KEKI IRANI, MUMBAI V. ACIT CEN CIR 20, MUMBAI

ITA 6422/MUM/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48683 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 14-12-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N K BALODIA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A , MUMBAI BEFORE SHRI S. V. MEHROTRA, A.M. AND SHRI R.S. PADV EKAR, J.M. I.T.A. NO.: 6422/MUM/2009 (ASSESSMENT YEAR : 2004-05) I.T.A. NO.: 6423/MUM/2009 (ASSESSMENT YEAR : 2005-06) MR. KEKI IRANI 1 ST LANE, OFF. S. V. ROAD, ANDHERI (W), MUMBAI-400 058 PAN NO: AAAPI1910R VS. ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-20, MUMBAI (APPELLANT) (RESPONDENT) I.T.A. NO.: 6645/MUM/2009 (ASSESSMENT YEAR : 2004-05) I.T.A. NO.: 6646/MUM/2009 (ASSESSMENT YEAR : 2005-06) M/S. MERWAN CONFECTIONERS & BAKERS 1 ST LANE, OFF. S. V. ROAD, ANDHERI (W), MUMBAI-400 058 PAN NO: AAGFM5046L VS. ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-20, MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI HARIDAS BHAT RESPONDENT BY : SHRI N.K. BALODIA ORDER PER R. S. PADVEKAR (J.M.) : THIS BATCH OF FOUR APPEALS OF THE TWO DIFFERENT A SSESSEES PERTAINS TO A.YRS. 2004-05 AND 2005-06. BOTH THE ASSESSEES HAV E CHALLENGED THE RESPECTIVE IMPUGNED ORDERS OF THE LD. CIT(A)39, MU MBAI. IN BOTH THESE CASES ALL FACTS AND ISSUES ARE IDENTICAL, HENCE TH ESE APPEALS ARE DISPOSED OFF BY THIS COMMON ORDER. 2 2. WE FIRST TAKE THE APPEALS OF THE APPELLANT SHRI KEKI IRANI BEING I.T.A. NOS. 6422/MUM/2009 AND 6423/MUM/2009 IN BOTH THESE APPEALS, THE ISSUE IS WHETHER THE LD. CIT(A) JUSTIFY IN CONFIRMI NG THE ADDITION OF ` 5,46,324/- IN THE A.Y. 2004-05, AND `. 4,46,950/- IN THE A.Y. 2005-06 TOWARDS THE G.P ON SUPPRESSED SALES. THE FACTS WHIC H REVEALED FROM THE RECORDS ARE AS UNDER:- 3. THE ASSESSEE IS IN THE TRADING OF BAKERY PRODUCT S. THE ASSESSEES BUSINESS IS ONE OF THE GROUP CONCERNS IN THE MERWA N GROU OF BAKERS AND CONFECTIONERS, AGAINST WHICH THE SEARCH AND SEIZUR E OPERATION U/S.132 OF THE IT ACT WAS CONDUCTED. THE ASSESSEES BUSINESS P REMISES WERE ALSO COVERED IN THE SAID SEARCH ACTION. THE ASSESSEE IS A PROPRIETOR OF M/S. PERSIAN BAKERY AND RECEIVES THE COMPENSATION FROM M /S. MERWAN CONFECTIONERS & BAKERS, THIS IS ANOTHER APPELLANT I N THIS BATCH OF APPEALS. THE ASSESSEE STARTED THE NEW BUSINESS IN THE NAME A ND STYLE AS M/S. MERWAN CAKE SHOP, IN THE PREVIOUS YEAR 2002-03 RELE VANT TO A.Y.2004-05. DURING THE COURSE OF SEARCH ACTION, TWO DIFFERENT C OMPUTER PROGRAMS WERE FOUND AND ON INVESTIGATION AND ANALYZING THE DATA O F THE COMPUTERS, HUGE SUPPRESSION ON THE SALE RECEIPTS WERE UNCOVERED. IT WAS FOUND THAT THERE WAS A DIFFERENCE IN THE DATA AT THE SALE COUNTER OF THE COMPUTER I.E. VENDING MACHINE. MOREOVER, THERE WAS A DISCREPANCY IN THE F IGURE OF SALES RECORDED IN THE COMPUTER AS WELL AS THE AMOUNT RENDERED BY T HE CUSTOMER AS WELL AS THE AMOUNT RETURNED TO THE CUSTOMER IN THE VENDING MACHINE. 