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TAXAP/37320/2008 8/ 8 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX
APPEAL No. 373 of 2008
With
TAX
APPEAL No. 374 of 2008
=========================================================
THE
COMMISSIONER OF INCOME TAX-I - Appellant(s)
Versus
NEW
LUCKY RESTAURANT - Opponent(s)
=========================================================
Appearance
:
MRS
MAUNA M BHATT for
Appellant(s) : 1,MR MANISH R BHATT for Appellant(s) : 1,
None for
Opponent(s) :
1,
=========================================================
CORAM
:
HONOURABLE
MR.JUSTICE K.A.PUJ
and
HONOURABLE
MR.JUSTICE BANKIM.N.MEHTA
Date
: 30/07/2008
COMMON
ORAL ORDER
(Per
: HONOURABLE MR.JUSTICE K.A.PUJ)
The Revenue has filed
these Tax Appeals for the assessment years 1996-97 and 1998-99 under
Section 260A of the Income Tax Act, 1961 proposing to formulate the
following substantial question of law for determination and
consideration of this Court. Identical question is raised for both
the years which is as under:-
Whether the Appellate
Tribunal is right in law and on facts in restricting the addition
made by the Assessing Officer on account of suppression of sales on
the basis of material found during the course of Survey u/s.133A of
the Act?
Mrs.Mauna R.Bhatt,
learned Standing Counsel appearing for the Revenue has submitted
that the assessee is engaged in a restaurant business, wherein the
main sale is of tea, coffee, bun, muskabun, cold drinks etc. and
also derives rental income. The
assessee’s survey under Section 133A was carried out at the business
premises of the assessee on 24.10.1997 and some books of account and
incriminating documents were found. Subsequent to survey, a notice
under Section 148 was issued and accordingly assessment was
completed under Section 143(3) read with Section 148 of the Income
Tax Act. As the books of account found during the course of survey
and impounded subsequently were not reflecting true and correct
picture of the business, the Assessing Officer rejected the books of
accounts under Section 145 of the Act and estimated the business
income after recording statements of the partners, milk suppliers
and suppliers of snacks and other items. The Assessing Officer made
additions on account of suppression of sales at Rs.25,49,200/- for
the assessment year 1998-99 and Rs.9,14,413/- for the assessment
year 1996-97.
Being aggrieved by the
said order the assessee preferred appeal before the CIT(A). The
learned CIT(A) restricted the addition of Rs.19,42,418/- for the
assessment year 1998-99 and Rs.6,33,068/- for the assessment year
1996-97. The learned CIT(A) also enhanced the income by Rs.63,237
for the assessment year 1998-99 and Rs.23,380/- for the assessment
year 1996-97, treating the same as commission expenses not shown by
the assessee. The CIT(A) also observed that the assessee had shown
lumpsum amount as commission expenses and not shown the correct
picture of the commission expenses. The CIT(A) also confirmed
disallowance of telephone expenses of Rs.5,000/- in each of the two
years.
Being aggrieved by the
order of the CIT(A) the asseessee filed appeal before the Income Tax
Appellate Tribunal, Ahmedabad and the Tribunal restricted the
addition to Rs.1,35,160/- and Rs.3,12,580/- for the assessment year
1996-97 and 1998-99 respectively on account of suppression of sales.
The Appellate Tribunal observed that as the Assessing Officer had
rejected the books of account, he could not take the figures of
expenses from the books. The Appellate Tribunal has taken the G.P.
at 25% on the ground that the Assessing Officer in the assessment
year 1994-95 had adopted the G.P. at 25%. By adopting the G.P. the
Appellate Tribunal has calculated the new G.P. which is slightly
more than the G.P. Declared by the assessee.
Mrs.Bhatt, learned
Standing Counsel appearing for the Revenue further submitted that
the Appellate Tribunal ignored the fact that the Assessing Officer
had adopted the G.P. at 52%. This was based on the documentary
evidence found during the course of survey. Further, the Assessing
Officer had adopted the G.P. on the basis of statement of tea maker,
milk suppliers and suppliers of other snacks. The Assessing Officer
had also adopted the figures of expenses not only on the basis of
books but on the basis of statement of milk suppliers and suppliers
of other items. The Assessing Officer had adopted the figure of
G.P. after deducting all the expenses incurred by the assessee. She
has, therefore, submitted that the Assessing Officer was justified
and the Tribunal has committed an error while reducing the addition
made by the Assessing Officer on account of suppression of sale.
She has, therefore, submitted that the substantial question of law
arises out of the order of the Tribunal.
We have considered
submissions made by Mrs.Bhatt and we have also perused the order of
the authorities below. The learned CIT(A) has adopted the G.P. at
the rate of 52% which was similar to one adopted by the Assessing
Officer. He has ignored the fact that in the assessment year 1994-95
G.P. was taken at 25% by the Assessing Officer. The Tribunal has
considered this aspect in its order and observed that the Assessing
Officer has taken turn over/sale of Rs.27,25,083/- on the basis of
material found at the time of survey and statement recorded at the
time of survey and later on. The Tribunal has further observed that
the Revenue has failed to point out any error or calculation or
defect in the calculation of turn over calculated by the CIT(A) for
the purpose of estimation of gross profit. The Tribunal was of the
view that the net sale calculated by the CIT(A) appears to be a
reasonable and fair estimation of sale. The Tribunal has,
therefore, restricted the addition made by the Assessing Officer.
Since all these issues
are relating to the estimate of turn over and G.P. which are in the
realm of appreciation of facts and Tribunal being final fact finding
authority, has arrived at a particular conclusion, we are of the
view that no substantial question of law arises out of the order of
the Tribunal.
Both these Appeals are
accordingly dismissed.
(K. A. PUJ, J.) (B. N. MEHTA, J.)
kks
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