USHA ASHOKKUMAR HEGDE, THANE V. ITO, WARD-2(3), KALYAN

ITA 4488/MUM/2013

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3303 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 26-02-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 04-06-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUMIT KUMAR
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F, MUMBAI BEFORE SHRI JASON P. BOAZ ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, JUDICIAL MEMBER ITA NO. 4488/MUM/2013 (ASSESSMENT YEAR : 2008-09) USHA ASHOK KUMAR HEGDE, HOTEL GARUDA BAR & RESTAURANT, OPP. TELEPHONE EXCHANGE, LADI NAKA, AMBERNATH PAN:ABHPH 8068F ... APPELLANT VS. THE INCOME TAX OFFICER, WARD 2(3), MOHAN PRIDE, NEAR PODDAR SCHOOL, WAILE NAGAR, KHADAKPADA, KALYAN(W) 421 301 .... RESPONDENT APPELLANT BY : NONE RESPONDENT BY : SHRI SUMIT KUMAR DATE OF HEARING : 27/01/2016 DATE OF PRONOUNCEMENT : 29/01/2016 ORDER PER JASON P. BOAZ, A.M: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE CIT(APPEAL)-II, THANE DATED 2/5/2013 FOR ASSESSMENT YEAR 2008-09. 2. THIS CASE WAS FIXED FOR HEARING ON ATLEAST TO OC CASIONS FROM 17/9/2014 TILL TODAY I.E. 27/1/2016 AND HAS BEEN AD JOURNED BY THE BENCH AT THE INSTANCE OF THE LD. REPRESENTATIVE FOR THE ASSESSEE SIX TIMES. TODAY I.E. 27/01/2016 WHEN THE CASE WAS CAL LED OUT FOR HEARING, 2 ITA NO. 4488/MUM/2013 (ASSESSMENT YEAR : 2008-09) NONE WAS PRESENT ON BEHALF OF THE ASSESSEE, BUT THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE WAS PRESENT. IN THE CIRCUMSTANCES AS LAID OUT ABOVE, IT APPEARS TO US THAT THE ASSESSEE IS NOT INTERESTED IN PURSUING THIS APPEAL. THIS APPEAL IS, THEREFORE, D ISPOSED OFF WITH THE HELP OF THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE AND THE MATERIAL ON RECORD. 3. IN THE FACTS OF THE CASE, BRIEFLY, ARE AS UNDER: - 3.1 THE ASSESSEE, PROPRIETOR OF HOTEL GARUDA BAR & RESTAURANT, FILED HER RETURN OF INCOME FOR ASSESSMENT YEAR 2008-09 ON 27/2/2009 DECLARING INCOME OF RS.63,441/-. THE RETURN WAS PR OCESSED UNDER SECTION 143(1) OF THE INCOME TAX ACT, 1961 ( IN SHO RT THE ACT) AND THE CASE WAS SUBSEQUENTLY TAKEN UP FOR SCRUTINY. THE A SSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT VIDE ORDE R DATED 16/12/2010, WHEREIN THE INCOME OF THE ASSESSEE WAS ASSESSED AT RS.4,94,754/- IN VIEW OF THE FOLLOWING ADDITIONS:- (I) ADDITION ON ACCOUNT OF LOW N.P - RS. 3 ,47,040/- (II) ADDITION ON ACCOUNT OF UNDISCLOSED S.B. INTEREST OF MINOR CHILD U/S.68 - RS. 84,273/- 3.2 AGGRIEVED BY THE ORDER OF ASSESSMENT FOR ASSESS MENT YEAR 2008- 09 DATED 16/12/2010, THE ASSESSEE PREFERRED AN APPE AL BEFORE THE CIT(APPEALS)-II, THANE. THE LD. CIT(A) DISPOSED OF F THE APPEAL VIDE ORDER DATED 2/5/2013 ALLOWING THE ASSESSEE PARTIAL RELIEF. 