Raj Residency, CHENNAI V. ACIT, CHENNAI

ITSSA 8/CHNY/2015

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5722 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 30-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 06-07-2017
• Assessment Year: misc
• Appeal Filed On: 07-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAILENDRA MAMMIDI
• Assessee Lawyers: S SRIDHAR
• Keywords: Business income; Block assessment

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . . . , , ! BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER /. I.T(SS).A. NO. 08/CHNY/2015 / BLOCK ASSESSMENT: 01.04.1996 TO 17.12.2002 M/S. RAJ RESIDENCY, NO. 22, KENNET LANE, EGMORE, CHENNAI 600 006. [PAN: AAGFR 9735B] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE II(2), CHENNAI. ( / APPELLANT) ( '#% /RESPONDENT ) ASSESSEE BY : SHRI. S. SRIDHAR, ADVOCATE REVENUE BY : SHRI. SAILENDRAMAMMIDI, CIT / /DATE OF HEARING : 19.09.2018 / /DATE OF PRONOUNCEMENT : 30.11.2018 / O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER: THE ASSESSEE FILED THIS APPEAL AGAINST THE ORDER O F COMMISSIONER OF INCOME TAX (APPEALS)-19, CHENNAI IN ITA NO. 13/CIT( A)-19/07-08 DATED 30.12.2014 FOR THE BLOCK ASSESSMENT 1996-97 TO 200 2-03. 2. M/S. RAJ RESIDENCY, A PARTNERSHIP FIRM, DOING B USINESS IN PROVIDING LODGING FACILITIES. DURING SEARCH AND SEI ZURE OPERATIONS IN THE :-2-: IT(SS)A NO. 08/CHNY/2015 RESIDENTIAL PREMISES OF ONE OF THE PARTNERS, CERTAI N INCRIMINATING MATERIALS WERE SEIZED WHICH REVEALED, INTER ALIA, THAT THE HOTEL RECEIPTS WERE NOT PROPERLY ACCOUNTED FOR, CERTAIN OMISSION OBSERVED B Y COMMERCIAL TAX OFFICERS ETC. BASED ON THEM, THE AO DETERMINED TH E UNDISCLOSED INCOME. AGGRIEVED, THE ASSESSEE FILED AN APPEAL. THE CIT(A) CALLED FOR A REMAND REPORT FROM THE AO AND AFTER CONSIDERING THE ASSESS EES SUBMISSIONS ETC DISMISSED THE APPEAL ON THE IMPUGNED ADDITIONS. AGG RIEVED, THE ASSESSEE FILED THIS APPEAL. 3. THE LD AR SUBMITTED THAT THOUGH THE ASSESSEE HAS TAKEN VARIOUS PLEAS IN THIS APPEAL, HE SUBMITTED THAT IF MERIT OF THE ADDITIONS BASED THE SEIZED MATERIAL IS CONSIDERED THAT WOULD MEET THE E NDS OF JUSTICE. INVITING OUR ATTENTION TO PARA 4.0 OF THE ORDER OF THE LD CI T(A) TITLED AS ESTIMATE OF BUSINESS INCOME FOR AY 2003-04 FROM PAGE 13 TO 17 AND COPIES OF THE SEIZED MATERIALS IN THE PAPER BOOK, THE LD AR SUBMI TTED THAT THE AO HAS NOT FULLY RELIED UPON THESE TWO MATERIALS TO ESTIMA TE THE TOTAL INCOME. THE LEARNED ASSESSING OFFICER WITH ALL HIS HONESTY SHOULD HAVE CONSIDERED THE ENTIRE DATA AVAILABLE IN THE SEIZED MATERIAL COVERING THE ABOVE SAID PERIOD WHILE ARRIVING AT THE SOCALLED AV ERAGE COLLECTION PER DAY PER ROOM. INSTEAD, HE CHOSE TO HAND PICK 8 NON CONS ECUTIVE DAYS