4. DURING THE SEARCH ACTION IT WAS NOTICED THAT NO PRODUCTION RECORD WAS MAINTAINED BY THE ASSESSEES GROUP IN THEIR FACTORY . THE SINGLE COPY OF THE DELIVERY CHALLAN WAS ISSUED AT THE TIME OF SENDING GOODS TO THE SHOP AND THE CHALLANS WERE DESTROYED AT THE END OF THE DAY. IN T HE COMPUTER, THE ASSESSEE WAS MAINTAINING TWO FILES AND THE SALES WERE STORED IN THE DIFFERENT DATA. IT WAS NOTICED THAT THE VENDING MACHINES IN THE ASSESS EES SHOP WAS CONNECTED TO MAIN COMPUTER SERVER INSTALLING THE OF FICE OF THE ASSESSEE GROUP. IT IS PERTINENT TO NOTE THAT PRODUCT MANUFAC TURED BY M/S. MERWAN CONFECTIONERS & BAKERS, ANOTHER APPELLANT WERE SOLD THROUGH ASSESSEE IN 3 HIS RETAIL SHOPS. THE BAKERY PRODUCTS WERE MANUFACT URED AS PER THE REQUIREMENT OF THE ASSESSEE. THE AO HAS IN DETAIL N ARRATED THE FACTS IN THE ASSESSMENT ORDERS AS FOUND DURING THE COURSE OF THE SEARCH AND SUBSEQUENT INVESTIGATION. AS PER THE FACTS ON RECOR D, M/S. MERWAN CONFECTIONERS & BAKERS ARE MANUFACTURING THE BAKERY PRODUCTS AND THE SAME ARE SOLD BY THE ASSESSEE IN HIS RETAIL SHOP NO .9 AND SHOP NOS. 12/13, MADHAVNAGAR, S.V. ROAD, ANDHERI(W), MUMBAI. SO FAR AS THE A.Y. 2004-05 IS CONCERNED, THE ACTUAL SALES AS PER THE COMPUTER BACK UP WERE FOUND AT `. 3,15,54,775/-, BUT THE ASSESSEE HAS ONLY RECORDED T HE SALES AT `. 1,66,87,071/-. SO FAR AS A.Y. 2005-06 IS CONCERNED, AS PER THE COMPUTER BACK UP AVAILABLE IN CONSEQUENCE OF THE SEARCH ACTI ON FOR THE PERIOD 01.04.2004 TO 04.04.2004, THE SALES WERE RECORDED A T `. 75,69,237/-, AND FOR THE SAME PERIOD THE ASSESSEE HAS DECLARED THE SALES OF ` `. 47,05,213/-. THE AO, THEREFORE, WORKED OUT THE SUPPRESSED GP ON THE SALES IN THE A.Y. 2004- 05 AT 21% ADOPTING THE FIGURE DECLARED BY THE ASSES SEE AND MADE AN ADDITION OF ` `. 5,46,324/-. 5. IN THE A.Y. 2005-06, AO WORKED OUT THE SUPPRESSE D GP ON THE SALES BY ADOPTING THE GP AT 22% WHICH WAS WORKED OUT AT `. 6,30,085/- ON THE SUPPRESSED SALES OF `. 28,64,024/-. AS THE ASSESSEE HAS DECLARED THE ADDITIONAL INCOME OF `. 1,83,135/-, HENCE, THE ADDITION WAS RESTRICTED TO `. 4,46,950/-. THE ASSESSEE CHALLENGED THE ADDITION BE FORE THE LD.CIT(A), BUT WITHOUT SUCCESS. NOW, THE ASSESSEE IS IN APPEAL BEF ORE US. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORDS. THE LD. COUNSEL TRIED TO JUSTIFY THE DIFFERENCE IN THE COMP UTER ATTACHED WITH THE VENDING MACHINE BY SAYING THAT AT THE TIME OF THE S EARCH, THE VENDING MACHINE WERE NOT PROPERLY WORKING. THE LD. COUNSEL ALSO FILED THE XEROX COPY OF THE PRINT OUT OF THE VENDING MACHINES AND FROM T HE SAME IT IS SEEN THAT THERE IS A DIFFERENCE IN FIGURES, MORE PARTICULARL Y IN RESPECT OF THE AMOUNT OF BILL, AMOUNT RENDERED AND AMOUNT WRITTEN. IT WAS DE TECTED THAT THE COMPUTER PROGRAM WAS MADE IN SUCH A WAY THAT AT NIG HT AT 11.30 P.M., THE COMPUTER AUTOMATICALLY MODIFIED THE SALES FIGURE AS RECORDED IN THE BOOKS OF ACCOUNTS, WHICH WAS LESSER THAN THE ACTUAL SALES. N OWHERE, IT IS DENIED 4 BEFORE US ALSO THAT THE ASSESSEE HAD TWO COMPUTERS BACK UP. WE ARE UNABLE TO ACCEPT THE PLEA OF THE ASSESSEE THAT THE VENDING MACHINE WAS NOT WORKING. WE, THEREFORE, HOLD THAT INCOME ON SUPPRES SED OF THE SALES DETECTED BY THE DEPARTMENT WAS AS PER THE EVIDENCE OF THE BACK UP FOUND IN THE COMPUTERS. THE ALTERNATE CONTENTION OF THE LD. COUNSEL IS THAT THE ASSESSEE WAS ALSO SELLING THE PRODUCT, PURCHASED FR OM OUTSIDE PARTIES. THIS IS A QUESTION OF FACT AND WE FIND THAT NOTHING IS O N RECORD TO SUPPORT THE PLEA OF THE ASSESSEE. WE FIND NO MERIT IN THE APPEA LS FILED BY THE ASSESSEE FOR BOTH THE ORDERS. ACCORDINGLY, BOTH THE APPEALS ARE DISMISSED. 7. NOW, WE TAKE UP THE APPEALS OF OTHER APPELLANT N AMELY M/S. MERWAN CONFECTIONERS & BAKERS BEING ITA NOS. 6645/MUM/2009 & 6646/MUM/2009. BOTH THESE APPEALS ALSO PERTAIN TO A .Y. 2004-05 AND 2005-06. THE ASSESSEE FIRM IS ENGAGED IN THE MANUFA CTURING OF BAKERY PRODUCTS. SEARCH WAS TAKEN AGAINST THE ASSESSEE AND ASSESSMENTS WERE COMPLETED U/S.153A. DURING THE COURSE OF THE SEARCH , IT WAS DETECTED THAT WITH THE HELP OF THE SPECIAL COMPUTER PROGRAM, THE ASSESSEE WAS SUPPRESSING THE SALES. NO PRODUCTION RECORD WAS MAI NTAINED BY THE ASSESSEE IN HIS FACTORY. THE PRODUCTS MANUFACTURED WERE SENT TO THE SHOPS WITH THE SINGLE DELIVERY CHALLAN AND THE DELIVERY C HALLANS WERE DESTROYED ON THE SAME DAY. THE ASSESSEE WAS MAINTAINING THE TWO DIFFERENT FILES IN THE COMPUTER, RECORDING THE SALES AND OTHER TRANSACTION S. THE PRODUCTS MANUFACTURED BY THE ASSESSEE WERE SOLD THROUGH M/S. MARWAN CAKE SHOP AS WELL AS THROUGH KEKI ERANI. ALL THE VENDING MACH INES WERE CENTRALLY CONNECTED TO THE COMPUTER SERVER KEPT IN THE OFFICE AT SHOP NO.9. ON THE BASIS OF THE COMPUTER BACK UP, AS PER THE ADMISSION GIVEN BY SHRI KEKI IRANI IN THE STATEMENT RECORDED ON 11.08.2004, IT W AS FOUND THAT THE DETAILED RECORDS OF SALES WERE MODIFIED AUTOMATICAL LY BY THE COMPUTER AT NIGHT, AND ONLY THE MODIFIED SALES WERE RECORDED IN THE ACCOUNTS. AS PER THE COMPUTER BACK UP FOR THE A.Y. 2004-05, IT WAS DETEC TED THAT THE ASSESSEE FIRM HAS DETECTED THE SALES TO THE EXTENT OF `. 