Acit Virudhunagar Circle Virudhunagar v. N Narayanasamy Virudhunagar

In The Income Tax Appellate Tribunal D B Ench Chennai Before Shri A Mohan Alankamony Accountant Member And Shri Duvvuru Rl Reddy Judicial Member I T A Nos 1595 1596 Mds 2017 Assessment Years 2012 13 2013 14 The Assistant Commissioner Of Income Tax Virudhunagar Circle Virudhunagar Vs Shri N Narayanasamy Prop Banu Hotel No 134 Madurai Road Virudhunagar Pan Acjpn 6473 B Appellant Respondent C O Nos 120 121 Mds 2017 In I T A Nos 1595 1596 Mds 2017 Shri N Narayanasamy Prop Banu Hotel No 134 Madurai Road Virudhunagar Vs The Assistant Commissioner Of Income Tax Virudhunagar Circle Virudhunagar Pan Acjpn 6473 B Appellant Respondent Revenue By Smt S Vijayaprabha Jcit Assessee By Shri M Kumaraswamy Itp Date Of Hearing 15 11 2017 Date Of Pronouncement 28 12 2017 O R D E R Per A Mohan Alankamony Am These Appeals By The Revenue Are Directed Against T He Orders Passed By The Learned Commissioner Of Income Tax Appeals 3 Madurai Dated 24 03 2017 27 03 2017 In Ita 2 Ita No 1595 1596 M Ds 2017 Co No 120 121 Mds 2017 Nos 0086 2016 17 0087 2016 17 For The Assessment Years 2012 13 2013 14 Passed U S 250 6 R W S 143 3 147 Of The Act The Assessee Has Also Raised Cross Objection S Towards The Relevant Orders Of The Ld Cit A Supra 2 The Revenue Has Raised Identical Grounds In Both Its Appeals However The Cruxes Of The Issues Are That I The Ld Cit A Has Erred In Estimating The Turno Ver Of The Assessee At Rs 2 Crores And Rs 2 2 Crores For The Assessment Year 2012 13 2013 14 Respectively With Out Any Basis Ii The Ld Cit A Has Erred In Directing The Ld Ao To Adopt Net Profit 8 On Turnover 3 The Assessee Has Raised Several Identical Ground S In His Cross Objections Which Are In Support As Well As Ag Ainst The Orders Of The Ld Cit A 4 The Brief Facts Of The Case Are That The Assesse E Is An Individual Engaged In Hotel Business A Survey U S 133 A Of The Act Was Conducted In The Business Premises Of The A Ssessee On 3 Ita No 1595 1596 M Ds 2017 Co No 120 121 Mds 2017 04 02 2015 Till The Date Of Survey The Assessee H Ad Not Filed His Return Of Income For The Assessment Year 2012 13 As Well As For The Assessment Year 2013 14 During The Course Of Survey It Was Found That The Assessee Had Invested In Certain Immovable Properties Fixed Deposits Paid Money For Purchase Of Flat For His Son At Chennai During The Month Of January 2014 An D September 2014 It Was Further Observed That The Assessee Has Incurred Expenditure Of Rs 44 93 000 For His Son S Marriage During The Month Of September 2014 There Were Al So Certain Cash Deposits In City Union Bank Therefore A Not Ice Was Served U S 148 Of The Act Requiring The Assessee To Furnish His Return Of Income In Response The Assessee Filed His Return Of Income For The Assessment Year 2012 13 2013 14 On 31 03 2015 Admitting His Total Income As Rs 3 93 76 0 Rs 5 98 230 Respectively However The Assessee D Id Not Furnish His Statement Of Income Balance Sheet And Profit Loss Account Along With The Return Of Income Thereafte R The Ld A O Made Additions In The Hands Of The Assessee For The Assessment Year 2012 13 Under The Head Unexplained Investment Towards Immovable Property U S 69 Of The Act Income From O Ther Sources Unexplained Investments By Way Of Cash Dep Osits In 4 Ita No 1595 1596 M Ds 2017 Co No 120 121 Mds 2017 Savings Bank Account U S 69 Of The Act And Income F Rom Business Rs 53 12 830 Similarly Additions Were Made For The Assessment Year 2013 14 Under The Head Unexplained Investment In Immovable Properties U S 69 Of The Ac T Unexplained Investment By Way Of Cash Deposits In S Avings Bank Account U S 69 Of The Act And Income From Business Of Rs 50 73 996 5 During The Course Of Survey Proceedings It Was Revealed That The Assessee Had Disclosed Sales Before The Co Mmercial Tax Officer Virudhnagar As Rs 36 89 465 For The Assessment Year 2012 13 And Rs 35 23 609 For The Assessment Year 2013 14 However From The Materials Examined During Th E Course Of Survey With Respect To The Restaurant Owned By The Assessee In Virudhnagar Collectorate Kallikubi Rr Nagar It Was Revealed That The Assessee Had Suppressed The Sale To The Ex Tent Of Eight Times Therefore Multiplying The Turnover Disclose D Before The Commercial Tax Officer By Eight The Total Turnover Of The Assessee For The Assessment Year 2012 13 2013 14 Was Determined At Rs 2 95 15 720 Rs 2 81 88 872 R Espectively Thereafter The Ld Ao Estimated The Net Profit Of T He Assessee 5 Ita No 1595 1596 M Ds 2017 Co No 120 121 Mds 2017 18 Of The Turnover And Worked Out The Same At Rs 53 12 830 Rs 15 73 997 For The Assessment Year 2012 13 