WHERE THE NET RECEIPTS ARE POSITIVE TO ARRIVE AT THE TOTA L NET RECEIPTS OF RS. 1,479.86. HE HAS SELECTIVELY HAND PICKED A FEW ENT RIES FROM THE SEIZED MATERIAL SO AS TO ESTIMATE THE BUSINESS INCOME.IF T HE PRINCIPLE OF :-3-: IT(SS)A NO. 08/CHNY/2015 ESTIMATION AS ADOPTED BY THE LEARNED ASSESSING OFFI CER IS FOLLOWED CORRECTLY BY CONSIDERING THE SEIZED MATERIAL IN FUL L, THEN, THE TOTAL ESTIMATED RECEIPTS FOR THE 9 MONTH PERIOD ENDED 31. 12.2002 (THOUGH IT SHOULD BE RESTRICTED UPTO 17-12-2002) WILL BE RS. 5 ,10,117/- AND IF THE SAME IS CONVERTED FOR THE 12 MONTH PERIOD, THEN THE GROSS RECEIPTS FOR THE YEAR SHOULD BE ONLY RS. 6,80,156/-, AS RECOMPUT ED BELOW : AVERAGE ROOM RECEIPT PER ROOM (2,464/60ROOMS) - RS. 41.07 ROOM RECEIPTS FROM 1.4.2002 TO 30.9.2002 - RS. 2, 88,327 (41.07 X 30 X 39 X 6) ROOM RECEIPTS FROM 1.10.2002 TO 31.12.2002 - RS.2, 21,790 (41.07X30X60X3) TOTAL ESTIMATED RECEIPTS FOR THE BLOCK PERIOD - RS .5,10,117 (RS. 2,88,327 + RS. 2,2 1,790) THESE SUBMISSIONS AND OTHER SUBMISSIONS ON THE ALLO WABILITY OF THE EXPENDITURES ETC WERE MADE BEFORE THE LD CIT(A) ALS O. THOUGH, HE HAS INCORPORATED THEM IN HIS ORDER, UNFORTUNATELY THE LD CIT(A) HAS NOT CONSIDERED THEM ON MERITS. THE LD AR PLEADED THA T IF THE AO IS DIRECTED TO RE-EXAMINE THE ISSUES BASED ON THE SEIZ ED MATERIALS AND DETERMINE THE INCOME IN ACCORDANCE WITH THEM AS PER ESTABLISHED PROCEDURE THAT WOULD MEET THE ENDS OF JUSTICE. THE LD DR SUBMITTED THAT HE HAS NO OBJECTION IF THE ISSUES ARE REMITTED BACK TO THE A O FOR DUE EXAMINATION. :-4-: IT(SS)A NO. 08/CHNY/2015 4. WE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH RELEVANT MATERIAL. WE FIND MERIT IN THE SUBMISSIONS OF THE L D AR, SUPRA. WHEN THE ASSESSING OFFICER USES THE SEIZED MATERIALS FOR MAK ING THE ADDITIONS, HE SHOULD CONSIDER THE ENTIRE DATA AVAILABLE IN THE SE IZED MATERIALS COVERING THE PERIOD FOR WHICH SUCH MATERIALS EVIDENCE AND D ETERMINE INCOME ACCORDINGLY. DEVIATIONS, IF ANY, SHOULD ALSO BE SUP PORTED BY THE INTERNAL EVIDENCE. HENCE, WE DEEM IT FIT TO REMIT THE ISS UE BACK TO THE AO FOR DETERMINING THE UNDISCLOSED INCOME IN ACCORDANCE WI TH THE SEIZED MATERIALS AS PER ESTABLISHED PROCEDURE. THE AO SHA LL AFFORD ADEQUATE OPPORTUNITY TO THE ASSESSEE AND DECIDE THE UNDISCL OSED INCOME. THE ASSESSEES APPEAL IS TREATED AS ALLOWED FOR STATIS TICAL PURPOSES. 5. IN THE RESULT, THE ASSESSEES APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON FRIDAY, THE 30 TH DAY OF NOVEMBER, 2018 AT CHENNAI. SD/- ( . . . ) (N.R.S. GANESAN) /JUDICIAL MEMBER SD/- ( ) (S. JAYARAMAN) /ACCOUNTANT MEMBER /CHENNAI, 4 /DATED: 30 TH NOVEMBER, 2018 JPV /'5676 /COPY TO: 1. %/ APPELLANT 2. '#% /RESPONDENT 3. 9 ) (/CIT(A) 4. 9 /CIT 5. 6' /DR 6. < /GF