M/s. Grand Lilly Motels Ltd, Jalandhar V. The Additional Commissioner of Income-tax, Jalandhar

ITA 189/ASR/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68145 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 29-07-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 14-05-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AMRIK CHAND
• Assessee Lawyers: R K BAJAJ
• Keywords: Principle of natural justice; Additional evidence; Assessment record
• Section: 133A; 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO. 189(ASR)/2012 ASSESSMENT YEAR:2008-09 PAN :AABCG4527E M/S. GRAND LILLY MOTELS LTD. VS. ADDL. COMMR. OF IN COME TAX, 4, MODEL TOWN, JALANDHAR. RANGE-III, JALANDHAR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH.R.K.BAJAJ, ADV. RESPONDENT BY:SH.AMRIK CHAND, DR DATE OF HEARING: 29/08/2013 DATE OF PRONOUNCEMENT:12/08/2013 ORDER PER BENCH ; THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF THE CIT(A), JALANDHAR DATED 30.03.2012 FOR THE ASSESSMENT YEAR 2008-09. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT THE ORDER UNDER APPEAL IS AGAINST LAW AND FACTS ON THE FILE. 2. THAT THE A.O. HAS WRONGLY CONVERTED THE LOSS OF RS.134853/- INTO THE INCOME OF RS.4071805/- WHICH IS HIGHLY U NJUSTIFIED, UNREASONABLE AND UNCALLED FOR. ITA NO.189(ASR)2012 2 3. THAT THE CIT HAS WRONGLY REJECTED THE ADDITIONA L GROUND OF APPEAL WHICH IS MOST UNJUSTIFIED, UNREASONABLE AN D UNCALLED FOR AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 4. THAT THE CIT(A) HAS WRONGLY CONFIRMED THE ADDIT ION ON ACCOUNT OF FOOD AND BEVERAGE, WHICH IS MOST UNJUSTIFIED A ND UNCALLED FOR. 5. THAT THE CIT(A) HAS WRONGLY CONFIRMED THE ADDIT ION ON ACCOUNT OF FUNCTION CHARGES, WHICH IS MOST UNJUSTIFIED, U NREASONABLE AND UNCALLED FOR. 6. THAT THE CIT(A) WRONGLY REJECTED THE PLEA OF TH E APPELLANT ON ACCOUNT OF WASTE OF FOOD FROM 25% TO 30% ON ACCOU NT OF FOOD AND BEVERAGE, WHICH IS HIGHLY UNJUSTIFIED UNREASO NABLE AND UNCALLED FOR. 7. THAT THE CIT(A) WRONGLY REJECTED THE GROUNDS OF APPEAL ON ACCOUNT OF INTEREST TO THE DIRECTORS, WHICH IS MO ST UNJUSTIFIED, UNREASONABLE AND UNCALLED FOR. 8. THAT THE CIT(A) WRONGLY DISALLOWED THE INTEREST U/S 2324A, 234B AND 234C OF THE INCOME TAX ACT, WHICH IS HIG HLY UNJUSTIFIED UNREASONABLE AND UNCALLED FOR. 9. THAT THE CIT(A) WRONGLY DISALLOWED THE VERDICT OF THE HONBLE SUPREME COURT, HIGH COURTS AS WELL AS OF THE ITAT AND ALSO IGNORED THE FORMULA REGARDING WASTAGE OF FOOD AND BEVERAGE, WHICH IS MOST UNJUSTIFIED, UNREASONABLE AND UNCAL LED FOR. 10. THAT THE APPELLANT RESERVES RIGHT TO ADD OR DE LETE ANY OTHER GROUND OR GROUNDS OF APPEAL AT THE TIME OF HEARIN G AND TO ALSO SUBMIT WRITTEN ARGUMENTS. 2. THE BRIEF FACTS IN ALL THE GROUNDS OF APPEAL ARE THAT THE ASSESSEE HAD SHOWN RECEIPTS AMOUNTING TO RS.9,25,265/- ON ACCOUN T OF FOOD SALES. THE PURCHASE AGAINST THE FOOD SALES WAS RS.39,12,897/- AND THE OPENING AND CLOSING STOCK OF FOOD ITEMS WERE SHOWN AT RS.72,82, 615/- AND RS.73,18,326/- RESPECTIVELY. THE AO ASKED THE ASSES SEE TO FURNISH THE QUANTITATIVE DETAILS OF THE OPENING AND CLOSING STO CK AND TO EXPLAIN THE METHOD OF VALUATION OF THE STOCK WITH EVIDENCE. SIN CE THIS INFORMATION WAS ITA NO.189(ASR)2012 3 NOT SUBMITTED BY THE ASSESSEE DESPITE REMINDERS, TH E AO GAVE ANOTHER OPPORTUNITY TO THE ASSESSEE TO SUBMIT THE REQUISITE INFORMATION, AS WELL AS TO PRODUCE THE STOCK REGISTER CONTAINING THE INVENTORY OF OPENING AND CLOSING STOCK AND DAY TO DAY CONSUMPTION OF THE PROVISIONS AND THE GROCERIES PURCHASED AND MONTH-WISE PARTICULARS OF OPENING STO CK, PURCHASES, CONSUMPTION AND CLOSING STOCK OF THE GROCERIES OR T HE PROVISIONS. THE MONTH-WISE BREAK-UP OF THE PURCHASES AND SALES WAS ALSO ASKED FOR ALONGWITH THE MONTHWISE RATIO OF CONSUMPTION OF GR OCERIES/PROVISIONS TO FOOD SALES. THE ASSESSEE SUBMITTED BEFORE THE AO TH AT IT WAS NOT MAINTAINING DAY TO DAY STOCK REGISTER OF CONSUMPTION OF GROCERI ES DUE TO VARIOUS REASONS. IT WAS SUBMITTED THAT MAINTENANCE OF CONSUMPTION RE GISTER WAS NOT FEASIBLE FOR THE REASON THAT THERE WERE 250 ITEMS WHICH WERE CONSUMED AND THAT THERE WERE NUMEROUS PERISHABLE ITEMS PURCHASED WHICH, IF NOT CONSUMED WITHIN THE REQUISITE TIME, HAD TO BE THROWN AWAY. IT WAS S UBMITTED THAT NUMEROUS ITEMS BECAME OBSOLETE