Dy, CIT, Circle -3(1), Hyderabad V. Shri Raviteja Restaurant & Resorts Pvt. Ltd, Hyderabad

ITA 1416/HYD/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1419 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 14-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMISHA S GUPT
• Assessee Lawyers: S RAMA RAO
• Keywords: Depreciation; Search and seizure; Initiation of penalty proceedings; Block assessment
• Section: 133A; 27; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SMT. ASHA VIJAYARAGHAVAN, J.M. AND SHRI B.R.BASKARAN, A.M. ITA NO.1414/HYD/2012 : ASSESSMENT YEAR 2003-04 ITA NO.1415/HYD/2012 : ASSESSMENT YEAR 2004-05 ITA NO.1416/HYD/2012 : ASSESSMENT YEAR 2005-06 ITA NO.1417/HYD/2012 : ASSESSMENT YEAR 2006-07 DY. COMMISSIONER OF INCOME - TAX, CIRCLE 3(1), HYDERABAD V/S. M/S. SHRI RAVITEJA RESTAURANT & RESORTS P. LTD., HYDERABAD ( PAN - AAECS 6149 R ) (APPELLANT) (RESPONDENT) AND ITA NO.1800/HYD/2011 : ASSESSMENT YEAR 2008-09 M/S. SHRI RAVITEJA RESTAURANT & RESORTS P. LTD., HYDERABAD ( PAN - AAECS 6149 R ) V/S. ASST. COMMISSIONER OF INCOME-TAX, CIRCLE 3(1), HYDERABAD (APPELLANT) (RESPONDENT) ASSESSEE BY : S HRI S.RAMA RAO DEPARTMENT BY : MS. AMISHA S.GUPT DATE OF HEARING 2.1 .201 3 DATE OF PRONOUNCEMENT 04.01.201 3 ITA NO.1414/HYD/2012 & 4 ORS M/S. SHRI RAVITEJA RESTAURANT & RESORTS P. LTD., HYDERABAD 2 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE REVENUE HAS FILED APPEALS CHALLENGING THE ORD ERS PASSED BY LD CIT(A)-IV, HYDERABAD FOR ASSESSMENT YEARS 2003-04 T O 2006-07 CANCELING THE PENALTY LEVIED BY THE ASSESSING OFFICER U/S 271(1)( C) OF THE ACT. THE ASSESSEE HAS FILED APPEAL FOR ASSESSMENT YEAR 2008-09 CHALLENGIN G THE ORDER PASSED BY LD CIT(A) IN CONFIRMING THE ADDITIONS MADE BY THE ASSE SSING OFFICER. AS THESE APPEALS WERE HEARD TOGETHER, WE FIND IT CONVENIENT TO DISPOSE THEM OF BY THIS COMMON ORDER, FOR THE SAKE OF CONVENIENCE. 2. WE SHALL FIRST TAKE UP THE APPEALS FILED B Y THE REVENUE FOR THE ASSESSMENT YEARS 2003-04 TO 2006-07. THE ISSUE INV OLVED IN THESE APPEALS RELATES TO THE CANCELLATION OF PENALTY LEVIED U/S 2 71(1)(C) OF THE ACT. THE FACTS RELATING THERETO ARE IDENTICAL IN ALL THE YEARS. W E SHALL DISCUSS THE RELEVANT FACTS IN BRIEF. THE ASSESSEE IS RUNNING A RESTAURANT. A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT ON 27.09.2006 IN THE HANDS OF THE D IRECTORS OF THE ASSESSEE COMPANY U/S 132 OF THE ACT. CONSEQUENT THERETO A S URVEY OPERATION U/S 133A OF THE ACT WAS CARRIED OUT IN THE BUSINESS PREMISES OF THE ASSESSEE. CONSEQUENT TO SEARCH AND SEIZURE/SURVEY OPERATIONS, THE ASSESSMEN TS FOR THE