Smt. M.Uma Maheswari, Madurai v. ACIT, Madurai

ITA 1501/CHNY/2011 | 2004-2005
Pronouncement Date: 08-12-2011 | Result: Dismissed

Appeal Details

RSA Number 150121714 RSA 2011
Assessee PAN NDENT1495T
Bench Chennai
Appeal Number ITA 1501/CHNY/2011
Duration Of Justice 3 month(s) 1 day(s)
Appellant Smt. M.Uma Maheswari, Madurai
Respondent ACIT, Madurai
Appeal Type Income Tax Appeal
Pronouncement Date 08-12-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 08-12-2011
Assessment Year 2004-2005
Appeal Filed On 06-09-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH CHENNAI BEFORE DR. O.K.NARAYANAN VICE-PRESIDENT AND SHRI HARI OM MARATHA JUDICIAL MEMBER ITA NOS. ASSESSMENT YEARS APPELLANT RESPONDENT 1495 TO 1500 /MDS/2011 2002-03 2004-05 2005-06 2006-07 2007-08 & 2008-09 SHRI S.MANOHARAN 198 WEST MASI STREET MADURAI-625 001 PAN:AITPM1981H ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE II MADURAI. 1501 TO 1505 /MDS/2011 2004-05 2005-06 2006-07 2007-08 & 2008-09 SMT. UMA MAHESWARI 198 WEST MASI STREET MADURAI-625 001 PAN:AANPU4807G ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE II MADURAI. APPELLANTS BY : SHRI R.M EENAKSHISUNDARAM ADVOCATE RESPONDENT BY : SHRI P.MAD HANASEKARAN IRS JOINT COMMISSIONER OF INCOME-TAX DATE OF HEARING : 30 TH NOVEMBER 2011 DATE OF PRONOUNCEMENT : 8 TH DECEMBER 2011 O R D E R PER BENCH: THIS IS A BUNCH OF 11 APPEALS FILED BY THE ASSESSE ES SHRI S.MANOHARAN AND HIS WIFE SMT. UMA MAHESWARI. T HE RELEVANT ASSESSMENT YEARS ARE 2002-03 2004-05 200 5-06 2006-07 2007-08 AND 2008-09. THESE APPEALS ARE DI RECTED AGAINST THE ORDERS OF THE COMMISSIONER OF INCOME TAX(APPEALS)-II AT MADURAI AND ARISE OUT OF THE ASS ESSMENTS COMPLETED UNDER SECTIONS 143(3) READ WITH 153A AND 153C. ITA NOS.1495 TO1505/MDS/2011 2 2. SHRI S.MANOHARAN AND HIS WIFE SMT. UMA MAHESWARI ASSESSEES IN THESE APPEALS BEFORE US ARE RUNNING V EGETARIAN RESTAURANTS UNDER THE NAME AND STYLE OF MURUGAN ID LI SHOP. THEY ARE RUNNING A CHAIN OF RESTAURANTS UNDER THE A BOVE BRAND NAME IN DIFFERENT PLACES AND IN DIFFERENT LOC ATIONS IN SAME CITIES. THERE WAS A SEARCH OPERATION CONDUCTED IN THE SHOPS OF SHRI S.MANOHARAN AT MADURAI AND CHENNAI AN D ALSO AT HIS RESIDENCE AT CHENNAI. IN THE COURSE OF SEARC H OPERATIONS CERTAIN DETAILS WERE COLLECTED RELATING TO THE INCOME AND INVESTMENTS OF THE ASSESSEES AND NOTICES WERE ISSUED AS A RESULT OF WHICH ASSESSMENTS WERE COMPL ETED IN THE HANDS OF SHRI S.MANOHARAN UNDER SECTION 153A AN D IN THE HANDS OF SMT. UMA MAHESHWARI UNDER SECTION 153C OF THE INCOME TAX ACT 1961. THE ADDITIONS MADE IN BOTH TH ESE CASES WERE TAKEN UP BEFORE THE COMMISSIONER OF INCO ME TAX(APPEALS) WHO GRANTED PARTIAL MODIFICATIONS AND SUSTAINED CERTAIN ADDITIONS. THE ASSESSEES ARE AGGRIEVED AND THEREFORE THESE BUNCH OF APPEALS FILED BEFORE THE TRIBUNAL. ITA NOS.1495 TO1505/MDS/2011 3 3. THE GROUNDS FILED BY SHRI S.MANOHARAN ARE COMMON FOR ALL THE ASSESSMENT YEARS. AS FAR AS THE ASSESSMENT YEAR 2002-03 IS CONCERNED THE ISSUE RAISED BY SHRI S.MA NOHARAN IS THAT THE COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN CONFIRMING THE ADDITION IN THE HANDS OF THE ASSESSE E EVEN THOUGH THE AMOUNT INVOLVED IN THAT ADDITION WAS IN FACT CONNECTED WITH THE PURCHASE OF AGRICULTURAL LAND BY HIS FRIEND SHRI LAKSHMANA IYER. IN THE ASSESSMENT YEAR 2004-05 THE GROUND RAISED BY THE ASSESSEE SHRI S.MANOHARAN IS T HAT THE COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN CONFIRMING THE ADDITION IN RESPECT OF JIGGARTHANDA TO THE SALES TWICE AND ALSO IN REFIXING THE NET PROFIT AT 15% WH ICH IS HIGHLY EXCESSIVE AND AGAINST THE FACTS OF THE CASE. IT IS ALSO THE CASE OF THE ASSESSEE THAT THE COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN CONFIRMING THE AMOUNT IN THE HANDS OF ASSESSEE WHICH RELATED TO HIS FAMILY SETTLEMENT. FOR ASSESSMENT YEAR 2005-06 THE GROUND RAISED BY THE AS SESSEE IS ONLY IN RESPECT OF ESTIMATE OF NET PROFIT AT 15 % AND THE QUANTUM OF SALES ATTACHED TO JIGGARTHANDA. FOR THE ASSESSMENT YEAR 2006-07 AGAIN THE ONLY GROUND IS RE LATING TO ITA NOS.1495 TO1505/MDS/2011 4 ADDITION SUSTAINED IN RESPECT OF SALES. THE ASSESSE E SHRI S.MANOHARAN HAS RAISED FOR THE ASSESSMENT YEAR 2007 -08 THREE GROUNDS. THE FIRST GROUND RELATES TO THE ESTI MATE OF PROFIT; THE SECOND GROUND IS WITH REFERENCE TO A SU M OF ` 37 30 000/- STATED TO BE AN ADVANCE PAID FOR PURCHA SE OF PROPERTY; AND THE THIRD GROUND RELATES TO ADDITION IN RESPECT OF ` 1 06 000/- MADE IN THE CONTEXT OF STAMP DUTY. FOR THE ASSESSMENT YEAR 2008-09 THE GROUND IS ONLY IN RESP ECT OF ESTIMATE ADDITION IN RESPECT OF SALES RELATING TO J IGGARTHANDA AND THE RESTAURANT. 4. IN RESPECT OF 5 APPEALS FILED BY SMT. UMA MAHESW ARI FOR THE ASSESSMENT YEARS 2004-05 2005-06 2006-07 200 7-08 AND 2008-09 THE GROUNDS ARE COMMON. THE SAID COMM ON GROUND IS THAT THE COMMISSIONER OF INCOME TAX(APPEA LS) HAS ERRED IN ESTIMATING THE SALES OF JIGGARTHANDA TO TW ICE OF THE SALES AND ALSO ERRED IN DETERMINING THE NET PROFIT AT 15%. 5. WE HEARD SHRI R.MEENAKSHISUNDARAM LEARNED ADVOCATE APPEARING FOR THE APPELLANTS AND SHRI ITA NOS.1495 TO1505/MDS/2011 5 P.MADHANASEKARAN LEARNED JOINT COMMISSIONER OF INC OME TAX APPEARING FOR THE REVENUE. 6. IT IS A FACT THAT THE SEARCH CARRIED OUT IN THE BUSINESS AND RESIDENTIAL PREMISES OF SHRI S.MANOHARAN HAS BR OUGHT OUT SPEAKING MATERIALS REGARDING BUSINESS AND INVES TMENT TRANSACTIONS OF THE ASSESSEES WHICH WERE NOT REFLE CTED IN THE REGULAR BOOKS OF ACCOUNTS OR IN THE STATEMENTS FILE D BEFORE THE REVENUE AUTHORITIES. IT IS AFTER EXAMINING THESE MA TERIALS AS WELL AS THE STATEMENTS OF THE CONCERNED PERSONS THA T THE ASSESSING AUTHORITY HAS PROCEEDED TO MAKE ADDITIONS UNDER DIFFERENT HEADS. 7. AS FAR AS BOTH THE ASSESSEES ARE CONCERNED THE COMMON GROUND IS THAT THE COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED IN CONFIRMING ADDITIONS IN R ESPECT OF RESTAURANT SALES AS WELL AS JIGGARTHANDA SALES. IN FACT THE ASSESSING AUTHORITY HAD ESTIMATED THE PROFIT AT 20% OF THE SUPPRESSED SALES. THE COMMISSIONER OF INCOME TAX(APPEALS) HAS MODIFIED THE ESTIMATE TO 15%. SEIZ ED MATERIALS HAVE CLEARLY ESTABLISHED A PATTERN OF SUP PRESSION OF ITA NOS.1495 TO1505/MDS/2011 6 THE SALES PRACTICED BY THE ASSESSEE. THIS FINDING I S APPLICABLE BOTH TO THE RESTAURANT AS WELL