Rajiv Hotel (I) Pvt. Ltd., Jalgaon V. Asst. CIT, Circle-2, Jalgaon

ITA 696/PUN/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 85007 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 25-09-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 18-03-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P S NAIK
• Keywords: Bogus purchase
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.696/PN/2013 (ASSESSMENT YEAR : 2007-08) RAJIV HOTEL (I) PVT. LTD., RAJGAD GHAT ROAD, CHALISGAON:PIN 424101 PAN : AABCR0896B . APPELLANT VS. ASST. COMMISSIONER OF INCOME TAX, CIRCLE-2, JALGAON. . RESPONDENT ASSESSEE BY : NONE DEPARTMENT BY : MR. P. S. NAIK DATE OF HEARING : 2 5-09-2014 DATE OF PRONOUNCEMENT : 26-09-2014 ORDER PER G. S. PANNU, AM THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED AG AINST AN ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-II, NASHIK DATED 10.01.2013 WHICH, IN TURN, HAS ARISEN FROM AN ORDER DATED 17.1 2.2009 PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT) PERTAINING TO THE ASSESSMENT YEAR 2007-08. 2. WHEN THE APPEAL WAS CALLED FOR HEARING, THE APPE LLANT DID NOT APPEAR IN PERSON OR THROUGH ANY AUTHORIZED REPRESENTATIVE, IN SPITE OF SERVICE OF NOTICE. IT IS REVEALED FROM RECORD THAT EVEN ON EARLIER OCC ASIONS ON 02.04.2014 AND 26.06.2014 WHEN THE APPEAL WAS FIXED FOR HEARING, T HE APPELLANT DID NOT PUT IN ANY APPEARANCE. CONSIDERING THE AFORESAID, THE APP EAL WAS HEARD EXPARTE QUA THE APPELLANT AFTER HEARING THE RESPONDENT REVENUE ON MERITS, IN TERMS OF RULE 24 OF THE APPELLATE TRIBUNAL RULES, 1964. 3. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE REA D AS UNDER: ITA NO.696/PN/2013 A. Y. : 2007-08 1. ON THE FACTS AND IN THE PREVAILING CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE ADDITION OF RS.9,58,254/- OUT OF TOTAL ADDITION OF RS.14,00,718 /- MADE U/S.41(1), THOUGH ADMITTED THAT THE A.O IS NOT JUSTIFIED IN AP PLYING PROVISION OF SECTION 41(1) OF THE I T ACT. THEREFORE, ENTIRE ADD ITION MAY PLEASE BE DELETED. 2. ON THE FACTS AND IN THE PREVAILING CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE ADDITION OF RS.9,58,254/- OUT OF TOTAL ADDITION OF RS.14,00,718 /-, GIVING FINDING THAT IT IS A BOGUS PURCHASES, WITHOUT BRINGING ANY DIRECT, INDIRECT OR CORROBORATIVE EVIDENCE ON RECORD AND THOUGH APPELLA NT MAINTAINED ALL PURCHASE AND SALE QUANTITY STOCK REGISTER WHICH IS UNDER OBLIGATION AS PER STATE EXCISE ACT / RULES IN FORM OF FLR-3 [SEE-RULE 15(1)] AND BOOKS OF ACCOUNTS ARE AUDITED. THEREFORE , FINDING OF CIT(A) MAY PLEASE BE VACATED AND ENTIRE ADDITION MA Y PLEASE BE DELETED. 3. ON THE FACTS AND IN THE PREVAILING CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE ADDITION OF RS.1,00,000/- OUT OF TOTAL ADDITION OF RS.5,00,000/ - MADE ON AD-HOC BASIS FOR NON MAINTENANCE OF STOCK IN REGARDS TO ED IBLE ITEM (WHERE IN TOTAL TURNOVER WAS SHOWN AT RS.5,99,427) AND ON ASSUMING THAT INFLATION OF EXPENDITURE ON ACCOUNT OF THESE ITEMS CANNOT BE RULED OUT. THEREFORE, ADDITION CONFIRMED ON ASSUMPTION AN D PRESUMPTION BASIS MAY PLEASE BE DELETED. 4. THE APPELLANT IS ENGAGED IN THE BUSINESS OF RUNN ING A HOTEL, RESTAURANT AND PERMIT ROOM AT CHALISGAON. FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, IT FILED RETURN OF INCOME DECLARING A LOSS OF RS.11,50,505/- WHICH WAS SUBJECT TO SCRUTINY ASSESSMENT, WHEREBY THE TOT AL INCOME OF THE ASSESSEE WAS DETERMINED AT A POSITIVE FIGURE OF RS.21,87,930 /- AND AN ORDER PASSED ON 17.12.2009. 