The ACIT, Central Circle-1(2),, Ahmedabad v. Havmor Restaurant-Baroda,, Ahmedabad

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI JM AND N. S. SAINI AM) ITA NO.3209/AHD/2007 A. Y.: 2004-05 THE A. C. I. T. CENTRAL CIRCLE-1(2) ROOM N9O.305 3 RD FLOOR AAYAKAR BHAVAN AHMEDABAD VS M/S. HAVMORE RESTAURANT BARODA RELIED ROAD AHMEDABAD PA NO. AACFH 2765 H (APPELLANT) (RESPONDENT) ITA NO. 3210/AHD/2007 A. Y.: 2004-05 THE A. C. I. T. CENTRAL CIRCLE-1(2) ROOM N9O.305 3 RD FLOOR AAYAKAR BHAVAN AHMEDABAD VS M/S. HAVMORE NAVRANGPURA AHMEDABAD PA NO.2744 P (APPELLANT) (RESPONDENT) APPELLANT BY SHRI C. K. MISHRA DR RESPONDENT BY SHRI ANKIT PARIKH AND SANJAY S. MAJUNDAR AR O R D E R PER BENCH: THIS ORDER SHALL DISPOSE OF BOTH THE DEPARTMENTAL APPEALS ON THE FOLLOWING GROUNDS: ITA NO.3209/AHD/2007 1. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIR ECTING TO DELETE THE ADDITION OF RS.14 45 413/- MADE ON ACCOU NT OF DISALLOWANCE OF INFLATION IN PRODUCTION COST. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF T HE A. O. ITA NO.3209 AND 3210/AHD/2007 M/S. HAVMORE RESTAURANT BARODA AND M./S. HAVMORE NAVRANGPURA 2 ITA NO.3210/AHD/2007 1. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIR ECTING TO DELETE THE ADDITION OF RS.19 18 449/- MADE ON ACCOU NT OF DISALLOWANCE OF INFLATION IN PRODUCTION COST. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF T HE A. O. 2. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND C ONSIDERED THE MATERIAL AVAILABLE ON RECORD. ITA NO.3209/AHD/2007 3. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST T HE ORDER OF THE LEARNED CIT(A) -1 AHMEDABAD DATED 16-05-2007 FOR A SSESSMENT YEAR 2004-05 CHALLENGING THE DELETION OF ADDITION OF RS. 14 45 413/- MADE ON ACCOUNT OF DISALLOWANCE OF INFLATION IN PRODUCTION COST. THE AO OBSERVED ON VERIFICATION OF THE MONTHLY SUMMARY OF PURCHASES AND SALES PRODUCED BY THE ASSESSEE THAT FOOD PRODUCTION COST WAS QUITE HIGH (36.34%). THE ASSESSEE WAS ASKED TO FURNISHED PRODUCTION REGISTER FOR VERIFICATION BUT THE SAME COULD NOT BE PRODUCED. THE ASSESSEE SUBMIT TED BEFORE THE AO THAT ALL THE DETAILS OF THE MATERIAL CONSUMED ARE M ENTIONED IN THE BOOKS OF ACCOUNT PRODUCED BEFORE THE AO AND THAT ON THE S IMILAR PATTERN COST IS ALREADY CONSIDERED IN THE EARLIER YEAR. THE ASSESSE E EXPLAINED VARIOUS ITEMS BUT THE AO WORKED OUT THE INFLATION IN THE FO OD/PRODUCTION COST AND MADE THE ADDITION OF RS.14 45 413/-. THE ASSESS EE EXPLAINED THE FACT BEFORE THE LEARNED CIT(A) THAT ALL THE DETAILS WERE MENTIONED IN THE BOOKS OF ACCOUNT WHICH WERE PRODUCED BEFORE THE AO. THE ASSESSEE EXPLAINED THE COST OF THE ITEMS SUPPLIED FREE COST OF STAFF FOOD WASTAGE DISCOUNT TO THE CUSTOMERS AND SUPPLEMENTARY FOOD AS PER SCHEME AND EXPLAINED AVERAGE COST OF FOOD AND THE LOWER PROFIT MARGIN DUE TO THE RESTAURANT IS PUTTING SOME SCHEMES IN OFF DAYS. IT WAS STATED THAT THE ITA NO.3209 AND 3210/AHD/2007 M/S. HAVMORE RESTAURANT BARODA AND M./S. HAVMORE NAVRANGPURA 3 SAME WAS WORKED OUT IN EARLIER YEAR. THEREFORE EST IMATE MADE BY THE AO IS NOT CORRECT. THERE WAS NO INCRIMINATING MATERIAL ON RECORD AGAINST THE ASSESSEE AND THAT NO SPECIFIC DEFECT HAS BEEN POINT ED OUT IN THE BOOKS OF ACCOUNT. IT WAS FURTHER SUBMITTED THAT THERE WAS A SEARCH IN THE GROUP CASES AND BLOCK ASSESSMENT ORDER HAS BEEN FRAMED AN D THE AO ON THE BASIS OF THE BLOCK ASSESSMENT ORDER AND THE ADDITIO N MADE THEREOF CONSIDERING THE SAME ISSUE IN THE REGULAR ASSESSMEN T MADE THE ADDITION. IT WAS ALSO EXPLAINED THAT THE LEARNED CIT(A) DELET ED THE SIMILAR ADDITION IN THE BLOCK ASSESSMENT. THE LEARNED CIT(A) CONSIDE RING THE SUBMISSION OF THE ASSESSEE NOTED THAT THE LEARNED CIT(A) ON TH E SAME ISSUE AND ON SIMILAR ADDITION ALLOWED THE APPEAL OF THE ASSESSEE IN THE ASSESSMENT EAR 2003-04. THE LEARNED CIT(A) ACCORDINGLY DELETED THE ENTIRE ADDITION. 4. THE LEARNED DR RELIED UPON THE ORDER OF THE AO. ON THE OTHER HAND THE LEARNED COUNSEL FOR THE ASSESSEE REITERAT ED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THA T THE AO MADE THE ADDITION MERELY BECAUSE SEARCH WAS CONDUCTED IN THE GROUP CASES IN EARLIER YEAR. HE HAS SUBMITTED THAT THE LEARNED CIT (A) DELETED THE ADDITION IN THE ASSESSMENT YEAR 2003-04 AND THE ORD ER OF THE LEARNED CIT(A) IS NOW CONFIRMED BY ITAT AHMEDABAD BENCH IN ITA NO.1849/AHD/2006 ETC. DATED 22-05-2009. COPY OF THE ORDER IS PLACED ON RECORD. 5. ON CONSIDERATION OF THE RIVAL SUBMISSIONS WE DO NOT FIND IT TO BE A FIT CASE FOR INTERFERENCE. THE AO BASICALLY RELIED UPON THE REASONS DISCUSSED IN THE BLOCK ASSESSMENT ORDER FOR THE PUR POSE OF MAKING THE ADDITION. THE LEARNED AO ALSO NOTED THAT THOUGH AD DITION HAS BEEN DELETED ON ACCOUNT OF INFLATION IN FOOD PRODUCTION COST BY THE LEARNED CIT(A) BUT THE DEPARTMENT HAS PREFERRED APPEAL BEFO RE THE TRIBUNAL WHICH IS YET TO BE DECIDED. IT WOULD THEREFORE SH OW THAT THE AO MERELY ON THE BASIS OF FINDING GIVEN IN THE BLOCK ASSESSME NT MADE THE ADDITION ITA NO.3209 AND 3210/AHD/2007 M/S. HAVMORE RESTAURANT BARODA AND M./S. HAVMORE NAVRANGPURA 4 IN THE ASSESSMENT YEAR IN QUESTION. THE ASSESSEE FI LED COPY OF THE ORDER OF THE TRIBUNAL FOR ASSESSMENT YEAR 2003-04 DATED 2 2-05-2009 (SUPRA) IN WHICH THE TRIBUNAL CONSIDERING THE ISSUE IN DETAIL CONFIRMED THE ORDER OF THE LEARNED CIT(A) FOR ASSESSMENT YEAR 2003-04. THE DEPARTMENTAL APPEAL FOR ASSESSMENT YEAR 2003-04 WAS ACCORDINGLY DISMISSED. SIMILARLY THE GROUP CASES IN WHICH SEARCH WERE CON DUCTED WAS ALSO CONSIDERED FOR BLOCK ASSESSMENT AND THE DEPARTMENTA L APPEALS IN THE BLOCK ASSESSMENT HAVE ALSO BEEN DISMISSED BY THE SA ME ORDER. IT THEREFORE STANDS PROVED ON RECORD THAT THE BASIS O F THE AO FOR MAKING THE ADDITION DISAPPEAR BECAUSE OF THE DEPARTMENTAL APPEAL IS DISMISSED. IN THE PRECEDING ASSESSMENT YEAR 2003-04 ALSO THE A O MADE SIMILAR ADDITION ON THE SAME REASON. THE ORDER OF THE LEARN ED CIT(A) IS CONFIRMED BY THE TRIBUNAL. THEREFORE THE LEARNED CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION BY FOLLOWING THE ORDER FOR ASSESSMENT YEAR 2003-04. THE LEARNED DR COULD NOT CONTRIBUTE MUCH AND HAS NOT PO INTED OUT ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT(A) IN FOL LOWING THE ORDER FOR THE PRECEDING ASSESSMENT YEAR. WE ACCORDINGLY DO NOT F IND ANY MERIT IN THE DEPARTMENTAL APPEAL. THE SAME IS ACCORDINGLY DISMIS SED. 6. AS A RESULT THE DEPARTMENTAL APPEAL STANDS DISM ISSED. ITA NO.3210/AHD/2007 7. THE REVENUE PREFERRED THIS APPEAL AGAINST THE OR DER OF THE LEARNED CIT(A)-I AHMEDABAD DATED 16-05-2007 CHALLENGING TH E DELETION OF ADDITION OF RS.19 18 449/- MADE ON ACCOUNT OF DISAL LOWANCE OF INFLATION IN PRODUCTION COST FOR ASSESSMENT YEAR 2004-05. IT IS ADMITTED FACT THAT THE FACTS ARE SIMILAR AS IS CONSIDERED IN ITA NO.32 09/AHD/2007. BY FOLLOWING THE SAME ORDER IN THIS APPEAL WE DISMISS THE DEPARTMENTAL APPEAL. 8. AS A RESULT THE DEPARTMENTAL APPEAL IS DISMISSE D. ITA NO.3209 AND 3210/AHD/2007 M/S. HAVMORE RESTAURANT BARODA AND M./S. HAVMORE NAVRANGPURA 5 9. IN VIEW OF THE ABOVE BOTH THE DEPARTMENTAL APPE ALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 07-05-2010 SD/- SD/- (N. S. SAINI) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 07- 05-2010 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR ITAT AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR ITAT AHMEDABAD