AS JIGGARTHANDA. THE REFORE IN THE FACTS AND CIRCUMSTANCES OF THE CASE THERE IS N O FORCE IN THE ARGUMENTS OF THE ASSESSEES THAT THE CASE OF JIG GARTHANDA SHOULD BE CONSIDERED AS PART OF RESTAURANT SALES. I T IS NOT POSSIBLE TO ACCEPT THE CONTENTION OF THE ASSESSEES THAT THE SALES OF JIGGARTHANDA HAD ALREADY BEEN REFLECTED IN THE SALES OF RESTAURANT. ON GOING THROUGH THE UNSATISFACTORY MAINTENANCE OF ACCOUNTS AND DETAILS REGARDING THE S ALES AND OTHER ACTIVITIES OF THE ASSESSEES WE FIND THAT AN ADDITION ON ESTIMATE BASIS IS NECESSARILY JUSTIFIED. THE ASSES SING AUTHORITY HAS COMPUTED THE TURNOVER AFTER MAKING AD DITIONS AND THEREAFTER ESTIMATED THE PROFIT THEREON. THE COMMISSIONER OF INCOME TAX(APPEALS) HAS ULTIMATELY ESTIMATED THE PROFIT AT 15%. IN A BUSINESS LIKE RES TAURANT THERE IS NO MUCH DIFFERENCE BETWEEN THE QUANTUM OF GROSS PROFIT AND THE QUANTUM OF NET PROFIT. THIS IS BECAU SE ALMOST ALL THE EXPENSES ARE COVERED BY THE COMPUTATION OF GROSS PROFIT ITSELF AND A FEW EXPENSES ALONE WOULD COME U NDER THE COMPUTATION OF NET PROFIT. THERE IS NO CLAIM OF SUB STANTIAL ITA NOS.1495 TO1505/MDS/2011 7 DEPRECIATION EITHER. THE RATE OF PROFIT ESTIMATED B Y THE COMMISSIONER OF INCOME TAX(APPEALS) IS REASONABLE A ND THEREFORE WE ARE NOT INCLINED TO INTERFERE WITH THE QUANTUM OF ADDITIONS SUSTAINED BY THE COMMISSIONER OF INCOME TAX(APPEALS) IN RESPECT OF SALES IN THE HANDS OF BO TH THE ASSESSEES. 8. WE HAVE ALSO CONSIDERED THE SPECIFIC GROUNDS RAI SED BY SHRI S.MANOHARAN IN HIS APPEALS REGARDING INDIVIDUA L ADDITIONS MADE IN HIS HANDS FOR DIFFERENT ASSESSMEN T YEARS. IN ALL THESE ADDITIONS THE MAIN ARGUMENT MADE BY THE ASSESSEE IS THAT HE MUST BE GIVEN THE BENEFIT OF TELESCOPING SO THAT THESE INDIVIDUAL ADDITIONS MAY BE SET OFF AGAINST T HE ADDITIONS MADE IN RESPECT OF INCOME FROM SUPPRESSED SALES. IT IS THE CASE OF THE ASSESSEE THAT THE INDIVIDUAL ADDITIONS MADE AND CONFIRMED BY THE COMMISSIONER OF INCOME TAX(APPEALS ) WILL NOT SUBSIST AS THOSE ADDITIONS HAVE TO BE SET OFF A GAINST ADDITIONS MADE ON ACCOUNT OF SALES SUPPRESSION. 9. WE ARE NOT ABLE TO ACCEPT THIS CONTENTION BECAUS E THE MUTUALLY OFFSETTING IMPACT OF ADDITIONS ON ACCOUNT OF SALES ITA NOS.1495 TO1505/MDS/2011 8 SUPPRESSION AND OTHER INDIVIDUAL ADDITIONS HAVE NO T BEEN ESTABLISHED IN THIS CASE. INDIVIDUAL ADDITIONS MADE BY THE ASSESSING AUTHORITY ARE SUPPORTED BY MATERIALS STAN DING FAR AWAY FROM THE CASE OF SALES SUPPRESSION. THEY DO NO T HAVE ANY CONTEMPORANEOUS NEXUS. THEREFORE WE FIND THAT T HE PLEA OF THE ASSESSEE FOR THE BENEFIT OF TELESCOPING CANN OT BE ACCEPTED. 10. REGARDING THE INDIVIDUAL MERIT OF THOSE ADDITIO NS WE DO NOT FIND MUCH FORCE IN THE ARGUMENT OF THE ASSESSEE . THOSE ADDITIONS HAVE BEEN MADE ON THE BASIS OF MATERIALS COLLECTED DURING THE SEARCH. 11. IN RESULT THESE APPEALS FILED BY THE ASSESSEES ARE DISMISSED. ORDER PRONOUNCED ON THURSDAY THE 8TH DECEMBER 2011 AT CHENNAI. SD/- SD/- (HARI OM MARATHA) (DR. O.K.NARAYANAN) JUDICIAL MEMBER VICE-PRESIDENT CHENNAI DATED THE 8 TH DECEMBER 2011. SOMU ITA NOS.1495 TO1505/MDS/2011 9 COPY TO: (1) APPELLANT (4) CIT(A) (2) RESPONDENT (5) D.R. (3) CIT (6) G.F.