Commissioner Of Income Tax Jabalpur v. M/S Vandana Hotel, Sagar

Commissioner of Income Tax Jabalpur Vs. M/s Vandana Hotel, Sagar 22/08/2014 Shri Sanjay Lal, learned counsel for the appellant. This is revenue's appeal under Section 260A of the IncomeTax Act, 1961 calling in question tenability of an order dated 13[th]of June, 2011 passed by the Income Tax Appellate Tribunal,Indore in the matter of imposition of tax for the assessment year2004-05. In the business premises of the respondent/assessee'sSantosh Sahu Group of Sagar, certain search and seizure wasconducted on 10[th] of December, 2003. During these proceedings, ahard disc was seized, print out of which yielded, certain particularsof cash books, ledgers and final accounts for the period 1.4.2003to 31.3.2002 & 1.4.2003 to 5.12.2003, certain sales with regard torestaurant and bar were reflected in these documents. The sale proceeds included sale of liquor and cigarette fromthe bar of sister concern M/s Sagar Wines. The assessing officerwhile passing assessment order added the said sale proceeds ofM/s Sagar Wines to the account of the assessee and on an appealbeing filed, the Commissioner Income Tax recalculated the matterand assessed the income at a lower rate. Finally, when the matterwent to the tribunal, the tribunal assessed the profit at 10% of theliquor and cigarette sale as reflected in the computer print out.Challenging this order of the tribunal on the ground that theassessing the profit only at 10% is an illegality, this appeal hasbeen filed. On consideration of the facts and circumstances of the caseand on going through the orders passed by the appellate tribunal,we find that the appellate tribunal has found that based on the sales made by a sister concern with regard to the bar owned by thesister concerned, adding the entire sale, as reflected in thedocuments on the account of the assessee/company was notproper. It was found that the assessment was based on certaindocuments, which could not be done and taking a pragmatic viewof the matter, a reasonable approach has been adopted by thetribunal in making the assessment. The reasons that weighed withthe tribunal in doing so reads as under : “There were two print outs in the computer, one wasrelated to the business of restaurant and another was theconsolidated profit and loss account without cash bookindicating total sale of restaurant, liquor and cigarettes. TheAO disbelieved the books of account and made addition onthe basis of sale of liquor and cigarettes shown in the printout taken from computers so found in assessee's premises.Contention of the assessee was that it has merely allowed saleof liquor and cigarettes at its restaurant, so as to increase saleof restaurant items, actually the sale of liquor was by M/s S.S.Enterprises and Sagar Wines, who were liquor contractors.Further contention was that the assessee was not having barlicense, therefore, there was no reason for adding the sale andincome from Bar and Cigarettes in assessee's total income. Hefurther drew our attention to the fact that M/s Sagar Winesobtained the separate license on 29.2.2003 to make the Barsales in assessee restaurant and also paid license fee of Rs.3Lakhs and claimed the same in their profit and loss account.It was also contention of the ld. Authorized Representativethat legal presumption u/s 292-C that only papers showinghigher sales have to be accepted is not correct, in so far asboth the profit and loss account was found in the computer,one relating to sale of restaurant and another consolidatedindicating sale of liquor and cigarettes. However, neither theassessee nor the revenue could substantiate the figures Commissioner of Income Tax Jabalpur Vs. M/s Vandana Hotel, Sagar reflected in the computer print out nor any cogent reasoning was given for the additions so made.” Commissioner of Income Tax Jabalpur Vs. M/s Vandana Hotel, Sagar reflected in the computer print out nor any cogent reasoning was given for the additions so made.” It was after recording such a finding, the tribunal found thatthe additions have been made by the assessing officer mainly onthe basis of the sale of liquor and cigarette but as there is nosupporting document to show that the figures reflected are correctand when the assessing officer has rejected books of accounts andwhen no other cogent evidence or material is available, it was heldthat the entire sale of liquor and cigarette of the Compnay M/sSagar Wines cannot be added and accordingly, the order of taking10% profit was directed. In doing so, we are of the considered view that a reasonableapproach has been adopted by the tribunal and the discretionexercised by the tribunal in the matter cannot be termed asperverse or erroneous to such an extent that a substantial questionof law arises for consideration in the matter. The total amount ofsuch profit and loss is Rs.5,76,609/-. Accordingly, we find no reason to interfere into the matter.The appeal is, therefore, dismissed. (Rajendra Menon) Judge (Alok Aradhe) Judge