5. IN SO FAR AS THE ISSUE RAISED BEFORE US BY WAY O F GROUNDS OF APPEAL NO.1 AND 2 IS CONCERNED, IT RELATES TO AN ADDITION OF RS.9,58,254/- SUSTAINED BY THE CIT(A) OUT OF AN ADDITION OF RS.14,00,718/- MAD E BY THE ASSESSING OFFICER. IN THIS CONTEXT, BRIEF FACTS ARE THAT THE ASSESSING OFFICER MADE AN ADDITION U/S 41(1) OF THE ACT AMOUNTING TO RS.14,00,718/- WITH R ESPECT TO THE CREDITOR LIABILITIES, WHICH AS PER THE ASSESSING OFFICER HAD CEASED TO EXIST. THE CIT(A) HELD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED I N APPLYING THE PROVISIONS OF SECTION 41(1) OF THE ACT WITH RESPECT TO THE IMPUGN ED SUM BECAUSE THERE WAS NO REMISSION OR CESSATION OF THE LIABILITY. INSTEA D, IN TERMS OF HIS ANALYSIS IN ITA NO.696/PN/2013 A. Y. : 2007-08 PARA 6 OF THE IMPUGNED ORDER, HE FOUND THAT THERE W AS NO MATERIAL TO SUPPORT THE GENUINENESS OF THE CERTAIN CREDITORS AMOUNTING TO RS.9,58,254/-. THE CIT(A) CAME TO SUCH A CONCLUSION AFTER CONSIDERING THE MATERIAL ON RECORD AS WELL AS THE REMAND REPORT OF THE ASSESSING OFFICER AND THE COMMENTS OF THE ASSESSEE THEREOF. THE CIT(A) HELD THAT THE PURCHAS ES REFLECTED BY SUCH AMOUNT OF CREDITOR BALANCES, ARE TO BE TREATED AS B OGUS. ACCORDINGLY, HE RETAINED AN ADDITION TO THE EXTENT OF RS.9,58,254/- AS BOGUS PURCHASES AND DELETED THE BALANCE. THE ASSESSEE IS IN APPEAL BEF ORE US AGAINST THE AFORESAID DECISION OF THE CIT(A). 6. WE FIND THAT THE CIT(A) MADE NO ERROR IN COMING TO THE SAID CONCLUSION HAVING REGARD TO THE MATERIAL ON RECORD BEFORE HIM. THE DECISION OF THE CIT(A) IS HEREBY AFFIRMED. THUS, ON THIS GROUND, THE ASSE SSEE FAILS. 7. ANOTHER ISSUE RAISED BY THE ASSESSEE IS AGAINST THE ACTION OF THE CIT(A) IN SUSTAINING THE ADDITION OF RS.1,00,000/- OUT OF A TOTAL ADDITION OF RS.5,00,000/- MADE BY THE ASSESSING OFFICER ON ADHO C BASIS FOR NON- MAINTENANCE OF STOCK IN REGARD TO EDIBLE ITEMS. 8. IN COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSI NG OFFICER MADE AN ADDITION OF RS.5,00,000/- ON ADHOC BASIS ON ACCOUNT OF NON-MAINTENANCE OF STOCK RECORDS IN RESPECT OF EDIBLE ITEMS AND LIQUOR . THE CIT(A) NOTICED THAT IN SO FAR AS THE LIQUOR BUSINESS WAS CONCERNED, ASSESS EE WAS UNDER THE CONTROL OF THE STATE EXCISE ACT / RULES. WITH RESPECT TO T HE OTHER ITEMS DEALT WITH VIZ. EDIBLE ITEMS, SNACKS AND MEALS, ETC., THE CIT(A) NO TED THAT EVEN THE AUDITORS HAVE REPORTED NON-MAINTENANCE OF PROPER RECORDS OF INVENTORY. IN THIS BACKGROUND, THE CIT(A) DEEMED IT PROPER TO RETAIN A DDITION ONLY WITH RESPECT TO NON-MAINTENANCE OF PROPER RECORD OF INVENTORY IN RE SPECT OF SNACKS AND MEALS. THEREFORE, HE SCALED DOWN THE ADHOC ADDITIO N FROM RS.5,00,000/- TO RS.1,00,000/- ONLY. ITA NO.696/PN/2013 A. Y. : 2007-08 9. CONSIDERING THE DISCUSSION MADE BY THE CIT(A), I N OUR VIEW, NO INTERFERENCE IS CALLED FOR IN HIS ORDER. THE ORDER OF CIT(A) IS AFFIRMED ON THIS COUNT TOO. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH SEPTEMBER, 2014. SD/- SD/- (SUSHMA CHOWLA) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBE R PUNE, DATED: 26 TH SEPTEMBER, 2014. GCVSR COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-II, NASHIK 4) THE CIT-II, NASHIK 5) THE DR B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE