Commissioner Of Income Tax – 8, Mumbai v. M/S.deepa Bar & Restaurant Private Limited

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.48 OF 2013 AND INCOME TAX APPEAL (L) NO.1513 OF 2012 Commissioner of Income Tax – 8, Mumbai..Appellant. Versus M/s.Deepa Bar & Restaurant Private Limited ..Respondent. Mr.Arvind Pinto for the appellant.Mr.S.N. Inamdar, Senior Advocate with Mr.Mihir Naniwadekar for the respondent. CORAM : J.P. Devadhar &M.S. Sanklecha, JJ. DATE : 28[th] February 2013 P.C. : 1.In these appeals by the Revenue for assessment years 2004-05 and 2005-06 following common questions of law have been proposed for our consideration. “a)Whether on the facts and in the circumstances of the case, the Tribunal was justified in totally rejecting all the factual evidence relied upon by the Revenue while fully accepting the submission of Tribunal was justified in totally rejecting all the factual evidence relied upon by the Revenue while fully accepting the submission of the assessee wihtout adequate justification and, therefore, could be said to be perverse ? b)Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in not upholding the rejection of the assessee's books of accounts under Section 145 of the Act and in deleting the addition made on account of estimation of GP without appreciating that in the assessee's business all the receipts are in cash only and the books of accounts prepared by the assessee will reflect only those transactions which the assessee intended to disclose to the department and hence there would be no defects per se in the books of account ?law, the Tribunal was justified in not upholding the rejection of the assessee's books of accounts under Section 145 of the Act and in deleting the addition made on account of estimation of GP without appreciating that in the assessee's business all the receipts are in cash only and the books of accounts prepared by the assessee will reflect only those transactions which the assessee intended to disclose to the department and hence there would be no defects per se in the books of account ? c)Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in deleting the adition made on account of entertaining receipts without appreciating the contents of the statement of Shri D'Silva, Assistant Manager of the Company recorded under Section 133A of the Income Tax Act, 1961 ?law, the Tribunal was justified in deleting the adition made on account of entertaining receipts without appreciating the contents of the statement of Shri D'Silva, Assistant Manager of the Company recorded under Section 133A of the Income Tax Act, 1961 ? d)Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in holding that the statement of Shri Willi John D'Silva recorded under Section 133a did not have evidentiary value in respect of suppression of receipts and consequently the assessee's income without appreciating that Shri Willi John D'Silva was the Assistant Manager of the hotel and conducting its day to day affairs as the trusted employee of the assessee and, therefore, the facts disclosed by him on oath constitute material evidence for determining the assessee's true and fair income by rejecting the book results under Section 145 of the Act ?”law, the Tribunal was justified in holding that the statement of Shri Willi John D'Silva recorded under Section 133a did not have evidentiary value in respect of suppression of receipts and consequently the assessee's income without appreciating that Shri Willi John D'Silva was the Assistant Manager of the hotel and conducting its day to day affairs as the trusted employee of the assessee and, therefore, the facts disclosed by him on oath constitute material evidence for determining the assessee's true and fair income by rejecting the book results under Section 145 of the Act ?” 2.Although various questions have been raised, the basic dispute which arises for our consideration is, whether the Tribunal was justified in upholding the order of Commissioner of Income Tax (A) deleting the addition made by the assessing officer on the basis of the statement recorded during the course of survey under Section 133A. itxa48-13+ a bar and restaurant. On 21[st] January 2004, there was a survey on the premises of the respondent – assessee. During the course of survey, sale bills pertaining to 31[st] December 2003 were impounded. On the basis of the sales bill impounded and the statement made during the course of survey, the assessing officer applied the rates mentioned in the cash memo of new year eve for the purpose of computing the value of sales throughout the year and also applied only one rate irrespective of the brand of liquor sold. Thus, the addition was done by the assessing officer disregarding the books of account, excise and sales tax records. 4.The Commissioner of Income Tax (A) and the Tribunal have held that the rate card was with the assessing officer during the assessment proceedings which would have given the rates at which articles of food and liquor were sold. However, the same was ignored while completing the assessment proceedings. The assessing officer does not dispute the quantitative figure of sales recorded in the books of account as well as sales mentioned in the rate card, accepted by the excise and sales tax departments as well as by the assessing officer while completing the assessment for the assessment year 2003-04 which was completed after the survey action. Yet the assessing officer makes addition contrary to the facts on record. The Tribunal held that the rates charged on the occasion of new year eve cannot be applied for the entire year, particularly in view of the fact that the itxa48-13+ assessing officer has not held that the sales recorded in the books of account are contrary to the rate as shown in the rate card or waiter sheet found and impounded during the course of survey. The Tribunal also held that there was no material brought on record that the assessee had received higher sale price of liquor than the price recorded in the books of account. 5.Counsel for the Revenue submits that the books of account rejected by the assessing officer under Section 145 of the Act was on account of higher rate of sale than the rates as found in the cash memo dated 31[st ]December 2003. However, the Tribunal held that the sales recorded in the books of account were not found inconsistent with the rates mentioned in the rate card and the excise and sales tax records, which were accepted by the Revenue. 6.So far as assessment year 2005-06 is concerned, the assessing officer rejected the books of account under Section 145 of the Act on the ground that GP rate was low compared to the earlier years. The Tribunal has reached a finding of fact that the respondent – assessee has done business only for three months in the year. This is because it closed its business with effect from 2[nd] July 2004. Besides the above, the finding arrived for the assessment year 2004-05 was applied for the assessment year 2005-06. 7.In these circumstances, as the decision of the Tribunal is based on finding of fact, we see no reason to entertain the proposed questions of law. Accordingly, both the appeals are dismissed with no order as to costs. (M.S. Sanklecha, J.)(J.P. Devadhar, J.)