1,17,45,486/-. THE ASSESSEE DECLARED THE ADDITIONAL INCOME OF `. 24,27,212/-, IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S.153A. CONSIDERING T HE ADDITIONAL INCOME DECLARED, THE AO MADE AN ADDITION OF `. 5,09,160/-, WHICH WAS TOWARDS THE 5 GP ON SUPPRESSED SALES. SAME WAY IN THE A.Y.2005-06 AS THE ASSESSEE HAS DECLARED THE ADDITION OF `. 1,41,808/-, THE AO MADE AN ADDITION OF `. 3,94,337/-, TOWARDS THE GP ON SUPPRESSED SALES. THE ASSESSEE CHALLENGED THE ADDITIONS BEFORE THE LD. CIT(A), BUT WITHOUT SU CCESS. NOW, THE ASSESSEE IS IN APPEAL BEFORE US. 8. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD S. THE ASSESSEE FIRM IS MANUFACTURING THE BAKERY PRODUCTS WHICH WERE SOL D THROUGH TWO SHOPS OF THE SAME GROUP. DURING THE COURSE OF SEARCH ACTION, IT WAS FOUND THAT THE VENDING MACHINES OF THE CAKE SHOPS WERE CONNECTED T O THE MAIN COMPUTER AND THE COMPUTER PROGRAM WAS DESIGNED IN SUCH A MAN NER THAT AT NIGHT THE COMPUTER WAS AUTOMATICALLY MODIFIED THE SALES FIGUR ES, AND MODIFIED SALES FIGURES WERE TRANSFERRED TO THE DATA FILES OF BOOKS OF ACCOUNTS. ALL FACTS ARE IDENTICAL AS IN THE CASE OF KEKI IRANI BEING ITA NO S. 6422/MUM/2009 AND 6423/MUM/2009. IN THIS CASE, THE GP RATIO DECLARED BY THE ASSESSEE WAS ADOPTED, AND THE ADDITION IS RESTRICTED ONLY TO THE G.P. ON THE SUPPRESSED SALES. IT IS ALSO SEEN THAT TO THE EXTENT OF THE AD DITIONAL INCOME DECLARED, THE AO HAS GIVEN THE SET OFF. NOWHERE IT IS DENIED THA T THE ASSESSEE INDULGED IN FABRICATING THE SALES FIGURE BY USING THE COMPUTER SOFTWARE. AFTER GIVING OUR ANXIOUS CONSIDERATION TO THE TOTALITY OF THE FACT, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDERS OF THE LD.CIT (A)S, FOR BOTH THE A.Y. 2004-05 AND 2005-06. WE ACCORDINGLY, DISMISS THE GROUNDS TAKEN BY THE ASSESSEE. 9. IN THE RESULT, ALL THE APPEALS OF BOTH ASSESSEE S ARE DISMISSED. ORDER PRONOUNCED ON THIS 27 TH DAY OF APRIL, 2011. SD/- SD/- ( S.V. MEHROTRA ) (R.S. P ADVEKAR ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DT: 27 TH APRIL, 2011 6 COPY FORWARDED TO : PRONOUNCED IN THE OPEN COURT ON 27.04.2011 1. THE APPELLANT, 2. THE RESPONDENT, ( RAJENDRA SINGH ) ( R.S. PADVEKA R) 3. THE C.I.T. A.M. J. M. 4. CIT (A) 5. THE DR, A - BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ROSHANI