS BEEN MADE BY THE ASSESSING OFFICER ON THE BASIS OF SALE OF LIQUOR AND CIGARETTES REFLECTED IN THE COMPUTER PRI NT OUT SEIZED -: 12: - 12 FROM ASSESSEES PREMISES. HOWEVER, THERE WERE NOT S UPPORTING DOCUMENT TO SUPPORT THE FIGURE REFLECTED IN THE PRI NT OUT SO TAKEN. WHEN THE AO HAS REJECTED THE BOOKS OF ACCOUN T AND NO CORROBORATIVE MATERIAL WAS BROUGHT ON RECORD, IT WO ULD BE REASONABLE TO MAKE ADDITION WITH RESPECT TO THE PRO FITS EARNED ON THE SALE OF LIQUOR AND CIGARETTES. ENTIRE SALE O F LIQUOR AND CIGARETTES CANNOT BE ADDED AS INCOME OF THE ASSESSE E. EVEN THOUGH M/S. SAGAR WINE AND S. S. ENTERPRISES WERE L IQUOR CONTRACTORS AND HAD SHOWN SALE OF LIQUOR WHICH IS M UCH MORE THAN THE SALES REFLECTED IN THE COMPUTER PRINT OUT, BUT THE ASSESSEE COULD NOT CONCLUSIVELY PROVE THE SAME. WE , THEREFORE, DIRECT THE AO TO MAKE ADDITION BY TAKING PROFIT AT 10% ON LIQUOR AND CIGARETTES SALES AS REFLECTED IN THE COMPUTER PRINT OUT AND TO MAKE ADDITION ACCORDINGLY TO THE R ETURNED INCOME OF ASSESSEE. 12. IN THE RESULT, BOTH THE APPEALS ARE ALLOWED IN PART . THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 13 TH JUNE, 2011. SD/- SD/- ( R.C.SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 13 TH JUNE, 2011. CPU 9106 -: 13: - 13