ASSESSMENT YEARS 2003-04 TO 2006-07 WERE COMPLETED U/S 153C OF THE A CT. FOR COMPLETING THE ASSESSMENT OF THE SAID YEARS, THE ASSESSING OFFICER MAINLY RELIED UPON THE ALLEGED DEFECTS NOTICED IN THE BOOKS OF ACCOUNT FOR THE FIN ANCIAL YEAR 2006-07 RELEVANT TO THE ASSESSMENT YEAR 2007-08. BASED ON THE DEFECTS NOTICED IN THE BOOKS RELATING TO THE FINANCIAL YEAR 2006-07, THE BOOK RESULTS OF ALL THE FOUR YEARS UNDER CONSIDERATION, VIZ., ASSESSMENT YEARS 2003-04 TO 20 06-07 WERE REJECTED AND THE INCOME WAS ESTIMATED @ 17%, 17.5%, 18%, 18.5% RESPECT IVELY FOR THE ASSESSMENT YEAR 2003-04 TO 2006-07. HOWEVER, THE T RIBUNAL DIRECTED THE ASSESSING OFFICER TO ESTIMATE THE INCOME UNIFORMLY AT 17% FOR ALL THE YEARS. IT IS ITA NO.1414/HYD/2012 & 4 ORS M/S. SHRI RAVITEJA RESTAURANT & RESORTS P. LTD., HYDERABAD 3 PERTINENT TO MENTION HERE THAT THE ASSESSEE ITSELF WAS SUBJECTED TO SEARCH AND SEIZURE OPERATIONS U/S 132 OF THE ACT ON 04-07-2002 AND THE BLOCK ASSESSMENT WAS COMPLETED FINALLY DETERMINING THE INCOME @ 17% FOR THE ENTIRE BLOCK PERIOD. THUS, APPARENTLY, THE PROFIT DETERMINED IN THE BLOC K PROCEEDINGS WAS TAKEN AS GUIDANCE FOR DETERMINING THE PROFITS FOR THE FOUR Y EARS UNDER CONSIDERATION. 3. THEREAFTER, THE ASSESSING OFFICER PASSED PENA LTY ORDERS U/S 271(1)(C) OF THE ACT AND LEVIED PENALTY CALCULATED @ 200% OF T HE TAX SOUGHT TO BE EVADED IN ALL THE FOUR YEARS AS DETAILED BELOW:- ASSESSMENT YEAR PENALTY LEVIED 2003-04 13,78,028 2004-05 22,43,578 2005-06 27,35,856 2006-07 15,71,342 ____________________________________ THE ASSESSEE CHALLENGED THE SAID PENALTY ORDERS BY FILING APPEALS BEFORE LD CIT(A) AND THE FIRST APPELLATE AUTHORITY CANCELLED THE PENALTY LEVIED BY THE ASSESSING OFFICER IN ALL THE FOUR YEARS. AGGRIEVED BY HIS ORDERS, THE REVENUE HAS FILED THESE APPEALS BEFORE US. 4. THE LD D.R PLACED HEAVY RELIANCE ON THE FO LLOWING DEFECTS NOTICED BY THE SURVEY TEAM IN THE BOOKS RELATING TO THE FIN ANCIAL YEAR 2006-07 RELEVANT TO THE ASSESSMENT YEAR 2007-08. (A) CAPITAL EXPENSES ON CONSTRUCTION ACTIVITIES C LAIMED AS REVENUE. (B) EXPENSES ARE SUPPORTED BY SELF MADE VOUCHERS. ITA NO.1414/HYD/2012 & 4 ORS M/S. SHRI RAVITEJA RESTAURANT & RESORTS P. LTD., HYDERABAD 4 (C) CROCKERY PURCHASES CLAIMED AS REVENUE EXPENDIT URE. BILLS WERE NOT PRODUCED FOR ALL THE PURCHASES. (D) THE ASSESSEE HAS BOOKED EXPENSES LIKE PART TIM E SALARIES, PURCHASE OF VEGETABLES AND NON-VEGETARIAN ITEMS IN THE SECOND H ALF OF THE YEAR, APPARENTLY TO REDUCE THE PROFITS. (E) THE NET PROFIT SHOWN IN THE ACCOUNTS FROM 1.4. 