Income Tax Appellate Tribunal - Delhi
Tanuja Bindra, New Delhi vs Assessee
IN THE INCOME TAX APPELLATE TRIBUNAL
(DELHI BENCH : H ' NEW DELHI)
BEFORE SHRI A.D. JAIN, J UDICIAL MEMBER AND
SHRI A.K. GARODIA, ACCOUNTANT MEMBER
ITA. No.4479/Del./2009
(Assessment Year : 2006-07)
Smt. Tanuja Bindra, Vs. ACIT, Cen. Circle 9,
Prop. M/s Moet's Chinese Cuisine, New Delhi.
50, Defence Colony Mkt.,
New Delhi.
(PAN/GIR No.AAGPB4452L)
(Appellant) (Respondent)
Assessee by : Shri Anil Jain, Adv.
Revenue by : Shri Sukhesh Jain, Sr.DR
ORDER
PER A.K. GARODIA, AM
This is an assessee's appeal directed against the order of CIT(A)-II, New Delhi dated 28.10.2009 for AY 2006-07. The grounds raised by the assessee reads as under:
"1. The Ld.CIT(A) has erred in confirming and estimating the g.p. rate from M/s Moet's Chinese Cuisine @ 25% as against 30% estimated by AO and 19.29% as per books of account without rejection of books of account or any adverse mat3rial under seizure.
2. The Ld.CIT)(A) has erred in applying the decision of his predecessor in the case of sister concern Moet's Bar Be Que for the AY 2004-05 and 2005-06 jn which 25% g.p. rate was estimated by the CIT(A) without finding any adverse material in the case of the assessee and agreeing to the various contentions of the appellant.
3. The order of the Ld.CIT(A) is against law and facts of the case.
2. Brief facts are that a search was conducted on 6.12.2005 in the Moet's Group of cases and it included the business premises of the assessee, A-50, Defence Colony, New Delhi. The assessee is proprietor of a restaurant in the name and style of M/s Moet's Chinese Cuisine. The AO has referred to some statement of employees of the assessee ITA No.4479/Del./2009 (AY : 2006-07) and AO was doubting about the sales recorded in the books of the assessee, but ultimately the AO did not make any addition on account of any suppressed sale and the only addition made by the AO of Rs.424,862/- is on the basis of estimating the g.p. of the assessee at the rate of 30% of the sales of Rs.39,67,945/-, being the sales declared by the assessee itself as against g.p. rate of 19.29% declared by the assessee. Being aggrieved, the assessee carried the matter in appeal before the CIT(A) who has restricted the addition to the extent of g.p. @ 25% of sales and now the assessee is in further appeal before us.
3. It is submitted by the Ld.AR of the assessee that books were not rejected by the AO and hence the g.p. declared by the assessee cannot be disturbed. Regarding the decision of Ld.CIT(A) in the case of Moet's Bar be Que for AYs 2004-05 & 05-06, which has been followed by the CIT(A) in the present case as per para 2.3.1 of his order, it was submitted that in those two years of that assessee, there were material found regarding suppression of sales. In support of this contention, he submitted a copy of the order of the CIT(A) in the case for those two years of that assessee. For AY 2004-05, our attention was drawn to page 3 of the order of the CIT(A) wherein it is noted by him that the sales as per seized paper were coming to Rs.27.04 lakh whereas in the books of account, sales were recorded only to the extent of Rs.15.03 lakh and hence there was un- recorded sales of Rs.12 lakh. Similarly, our attention was drawn to page 2 of the order of the CIT(A) in AY 2005-06 wherein it is noted by the CIT(A) that the assessee firm had included the unaccounted sales of Rs.20.26 lakh for AY 2005-06. It is submitted that in the present case, there is no allegation regarding any unaccounted sales and in fact no addition was made on account of any unaccounted sales and hence the decision in those cases has no bearing in the present case. Reliance was placed on the Tribunal decision rendered in the case of ITO vs. Narmada Cement Co. Ltd., reported in 81 TTJ 955 in support of this contention that when no mistake is pointed out in the books and the books were not rejected, no addition can be made on estimation basis.
4. As against this, Ld.DR of the Revenue supported the order of the authorities below. It is also submitted by the Ld.DR of the Revenue that books of account were not rejected by the AO by making specific mention in the assessment order to that effect, but rejection of books by the AO is discernible from the assessment order although not so 2 ITA No.4479/Del./2009 (AY : 2006-07) mentioned specifically . It is also submitted that defects in books are pointed out by the AO and hence g.p. has to be estimated. He supported the order of the authorities below.
5. We have considered the rival submissions and have gone through the orders of the authorities below. We find that in the present case, no addition has been made on account of any suppression of sales because even the increased g.p. rate of 30% by the AO and 25% by the CIT(A) has been applied to the sales declared by the assessee in its books of account at Rs.39.67 lacs. In the assessment order, there is no allegation that any expenses have been inflated by the assessee. A general statement is made by the AO in para 6 of the assessment order that the assessee is not maintaining complete books of account and the sale and purchase made are not supported with sale bills/purchase bills/vouchers, but even after stating so, the AO has accepted the sales declared by the assessee at Rs.39.67 lakhs and he has made addition by estimating the g.p. rate of 30% on the basis of other group cases. The CIT(A) has referred to two orders of the CIT(A) in the case of Moet's Bar be Que for AYs 2004-05 & 05-06 in which CIT(A) has reduced the g.p. rate estimation from 30% to 25%. Ld.AR of the assessee has submitted before us the copy of the order of CIT(A) for those two years in the case of Moet's Bar be Que and we have seen that in those two cases, suppressed sale was there whereas in the present case, there is no suppressed sale and hence decision in those two years of Moet'sBar be Que has no relevance for deciding the issue in dispute in the present case. No independent reasoning is given by the authorities below for making addition in the present case and the addition was made by them simply on the basis of group cases. Under these facts, we are of the considered opinion that the addition was made on the basis of suspicion and doubt without bringing any adverse material on record to indicate that the gross profit declared by the assessee in her regular books of account is not correct and reliable. In the absence of any adverse material, we are of the considered opinion that the addition made by the AO and partly confirmed by the CIT(A) cannot be sustained, particularly when the books of account of the assessee are not rejected by the AO and there is no specific instance pointed out by the AO indicating inflation of expenses. We, therefore, delete the addition made by the AO and partly confirmed by the CIT(A).
3ITA No.4479/Del./2009 (AY : 2006-07)
5. In the result, the appeal of the assessee is allowed.
6. Order pronounced in open court on 23.04.2010.
Sd/- Sd/-
(A.D. JAIN) (A.K. GARODIA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated, April 23 , 2009.
SKB
Copy forwarded to:
1.Appellant
2.Respondent
3.CIT
4.CIT(A)-II, New Delhi.
5.CIT(ITAT), New Delhi. AR/ITAT
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