3 ITA NO. 4488/MUM/2013 (ASSESSMENT YEAR : 2008-09) 4. BEING AGGRIEVED BY THE ORDER OF THE CIT(APPEALS) -II, THANE DATED 2/5/2013 FOR ASSESSMENT YEAR 2008-09, THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL RAISING THE FOLLOWING GR OUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LEARNED AO HAS ERRED PASSING A ORDER U/ S. 143(3) BASED ON A NON EST RETURN OF INCOME IN CASE OF THE APPELLANT AND AS SUCH THE ASS ESSMENT ORDER IS AB INITIO VOID AND BAD IN LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LEANED AO HAS ERRED IN NOT APPLYING THE PROVISIONS OF SECT ION 44AF TO THE APPELLANT WHO WAS ENGAGED IN RETAIL TRADE AND THE LEARNED CIT HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF AO IN ASSESSING THE APPELLANT AT A NET PROFIT RATE OF 12% ON THE SALES OF RS. 342068 9/- FROM RETAIL TRADE AND NOT AT THE RATE OF 5% AS PROVIDED IN SECTION 44AF. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LEARNED AO HAS ERRED IN ASSESSING RS. 84273/- ON ACCOUNT OF INTEREST EARNED BY THE DAUGHTER OF THE APPELLANT IN THE HANDS OF THE APPEL LANT THOUGH THE DAUGHTER HAD ATTENDED MAJORITY ON 1.4.2008 LE THE FIRST DAY OF AY 2008-09. 5. APPELLANT CRAVES LEAVE TO ADD, DELETE OR SUBSTIT UTE ANY OF THE ABOVE GROUND OF APPEAL. 5. THE G ROUNDS RAISED AT S.NO.1 AND5 OF THE ASSESSEES APPEAL BEING GENERAL IN NATURE, NO ADJUDICATION IS CALLED FOR THEREON. 6.1 IN THE GROUNDS AT S.NO.2 AND 3 (SUPRA), THE ASSESSEE ASSAILS THE ORDER OF THE LD. CIT(A) FOR CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN ASSESSING HER AT A NET PROFIT OF 12% ON SALES RA THER THAN @ 5% AS PROVIDED IN SECTION 44AF OF THE ACT AS APPLICABLE T O THE ASSESSEE. 6.2.1 IN THIS REGARD WE HAVE HEARD THE LD. DEPARTME NTAL REPRESENTATIVE FOR THE REVENUE IN SUPPORT OF THE IM PUGNED ORDER OF THE LD. CIT(A) ON THIS ISSUE AND PERUSED AND CAREFU LLY CONSIDERED THE MATERIAL ON RECORD. IN THE IMPUGNED ORDER, AFTER C ONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE LD. CIT(A) AT PARA 4.1 AND 4.1.1., THEREOF HAS HELD AS UNDER:- 4 ITA NO. 4488/MUM/2013 (ASSESSMENT YEAR : 2008-09) 4.1 AS REGARDS APPLICABILITY OF S% NET PROFIT RA TE ON TOTAL TURNOVER OF RS. 34,20,689/- U/S. 44AF OF THE ACT AS AGAINST NET PRO FIT RATE OF 12% APPLIED BY THE A.O., I FIND THAT THE CASE OF APPELLANT IS NOT COVERED U/S. 44AF OF THE ACT BECAUSE THE BUSINESS OF APPELLANT IS NOT PURELY TRA DING IN NATURE. IT INVOLVES CONSUMPTIONS OF VARIOUS ITEMS AND PREPARATION OF FO OD AS PER THE REQUIREMENTS OF THE CLIENTS AND HENCE IT IS NOT SIM PLY A TRADING OF THE ITEMS. IT IS A FACT THAT THE PROFIT MARGIN IN THE RETAIL B USINESS OF THE LIQUOR PARTICULARLY SERVED IN THE RESTAURANT AND ALSO ON T HE FOOD SERVED IN RESTAURANT IS VERY HIGH. THE A.O HAS APPLIED NET PR OFIT RATE OF 12% CONSIDERING NET PROFIT RATE DISCLOSED IN EARLIER TH REE YEARS WHICH IS AS UNDER:- A.Y. 2005-06 : 12.39% A.Y. 2006-07 : 12.45% A.Y. 2007-08 : 13.03% 4.1.1 SINCE THE NET PROFIT RATE HAS BEEN APPLIED BY A.O CONSIDERING THE HISTORY OF THE APPELLANT HERSELF, IN MY CONSIDERED VIEW, TH E DECISION OF A.O. IS WELL REASONED AND WELL FOUNDED. THEREFORE, I CONFIRM THE NET PROFIT RATE OF 12% RESULTING INTO AN ADDITION OF RS.3,47,040/-. ACCOR DINGLY, APPELLANT DOES NOT DESERVE ANY RELIEF ON THIS ACCOUNT AND HENCE FAILS IN RESPECT OF GROUND NO.2. 