INCOME TAX OFFICER 8(1)(3), MUMBAI v. M/S. EQVITY HOTELS PVT.LTD., MUMBAI

ITA 1102/MUM/2009 | 2005-2006
Pronouncement Date: 31-05-2010 | Result: Dismissed

Appeal Details

RSA Number 110219914 RSA 2009
Bench Mumbai
Appeal Number ITA 1102/MUM/2009
Duration Of Justice 1 year(s) 3 month(s) 11 day(s)
Appellant INCOME TAX OFFICER 8(1)(3), MUMBAI
Respondent M/S. EQVITY HOTELS PVT.LTD., MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 31-05-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted E
Tribunal Order Date 31-05-2010
Date Of Final Hearing 19-05-2010
Next Hearing Date 19-05-2010
Assessment Year 2005-2006
Appeal Filed On 18-02-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E MUMBAI BEFORE SHRI R.S.SYAL AM AND SHRI VIJAY PAL RAO JM ITA NO.1102/MUM/2009 : ASST.YEAR 2005-2006 THE INCOME TAX OFFICER WARD 8(1)(3) MUMBAI. VS. M/S.EQUITY HOTELS PRIVATE LIMITED ANJALI ESTATE NEAR RAILWAY CROSSING MIRA-BHAYANDAR ROAD BHAYANDAR (EAST) MUMBAI 400 105. PA NO.AAACE4746J. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SHRAVAN KUMAR RESPONDENT BY : SHRI K.SHIVARAM O R D E R PER R.S.SYAL AM : THIS APPEAL BY THE REVENUE ARISES OUT OF THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON 26.12.2008 IN RELATION TO THE ASSESSMENT YEAR 2005-2006. 2. FIRST GROUND IS AGAINST THE DELETION OF ADDITION ON ACCOUNT OF SUPPRESSION OF LIQUOR SALE. THE FACTS APROPOS THIS GROUND ARE THAT THE ASSESSEE SHOWED SALES OF RS.32 76 214 COMPRISING OF LIQUOR SALE OF RS.19 54 177 AND FOOD SALES OF RS.13 22 037. THE ASSESSING OFFICER COMPARED THESE FIGURES WITH THE SALES MADE IN THE EARLIER YEAR AT RS.25 77 193 AND RS.13 93 720 R ESPECTIVELY. ON BEING CALLED UPON TO FILE THE DETAILS OF MONTH-WISE SALE AND PUR CHASE OF LIQUOR THE ASSESSEE FURNISHED THE SAME. THE ASSESSING OFFICER ON THE P ERUSAL OF SUCH DETAILS OBSERVED THAT THE ASSESSEE WAS SELLING HARD LIQUOR AS WELL A S BEER. IT WAS FURTHER NOTICED THAT IN CASE OF HARD LIQUOR THE BOTTLE SIZES WERE 1000 M L. 750 ML. 375 ML. AND 180 ML. AND FOR BEER SALE THERE WERE TWO TYPES OF BOTTLES I .E. 650 ML. AND 330 ML. THE ASSESSEE ALSO FURNISHED THE MONTH-WISE SALE AMOUNT OF THE BEER AS WELL AS LIQUOR. FROM THE CHART GIVEN BY THE ASSESSEE THE QUANTITY OF HARD LIQUOR SOLD WAS COMPUTED BY THE A.O. IN VOLUME FROM WHICH IT WAS OB SERVED THAT THE ASSESSEE HAD ITA NO.1102/MUM/2009 M/S.EQUITY HOTELS PRIVATE LIMITED. 2 SOLD 57337 PEGS HARD LIQUOR DURING THE YEAR. THE A. O. REQUIRED THE ASSESSEE TO FURNISH MENU CARD AND ROOM TARIFF CARD WHICH WERE NOT FURNISHED BY THE ASSESSEE. THE ASSESSING OFFICER PROCEEDED TO ESTIMATE THE SAL ES OF HARD LIQUOR AND BEER WHICH COULD HAVE BEEN MADE BY THE ASSESSEE IN QUANT ITY AS WELL AS VALUE AND BY THAT ARITHMETICAL EXERCISE COMPUTED SUPPRESSION OF LIQUOR SALE AT RS.31 69 043. ADDITION WAS MADE FOR THE SUM WHICH CAME TO BE DELE TED IN THE FIRST APPEAL. 3. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD IT IS NOTICED THAT THE ASSESSEE FURNISHED CO MPLETE DETAILS OF QUANTITY AND VALUE WISE OF LIQUOR SOLD BY IT DURING THE YEAR. SI MPLY BECAUSE THE ASSESSEE COULD NOT FURNISH MENU CARD AND ROOM TARIFF CARD THE A.O . WAS NOT JUSTIFIED IN REJECTING THE DECLARED VERSION AND ESTIMATE THE QUANTITY OF L IQUOR SOLD AND THE RATE APPLICABLE AS PER HIS OWN WHIMS AND FANCIES. IT IS BORNE OUT F ROM THE IMPUGNED ORDER THAT THE ASSESSEE COULD NOT FURNISH MENU CARD AND ROOM TARIF F CARDS BEFORE THE A.O. BECAUSE THERE WAS CHANGE IN THE MANAGEMENT OF HOTEL AS A RESULT OF WHICH NEW MENU CARDS AND ROOM TARIFF CARDS WERE ISSUED BY THE NEW MANAGEMENT. THE LEARNED CIT(A) HAS RECORDED A FINDING THAT THE ASSE SSEE WAS SHOWING CASH MEMOS ON SALE OF LIQUOR WHICH WAS ENTERED IN ONE REGISTER ISSUED BY SUPERINTENDENT OF EXCISE IN FORM FLR 6 UNDER RULE 15B OF EXCISE RUL ES AND THESE ENTRIES WERE MADE IN BRAND-WISE FORM IN REGISTER ISSUED BY THE S UPERINTENDENT OF EXCISE IN FORM FLR-1A/2A/3A. BASED ON THESE REGISTERS THE ASS ESSEE WAS REGULARLY FURNISHING MONTHLY RETURN WITH EXCISE DEPARTMENT WH ICH WERE VERIFIED FROM TIME TO TIME. IN VIEW OF THE FOREGOING REASONS MORE SPECIF ICALLY THE FACT THAT THE ASSESSING OFFICER HAD NOT POINTED OUT ANY DEFECT IN THE MAIN TENANCE OF CASH MEMO FOR SALE OF LIQUOR WE ARE OF THE CONSIDERED OPINION THAT THERE WAS NO JUSTIFICATION FOR DISREGARDING THE BOOK VERSION AND ESTIMATING THE SA LES AT HIS OWN OPTION. IN OUR VIEW THE LEARNED CIT(A) WAS JUSTIFIED IN DELETING T HIS ADDITION. BASED ON ALMOST SIMILAR FACTS THE JODHPUR BENCH OF THE TRIBUNAL IN HOTEL HILLTONE PVT. LTD. VS. ITA NO.1102/MUM/2009 M/S.EQUITY HOTELS PRIVATE LIMITED. 3 ACIT [(2005) 97 TTJ (JD.) 969] (TO WHICH ONE OF US NAMELY THE A.M. IS PARTY) HAS ORDERED FOR THE DELETION OF ADDITIONS. THIS GROUND IS THEREFORE NOT ALLOWED. 4. SECOND GROUND IS AGAINST THE DELETION OF ADDITIO N ON ACCOUNT OF SALE OF EMPTY BOTTLES. THE ASSESSING OFFICER OBSERVED IN PARA 4 O F THE ASSESSMENT ORDER THAT THE ASSESSEE HAD NOT SHOWN INCOME FROM SALE OF EMPTY BE ER BOTTLES AS COMPARED TO EARLIER YEARS FIGURE OF RS.15 330. HE THEREFORE ESTIMATED THE RATE OF EMPTY BOTTLE AT RS.2 EACH AND MULTIPLIED IT WITH THE NUMBER OF BEER BOTTLES CONSUMED BY THE ASSESSEE AT 15 662. RESULTANTLY AN ADDITION OF RS.3 0 000 WAS MADE. THE LEARNED CIT(A) DELETED THE SAID ADDITION. 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD IT IS NOTED THAT THE ASSESSEE HAD SHOWN SALE OF EMPTY BOTTLES AT RS.23 708 ON 18.12.2004 IN RESPECT OF WHICH RECEIPT VOUCHER WAS ALSO THERE. THE ASSESSING OFFICER WITHOUT GOING THROUGH THE BOOKS OF ACCOUNT AND SUBMISSIONS MADE BEFORE HER PRESUMED AN IMAGINARY STATE OF AFFAIRS AND RE SULTANTLY MADE THE ADDITION. IN VIEW OF THE FACT THAT THE ASSESSEE HAD RECORDED SAL E OF EMPTY BOTTLES AT RS.23 708 IN THE YEAR IN QUESTION WE ARE OF THE CONSIDERED OPIN ION THAT THE LEARNED CIT(A) WAS JUSTIFIED IN DELETING THIS ADDITION. 6. THIRD GROUND IS AGAINST THE DELETION OF ADDITION ON ACCOUNT OF SUPPRESSION OF ROOM RENT. THE ASSESSEE HAD SHOWN AN AMOUNT OF RS.2 2 08 640 AS INCOME FROM LODGING. THE ASSESSING OFFICER NOTED THAT THE ASSES SEE HAD 29 ROOMS WITH THE TARIFF RANGE OF RS.500 TO 1 300. SHE ADOPTED AVERAGE RATE OF RS.600 FOR CALCULATING THE ACTUAL OCCUPANCY RATE AT 10.08%. IN HER OPINION T HIS OCCUPANCY RATE WAS ABYSMALLY LOW AS NO PRUDENT BUSINESSMAN WOULD DO T HAT KIND OF BUSINESS. SHE ESTIMATED THE OCCUPANCY RATE AT 70% AND COMPUTED LO DGING INCOME AT RS.44 45 700 WHICH RESULTED INTO AN ADDITION OF R S.22 37 060. THE LEARNED CIT(A) DELETED THIS ADDITION. ITA NO.1102/MUM/2009 M/S.EQUITY HOTELS PRIVATE LIMITED. 4 7. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD IT IS NOTED THAT THE ASSESSING OFFICER HAD S TARTED WITH 29 ROOMS AVAILABLE AT THE ASSESSEES DISPOSAL AS AGAINST 22 ROOMS ACTUALL Y AVAILABLE. HOTEL IS REQUIRED TO MAINTAIN STATUTORY GUESTS REGISTER APPROVED BY THE SUB DIVISIONAL MAGISTRATE THANE WHICH WAS PRODUCED BEFORE THE A.O. DURING TH E COURSE OF ASSESSMENT PROCEEDINGS. THIS REGISTER WAS VERIFIED BY VARIOUS AUTHORITIES SUCH AS POLICE DEPARTMENT LOCAL CRIME BRANCH AND CID FROM TIME TO TIME. THE ASSESSING OFFICER DID NOT POINT OUT ANY DISCREPANCY IN SUCH REGISTER BUT ON THE BASIS OF GUESS WORK MADE AN ADDITION OF RS.22 37 060. IN OUR CONSIDERE D OPINION THERE IS ABSOLUTELY NO BASIS FOR COMPUTING THE LODGING CHARGES ON THE B ASIS OF PRESUMPTION WHEN THE EVIDENCE SHOWING ACTUAL OCCUPANCY WAS THERE BEFORE THE A.O. THE FACTUAL POSITION RECORDED BY THE LEARNED CIT(A) IN THE IMPUGNED ORDE R ON THIS ISSUE COULD NOT BE CONTROVERTED BY THE LEARNED DEPARTMENTAL REPRESENTA TIVE. WE THEREFORE ORDER FOR THE DELETION OF THIS ADDITION. THE RATIO OF THE ORD ER IN HOTEL HILLTONE PVT. LTD. (SUPRA) WILL EQUALLY APPLY HERE. THIS GROUND IS NOT ALLOWED. 8. LAST GROUND IS AGAINST THE DELETION OF ADDITION ON ACCOUNT OF SUPPRESSION OF FOOD SALES. THE ASSESSEE HAD SHOWN SALE OF FOODS AN D OTHER AT RS.13 22 037. THE ASSESSING OFFICER FOUND THAT THE PROFIT ON SALE OF THESE ITEMS DECLARED BY THE ASSESSEE AT 29.22% WAS VERY LESS. FOLLOWING HER D ECISION ON THE SUPPRESSION ON ACCOUNT OF LIQUOR SALE SHE COMPUTED THE SUPPRESSIO N OF SALE OF FOOD AT RS.15 38 033 AND MADE THE ADDITION ACCORDINGLY. THE LEARNED CIT(A) DELETED THE SAID ADDITION. 9. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD WE FIND THAT FACTS AND CIRCUMSTANCES OF THIS ADDITION MADE BY THE A.O. AND DELETED BY THE LEARNED CIT(A) ARE SIMILAR TO THOSE OF GROUND NO.1 IN RESPECT OF SUPPRESSION OF LIQUOR SALE. HERE ALSO THE ASSESSING OFFICER BRUSHED ASIDE THE ACTUAL ITA NO.1102/MUM/2009 M/S.EQUITY HOTELS PRIVATE LIMITED. 5 SALE PRICE OF THE FOOD ITEMS AND VENTURED TO MAKE H ER OWN ESTIMATE. FOR THE REASONS GIVEN ABOVE WE UPHOLD THE DELETION OF THIS ADDITIO N. 10. IN THE RESULT THE APPEAL IS DISMISSED. ORDER PRONOUNCED ON THIS 31 ST DAY OF MAY 2010. SD/- SD/- ( VIJAY PAL RAO ) ( R.S.SYAL ) JUDICIAL MEMBER ACCOUNTANT M EMBER MUMBAI : 31 ST MAY 2010 . DEVDAS* COPY TO : 1. THE APPELLANT. 2. THE RESPONDENTS. 3. THE CIT CONCERNED 4. THE CIT(A)-VIII MUMBAI. 5. THE DR/ITAT MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR ITAT MUMBAI.