DCIT, New Delhi V. M/s. Misthan Cafe (saket), New Delhi

ITA 984/DEL/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 2306 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-12-2009
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 03-12-2009
• Assessment Year: 2005-2006
• Appeal Filed On: 17-03-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M K GAUTAM
• Keywords: Opportunity of being heard; Revised return; Set aside
• Section: 263

Judgement Text

I.T.A. NO.984 /DEL/09 1/5 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E NEW DELHI) BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER I.T.A. NO.984 /DEL/2009 ASSESSMENT YEAR : 2005-06 DCIT, M/S MISTHAN CAF , CENTRAL CIRCLE-3, SHOP NO.1 & 2,J BLOCK MARKET, NEW DELHI. V. SAKET, NEW DELHI. AND CROSS OBJECTION NO.378/DEL/2009 (IN I.T.A. NO.984/DEL/2009) ASSESSMENT YEAR : 2005-06 M/S MISTHAN CAF, DCIT, SAKET, NEW DELH. V. CENTRAL CIRCLE-3, NEW DELHI. (APPELLANT) (RESPONDENT) DEARTMENT BY : SHRI MK GAUTAM, CIT-DR. RESPONDENT BY : SHRI SATYEN SETHI, ADVOCATE. ORDER PER A.K. GARODIA, AM: THIS IS REVENUES APPEAL AND CROSS OBJECTION IS FIL ED BY THE ASSESSEE. BOTH ARE DIRECTED AGAINST THE ORDER OF LD CIT(A)-II, NEW DELHI DATED 15.12.2008 FOR ASSESSMENT YEAR 2005-06. FOR THE SAKE OF CONVENIE NCE, BOTH ARE DISPOSED OFF BY THIS COMMON ORDER. 2. BRIEF FACTS OF THE CASE ARE THAT DURING THIS YEA R, THE ASSESSEE FIRM WAS ENGAGED IN THE BUSINESS OF RUNNING AND OPERATING A RESTAURANT AND SWEET SHOP . I.T.A. NO.984/DEL/09 2/5 UNDER THE NAME AND STYLE OF M/S MISTHAN CAF. NATUR E AND SOURCE OF INCOME REMAINED THE SAME AS IN THE LAST YEAR. THE PARTNERS HIP WAS RECONSTITUTED W.E.F. 1.4.2004 WITH THE RETIREMENT OF TWO PARTNERS AND RE SULTING THAT ONLY TWO PARTNERS REMAINED IN THE PARTNERSHIP FIRM I.E. SHRI KRISHAN KUMAR CHAUDHARY AND MRS. SUNITA CHAUDHARY. WHILE FILING THE REVISED RETURN, THE ASSESSEE HAS DECLARED UNDISCLOSED INCOME OF RS.13,85,500/- IN THE HANDS O F THE ASSESSEE AND RS.7,45,085/- IS STATED TO HAVE BEEN DISCLOSED IN THE HANDS OF SHRI KRISHAN CHAUDHARY, ONE OF THE PARTNERS. IN THE STATEMENT RE CORDED OF SHRI KRISHAN KUMAR ON 18.1.2006, HE ADMITTED A PROFIT OF RS.40 LAKHS A S UNDISCLOSED INCOME FROM THE UNACCOUNTED SALES OF M/S MISTHAN CAF. RELYING ON T HE STATEMENT OF SHRI KRISHAN CHAUDHARY, THE ASSESSING OFFICER HAS MADE ADDITION OF RS.18,69,415/- ON THIS ACCOUNT BEING THE DIFFERENCE OF AMOUNT DISCLOSED IN THE RETURN OF INCOME AND SURRENDERED IN THE STATEMENT. AGAINST SUCH ADDITION , THE ASSESSEE WAS IN APPEAL BEFORE LD CIT(A) WHO HAS DELETED THIS ADDITION ON T HE BASIS THAT AS PER THE STATEMENT RECORDED ON 18.1.2006 OF SHRI KRISHAN CHA UDHARY, ADDITIONAL INCOME WAS DECLARED FOR TWO ASSESSMENT YEAR I.E. 2005-06 A ND 2006-07 AND HENCE, THE ENTIRE ADDITION CANNOT BE MADE IN THE PRESENT YEAR. IT IS FURTHER NOTED BY THE LD CIT(A) THAT IN THE SUBSEQUENT YEAR, LD CIT HAS INVO KED THE PROVISIONS OF SECTION 263 IN THE CASE OF MRS. SUNITA CHAUDHARY FOR ASSESS MENT YEAR 2006-07 ON THIS ACCOUNT BECAUSE MRS. SUNITA CHAUDHARY HAS BECOME T HE PROPRIETOR OF TWO OUT LETS OF M/S MISTHAN CAF FOR ASSESSMENT YEAR 2006- 07 AND HENCE, THE BALANCE PROFIT ADMITTED IN THE COURSE OF SUCH PROCEEDINGS