6.2.2 WE FIND, AS PER THE MATERIAL ON RECORD AND TH E SUBMISSIONS OF THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE THA T THE ASSESSEE HAS FAILED TO CONTROVERT WITH EVIDENCE THE FINDINGS OF THE LD. CIT(A) IN THE IMPUGNED ORDER CONFIRMING THE ADDITION OF RS.3,47,0 40/- BY THE ASSESSING OFFICER ON APPLICATION OF PROFIT @ 12.0% ON THE BASIS OF THE PROFITS DECLARED BY THE LAST THREE YEARS WHICH ARE FROM 12.39% TO 13.03%. WE CONSEQUENTLY DISMISS GROUND NOS. 2 AND 3 RAISED BY THE ASSESSEE. 7.1 IN GROUND NO.4 THE ASSESSEE ASSAILS THE FINDINGS OF THE AUTHORITIES BELOW IN ASSESSING THE BANK INTEREST OF RS.84,273/- EARNED BY THE ASSESSEES DAUGHTER ON THE GROUND THAT THE S AID DAUGHTER HAD ATTAINED MAJORITY ON 1/4/2008, I.E. FIRST DAY OF AS SESSMENT YEAR 2008- 09. 5 ITA NO. 4488/MUM/2013 (ASSESSMENT YEAR : 2008-09) 7.2.1 IN THIS REGARD, WE HAVE HEARD THE LD. DEPARTM ENTAL REPRESENTATIVE FOR THE REVENUE IN SUPPORT OF THE IM PUGNED ORDER OF LD. CIT(A) AND CONSIDERED THE MATERIAL ON RECORD. IN THE IMPUGNED ORDER, THE LD.CIT(A) AFTER CONSIDERING THE AVERMENTS OF TH E ASSESEE HAS HELD AS UNDER AT PARA 4.2, THEREOF:- 4.2. IN RESPECT OF CLUBBING OF INTEREST INCOME OF MINOR AT RS. 84,273/-, I FIND THAT THERE IS NO DISPUTE ABOUT QUANTUM OF INCOME. S INCE THE DAUGHTER OF APPELLANT BECAME MAJOR ONLY ON 24/03/2008, THE INCO ME ACCRUING TO HER FROM 1ST APRIL, 2007 TO 24TH MARCH,2008 WAS PERTAIN ING TO THE PERIOD OF HER MINORITY. THEREFORE, THE SAME IS REQUIRED TO BE CLU BBED U/S. 64 IN THE HANDS OF APPELLANT. THE A.O. IS DIRECTED ACCORDINGLY TO W ORK OUT THE ADDITION AND ALLOW CONSEQUENTIAL RELIEF' APPELLANT, THUS, SUCCEE DS PARTLY IN RESPECT OF GROUND NO. 3. 7.2.2. WE FIND FROM THE SUBMISSIONS OF THE LD. DEPA RTMENTAL REPRESENTATIVE FOR THE REVENUE AND MATERIAL ON REC ORD, THAT THE ASSESSEE HAS FAILED TO CONTOVERT WITH ANY EVIDENCE THE FINDINGS OF THE LD. CIT(A) IN THE IMPUGNED ORDER ON THE ISSUE OF C LUBBING OF BANK INTEREST EARNED BY THE MINOR DAUGHTER OF THE ASSESS EE FOR THE RELEVANT PERIOD IN THE YEAR UNDER CONSIDERATION IN THE HAND S OF THE ASSESSEE. CONSEQUENTLY, WE DISMISS GROUND NO.4 RAISED BY THE ASSESSEE. 8. IN THE RESULT, THE ASSESSEES APPEAL FOR ASSESSM ENT YEAR 2008-09 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29/01/2016 SD/- SD/- (SANDEEP GOSAIN) (JASON P. BOAZ) JUDICIAL MEMBER ACCOUNTANT ME MBER MUMBAI, DATED 29/01/2016 VM , SR. PS 6 ITA NO. 4488/MUM/2013 (ASSESSMENT YEAR : 2008-09) COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI