ITO, WD-32(2), KOLKATA, Kolkata V. M/s peiping Restaurant, Kolkata

ITA 440/KOL/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0586 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-12-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 14-03-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SALLONG YADEN CIT DR REVEN
• Section: 143(3); 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA A BENCH, KOLKATA [BEFORE SRI J. SUDHAKAR REDDY, HONBLE A CCOUNTANT M EMBER & SRI S.S. VISWANETHRA RAVI, HONBLE JUDICIAL MEMBER ] I .T.A. NO. 440 /KOL /201 6 ASSESSMENT YEAR: 20 11 - 12 INCOME TAX OFFICER , WARD - 32 (2), KOLKATA . .. APPELLANT PRINCIPAL COMMISSIONER OF INCOME TAX 10 - B, MIDDLETON ROW 3 RD FLOOR KOLKATA - 700 0 71 M/S. PEIPING RESTAURANT.... .. . .. .. . . RESPONDENT 14, MULLEN STREET KOLKATA 7000 20 [PAN : AADFP 4903 G] APPEARANCES BY: SHRI SANJAY BHATTACHARYA , ADVOCATE, APPEAR ED ON BEHALF OF THE ASSESSEE. SHRI SALLONG YADEN , ADDL. CIT , DR, APPEARING ON BEHALF OF THE REVENUE. DATE OF CONCLUDING THE HEARING : NOVEMBER 11 TH , 2017 DATE OF PRONOUNCING THE ORDER : DECEMBER 15 TH , 2017 O R D E R PER J. SUDHAKAR REDDY : - THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 9 , KOLKATA , (HEREINAFTER THE LD. CIT (A)), PASSED U/S 250 OF THE INCOME TAX ACT, 1961 (THE ACT), DT. 31 / 12 /201 5 , FOR THE ASSESSMENT YEAR 20 11 - 12 . 2. THE ASSESSEE IS A PARTNERSHIP FIRM AND IS IN THE BUSINESS OF RUNNING A RESTAURANT AT PARK STREET, KOLKATA. DURI NG THE COURSE OF SURVEY, CERTAIN MATERIAL WAS IMPOUNDED. THE ASSESSING OFFICER IN HIS ORDER PASSED U/S 143(3) OF THE ACT, CAME TO THE CONCLUSION THAT THE ASSESSEE HAD SUPRESSED HIS SALES. THE UNDISCLOSED SALES WERE ADDED AS INCOME. THE AMOUNT ADDED WAS RS. 46,24,230/ - . FURTHER, THE ASSESSING OFFICER WAS OF THE VIEW THAT THE ASSESSEE HAD COLLECTED SALES TAX FROM THE CUSTOMERS AND HAS NOT DEPOSITED THE SAME WITH THE GOVERNMENT AND THIS RESULTED IN A PROFIT TO THE ASSESSEE. HE MADE AN ADDITION OF RS.8,71,058/ - . FURTHER DISALLOWANCE WAS MADE U/S 40(A)(IA). 2 I.T.A. NO. 440/KOL/2016 ASSESSMENT YEAR: 2011 - 12 M/S. PEIPING RESTAURANT 2.1. AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL. 3. THE LD. FIRST APPELLATE AUTHORITY, HELD THAT THE ENTIRE TURNOVER CANNOT BE TREATED AS INCOME. HE DIRECTED THE ASSESSING OFFICER TO APPLY THE NET PROFIT RATE DISCLOSED BY THE ASSESSEE IN ITS REGULAR BOOKS OF ACCOUNT ON ITS RECORDED SALES, TO THIS SUPRESSED TURNOVER. HE REJECTED THE CONTENTI ON OF THE ASSESSEE THAT THE ASSESSING OFFICER HAS NOT FOLLOWED THE CORRECT PROCEDURE WHILE TAKING OUT THE PRINTOUT FROM THE IMPOUNDED COMPUTERS, ETC. ON THE ADDITION MADE ON ACCOUNT OF SALES TAX CALCULATED ON SUPRESSED TURNOVER AND NOT REMITTING THE SAME T O THE GOVERNMENT, THE LD. CIT(A), DIRECTED THE ASSESSING OFFICER TO CALCULATE THE NET PROFIT ON THE SAME AS IN THE CASE OF UNACCOUNTED SALES AND INCREASE THE SAME BY ANOTHER 2 PER CENT. 3.1. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. 4. AFTER HEARING R IVAL CONTENTIONS, WE UPHOLD THE FINDING OF THE LD. CIT(A) TO THE EXTENT THAT THE ENTIRE UNDISCLOSED TURNOVER CANNOT BE TREATED AS INCOME. ONLY A PERCENTAGE OF PROFIT ON THIS UNDISCLOSED TURNOVER SHOULD BE THE INCOME OF THE ASSESSEE. THUS, GROUND NO. 1 & 2 OF THE REVENUES APPEAL IS DISMISSED. 5. GROUND NO. 3 & 4, ARE AGAINST THE FINDING ON THE SALES TAX CALCULATED BY THE ASSESSEE ON UNDISCLOSED TURNOVER. THE LD. COUNSEL FOR THE ASSESSEE, VEHEMENTLY CONTENDED THAT NO SALES - TAX IS COLLECTED ON SUPRESSED TURN OVER. HE FILED CERTAIN PAPERS IN SUPPORT OF HIS CONTENTION. 5.1. WE FIND THAT THE ASSESSING OFFICER, AFTER EXAMINING THE IMPOUNDED MATERIAL, BOOKS OF ACCOUNT AND CONTENTIONS OF THE ASSESSEE CAME TO A CONCLUSION THAT THE TOTAL TAXES RECEIVED BY THE ASSESSE E FROM THE CUSTOMERS STANDS AT RS.13,56,468/ - . OUT OF THIS, ONLY RS.4,85,410/ - , HAS BEEN PAID BY THE ASSESSEE TO THE GOVERNMENT. THE DIFFERENCE OF RS.8,71,058/ - , IS ADDED AS INCOME OF THE ASSESSEE. THE ARGUMENT OF THE ASSESSEE THAT NO SALES TAX HAS BEEN CO LLECTED BY THE ASSESSEE, IS NOT SUPPORTED BY ANY DOCUMENT OR ANY EVIDENCE. THUS, THIS CONTENTION OF THE ASSESSEE IS REJECTED. THE LD. CIT(A), IN OUR VIEW, WAS IN ERROR IN HOLDING THAT ONLY A PERCENTAGE OF SUCH SALES TAX COLLECTED, SHOULD BE TREATED AS INCO ME OF THE ASSESSEE. THE SALES TAX AS AND WHEN PAID WOULD BE ALLOWED AS AN EXPENDITURE . THE DECISION TO TAX ONLY A SMALL PERCENTAGE OF THE 3 I.T.A. NO. 440/KOL/2016 ASSESSMENT YEAR: 2011 - 12 M/S. PEIPING RESTAURANT SALES TAX COLLECTED AS INCOME OF THE ASSESSEE IS FACTUALLY INCORRECT. THUS, WE REVERSE THE FINDING OF THE LD. CIT(A) A ND ALLOW GROUND NO. 3 & 4, OF THE REVENUE. 6. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED IN PART. KOLKATA, THE 15 TH DAY OF DECEMBER , 2017. SD/ - SD/ - [ S.S. VISWANETHRA RAVI ] [ J. SUDHAKAR REDDY ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 15 .1 2 .2017 {SC SPS} COPY OF THE ORDER FORWARDED TO: 1. INCOME TAX OFFICER, WARD - 32(2), KOLKATA PRINCIPAL COMMISSIONER OF INCOME TAX 10 - B, MIDDLETON ROW 3 RD FLOOR KOLKATA - 700 071 2. M/S. PEIPING RESTAURANT 14, MULLEN STREET KOLKATA 7000 20 3. CIT(A) - 4. CIT - , 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY HEAD OF OFFICE/ D .D.O. ITAT, KOLKATA BENCHES