2006 TO THE DATE OF SURVEY, I.E., 27-09-2006 WAS 24.7% BEFORE DEPRECIATI ON AND 19% AFTER DEPRECIATION. HOWEVER THE ASSESSEE HAS DECLARED TH E NET PROFIT @ 14% AS ON 31.3.2007. THE LD D.R SUBMITTED THAT THE FINDINGS MADE IN THE ASSESSMENT YEAR 2007-08 WOULD CLEARLY PROVE THAT THERE WAS A DELIBERATE ATT EMPT ON THE PART OF THE ASSESSEE TO SUPPRESS THE INCOME. THE LD D.R SUBMIT TED THAT THE LD CIT(A) HAS DELETED THE PENALTY MAINLY ON THE REASONING THAT (A) THERE ARE NO DIRECT EVIDENCE TO PROVE CONCEALMENT O F INCOME. (B) THE INCOME WAS FINALLY ESTIMATED. (C) THE ASSESSEE HAS AGREED TO THE SAID ESTIMATE OF INC OME. THE LD D.R SUBMITTED THAT THE PENALTY IS EXIGIBLE E VEN IF THE INCOME IS ESTIMATED AND FOR THIS PROPOSITION, SHE RELIED UPON THE FOLLO WING CASE LAW:- (A) CIT V/S. SMT. CHANDRAKANTA AND ANR. (205 ITR 607)-M P (B) CIT V/S. WARASAT HUSSAIN (171 ITR 405)-PAT. (C) A.M. SHAH AND COMPANY V.S. CIT (238 ITR 415)-GUJ. (D) CIT V/S. S.KRISHNASWAMY & SONS (219 ITR 157)-MAD. THE LD D.R FURTHER SUBMITTED THAT THE ASSESSEE DID NOT AGREE FOR THE ESTIMATE OF INCOME @ 17% DURING THE COURSE OF SURVEY. EVEN, IF THE ASSESSEE HAD AGREED FOR ITA NO.1414/HYD/2012 & 4 ORS M/S. SHRI RAVITEJA RESTAURANT & RESORTS P. LTD., HYDERABAD 5 THE ADDITION, STILL THE PENALTY COULD BE LEVIED AND FOR THIS PROPOSITION, SHE RELIED UPON THE FOLLOWING CASE LAW: (A) CIT V/S K.P.SAMPATH REDDY (197 ITR 232)-KAR. (B) BILAND RAM HARGAN DAS V/S. CIT (171 ITR 390)-ALL. (C) CIT V/S. A.SRINIVASA PAI (242 ITR 29)-KAR. (D) LMP PRECISION ENGG. CO. LTD. (330 ITR 93)-GUJ. 5. ON THE CONTRARY, THE LD A.R SUBMITTED THAT THE ASSESSING OFFICER HAS PROCEEDED TO REJECT THE BOOK RESULTS FOR ALL THE FO UR YEARS UNDER CONSIDERATION WITHOUT POINTING OUT ANY DEFECT IN THE RELEVANT BOO KS. HE SUBMITTED THAT THE ASSESSING OFFICER HAS DECIDED TO REJECT THE BOOK RE SULTS ON THE BASIS OF ALLEGED DEFECTS NOTICED IN THE BOOKS RELATING TO THE FINANC IAL YEAR 2006-07 RELEVANT TO THE ASSESSMENT YEAR 2007-08. ACCORDINGLY HE CONTENDED THAT THE ASSESSING OFFICER WAS NOT CORRECT IN ARRIVING AT THE SAID DECISION FO R THE YEARS UNDER CONSIDERATION ON THE BASIS OF THE ALLEGED DEFECTS POINTED OUT IN A SUBSEQUENT YEAR. HE FURTHER SUBMITTED THAT THE ASSESSING OFFICER HAS ACCEPTED T HE TURNOVER REPORTED BY THE ASSESSEE FOR ALL THE FOUR YEARS, EVEN THOUGH HE HAS OBSERVED THAT THERE WAS SUPPRESSION OF TURNOVER. THUS, THE SAID OBSERVATIO N, WHICH IS NOT BASED ON ANY MATERIAL, DOES NOT HAVE ANY VALUE. THE LD A.R SUBM ITTED THAT THE EXPLANATION 1 TO SEC. 271 SHALL APPLY IN THE PRESENT CIRCUMSTANCE S. IN THE INSTANT CASES, THE ASSESSEE HAS FURNISHED PROPER EXPLANATIONS, WHICH W ERE NOT