AND OUTDATED IF NOT CONSUMED WITHIN THE STIPULATED TIME AND HAD TO BE DESTROYED. IT WAS SUBMITTED THAT FOR THIS REASON NO CONSUMPTION REGISTER COLD BE MAINTAINED BY THE ASSE SSEE DURING THE YEAR AND, THEREFORE, CONSUMPTION RATIOS OF THE OPENING STOCK HAD BEEN PREPARED AND VALUED, THESE DETAILS/LISTS COULD NOT BE FOUND. ITA NO.189(ASR)2012 4 2.1. THE AO BEING NOT SATISFIED WITH ASSESSEES REP LY BECAUSE APART FROM NOT SUBMITTING THE CONSUMPTION RATIOS, EVEN THE INV ENTORY OF THE OPENING AND CLOSING STOCKS WAS NOT FURNISHED. THE AO THEREFORE, HELD THAT THE TRADING ACCOUNT PREPARED BY THE ASSESSEE WAS INCORRECT AND INCOMPLETE AND COULD NOT BE RELIED UPON.THE AO ALSO NOTED THAT THOUGH THE A SSESSEE HAD CONTENDED THAT THE ITEMS USED FOR CONSUMPTION WERE PERISHABL E AND HAD TO BE THROWN AWAY IF NOT CONSUMED WITHIN THE REQUISITE ITEM, IT WAS MAINTAINING HUGE OPENING AND CLOSING STOCK OF AROUND RS.73 LACS EACH AGAINST WHICH SALES OF ONLY RS.92.25 LACS HAD BEEN SHOWN. ACCORDING TO AO, THE FIGURES OF OPENING STOCK , CLOSING STOCKS AND SALES WERE THEMSELVES EN OUGH TO SHOW THAT THE BOOKS OF ACCOUNTS OF THE ASSESSEE WERE BEING MANIP ULATED AND THAT THE TRADING RESULTS SHOWN DID NOT PRESENT THE TRUE AND CORRECT PICTURE OF THE RATES OF AFFAIRS OF THE ASSESSEE. THE AO REFERRED TO SEVE RAL JUDICIAL DECISIONS FOR THE PROPOSITION THAT ON ACCOUNT OF NON-MAINTENANCE OF STOCK REGISTER AND NOT GIVING DETAILS OF OPENING AND CLOSING STOCK AND THE DAY TO DAY RECORDS OF CONSUMPTION OF RAW MATERIAL, THE TRADING RESULTS CO ULD NOT BE RELIED UPON AND THAT THE BOOK RESULTS COULD BE REJECTED AND REJECTE D THE BOOKS RESULTS OF THE ASSESSEE U/S 145(3) OF THE ACT. THE AO, THEREAFTER , PROCEEDED TO ESTIMATE THE INCOME OF THE ASSESSEE KEEPING IN VIEW THE PAST HISTORY OF THE CASE. SHE NOTED THAT PAST HISTORY OF THE ASSESSEE SHOWED THAT IT WAS IN THE HABIT ITA NO.189(ASR)2012 5 SUPPRESSING AND UNDER-REPORTING ITS FOOD SALES. IT WAS NOTED THAT IN A.Y.2005-06 AND EARLIER ASSESSMENT YEARS, THE FOOD SALES OF THE ASSESSEE COMPANY HAD BEEN ESTIMATED BY THE AO BY TAKING THE SAME TO BE 5 TIMES OF THE GROCERY/PROVISION CONSUMED BUT THE LD. CIT(A) H AD ALLOWED PART RELIEF AND ESTIMATED THE SALES BY APPLYING THE RATIO OF 1: 3. SHE NOTED THAT THE 1:3 RATIO WAS SUBSEQUENTLY CONFIRMED BY THE ITAT, AMRI TSAR BENCH. HENCE, THE AO GAVE A SHOW CAUSE NOTICE TO THE ASSESSEE TO EXPL AIN AS TO WHY THE RATIO OF 1:3 MAY NOT BE APPLIED IN THE ASSESSMENT YEAR UNDE R CONSIDERATION. THE ASSESSEE SUBMITTED THAT IN THE LATEST ORDER DATED 6 TH JUNE, 2008 OF THE ITAT FOR THE A.Y. 2005-06 IN ITS CASE FILED BY THE DEPAR TMENT AGAINST SUSTAINING ADDITION OF RS.65,785/- IN FOOD SALES AFTER RESTRIC TING THE EXORBITANT ADDITION OF RS.56,80,792/- IN FOOD SALES BY CIT(A), THIS GR OUND OF APPEAL WAS REJECTED AND THUS ONLY ADDITION OF RS.65,785/- REMA INED. IT WAS, THEREFORE, CONTENDED THAT THE ALLEGED RATIO OF 1:3 HAD NEVER B EEN APPLIED NOR BEEN SUSTAINED BY THE CIT(A) OR BY THE ITAT. THE AO, HOW EVER, REFERRED TO THE RELEVANT PORTION OF THE ORDER OF THE LD. CIT(A) FO R A.Y.2005-06 IN WHICH HE HAD CLEARLY MENTIONED THAT HE WAS APPLYING THE RATI O OF 1:3 BETWEEN GROCERY CONTENTION AND SALES HOLDING THAT IT WAS A REASONA BLE BASIS. HENCE, THE AO HELD THAT THE RATIO OF 1:3 WAS TO BE APPLIED FOR E STIMATING THE SALES MADE BY THE ASSESSEE. TAKING INTO ACCOUNT THE VALUE OF THE PURCHASES, OPENING AND ITA NO.189(ASR)2012 6 CLOSING STOCK, THE CONSUMPTION BY THE ASSESSEE WAS WORKED OUT TO RS.38,77,186/- AND THE SALES WERE ESTIMATED AT 3 TI MES THIS FIGURE AT RS.1,16,31,558/-. SINCE THIS WAS IN EXCESS OF THE D ECLARED SALES OF RS.92,25,262/- BY RS.24,06,296/-, THE DIFFERENCE IN THE TWO FIGURES WAS ADDED TO THE TOTAL INCOME AS UNDECLARED SALES. 2.2. IN RESPECT OF THE INCOME FROM LAWN CHARGES, TH E AO ASKED THE ASSESSEE TO SUBMIT THE DETAILS OF NUMBER OF FUNCTIO NS HELD DURING THE YEAR, ALONGWITH THE DATE, NAME OF PERSON AND BOOKING AMOU NT/ADVANCE RECEIVED ALONGWITH THE BOOKING REGISTER. THE ASSESSEE FURNIS HED THE LIST TO THE AO SHOWING RECEIPTS OF RS.11,77,522/- FROM 24 FUNCTION S HELD DURING THE YEAR. NO BOOKING REGISTER OR ANY OTHER DOCUMENT SHOWING T HE BOOKING AMOUNT OR ADVANCE RECEIVED FOR EACH FUNCTIONS WAS PRODUCED BE FORE THE AO. THE AO NOTED FROM THE DETAILS PRODUCED BY THE ASSESSEE THA T DIFFERENT PERSONS HAD BEEN CHARGED DIFFERENT RATES AND THE VARIATION IN T HE AMOUNT CHARGED PER PERSON WAS WIDE RANGING FROM RS.3,347/- TO RS.2,45, 160/-. THE AO ASKED THE ASSESSEE TO, INTER-ALIA EXPLAIN THE BASIS ON WH ICH THE CHARGES WERE FIXED AND TO GIVE THE FUNCTION WISE DETAILS OF THE NUMBER OF PERSONS IN EACH FUNCTION, THE SERVICES PROVIDED, TO PRODUCE THE BOO KING REGISTER, AND TO EXPLAIN WHY LAWN CHARGES HAD BEEN SHOWN AT ONLY RS. 2.20 LACS IN THE PROFIT AND LOSS ACCOUNT WHERE THE TOTAL RECEIPTS SHOWN WER E MUCH HIGHER. THE ITA NO.189(ASR)2012 7 ASSESSEE SUBMITTED BEFORE THE AO THAT THE BOOKING REGISTER FOR THE RELEVANT PREVIOUS YEAR WAS NOT AVAILABLE AT PRESENT AS IT HA D BEEN RECORDED BY THE MANAGERIAL STAFF AND THE STAFF FREQUENTLY CHANGED. IN RESPECT OF THE FUNCTIONS, THE ASSESSEE SUBMITTED THAT THERE WERE T WO TYPES OF FUNCTIONS HELD ON BEHALF OF THE CUSTOMERS DURING THE YEAR UNDER CO NSIDERATION. IT WAS SUBMITTED THAT IF ONLY LAWN WERE PROVIDED, THEN TH E AMOUNT NET OF TAXES STOOD CREDITED TO THE LAWN CHARGES. IT WAS SUBMITTE D THAT IF PER PLATE FOOD WAS PROVIDED, THE LAWN CHARGES WERE INCLUSIVE IN TH E PER PLATE RATE, AND THE FOOD SALES, NET OF TAXES, STOOD CREDITED IN THE FOO D SALES ACCOUNTS. THE DETAILS OF THE CALCULATION, DEPICTING SETTLED RATES CHARGED PER PLATE FOR THE FUNCTIONS, NUMBER OF PERSONS AT EACH FUNCTION, ET. CETERA WERE SUBMITTED TO THE AO. IT WAS SUBMITTED THAT THESE RATES VARIED ACCORDING TO THE NUMBER OF ITEMS OF FOOD, WHETHER THEY WERE VEGETARIAN OR NON-VEGETARIA N, THE NUMBER OF SNACKS, ETC. THE AO WAS NOT SATISFIED WITH THE EXPLANATION FURNISHED AND NOTED THAT NO EXPLANATION HAD BEEN SUBMITTED ABOUT THE VARIATI ON IN LAWN CHARGES FROM RS.11,250/- TO RS.67,500/-. AS PER THE AO, THE PAST HISTORY OF THE CASE SHOWED THAT THE ASSESSEE WAS IN HABIT OF SUPPRESS ING ITS RECEIPTS AND UNDER REPORTING THE NUMBER OF FUNCTIONS HELD. THE AO HEL D THAT NON-PRODUCTION OF THE BOOKING REGISTER OR BOOKING DIARY SHOWED THAT T HE ASSESSEE WAS CONTINUING WITH THE SAME PRACTICE OF REPORTING THE NUMBER OF FUNCTIONS HELD ITA NO.189(ASR)2012 8 AND THE RECEIPTS THERE FROM AT ITS OWN SWEET WILL. THE AO NOTED THAT IN THE A.Y.2005-06 THE NUMBER OF FUNCTIONS HELD HAD BEEN E STIMATED BY THE AO AT 100 AND THE RECEIPTS HAD BEEN WORKED OUT AT AN AVER AGE OF RS.50,000/- PER FUNCTION. THIS WAS RESTRICTED BY THE CIT(A) TO 62 F UNCTIONS AT THE RATE OF RS.50,000/- PER FUNCTION. THE AO FURTHER NOTED THAT THE ASSESSEES HOTEL WAS SITUATED ON THE BUSY NATIONAL HIGHWAY AND WAS A PRO MINENT PLACE FOR ORGANIZING MARRIAGES, BIRTHDAY PARTIES, KITTY PARTI ES, ANNIVERSARY AND OTHER CELEBRATIONS. IT WAS HELD THAT THE NUMBER OF FUNCT IONS STATED BY THE ASSESSEE AT 24 DURING THE ENTIRE YEAR WAS HIGHLY UNDERSTAND. CONSIDERING THE PAST HISTORY OF THE CASE, THE AO HELD THAT IT WOULD BE R EASONABLE TO ESTIMATE THE NUMBER OF FUNCTIONS AT A MINIMUM OF 50. THE AVERAGE RATE PER RATE OF RS.50,000/- CONFIRMED IN THE A.Y. 2005-06. APPLYI NG THIS RATE, THE TOTAL INCOME FROM LAWN AND BANQUET PROCEEDS WAS WORKED OU T TO RS.27,50,000/- WHICH EXCEEDED THE RECEIPTS SHOWN BY THE ASSESSEE B Y RS.15,72,478/-. THIS DIFFERENCE WAS ADDED TO THE ASSESSEES TOTAL INCOME . 3. BEFORE THE LD. CIT(A), THE ASSESSEE FILED ADDITI ONAL EVIDENCE, WHICH IS REPRODUCED HEREUNDER: THAT THE A.O. HAS NOT ALLOWED THE BENEFIT OF WAST AGE OF 25% TO 30% OF CONSUMPTION OF PERISHABLE, WHICH HAVE BEEN THRO WN AWAY WHILE CALCULATING THE FORMULA OF 1:3 IN HER ORDER UNDER APPEAL, WHICH IS MOST UNJUSTIFIED, UNREASONABLE AND UNCALLED FOR. 4. THE LD. COUNSEL FOR THE ASSESSEE APPEARING BEFORE T HE LD. CIT(A) ITA NO.189(ASR)2012 9 ALSO SUBMITTED THE WRITTEN SUBMISSIONS BEFORE THE L D. CIT(A). THE ADDITIONAL EVIDENCE ALONGWITH SUBMISSIONS SUBMITTE D BY THE ASSESSEE WERE FORWARDED TO THE A.O. FOR COMMENTS. THE AO SUB MITTED THE REPORT WHICH WAS FORWARDED TO THE ASSESSEE FOR REJOINDER A ND IN RESPONSE TO THE REJOINDER RECEIVED FROM THE ASSESSEE, FURTHER COMME NTS OF THE A.O. AND LD. COUNSEL OF THE ASSESSEE WERE TAKEN ON RECORD BY THE LD. CIT(A) AND ACCORDINGLY, THE LD. CIT(A) REJECTED THE ADDITIONAL GROUND RAISED BY THE ASSESSEE. THE LD. CIT(A) AFTER MAKING DETAILED DISC USSIONS ULTIMATELY GAVE A FINDING, DISMISSING THE MAIN GROUND OF THE A SSESSEE BY UPHOLDING THE ADDITION OF RS.24,06,296/- ON ACCOUNT OF SUPPRE SSION OF FOOD SALES, SINCE THE CONSUMPTION TO SALES RATIO DETERMINED IN THE ASSESSEES CASE BASED ON OBSERVATION OF ACTUAL DATA FOUND DURING TH E SURVEY AND IS BASED ON REALITY. HE FURTHER HELD THAT THE OBSERVATIONS O N WHICH THE ASSESSEE HAS PLACED RELIANCE IS THAT THE LARGE NUMBER OF HOTELS AND RESTAURANTS CONTRIBUTE SUBSTANTIALLY TO THE GENERATION OF WASTE IN A MUNICIPAL WARD AND AS PER THE STUDY OF THE ORGANIZATION OF A FEW W ARDS, HOTELS AND RESTAURANT WASTE CONTRIBUTED TO AROUND 25% TO 30% O F THE TOTAL WASTE GENERATED BY THE WARD. THIS STUDY ONLY SAYS THAT O UT OF THE TOTAL WASTE IN A MUNICIPAL WARD, AROUND 25%-30% WAS ON ACCOUNT OF HOTELS & RESTAURANTS AS PER THE ARTICLE THE HOTEL WASTE COMP RISED OF ITEMS LIKE FOOD ITA NO.189(ASR)2012 10 AND DRY WASTE LIKE PLASTIC BOTTLE, TAPPERS ETC. TH IS ARTICLE DOES NOT SUGGEST 25%-30% OF GROCERY CONSUMPTION OF A HOTEL W AS WASTED. AS REGARDS THE OBSERVATIONS WHICH APPEAR ON THE WEBSIT E OF AN ORGANIZATION CALLED KARAMAYOG HAS BEEN RELIED UPON BUT THE CREDE NTIALS OF SUCH ORGANIZATION ARE NOT KNOWN. 5. AS REGARDS THE ADDITION ON ACCOUNT OF LAWN CHA RGES, THE LD. CIT(A) ESTIMATED THE RECEIPTS OF RS.50,000/- PER F UNCTION A REASONABALE AND NUMBER OF FUNCTIONS WERE ESTIMATED AT 40 INSTE AD OF 50 ESTIMATED BY THE A.O. AND ACCORDINGLY ALLOWED THE RELIEF OF RS.5 ,50,000/-OUT OF THE ADDITION OF RS.15,72,472/- MADE BY THE A.O. 6. THE LD. COUNSEL FOR THE ASSESSEE, MR. R.K. BAJA J, ADVOCATE OUT-RIGHTLY RELIED UPON THE SUBMISSIONS MADE BEFORE THE LD. CIT(A) AND ARGUED THAT THE ESTIMATIONS BY THE AO ARE WITHOUT ANY BASIS AND THE LD. CIT(A) IS NOT JUSTIFIED IN NOT ADMITTING THE ADDITI ONAL EVIDENCE AND WASTAGE OF 25% TO 30% IS BASED ON THE OBSERVATIONS OR ORGANIZATION AND ALSO AN ARTICLE WHICH WAS PLACED ON RECORD. THE SAM E HAS NOT BEEN TAKEN IN THE RIGHT SPIRIT BY THE LD. CIT(A) AND THE A.O. 7. THE LD. DR, MR. MAHAVIR SINGH, ON THE OTHER HAN D, ARGUED AND HEAVILY RELIED UPON THE ORDER OF THE LD. CIT(A). ITA NO.189(ASR)2012 11 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THERE IS NO DISPUTE TO THE FACT THAT THE ASSE SSEE IS NOT MAINTAINING DAY TO DAY CONSUMPTION REGISTER, STOCK REGISTER AND ANY DETAILS FOR OPENING STOCK AND CLOSING STOCK. THEREFORE, THE LD. CIT(A) HAS RIGHTLY UPHELD THE REJECTION OF BOOKS OF ACCOUNT. MOREOVER, AGAINST THE REJECTION OF BOOKS OF ACCOUNT, THERE IS NO GROUND RAISED BY T HE ASSESSEE BEFORE US, THOUGH THE LD. CIT(A) HAS RIGHTLY REJECTED THE BOOK S OF ACCOUNT. THE FINDINGS OF THE LD. CIT(A) IN PARA 7 TO 9 AT PAGES 13 TO 18 OF THE ORDER ARE PERTINENT WHERE IT HAS BEEN HELD THAT THE A.O. HAS RELIED UPON THE ORDER OF THE ITAT FOR THE ASSESSMENT YEAR 2005-06 FOR MAKING RESPECTIVE ADDITION TO THE TOTAL INCOME: PERUSAL OF THE ASSESSMENT RECORD SHOWS THAT IN T HE ASSESSMENT ORDER DATED 29.12.2006 FOR THE AY 2004-05 THE AO H AD MADE CERTAIN ADDITIONS TO THE TOTAL INCOME WHICH RESULTED IN TH E INCOME BEING ASSESSED AT RS.1.56 CRORES AGAINST A LOSS OF RS.(- ) 0.73 CRORES DECLARED IN THE RETURN OF INCOME. AS PER THE ASSESSMENT ORD ER FOR A.Y. 2004-05, A SURVEY OPERATION U/S 133A OF THE ACT WAS CONDU CTED AT THE BUSINESS PREMISES OF THE ASSESSEE AND SEVERAL BOOKS OF ACCO UNT AND DOCUMENTS WERE FOUND AND IMPOUNDED. DURING THE ASSESSMENT PR OCEEDINGS, THE AO POINTED OUT SEVERAL DEFECTS IN THE BOOKS. THES E INCLUDED THE FACT THAT NO STOCK REGISTER IN RESPECT OF USE OF PROVIS IONS ON DAY TO DAY CONSUMPTION WAS PRODUCED; THE INVENTORY OF OPENING AND CLOSING STOCK WAS NOT FURNISHED; THE CONSUMPTION OF FUEL, GASES AND ELECTRICITY WAS ON THE HIGHER SIDE; THE ASSESSEE HAD NOT ACCOU NTED FOR IN THE REGULAR BOOKS OF ACCOUNTS THE FOOD SALE/LAWN CHARG ES FOR SEVERAL FUNCTIONS HELD ON VARIOUS DATES AS PER THE IMPOUND ED BOOKS; IN THE MONTH OF JUNE NO LAWN CHARGES HAD BEEN SHOWN IN RE SPECT OF VARIOUS FUNCTIONS AND ONLY FOOD SALES HAD BEEN RECORDED; I N RESPECT OF SOME FUNCTIONS ONLY LAWN CHARGES HAD BEEN RECORDED AND NO FOOD SALES HAD ITA NO.189(ASR)2012 12 BEEN SHOWN; THE ASSESSEE HAD SHOWN LAWN CHARGES O NLY FOR FOUR OCCASIONS WHEREAS IN THE MONTH OF JUNE, 2003 ITSEL F THE NUMBER OF FUNCTIONS AND PARTIES WAS MORE THAN 40 IN NUMBER A S PER THE IMPOUNDED BOOKS. THE PATTERN OF RECORDING OF THE L AWN CHARGES AND FOOD CHARGES WAS FOUND TO BE FOLLOWED IN THE OTHER MONTHS ALSO. THE AO EXAMINED THE MONTHLY GROCERY PURCHASES AND THE SALES IN THE RESTAURANT, ROOM, BANQUET ETC. AND FOUND THAT IN T HE MONTH OF JUNE, 2003 THE SALES WERE 5:10 TIMES THE GROCERY PURCHAS ES. IN THE MONTH OF SEPT;2002 AS PER THE IMPOUNDED DOCUMENTS ALSO THE SALES WERE AROUND 6 TIMES THE GROCERY PURCHASES. THE AO ALSO FOUND T HAT THE PER PLATE RATE SHOWN BY THE ASSESSEE WAS BOOKED AT THE MUCH LOWER PRICE THAN THAT AVAILABLE EVEN IN A SMALL ROAD SIDE EATERY. H ENCE, THE AO ESTIMATED THE SALES AT 5 TIMES THE GROCERY CONSUME D AS PER THE BOOKS AND MADE AN ADDITION OF RS.1.03 CRORES. 7.1. IN RESPECT OF THE LAWN CHARGES OR PROCEEDS OF BANQUETS, THE AO NOTED THAT THE ASSESSEE HAD 5 PLACES WHERE BANQUET S COULD TAKE PLACE. HE NOTED THAT THE ASSESSEE HAD BOOKED 409 FUNCTION S AS PER THE DIARY IMPOUNDED DURING THE COURSE OF SURVEY, WHICH SHOWE D THAT 40 FUNCTIONS HAD BEEN HELD IN THE MONTH OF JUNE. HE A LSO NOTICED THAT SEVERAL DOCUMENTS SHOWED INSTANCES WHICH HAD NOT B EEN RECORDED IN THE FOOD SALES OR THE LAWN CHARGES. THE AO FURTHER NOTED THAT IN THE A.Y. 2002-03 THE AO HAD ESTIMATED THE AVERAGE PROC EEDS OF EACH FUNCTIONS AT RS.84,577/-. TAKING THE SAME AVERAGE, ALLOWING A MARGIN OF 60%, THE PROCEEDS FROM LAWN CHARGES WAS COMPUTE D AT RS.1.35 CRORES AND IS RESULTED IN AN ADDITION OF RS.1.21 C RORES. THE LD. CIT(A), VIDE HIS ORDER DATED 30.05.2007 IN APPEAL NO.518/06- 07/CIT(A)/JAL FOR THE A.Y. 2004-05 AFTER CONSIDERI NG THE RIVAL SUBMISSIONS, HELD THAT THOUGH 40 FUNCTIONS WERE NO TED IN THE BOOKING DIARY FOR THE MONTH OF JUNE, 2003, THERE WAS NO EV IDENCE THAT SO MANY FUNCTIONS ACTUALLY TOOK PLACE AS IT WAS THE ASSESS EES CONTENTION THAT SEVERAL FUNCTIONS, THOUGH BOOKED, WERE CANCELLED A ND THE ADVANCE WAS FORFEITED. HE HELD THAT AT THE SAME TIME THE CLAIM OF THE ASSESSEE THAT CERTAIN FUNCTIONS WERE PERFORMED BY RECORDING THE FOOD SALES WAS NOT ACCEPTABLE BECAUSE RECORDING IN THE FOOD SALES LAC KED DIRECT EVIDENCE OF HAVING BEING RECORDED IN THOSE FUNCTIONS. FOLLO WING THE DECISION IN THE ASSESSEES APPEAL FOR A.Y.2002-03 DECIDED VIDE ORDER DATED 31.3.2006, THE LD. CIT(A) APPLIED THE RATIO OF 1:3 AS AGAINST THE RATIO OF 1:5 APPLIED BY THE AO. IN RESPECT OF THE ADDIT ION ON FOOD SALES THE ASSESSEE CONSEQUENTIALLY GOT RELIEF OF RS.91,47,66 8/-. IN RESPECT OF ITA NO.189(ASR)2012 13 LAWN CHARGES THE CIT(A) HELD THAT THERE WAS NO EV IDENCE THAT 409 FUNCTIONS MENTIONED IN THE DIARY HAD ACTUALLY MATU RED DURING THE RELEVANT YEAR AND THAT IT COULD NOT BE DENIED THAT MANY A TIMES QUERIES WERE RAISED WHICH DID NOT RESULT IN FUNCTION. HE N OTED THAT A SUM OF RS.1,24,000/- WAS REFLECTED AS FORFEITURE OF ADVAN CE FROM CUSTOMERS. HENCE, CONSIDERING THE FINDINGS IN THE A.Y. 2002- 03, THE RATE OF EACH FUNCTION WAS TAKEN AT RS.50,000/-. THE NUMBER OF F UNCTIONS WAS TAKEN AT 100 AS AGAINST 115 TAKEN BY THE AO. THE ASSESSE E GOT RELIEF OF RS.85.32 LACS ON HIS ACCOUNT. 7.2. THE DEPARTMENT WENT IN APPEAL BEFORE THE ITAT , AMRITSAR BENCH, AGAINST THE ORDER OF THE LD. CIT(A), WHILE THE ASSESSEE FILED C.O. TO THE APPEAL. THE HONBLE ITAT, IN THEIR ORD ER DATED 60.06.2008 IN ITA NO.372(ASR)/2007 AND CO. NO.70(A SR)/2007, HAVE NOTED THAT THE ISSUE REGARDING FOOD SALES WAS COVE RED BY THEIR ORDER DATED 10.04.2008 IN ITA NOS.279 AND 320(ASR)/2006 FOR THE A.Y. 2002-03. IN THE SAID ORDER THE FINDINGS OF THE LD. CIT(A) IN RESPECT OF THE ADDITION ON ACCOUNT OF FOOD SALES HAD BEEN UPH ELD. FOLLOWING THE SAID ORDER, THE ITAT HAVE REJECTED THE DEPARTMENT S APPEAL AS WELL AS THE CROSS OBJECTION OF THE ASSESSEE. IN RESPECT O F THE ADDITION ON ACCOUNT OF LAWN CHARGES ALSO, THE ITAT UPHELD THE ORDER OF THE LD. CIT(A) AND REJECTED THE GROUNDS TAKEN BY THE DEPAR TMENT AND BY THE ASSESSEE. 7.3. IN THE ASSESSMENT ORDER DATED 27.12.2007 FOR THE A.Y. 2005-06 THE AO REJECTED THE BOOK RESULTS IN RELATION TO FO OD SALES AFTER NOTING THAT THE ASSESSEE WAS NOT MAINTAINING ANY STOCK RE GISTER NOR ANY DETAILS OF STOCK INVENTORY HAD BEEN FILED. HE ESTI MATED THE PRECEDING YEARS AND MADE AN ADDITION OF RS.56.80 LACS. IN RE SPECT OF LAWN CHARGES THE AO NOTED THAT THE ASSESSEE HAD SHOWN O NLY 46 FUNCTIONS AND RECEPTIONS AT AN AVERAGE RATE OF 45,930/- PER FUNCTION. THE ASSESSEE DID NOT SUBMIT THE NAMES AND ADDRESSES OF THE PERSON WHO HELD FUNCTION. THE AO ESTIMATED THE NUMBER OF FUNC TIONS AT 100 AND APPLIED THE EARNING FOR EACH FUNCTION AT AN AVERAG E RATE OF RS.50,000/- PER FUNCTION AND CONSEQUENTLY MADE AN ADDITION OF RS.28.87 LACS. THE LD. CIT(A) IN HIS ORDER DATED 27.03.2008 HAS FOLL OWED HIS EARLIER APPELLATE ORDERS FOR THE A.YS 2002-03 AND 2004-05 AND DIRECTED THAT THE RATIO OF 1:3 SHOULD BE APPLIED AGAINST THE RA TIO APPLIED BY THE AO IN RESPECT OF FOOD SALES. THIS RESULTED IN ADDITIO N OF RS.65,785/.- TO BE SUSTAINED IN RESPECT OF FOOD SALES. IN RESPECT OF ADDITION ON ACCOUNT OF ITA NO.189(ASR)2012 14 LAW CHARGES THE LD. CIT(A) ESTIMATED THE NUMBER O F FUNCTIONS AT 62, THEREBY SUSTAINING ADDITION OF RS.9,87,230/-. BOT H THE DEPARTMENT AND THE ASSESSEE APPEALED BEFORE THE ITAT. THE ITA T VIDE THEIR ORDER DATED 23.9.2008 IN ITA NOS. 378 & 407(ASR)/2008 HA VE REJECTED BOTH THE APPEALS BY RELYING ON THEIR ORDER IN ASSESSEE S CASE FOR AY 2004- 05. THUS, IT IS CLEAR THAT IN THE EARLIER ASSESSME NT YEARS THE ITAT HAVE HELD THAT THE RATIO OF 1:3 IN RESPECT OF FOOD SALE S WAS JUST AND PROPER. IN RESPECT OF LAWN CHARGES, THE ITAT HAD UPHELD T HE REJECTION OF THE ASSESSEES BOOKS AND THE NUMBER OF FUNCTION AS WEL L AS THE RATES. THESE ACCOUNTS HAVE BEEN REJECTED ON THE SAME FACT S AS APPEAR FOR THE ASSESSMENT ORDER FOR A.Y.2008-09. 8. WE HAVE SEEN EARLIER THAT IN THE ASSESSMENT ORD ER FOR THE A.Y. 2008-09 THE AO HAS APPLIED THE RATIO OF 1:3 TO EST IMATE THE FOOD SALES OF THE ASSESSEE AFTER REJECTING THE BOOK RESULTS. I DO NOT FIND ANY IRREGULARITY IN THE DECISION ARRIVED AT BY THE AO ON THIS ACCOUNT. THE REASON FOR THE REJECTION OF THE BOOK RESULTS ARE T HE NON-MAINTENANCE OF DAY TO DAY CONSUMPTION REGISTER AND STOCK REGISTER AND THE NON- PRODUCTION OF THE DETAILS OF THE OPENING AND CLOSI NG STOCK. FOR THESE VERY REASON THE REJECTION OF BOOK RESULTS FOR THE A.Y. 2004-05 AND 2005-06 HAVE BEEN UPHELD BY THE CIT(A) AND THE ITA T. EVEN IF IT IS NOT POSSIBLE TO MAINTAIN A DAY TO DAY STOCK REGIST ER, IN THE ABSENCE OF THE PARTICULARS OF THE VALUATION OF THE STOCK AT T HE BEGINNING AND AT THE END OF THE RELEVANT ACCOUNTING PERIOD, THE INCOME OF THE ACCOUNTING PERIOD CANNOT BE DETERMINED. VALUATION OF STOCK IS AN IMPORTANT INGREDIENT FOR DETERMINING THE PROFIT AND LOSS OF AN ACCOUNTING PERIOD. THE IRRATIONALITY OF THE VALUE OF THE OPENING AND CLOSING STOCK OF AROUND RS.73 LACS EACH CAN BE JUDGED FROM THE FACT THAT THESE ARE INCLUSIVE OF MAINLY PERISHABLE ITEMS AND IF THE AS SESSEE HAD OPENING STOCK OF RS.72.80 LACS AND SALES OF RS.92.25 LACS, THERE WOULD NO NEED TO MAKE PURCHASES OF RS.39.12 LACS, SINCE THE STOC K COULD NOT SURVIVE FOR VERY LONG. THE DECISIONS RELIED UPON BY THE LD . AR IN RESPECT OF REJECTION OF BOOK RESULTS HAVE BEEN CORRECTLY REBU TTED BY THE AO IN HIS REPORT. HE HAS POINTED OUT THAT IN THE DECISION R EPORTED IN 97 TTJ 969 (JODHPUR) THE ITAT HAD HELD THAT THE RATIO OF COST OF MATERIAL OF ONE HOTEL COULD NOT BE APPLIED TO ANOTHER HOTEL, WHERE AS IN THE CASE AT HAND THE RATIO IN THE CASE OF ASSESSEE ITSELF IN T HE EARLIER YEAR HAD BEEN APPLIED. IN RESPECT OF THE DECISION REPORTED AT 3 SOT 803 THE AO HAS POINTED OUT THAT IN THE CITED CASE THE YIELD OF F URNISHED PRODUCT WAS FOUND SATISFACTORY. IT IS FURTHER SEEN THAT THE BO OKS HAS BEEN REJECTED IN ITA NO.189(ASR)2012 15 THE CITED CASE ONLY BECAUSE THE GO RATE WAS LOW AN D THE DAY TO DAY STOCK REGISTER WAS NOT MAINTAINED. HOWEVER, IN THE CASE AT HAND THE PARTICULARS OF THE OPENING AND CLOSING STOCK HAVE NOT BEEN SUBMITTED AND THE SALE TO COST RATIO HAS BEEN FOUND TO BE MU CH HIGHER BASED ON THE DOCUMENT FOUND DURING THE COURSE OF SURVEY U/S 133A OF THE ACT AT THE PREMISE OF THE ASSESSEE. IN THE DECISION RE PORTED 296 ITR 501 THE AO HAS POINTED OUT THAT THE FACTS WERE DIFFERE NT AT THE REJECTION OF THE BOOKS WAS BASED ON LOW WASTAGE. IT IS SEEN THA T IN THIS CASE THE WASTAGE WAS FOUND TO BE REASONABLE BY THE TRIBUNAL RELYING ON CERTIFICATE ISSUED BY EXPERT AND THE ASSESSEE HAD ACCOUNTED FOR WASTAGE BY WEIGHTAGE IN ITS ACCOUNT BOOKS. HOWEVER , IN THE PRESENT CASE THE REJECTION OF THE ACCOUNTS IS FOR DIFFEREN T REASONS AS HAVE BEEN NOTED EALIER AND WHICH ARE SUFFICIENT FOR REJECTI ON OF BOOK RESULTS. IN THE CASE REPORTED AT 315 ITR 185 THE HONBLE HIGH COURT HAVE NOTED THAT NO SPECIFIC DEFECT WAS POINTED OUT BY THE AO AND THE GP HAD BEEN REJECTED ONLY BECAUSE OF FALL IN GP RATE FOR NON-MAINTENANCE OF STOCK REGISTER. HOWEVER, IN THE PRESENT CASE THE A O HAS POINTED THAT THE ASSESSEE DID NOT PRODUCE THE PARTICULARS OF TH E OPENING AND CLOSING STOCK AND DID NOT MAINTAIN PURCHASE AND SALE BILL S/VOUCHERS COMPLETELY. IN THE CASE REPORTED AT 316 ITR 120 TH ERE WAS A FINDING THAT THE QUANTUM AND VALUE OF PURCHASE AND SALE WE RE NOT DISPUTED AS THEY WERE FULLY VOUCHED AND THE INVENTORY OF THE C LOSING STOCK WAS ALSO NOT FOUND TO BE INCORRECT. IN THE PRESENT CA SE, AS NOTED EARLIER, THE INVENTORY OF THE STOCK HAS NOT BEEN FURNISHED FOR VERIFICATION AND THE VOUCHERS AND BILLS HAVE FULLY MAINTAINED. 8.1. THE LD. AR HAS PRESSED STRONGLY FOR ADMISSION OF AN ADDITIONAL GROUND OF APPEAL CONTENDING THAT THE BENEFIT OF WA STAGE OF 25% TO 30% OF CONSUMPTION OF PERISHABLES HAD NOT BEEN ALL OWED. FIRSTLY, I AM OF THE VIEW THAT THIS ADDITIONAL GROUND SHOULD NOT BE ADMITTED BECAUSE THERE IS NOTHING TO SHOW THAT FAILURE TO T AKE THIS GROUND OF APPEAL WAS NOT WILLFUL OR UNREASONABLE. THE ISSUE REGARDING THE RATIO OF CONSUMPTION OF GROCERY AND PERISHABLE TO THE S ALES HAS BEEN AGITATED IN ATLEAST THREE ASSESSMENTS PRIOR TO THE A.Y.2008-09 UNDER APPEAL, BUT THE POINT WAS NEVER RAISED BEFORE THE AO,, THE CIT(A) OR THE ITAT. THE ISSUE OF WASTAGE IN CONSUMABLES EVEN BY THE APPELLANT WOULD NOT BE AN UNKNOWN FACTOR. THERE WAS NOTHING TO PREVENT THE ASSESSEE FROM TAKING UP THIS ISSUE IN THE ORIGINAL APPEAL MEMO. MOREOVER, THE ADMISSION OF THE ADDITIONAL GROUND A PPEAL WILL REQUIRE INVESTIGATION INTO FACTS. IN THE CASE OF CIT VS. A BHISHEK INDUSTRIES ITA NO.189(ASR)2012 16 LTD. 290 ITR 655 (P&H) THE HONBLE JURISDICTIONAL HIGH COURT HAVE HELD THAT THE ONLY PRE-CONDITION FOR ADMISSION OF ADDITIONAL GROUND OF APPEAL WAS THAT IT SHOULD BE REASONABLE. IN THIS C ASE IT WAS HELD THAT THE REQUEST FOR RAISING THE ADDITIONAL GROUND WAS REASONABLE BECAUSE THE FACTS WITH REGARD TO THE LEGAL ISSUE, BEING RA ISED AS AN ADDITIONAL GROUND OF APPEAL, WERE ALREADY ON RECORD AND SECON DLY THE ISSUE HAD ALREADY BEEN DECIDED IN FAVOUR OF THE ASSESSEE IN THE EARLIER YEARS. THUS, ADMISSION OF AN ADDITIONAL GROUND WILL BE CO NSIDERED TO BE REASONABLE IF THE RELEVANT MATERIAL IS ALREADY AV AILABLE ON RECORD. IN THE CASE OF ACIT VS. DHL OPERATIONS BV 108 TTJ (MU MBAI)(SB) 152 THE HONBLE SPECIAL BENCH OF THE TRIBUNAL HAVE HELD THAT THE ONE LIMITATION OF ADMISSION OF ADDITIONAL GROUND OF AP PEAL WAS THAT NO NEW FACT WAS REQUIRED TO BE INVESTIGATED ON ADMISS ION OF THE ADDITIONAL GROUND. IN THE CASE OF ITO VS. BALINDER JASON MANN 112 TTJ (ASR) 125 IT WAS HELD BY THE TRIBUNAL THAT AN ADDITIONAL GROUND OF APPEAL WHICH REQUIRED INVESTIGATION OF NEW FACT S COULD NOT BE ADMITTED. IN THE CASE OF LATE BHAGWANDAS PUNJABI THROUGH L/H MISS VARSHA BHAGWANDAS PUNJABI VS. ACIT 138 TTH (AHD) 8 5 THE HONBLE TRIBUNAL REFUSED TO ADMIT AN ADDITIONAL GR OUND OF APPEAL WHICH REQUIRED INVESTIGATION OF FACTS NOT BROUGHT ON RECORD BY THE APPELLANT. THUS, THE GENERAL VIEW APPEARS TO BE TH AT WHILE AN ADDITIONAL GROUND OF APPEAL MAY BE ADMITTED WHICH DOES NOT REQUIRED EXAMINATION OF NEW FACTS, OR WHICH GOES TO THE ROO T OF THE JURISDICTION OF THE ASSESSMENT MADE BY THE AO, ANY ADDITIONAL G ROUND WHICH REQUIRES INVESTIGATION OF FACTS NOT ALREADY AVAILA BLE ON RECORD WILL NOT BE ADMITTED. IN THE PRESENT CASE THE FACTS NECESS ARY TO ADJUDICATE THIS GROUND OF APPEAL ARE NOT AVAILABLE ON RECORD. A DE TAILED INQUIRY WILL BE NEEDED TO BE CONDUCTED IN THIS REGARD, FIRSTLY ABOUT THE VERACITY OF THE EVIDENCE SOUGHT TO BE RELIED UPON BY THE APPEL LANT AND SECONDLY WHETHER THE SAID WASTAGE IS INBUILT IN THE RATIO 1 :3 APPROVED BY THE ITAT IN THE APPELLANTS CASE. HENCE, I DO NOT ADMI T THE ADDITIONAL GROUND OF APPEAL FOR ADJUDICATION. 8.2. EVEN OTHERWISE, I DO NOT FIND THAT THE EVIDEN CE WHICH THE APPELLANT SEEKS TO RELY UPON IN RESPECT OF THE ADD ITIONAL GROUND OF APPEAL FURTHERS THE CASE OF THE APPELLANT. THE OBS ERVATIONS APPEAR ON THE WEBSITE OF AN ORGANIZATION CALLED KARMAYOG WHO SE CREDENTIALS ARE NOT KNOWN. THE OBSERVATIONS ON WHICH THE APPELLANT HA PLACED RELIANCE IS THAT THE LARGE NUMBER OF HOTELS AND RE STAURANTS CONTRIBUTE SUBSTANTIALLY TO THE GENERATION OF WASTE IN A (MUN ICIPAL) WARD AND AS ITA NO.189(ASR)2012 17 PER THE STUDY OF THE ORGANIZATION OF A GENERATED B Y THE WARD. THUS, THIS STUDY ONLY SAYS THAT OUT OF THE TOTAL WASTE I N A MUNICIPAL WARD, AROUND 25%-30% WAS ON ACCOUNT OF HOTELS & RESTAURA NTS. AS PER THE ARTICLE THE HOTEL WASTE COMPRISED OF ITEMS LIKE FOOD AND DRY WASTE LIKE PLASTIC BOTTLE, TAPPERS ETC. THIS ARTICLE DOE S NOT SUGGEST 25%-30% OF GROCERY CONSUMPTION OF A HOTEL WAS WASTED. HEN CE, THIS ADDITIONAL EVIDENCE DOES NOT ASSIST THE APPELLANT. MOREOVER, THE PRICING OF SALES IN A RESTAURANT OR A HOTEL IS DETERMINED TAKING I NTO ACCOUNT THE COST OF PRODUCTION, WHICH IS DETERMINED FROM THE OPENING S TOCK, PURCHASES AND CLOSING STOCK. ANY WASTAGE OF THE RAW MATERIAL CONSUMPTION IS IMMEDIATELY REFLECTED THROUGH THE VALUE OF CLOSING STOCK. THE CONSUMPTION TO SALES RATIO DETERMINED IN THE APPEL LANTS CASE BASED ON OBSERVATION OF ACTUAL DATA FOUND DURING SURVEY AND IS BASED ON REALITY. HENCE, THE ADDITION OF RS.24,06,296/- ON ACCOUNT O F SUPPRESSION OF FOOD SALES IS UPHELD. THE LD. COUNSEL FOR THE ASSE SSEE RELIED UPON THE ASSESSMENT MADE BY THE AO FOR THE A.Y. 2010-2011 W HERE WASTAGE OF 15% HAS BEEN ALLOWED. IN THIS REGARD, FIRST OF ALL, IT IS NOT A PAST PRACTICE OF THE ASSESSEE. NORMALLY PAST TREND IS F OLLOWED IN THE CASE OF PRESENT ASSESSMENT. MOREOVER, EVERY YEAR IS AN IND EPENDENT YEAR AND THE DECISION OF THE AO IN THE FOLLOWING YEAR CANNO T BE A GUIDE WHILE DECIDING THE APPEAL IN THE PRESENT CASE. THEREFORE , THE SAID SUBMISSIONS MADE BY THE ASSESSEE IS REJECTED AND T HE LD. CIT(A) AS MENTIONED HEREINABOVE HAS RIGHTLY UPHELD THE FINDI NGS OF THE A.O. IN CONFIRMATION OF ADDITION OF RS.24,06,296/-. 9. AS REGARDS THE ADDITION ON ACCOUNT OF LAWN CHAR GES IN AY 2008-09, IT IS SEEN THAT IN THE AY 2002-03 THE NUM BER OF FUNCTIONS WERE ESTIMATED BY CIT(A) AT 100 AND IN THE AY 2004 -05 ALSO THE LD. CIT(A) ESTIMATED THE NUMBER OF FUNCTION AT 100. HO WEVER, IN THE AT 2005-06, THE LD. CIT(A) ESTIMATED THE NUMBER OF FU NCTIONS AT 62. THOUGH THE LD. AR FOR THE ASSESSEE HAS SUBMITTED T HAT THERE WAS NO EVIDENCE TO SUPPORT THE HIGHER NUMBER OF FUNCTIONS , IT IS SEEN THAT THE ASSESSEE DID NOT PRODUCE THE BOOKING DIARY OR REGI STER OF FUNCTIONS. THE NUMBER OF FUNCTIONS CLAIMED BY THE ASSESSEE IS ONLY 24 DURING RELEVANT PREVIOUS YEAR WHICH APPEARS TO BE VERY LO W CONSIDERING THE PAST HISTORY OF THE CASE AND EXCELLENT LOCATION OF THE APPELLANTS HOTEL. TAKING INTO ACCOUNT THE GENERAL FALL IN NUMBER OF FUNCTION OVER THE YEARS, THE NUMBER OF FUNCTION DURING THE RELEVANT PREVIOUS YEAR IS ESTIMATED AT 40 INSTEAD OF 50 ESTIMATED BY THE AO . THE ESTIMATE OF RECEIPTS OF RS.55,000/- PER FUNCTION TAKEN BY THE AO IS HELD TO BE ITA NO.189(ASR)2012 18 REASONABLE SINCE THIS IS ONLY A 10% INCREASE OVER THE RATE ESTIMATED IN AY 2002-03. THE ASSESSEE WILL CONSEQUENTLY GET REL IEF OF RS.5,50,000/- OUT OF THE ADDITION OF RS.15,72,472/ - MADE BY THE AO ON THIS ACCOUNT. 9. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE F IND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) WHICH IS A WELL REASONED OR DER. AS REGARDS THE FINDINGS OF AO IN THE SUBSEQUENT YEAR WHERE THE AO HAS ALLOWED 15% WASTAGE, AS ARGUED BY LD. AR, THE SAME CANNOT BE AP PLIED IN THE PRESENT FACTS AND CIRCUMSTANCES FOR THE REASONS, EACH YEAR IS INDEPENDENT YEAR IN INCOME TAX PROCEEDINGS AND THE FOLLOWING YEAR HAVI NG ITS OWN FACTS AND CIRCUMSTANCES AND DECISION OF AO FOR FOLLOWING YEAR CANNOT BE A GUIDE ON THE TRIBUNAL AS IN THE PRESENT CASE, WHICH HAS ITS OWN CIRCUMSTANCES. ACCORDINGLY, ALL THE GROUNDS OF APPEAL OF THE ASSES SEE ARE DISMISSED. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IN ITA NO.189(ASR)/2012 ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12TH AUGUST, 2013. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 12TH AUGUST, 2013 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. GRAND LILLY MOTELS LTD; JALANDHAR . 2. THE ADDL. CIT, R-III, JALANDHAR. 3. THE CIT(A), JLR. 4. THE CIT, JLR. 5. THE SR DR, ITAT, AMRITSAR.