2013 14 Respectively On Appeal The Ld Cit E Stimated The Turnover Of The Assessee For The Assessment Year 20 12 13 At Rs 2 00 Crs Based On His Findings That The Turnover Per Day Works Out To Rs 75 180 Which Was Further Based On The Materials Found During The Course Of Survey For The Assessment Year 2015 16 Wherein The Turnover Was Computed At R S 2 60 Crs Thereafter By Estimating 10 Increase In Turno Ver The Turnover For The Subsequent Assessment Year 2013 14 Was Worked Out At Rs 2 20 Crs Subsequently The Ld Cit Estimated The Income Of The Assessee At 8 Of The Turnover As Against 18 Worked Out By The Ld Ao Aggrieved By The Order Of The Ld Cit The Revenue Is In Appeal Before Us 6 The Ld Dr Submitted Before Us That The Ld Ao Had Fairly Estimated The Income Earned By The Assessee With Re Spect To His Restaurant Business Which Did Not Require Any Inter Ference By The Ld Cit A He Further Submitted That The Assess Ee Has Grossly Erred In Not Maintaining His Books Of Accou Nts And Therefore The Ld Ao Did Not Have Any Other Alternat Ive But To 6 Ita No 1595 1596 M Ds 2017 Co No 120 121 Mds 2017 Estimate The Income Of The Assessee It Was Furthe R Submitted That The Ld Ao Had Estimated The Turnover Of The As Sessee Based On The Materials Available Before Him During The Course Of Survey And The Ld Cit Had Erred In Reducing The Tur Nover Worked Out By The Ld Ao The Ld Dr Further Vehemently Arg Ued Stating That In Restaurant Business The Margin Is Quite Hig H And The Ld Ao Had Magnanimously Estimated The Net Profit At 18 On The Turnover Which Was Unduly Reduced By The Ld Cit To 8 It Was Therefore Pleased The Order Of The Ld Ao May Be Restored By Setting Aside The Order Of The Ld Cit On This Issue The Ld Ar On The Other Hand Submitted That The Estimation Of Tur Nover Made By The Ld Cit Was Improper Because The Assessees Actu Al Turnover Was Much Less Comparing To The Turnover Worked Out By The Ld Cit He Further Submitted That The Ld Cit Had Al So Erred In Estimating The Net Profit At 8 Of The Turnover Bec Ause In The Highly Competitive Restaurant Business The Margin I S Very Much Lesser 7 We Have Heard The Rival Submissions And Carefull Y Perused The Materials On Record 7 Ita No 1595 1596 M Ds 2017 Co No 120 121 Mds 2017 8 From The Facts Of The Case It Is Apparent That The Assessee Has Not Maintained His Books Of Accounts In This Situation The Revenue Has No Other Option But To Estimate The Inc Ome Of The Assessee On Some Logical Basis Considering The Fac Ts And Circumstance Of The Case We Are Of The View That Th E Ld Cit Has Fairly Estimated The Turnover Of The Assessee At Rs 75 180 Per Day After Examining The Materials On Record And Th Ereafter Came To A Reasonable Conclusion That The Turnover Of The Assessee For The Relevant Assessment Year 2012 13 Is Rs 2 00 Crs Further We Are Of The View That The Ld Cit A Has Fairly Wo Rked Out The Turnover Of The Assessee For The Assessment Year 20 13 14 At Rs 2 20 Crs By Estimating An Increase Of 10 For Th E Subsequent Assessment Year Therefore We Do Not Find Any Infi Rmity In The Orders Of The Ld Cit On This Issue However We Are Of The Opinion That The Estimate Of Net Profit At 8 On Tu Rnover With Respect To Restaurant Business Is Quite Low Though The Findings Of The Ld Ao That In Restaurant Business A Bare Min Imum Of 18 On Turnover Would Be The Net Profit Cannot Be Simpl Y Brushed Aside Taking A Lenient View We Hereby Hold That T He Net Profit Of The Assessee To Be 10 Of The Turnover Would Suffic E To Meet The End Of Justice Accordingly We Uphold The Decisio N Of The Ld Cit 8 Ita No 1595 1596 M Ds 2017 Co No 120 121 Mds 2017 With Respect To The Determination Of The Turnover O F The Assessee For The Assessment Year 2012 13 2013 14 At Rs 2 0 0 Rs 2 20 Crs Respectively And Further Direct The L D Ao To Compute The Net Profit Of The Assessee At 10 Of Th E Turnover For Both The Respective Assessment Years Thus Both T He Grounds Raised By The Revenue Are Disposed Off 9 Since We Have Confirmed The Order Of The Ld Cit W R T The Determination Of Turnover For Both The Assessment Y Ears And Further Modified The Order Of The Ld Cit W R T The Computation Of The Net Profit The Cross Objection Raised By The A Ssessee In His Co Stands Dismissed 10 In The Result The Appeal Of The Revenue Is Par Tly Allowed And The Cross Objection Raised By The Assessee Is D Ismissed Order Pronounced On The 28 Th December 2017 At Chennai Sd Sd Duvvuru Rl Reddy A Mohan Alankamony Judicial Member Accountant Member Chennai Dated 28 Th December 2017 9 Ita No 1595 1596 M Ds 2017 Co No 120 121 Mds 2017 Rsr Copy To 1 Appellant 2 Respondent 3 Cit A 4 Cit 5 01 2 Dr 6 1 Gf