FOUND TO BE FALSE. THE ASSESSEE HAS AGREED TO THE ESTIMATE OF INCOME @ 17% IN ORDER TO PURCHASE PEACE AND FURTHER IT HAS ALSO OFFERED EXPLANATION. HENCE THE ASSESSING OFFICER WAS NOT RIGHT IN LAW IN LEVYING PENALTY AS HE HAS N OT MADE OUT A CASE FOR EITHER CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. THE LD A.R CONTENDED THAT THE ESTIMATE HAS BEEN MADE WITHOUT ANY BASIS IN THE INSTANT CASES AND HENCE PENALTY U/S 27 (1)(C) SHOULD NOT BE LEVIED. THE LD A.R PLACED RELIANCE ON THE FOLLOWING CASE LA W:- ITA NO.1414/HYD/2012 & 4 ORS M/S. SHRI RAVITEJA RESTAURANT & RESORTS P. LTD., HYDERABAD 6 (A) CIT V/S. K. MEENAKSHI KUTTI (258 ITR 494)-MAD (B) NAVJIVAN OIL MILLS V/S.CIT (252 ITR 416)-GUJ (C) 94 TTJ 512 (AMRITSAR) (D) CIT(ADDL) V/S. BHOOPATHY(E) (113 ITR 188)-MAD (E) CIT V/S. NOKIA INDIA PVT. LTD. (343 ITR 434)- DELHI (F) CIT V/S. H.P. STATE FOREST CORPORATION LTD. ( 340 ITR 204)-HP (G) CIT V/S. VIJAY KUMAR JAIN (325 ITR 378)-CHAT TISGARH (H) JCIT V/S. PANCHRATNA HOTELS P.LTD. (313 ITR 3 98)-GUJ. THE LD A.R FURTHER POINTED OUT THAT THE ASSESSING O FFICER DID NOT MENTION ABOUT THE INITIATION OF PENALTY PROCEEDINGS IN THE ASSESS MENT ORDER AND HENCE THESE PENALTY ORDERS ARE WITHOUT JURISDICTION AND VOID AB -INITIO. 6. IN THE REJOINDER, THE LD D.R SUBMITTED THAT THE ASSESSEE HAS AGREED FOR ESTIMATION OF INCOME ONLY AFTER HE WAS CORNERED BY THE ASSESSING OFFICER AND HENCE IT WAS NOT VOLUNTARY ON THE PART OF THE ASSES SEE. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PE RUSED THE RECORD. THE UNDISPUTED FACT REMAINS THAT THE VARIOUS DEFECTS NA RRATED BY THE ASSESSING OFFICER RELATE TO THE FINANCIAL YEAR 2006-07 RELEVANT TO TH E ASSESSMENT YEAR 2007-08. IT IS ALSO UNDISPUTED THAT THE ASSESSING OFFICER HAS D ECIDED TO REJECT THE BOOK RESULTS OF THE FOUR YEARS UNDER CONSIDERATION, VIZ., ASSESS MENT YEARS 2003-04 TO 2006-07 ON THE BASIS OF OBSERVATIONS MADE FOR THE ASSESSMEN T YEAR 2007-08. HENCE, IN OUR VIEW, THE LD CIT(A) WAS RIGHT IN OBSERVING THAT THERE WAS NOT DIRECT EVIDENCE REGARDING SUPPRESSION OF TURNOVER OR INFLATION OF E XPENDITURE FOR THE FOUR YEARS UNDER CONSIDERATION. AS POINTED OUT BY LD A.R, THE ASSESSING OFFICER, IN FACT, HAS ADOPTED THE TURNOVER REPORTED BY THE ASSESSEE ONLY FOR THE PURPOSE OF ESTIMATING ITA NO.1414/HYD/2012 & 4 ORS M/S. SHRI RAVITEJA RESTAURANT & RESORTS P. LTD., HYDERABAD 7 THE INCOME, WHICH FACT PROVES THAT THERE IS NO SUBS TANCE IN THE OBSERVATION THAT THERE WAS SUPPRESSION OF TURNOVER. 8. THE ASSESSING OFFICER HAS POINTED ABOUT TH E SUPPRESSION OF INCOME ON THE BASIS OF A TRIAL BALANCE FOUND IN THE MIDDL E OF THE YEAR, I.E., THE ASSESSING OFFICER NOTICED THAT THE RATE OF PROFIT FOR THE PER IOD FROM 1.4.2006 TO THE DATE OF SURVEY, I.E.. 27-09-2006 WAS HIGHER THAN THE PROFIT DISCLOSED FOR THE ENTIRE YEAR, I.E., 1.4.2006 TO 31.3.2007. ACCORDINGLY, THE ASSE SSING OFFICER HAS PRESUMED THAT THE ASSESSEE HAS BEEN INFLATING THE EXPENSES IN THE SECOND HALF OF THE YEAR IN ORDER TO REDUCE THE PROFIT. THE FINAL FINDINGS GIV EN BY THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR 2007-08 ARE EXTRACTED BELOW:- IN THIS CONNECTION, IT IS ALSO TO BE MENTIONED THA T THE ABOVE SAID NET PROFIT OF 24.7% WAS BEFORE DEPRECIAT ION. AFTER CONSIDERING A DUE DEDUCTION OF DEPRECIATION, THE SAME WAS ARRIVED INTO 19%. HENCE IT IS EVIDENT THA T THE ASSESSEE COMPANY HAS INFLATED THE EXPENDITURES WITH AN INTENTION TO REDUCE THE NET PROFIT AND ADMITTED ONL Y 14% OF NET PROFIT, WHERE AS IN THE SIMILAR LINE OF BUSI NESS, THE NET PROFIT IS AROUND 20% OR MORE. THE PURPOSE OF SEARCH/SURVEY WAS FULFILLED BY STUDYING ITS OWN TRI AL BALANCE FOR TWO DIFFERENT PERIODS ON A CAREFUL PERUSAL OF THE FINDINGS GIVEN BY THE A SSESSING OFFICER WOULD SHOW THAT THE ASSESSING OFFICER HAS ARRIVED AT THE CONCL USION ABOUT THE CONCEALMENT OF INCOME BY COMPARING THE TRIAL BALANCE OF TWO DIFFER ENT PERIODS OF THE SAME FINANCIAL YEAR, VIZ., 2006-07 RELEVANT TO THE ASSES SMENT YEAR 2007-08. THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY MAT ERIAL TO SHOW THAT THE EXPENSES BOOKED IN THE SECOND HALF OF THE YEAR WAS EITHER BOGUS OR INFLATED. THUS, IT IS EVIDENT THAT HE HAS REACHED CONCLUSIONS ABOUT THE INFLATION OF EXPENSES ON THE BASIS OF SURMISES AND CONJECTURES. FURTHER THE ASSESSING OFFICER HAS ARRIVED AT THE ABOVE SAID CONCLUSIONS FOR THE ASSES SMENT YEAR 2007-08 AND HE HAS APPLIED THE SAME FOR ALL THE FOUR YEARS UNDER CONSI DERATION. IT IS WELL SETTLED THAT ITA NO.1414/HYD/2012 & 4 ORS M/S. SHRI RAVITEJA RESTAURANT & RESORTS P. LTD., HYDERABAD 8 THE INCOME TAX PROCEEDINGS OF EACH YEAR IS DISTINCT AND SEPARATE AND HENCE THE DECISION HAS TO BE TAKEN ON EACH OF THE ISSUE ON TH E BASIS OF FACTS PREVAILING IN EACH YEAR. HENCE, WE ARE OF THE VIEW THAT THE ASSE SSING OFFICER WAS NOT RIGHT IN LAW IN APPLYING THE CONCLUSIONS REACHED BY HIM FOR THE ASSESSMENT YEAR 2007-08, THAT TOO ON THE BASIS OF SURMISES AND CONJECTURES, TO THE FOUR YEARS UNDER CONSIDERATION. THUS, IN EFFECT, THE ASSESSING OFFI CER HAS NOT PROVED THAT THERE WAS CONCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURANCE PARTICULARS OF INCOME IN ALL THE FOUR YEARS UNDER CONSIDERATION. 9. THE ABOVE SAID DISCUSSIONS WOULD SHOW THAT THE ASSESSING OFFICER HAS RESORTED TO ESTIMATE THE INCOME WITHOUT ANY BAS IS. AS SUBMITTED BY THE ASSESSEE, IT HAS AGREED TO THE ESTIMATE OF 17%, APPA RENTLY TO PUT AN END TO THE PROCEEDINGS. HENCE, IN OUR VIEW, IT IS NOT CORRECT TO SAY THAT THE ASSESSEE HAS AGREED TO THE SAID ESTIMATE ONLY AFTER HE WAS CORNE RED BY THE ASSESSING OFFICER. FURTHER THE SAID ESTIMATE HAS BEEN BASED UPON THE R ATE DETERMINED DURING THE COURSE OF BLOCK ASSESSMENT PROCEEDINGS. THUS, EVEN THE SAID RATE OF 17% WAS NOT BASED UPON THE EVIDENCES, IF ANY, RELATING TO T HE FOUR YEARS UNDER CONSIDERATION. HENCE, IN OUR VIEW, THE VARIOUS CASE LAW RELIED UPON BY THE REVENUE BEFORE US WOULD NOT APPLY TO THE FACTS OF T HE INSTANT CASE. ON THE CONTRARY, THE ULTIMATE ASSESSMENT TURNS OUT TO BE A PURE ESTIMATE WITHOUT ANY BASIS AND HENCE THE VARIOUS CASE LAWS RELIED UPON B Y THE ASSESSEE, IN OUR VIEW, ARE APPLICABLE TO THE FACTS OF THE INSTANT CASES. 10. THE ASSESSEE, DURING THE COURSE OF PENALTY PROCEEDINGS HAS FURNISHED EXPLANATIONS, WHEREIN IT WAS STATED THAT THE ASSESSEE DID NOT CONCEAL ANY PARTICULARS AND FURTHER THE EXPLANATIONS GIVEN BY THE ASSESSEE ON VARIOUS POINTS HAVE NOT BEEN DISPROVED, MEANING THEREBY, TH EY WERE NOT FOUND TO BE FALSE. THE FACT REMAINS THAT THE ASSESSING OFFICER HAS ALSO ARRIVED AT THE DECISION ON THE BASIS OF FINDINGS ARRIVED IN THE COURSE OF A SSESSMENT PROCEEDINGS RELATING ITA NO.1414/HYD/2012 & 4 ORS M/S. SHRI RAVITEJA RESTAURANT & RESORTS P. LTD., HYDERABAD 9 TO THE ASSESSMENT YEAR 2007-08 AND ALSO DURING THE COURSE OF BLOCK ASSESSMENT PROCEEDINGS. THUS, IN OUR VIEW, THE ASSESSEE HAS S ATISFIED THE DEEMING PROVISION GIVEN IN EXPLANATION 1 TO SEC. 271 OF THE ACT. 11. ALL THESE DISCUSSIONS WOULD SHOW THAT THE ASSESSING OFFICER HAS NOT MADE OUT A CASE TO SUGGEST THAT THERE WAS EITHER CO NCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF I NCOME FOR THE FOUR YEARS UNDER CONSIDERATION. HENCE, WE ARE OF THE VIEW THAT THE PENALTY U/S 271(1)(C) OF THE ACT IS NOT EXIGIBLE IN ALL THE FOUR YEARS UNDER CON SIDERATION IN THE FACTS AND CIRCUMSTANCES OF THE CASE. ACCORDINGLY, WE AGREE W ITH THE FINAL CONCLUSION REACHED BY LD CIT(A) IN CANCELING THE PENALTY IN AL L THE FOUR YEARS. 12. THE ASSESSEE HAS ALSO URGED BEFORE US A LE GAL ISSUE, VIZ., THE ASSESSING OFFICER HAS INITIATED THE PENALTY PROCEED INGS WITHOUT RECORDING THE SAME IN THE ASSESSMENT ORDER AND HENCE THE IMPUGNED PENA LTY ORDERS ARE VOID AB- INITIO. THE LD D.R OBJECTED TO THE SAME BY STATING THAT THE ASSESSEE COULD NOT RAISE SUCH LEGAL GROUNDS IN THE APPEALS FILED BY TH E DEPARTMENT. SINCE, WE HAVE UPHELD THE ORDER OF LD CIT(A) IN CANCELING THE PENA LTY ON THE MERITS OF THE CASE, WE DO NOT FIND IT NECESSARY TO ADDRESS THIS LEGAL I SSUE. 13. WE SHALL NOW TAKE UP THE APPEAL FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2008-09. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN CONFIRMING THE DISALLOWANCE OF 15% OF THE EXPENSE S. 14. THE FACTS RELATING TO THE SAME ARE STATED IN BRIEF. THE ASSESSEE CLAIMED A SUM OF RS.1,20,71,149/- AS EXPENSES TOWAR DS PURCHASE OF PROVISIONS, NON-VEG. & FRUITS. THE ASSESSING OFFICER NOTICED T HAT SOME OF THE BILLS AND VOUCHERS WERE SELF MADE AND NOT PROPERLY VOUCHED. ACCORDINGLY HE DISALLOWED ITA NO.1414/HYD/2012 & 4 ORS M/S. SHRI RAVITEJA RESTAURANT & RESORTS P. LTD., HYDERABAD 10 15% OF THE SAID EXPENSES TO COVER UP THE DEFICIENCY . THE LD CIT(A) ALSO CONFIRMED THE SAID ADDITION. HENCE, THE ASSESSEE I S IN APPEAL BEFORE US. 15. WE HAVE HEARD THE RIVAL CONTENTIONS AND P ERUSED THE RECORD. THE LD A.R SUBMITTED THAT THE PURCHASES OF VEGETABLES, NON-VEGETARIAN ITEMS AND FRUITS ARE SOMETIMES MADE FROM VENDORS BELONGING TO UNORGANIZED SECTOR, WHO MAY NOT BE HAVING PROPER PRINTED BILLS. HOWEVER, T HE VOUCHERS, AS GIVEN BY THE SAID VENDORS, ARE PLACED ON RECORD AND HENCE THERE IS NO REASON TO SUSPECT THEM. ON THE CONTRARY THE LD D.R SUBMITTED THAT SUCH KIND OF VOUCHERS IS NOT SUSCEPTIBLE FOR VERIFICATION. THOUGH, WE FIND MERI T IN THE CONTENTION OF THE REVENUE, YET THE PRACTICAL DIFFICULTIES/REALITIES I N OBTAINING PROPER VOUCHERS, AS SUBMITTED BY THE LD A.R, ALSO NEEDS TO BE CONSIDERE D. HENCE, IN ORDER TO PUT THIS DISPUTE ON REST, WE ARE OF THE VIEW THAT A ROUND SU M ADDITION OF RS.5.00 LAKHS TO COVER UP THE DEFICIENCIES WOULD MEET THE ENDS OF JU STICE. WE ORDER ACCORDINGLY. THE ORDER OF LD CIT(A) ON THIS ISSUE IS SET ASIDE A ND THE ASSESSING OFFICER IS DIRECTED TO RESTRICT THE ADDITION TO RS.5.00 LAKHS. 16. IN THE RESULT, ALL THE FOUR APPEALS OF TH E REVENUE ARE DISMISSED AND THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 04.01.2013 SD/- SD/- ( ASHA VIJAYARAGHAVAN ) ( B.R.BASKARAN ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED/- 04 JANUARY, 2013 COPY FORWARDED TO: 1. M/S. SHRI RAVITEJA RESTAURANT & RESORTS P. LTD., RO AD NO.10, BANJARA HILLS, HYDERABAD ITA NO.1414/HYD/2012 & 4 ORS M/S. SHRI RAVITEJA RESTAURANT & RESORTS P. LTD., HYDERABAD 11 2. 3. 4. 5. DY./ASST. COMMISSIONER OF INCOME - TAX CIRCLE 3(1), HYDERABAD COMMISSIONER OF INCOME-TAX(APPEALS)-IV, HYDERABAD COMMISSIONER OF INCOME-TAX, III, HYDERABAD DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S.