N EED TO BE ASSESSED IN HER HANDS. ON THIS BASIS, HE DELETED THIS ADDITION OF R S.18,69,415/- BUT REGARDING THE AMOUNT OF INCOME STATED TO HAVE BEEN DECLARED IN TH E HANDS OF SHRI KRISHAN KUMAR IN THE PRESENT YEAR, IT WAS HELD BY LD CIT(A) THAT THE SAME HAS TO BE ASSESSED IN THE HANDS OF THE ASSESSEE FIRM IRRESPEC TIVE OF WHETHER ANY SUCH INCOME HAS BEEN DECLARED IN THE HANDS OF THE PARTNE R OR NOT. ON THIS BASIS, HE DIRECTED THE ASSESSING OFFICER TO RECOMPUTE THE INC OME OF THE ASSESSEE BY MAKING ADDITION OF RS.7,45,805/- AND BY DELETING TH E ADDITION OF RS. 18,69,415/- MADE BY HIM IN THE ASSESSMENT YEAR. NOW, THE REVENU E IS IN APPEAL BEFORE US AGAINST THE ADDITION DELETED BY LD CIT(A) AND THE A SSESSEE HAS FILED CROSS . I.T.A. NO.984/DEL/09 3/5 OBJECTION BEFORE US AGAINST THE ADDITION OF RS.7,45 ,805/- FOR WHICH DIRECTION IS GIVEN BY LD CIT(A) TO THE ASSESSING OFFICER. 3. IT IS SUBMITTED BY THE LD AR OF THE ASSESSEE BEF ORE US THAT AGAINST ORDER U/S 263 OF LD CIT IN THE CASE OF MRS. SUNITA CHAUDH ARY FOR THE NEXT YEAR, AN APPEAL HAS BEEN FILED BY THE ASSESSEE AND THE SAME IS ALSO FIXED BEFORE THE TRIBUNAL. IT IS ALSO SUBMITTED THAT AS PER THE DIRE CTION OF THE LD CIT U/S 263 IN THE CASE OF MRS. SUNITA CHAUDHARY IN ASSESSMENT YEAR 2 006-07, ADDITIONS ARE MADE BY THE ASSESSING OFFICER IN HER CASE IN THAT YEAR A ND AGAINST SUCH ADDITION, THAT ASSESSEE HAS FILED APPEAL BEFORE THE LD CIT(A) WHIC H IS ALREADY HEARD BY LD CIT(A) AND THE ORDER IS AWAITED. IT WAS HIS SUBMISS ION THAT UNDER THESE CIRCUMSTANCES, ALL THESE APPEALS SHOULD BE KEPT IN ABEYANCE BUT AFTER HEARING BOTH SIDES, IT WAS DECIDED THAT THE APPEAL OF MRS. SUNITA CHAUDHARY FOR ASSESSMENT YEAR 2006-07, AGAINST THE ORDER PASSED B Y LD CIT U/S 263 IS TO BE ADJOURNED. IT WAS ALSO AGREED BY BOTH SIDES THAT T HE APPEAL OF REVENUE AND THE CROSS OBJECTION OF THE ASSESSEE MAY BE DECIDED BY R ESTORING BACK THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR A FRESH DECIS ION AFTER THE MATTER GETS FINALIZED IN THE CASE OF MRS. SUNITA CHAUDHARY IN ASSESSMENT YEAR 2006-07 TILL THE STAGE OF TRIBUNAL IN 263 PROCEEDINGS AND IN THE PROCEEDIN GS CONSEQUENT TO DIRECTIONS OF CIT U/S 263 BECAUSE BOTH THESE ISSUES ARE CONNEC TED AND ADDITION HAS TO BE MADE ONLY IN ONE CASE AND THEREFORE BEFORE THE OUT COME OF THE APPEALS IN THE CASE OF SUNITA CHAUDHARY IN ASSESSMENT YEAR 2006-07 , THE PRESENT ISSUE CANNOT BE FINALLY DECIDED. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE GON E THROUGH THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE STATEMENT OF SHRI KRISHAN KUMAR, PARTNER OF THE ASSESSEE FIRM WAS RECORDED ON 18.1.2006 AND THE COPY OF STATEMENT IS APPEARING ON PAGES 13-22 OF THE PAPER BOOK AND IN T HE SAID STATEMENT IN PARA NO.41, IT HAS BEEN NOTED THAT THERE IS SUPPRESSION OF SALES IN FINANCIAL YEAR 2004- 05 AND THE FIGURES OF SALES FOR ALL THE THREE SHOPS ARE GIVEN AS PER BOOKS AND ACTUAL SALE WHICH IS EXCESS BY AROUND RS.200 LAKHS AND AGAINST THE SAME, THE . I.T.A. NO.984/DEL/09 4/5 ASSESSEE HAS DECLARED SUPPRESSED PROFITS OF RS.40 L AKHS ON THESE UNDISCLOSED SALES OF RS.200 LAKHS APPROX. WHICH STANDS INCLUDED IN THE OVERALL DISCLOSURE OF THE GROUP OF RS.5 CRORES. IN THE