M/a Meghana Restaurant & Bar, Warangal V. Asst.CIT, Circle-1, Warangal

ITA 26/HYD/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69813 (ITAT-HYDERABAD)
• Duration Of Justice: 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 07-01-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: G S PHANI KISHORE
• Assessee Lawyers: K V CHALAMAIAH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA.NO.26/HYD/2013 ASSESSMENT YEAR 2006-2007 M/S. MEGHANA RESTAURANT & BAR, WARANGAL PAN AANFM0966C VS. ACIT, CIRCLE (1), WARANGAL. (APPELLANT) (RESPONDENT) FOR APPELLANT : SHRI K.V. CHALAMAIAH (A.R.) FOR RESPONDENT : SHRI G.S. PHANIKISHORE (D.R.) DATE OF HEARING : 06.08.2013 DATE OF PRONOUNCEMENT : 27.09.2013 ORDER PER SMT. ASHA VIJAYARAGHAVAN, J.M. THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER OF CIT(A)-VI, HYDERABAD DATED 28.09.2012 FOR THE ASSESSMENT YEAR 2006-07. THE CONFIRMATION FOR THE CIT(A) OF THE PROFIT OF RS.24, 000/- ON THE ESTIMATED SALE OF RS.6 LAKHS ON THE ANCILLARY BUSIN ESS IN FAST FOODS SEPARATELY IN ADDITION TO DETERMINATION OF PROFIT O F THE CONCERN AT 5% IN THEIR LIQUOR BUSINESS U/S.44 AL. THE ASSESSE E IS ALSO AGGRIEVED BY THE ORDER OF CIT(A) CONFIRMING THE ADD ITION OF RS.33,89,827/- MADE U/S.87. 2. THE ASSESSEE FIRM HAS 6 PARTNERS AND ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF LIQUOR FROM A.P. BEVERAGES CORPORATION LTD. THE ASSESSEE HAD ADMITTED THE OTHER INCOME OF RS.4, 868/- IN THEIR 2 ITA.NO.26/HYD/2013 M/S. MEGHANA RESTAURANT & BAR, WARANGAL PROFIT & LOSS ACCOUNT AND THERE WAS NO EXPLANATION ABOUT THE SAME. THE AO HAS STATED THAT INSPITE OF NUMBER OF OPPORTU NITIES GIVEN TO THE ASSESSEE HE HAD NOT TO PUT FORWARD THE CASE. A S THE ASSESSEE DID NOT COMPLY WITH THE SAME OR FURNISH ANY PARTICU LARS, THE AO COMPLETED THE ASSESSMENT DETERMINING THE INCOME FRO M LIQUOR AT 5% OF THE LIQUOR TURNOVER. THE AO ALSO WAS AWARE THAT THE ASSESSEE SHOULD BE SELLING OTHER ITEMS OF FOOD TO T HE CUSTOMERS. THEREFORE HE ESTIMATED THE SALES OF FOOD ITEMS @ RS .6 LAKHS AND ESTIMATED THE INCOME @ 4% WHICH WORKED OUT TO RS.24 ,000/-. THE AO ALSO FOUND THAT THE CAPITAL BALANCE IN THE PARTN ERS ACCOUNT WAS CREDITED WITH A TOTAL SUM OF RS.33,89,827/-. AS TH E ASSESSEE DID NOT PROVIDE THE SOURCE OF INCOME OF THE PARTNERS TO MAKE THE ABOVE INVESTMENT THE AO ADDED RS.33,89,827/- U/S.68 OF I. T. ACT. 3. AGGRIEVED THE ASSESSEE CAME UP ON APPEAL BEFORE THE CIT(A). THE PROFIT ON THE LIQUOR BUSINESS WAS ESTIMATED BY THE CIT(A) FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH, M/ S. AMARAVATHI WINE SHOP IN ITA NO.1196/HYD/2011 DT.08.06.2012 WHE REIN IT HAS BEEN DECIDED THAT THE NET PROFIT HAS BEEN ESTIMATED @ 5% OF THE PURCHASE OR STOCK PUT FOR SALE SUBJECT TO THE CONDI TION THAT IT WILL NOT BE LESS THAN THE INCOME RETURNED BY THE ASSESSE E. THIS DETERMINATION OF INCOME FROM THE LIQUOR BUSINESS HA S BEEN ACCEPTED BY THE ASSESSEE AND THE DEPARTMENT 4. THE FIRST ISSUE ON WHICH THE ASSESSEE HAS COME UP AN APPEAL IS DETERMINATION OF RS.24,000/- AS AGAINST RS.4,868/- DECLARED BY THE ASSESSEE. BEFORE US THE ASSESSEE HAD FILED THE PRO FIT AND LOSS ACCOUNT AND THE BALANCE SHEET. IN THE ASSET SIDE F URNISHED BY THE ASSESSEE WE SEE AN ITEM `GAS FITTING AND KITCHEN IT EMS @ RS.1,36,889.65. THEY HAVE ALSO CLAIMED DEPRECIATIO N ON KITCHEN 3 ITA.NO.26/HYD/2013 M/S. MEGHANA RESTAURANT & BAR, WARANGAL ITEMS TO THE EXTENT OF RS.10,618 ON THE WDV OF RS.1 ,47,578. THIS WOULD SHOW THAT THE ASSESSEE IS ALSO DEALING WITH S OME FOOD ITEMS. THE ASSESSEE HAS NOT PROVIDED ANY INFORMATION REGAR DING THE PARTICULARS OF OTHER INCOME SHOWN AT RS.4,868/- EVE N AT THE TIME OF REMAND REPORT CALLED FOR BY THE CIT(A). THERE WAS ALSO NO SPECIFIC EXPLANATION ABOUT THE INCOME BEFORE US. THEREFORE, WE FEEL THAT THE ORDER OF CIT(A) ESTIMATING THE INCOME FROM SUPPLY O F FOOD @ RS.24,000/- IS NOT UNREASONABLE AND WE CONFIRM THE SAME. THE APPEAL OF THE ASSESSEE ON THIS ISSUE IS DISMISSED. 5. THE NEXT ISSUE ON APPEAL IS REGARDING THE ADDITI ON OF RS.33,89,827/- BEING THE AMOUNT SHOWN AS BROUGHT IN BY THE PARNERS AND CREDITED TO THEIR CAPITAL ACCOUNT. THE INDIVIDUAL PARTNERS HAVE BEEN CREDITED WITH DIFFERENT AMOUNTS. BEFORE THE AO THE ASSESSEE HAD NOT FURNISHED ANY PROOF REGARDING THE CREDITWORTHINESS OF THE PARTNERS TO INTRODUCE THIS AMOUNT. IN THE COURSE OF APPELLATE PROCEEDINGS, THE CIT(A) CALLED FOR REMAND REPORT FROM THE AO IN CONNECTION WITH THE ADDITIONAL INFOR MATION SUPPLIED BY THE ASSESSEE REGARDING THE SOURCE OF THE VARIOUS PARTNERS. WHILE IN THE REMAND REPORT THE AO HAD EXTRACTED THE EXPLA NATION FURNISHED BY THE ASSESSEE IN RESPECT OF SOURCE OF I NCOME FROM VARIOUS PARTNERS HE WAS NOT SATISFIED WITH THE COMP LETENESS OF THE EXPLANATION. THE ASSESSEE FILED INFORMATION ON 17. 11.11 AND THE AO COMPLETED HIS REMAND REPORT ON 28.2.12. THE ASSESS EE FURTHER CLARIFIED VARIOUS POINTS RAISED BY THE AO VIDE THEI R LETTER DT.18.5.12 TO THE CIT(A) EXPLAINING IN DETAIL THE SOURCE OF IN VESTMENT BY THE VARIOUS PARTNERS. THE CIT(A) DID NOT ACCEPT THE SAM E AND CONFIRMED THE ADDITION OF RS.33,89,827/- U/S 68. 4 ITA.NO.26/HYD/2013 M/S. MEGHANA RESTAURANT & BAR, WARANGAL 6. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. T HE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE US THAT A NOTHER OPPORTUNITY SHOULD BE GIVEN IN ORDER TO FURNISH THE SOURCE OF VARIOUS PARTNERS TOGETHER WITH BANK ACCOUNTS, PARTI CULARS OF SALE OF LAND BY PARTNERS ETC., 7. THE LEARNED D.R. OBJECTED TO THE PLEA OF THE LEA RNED COUNSEL FOR ASSESSEE AND RELIED ON THE DECISION OF THE HON BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. KRISHNAVENI AMMAL (198 6) 158 ITR 826 (MAD.). 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. WHILE DETERMINING WHETHER THE PARTNERS HAVE SUFFICIENT SOURCE TO MAKE AN INVESTMENT OF RS.33,89 ,827/- THE ASSESSING OFFICER SEEMS TO HAVE COME TO THE CONCLUS ION THAT THE PARTNERS HAVE NO SOURCE OF INCOME TO MAKE ANY INVES TMENT AT ALL IN THE FIRM AND ADDED THE ENTIRE AMOUNT. THE ASSESSEE HAD NOT TAKEN THE OPPORTUNITY OF EXPLAINING THE FULL DETAILS OF S OURCE OF THE PARTNERS IN THE COURSE OF ASSESSMENT PROCEEDINGS OR THE APPELLATE PROCEEDINGS. WE, THEREFORE, DISMISS THE APPEAL OF T HE ASSESSEE FOLLOWING THE RATIO OF THE DECISION IN THE CASE OF CIT VS. KRISHNAVENI AMMAL (SUPRA) WHEREIN IT HAS BEEN HELD AS FOLLOWS : JUDICIAL AUTHORITY CAN ACCEPT ANY STATEMENT OF AN ASSESSEE, WHEN THAT IS THE ONLY PIECE OF EVIDENCE AVAILABLE I N THAT PARTICULAR CASE, AND ORDER ASSESSMENT ON SUCH SOLE EVIDENCE. BUT WHEN EVEN ACCORDING TO THE ASSESSEE THERE IS OT HER DOCUMENTARY EVIDENCE OF CORROBORATIVE VALUE AND THE SAME IS WITHIN THE REACH OF THE ASSESSEE, IN SUCH A CASE TH E JUDICIAL BODY CANNOT ACT ON SUCH INTERESTED TESTIMONY OF THE ASSESSEE 5 ITA.NO.26/HYD/2013 M/S. MEGHANA RESTAURANT & BAR, WARANGAL ALONE. THE LAW OF EVIDENCE MANDATES THAT IF THE BES T EVIDENCE IS NOT PLACED BEFORE THE COURT, AN ADVERSE INFERENC E CAN BE DRAWN AS AGAINST THE PERSON WHO OUGHT TO HAVE PRODU CED IT. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 27.09.2013. SD/- SD/- (CHANDRA POOJARI) (SMT. ASHA VIJAYARAGHAVAN ) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATE 27.09.2013 VBP/- 1. M/S. MEGHANA RESTAURANT & BAR, C/O. S. VENKAT RE DDY, 1-1-110, PRASHANTH NAGAR, NIT P.O., WARANGAL 506 004. 2. ACIT, CIRCLE-1, WARANGAL 3. CIT(A)-VI, 6A, I.T. TOWERS, A.C. GUARDS, HYDERAB AD 500 004. 4. CIT-VI, HYDERABAD 5. D.R. ITAT A BENCH, HYDERABAD.