SAME STATEMENT IN PARA NO.34, IT HAS BEEN STATED THAT THE FIGURES AT TOP LEFT CORNER OF PAGE NO.1 OF ANNEXURE A-7 CONTAINS DETAILS OF ACTUAL SALES REGISTERED BY THIS CAF FOR THE MONTH OF DECEMBER, 2004 TO AUGUST,2005. THIS SHOWS THAT THE DISCLOSED SALES MA Y BE RELATING TO TWO FINANCIAL YEAR I.E. FINANCIAL YEAR 2004-05 AND 2005-06. THE A SSESSING OFFICER HAS ALSO NOT MADE ANY SEPARATE ADDITION EITHER IN THE HANDS OF T HE ASSESSEE FIRM OR IN THE HANDS OF MRS. SUNITA CHAUDHARY IN ADDITION TO ANY A MOUNT DECLARED BY THE ASSESSEE AT RS.40 LAKHS. THE ASSESSEE HAS DECLARED LESSER AMOUNT IN THE HANDS OF THE ASSESSEE FIRM FOR THIS YEAR TO THE EXT ENT OF RS.18,69,415/- AS PER THE ASSESSING OFFICER AFTER CONSIDERING THE INCOME DECL ARED IN THE HANDS OF SHRI KRISHAN CHAUDHARY OF RS.7,45,085/-. THE ASSESSING OFFICER HAS MADE ADDITION OF THE SAME IN THE HANDS OF THE ASSESSEE. SAME AMOU NT HAS BEEN STATED TO BE ADDED BY THE ASSESSING OFFICER IN THE HANDS OF SMT . SUNITA CHAUDHARY IN ASSESSMENT YEAR 2006-07 AFTER SETTING ASIDE OF THE ASSESSMENT BY THE LD CIT IN THAT CASE AFTER INVOKING THE PROVISIONS OF SECTION 263. THOSE PROCEEDINGS ARE STILL UNCOMPLETED AND HENCE WE FEEL THAT THIS MATTE R SHOULD GO BACK TO THE FILE OF THE ASSESSING OFFICER FOR A FRESH DECISION AFTER TH E MATTER GETS FINALIZED IN THE CASE OF MRS. SUNITA CHAUDHARY IN ASSESSMENT YEAR 20 06-07 BECAUSE WE ARE IN AGREEMENT WITH LD AR OF THE ASSESSEE THAT THE ADDIT ION MADE BY THE ASSESSING OFFICER IN THE PRESENT CASE CANNOT BE SUSTAINED, IF THE ADDITION MADE IN THE CASE OF SUNITA CHAUDHARY IS FINALLY SUSTAINED. REGARDING THE ADDITION OF RS.7,45,085/- FOR WHICH, IT IS THE CASE OF THE ASSESSEE THAT INCO ME HAS BEEN DECLARED IN THE HANDS OF THE PARTNER SHRI KRISHAN KUMAR AND HENCE I T IS NOT REQUIRED TO BE ADDED AGAIN IN THE HANDS OF THE ASSESSEE AS DIRECTED BY T HE LD CIT(A), WE FEEL THAT THIS ASPECT SHOULD ALSO BE DECIDED BY THE ASSESSING OFFI CER AFRESH AFTER EXAMINING THIS ASPECT AS TO UNDER WHAT CIRCUMSTANCES, THIS IN COME OF RS.7,45,085/- HAS BEEN DECLARED IN THE CASE OF SHRI KRISHAN KUMAR. T HE ASSESSING OFFICER SHOULD FIRST FIND OUT WHETHER ANY SUCH INCOME WAS DECLARED BY SHRI KRISHAN KUMAR IN HIS CASE ON ACCOUNT OF INCOME OF M/S MISTHAN CAF AND E VEN IF DECLARED, HOW ON . I.T.A. NO.984/DEL/09 5/5 THAT BASIS, INCOME IN THE HANDS OF THE PRESENT ASSE SSEE CAN BE REDUCED AS HAS BEEN DONE BY THE ASSESSEE. THE ASSESSING OFFICER S HOULD DECIDE THIS ASPECT ALSO AFRESH AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. IN VIEW OF THIS, WE SET ASIDE THE ORDER OF THE LD C IT(A) AND RESORE THIS MATTER TO THE FILE OF THE ASSESSING OFFICER FOR FRESH DECISIO N AFTER THE ISSUE GETS SETTLED REGARDING ADDITION OF BALANCE AMOUNT IN THE HANDS O F MRS. SUNITA CHAUDHARY IN ASSESSMENT YEAR 2006-07. 5. IN THE RESULT, THE APPEAL OF THE REVENUE AS WELL AS THE CROSS OBJECTION FILED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSE S. 6. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE O F HEARING I.E. 3.12.2009. SD/- SD/- (R.P.TOLANI) (A.K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 3 .12.2009. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DELHI. TRUE COPY. BY ORDER (ITAT, NEW DELHI).