Income Tax Appellate Tribunal - Hyderabad
M/A Meghana Restaurant & Bar, Warangal vs Assessee on 6 August, 2013
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCHES "A" : HYDERABAD
BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER
AND
SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER
ITA.No.26/Hyd/2013
Assessment year 2006-2007
M/s. Meghana Restaurant & vs. ACIT, Circle (1),
Bar, Warangal Warangal.
PAN AANFM0966C
(Appellant) (Respondent)
For appellant : Shri K.V. Chalamaiah (A.R.)
For respondent : Shri G.S. Phanikishore (D.R.)
Date of Hearing : 06.08.2013
Date of pronouncement : 27.09.2013
ORDER
PER SMT. ASHA VIJAYARAGHAVAN, J.M.
This appeal by the assessee is against the order of CIT(A)-VI, Hyderabad dated 28.09.2012 for the assessment year 2006-07. The confirmation for the CIT(A) of the profit of Rs.24,000/- on the estimated sale of Rs.6 lakhs on the ancillary business in Fast Foods separately in addition to determination of profit of the concern at 5% in their Liquor business u/s.44 AL. The assessee is also aggrieved by the order of CIT(A) confirming the addition of Rs.33,89,827/- made u/s.87.
2. The assessee firm has 6 Partners and engaged in the business of purchase and sale of liquor from A.P. Beverages Corporation Ltd. The assessee had admitted the other income of Rs.4,868/- in their 2 ITA.No.26/Hyd/2013 M/s. Meghana Restaurant & Bar, Warangal profit & loss account and there was no explanation about the same. The AO has stated that inspite of number of opportunities given to the assessee he had not to put forward the case. As the assessee did not comply with the same or furnish any particulars, the AO completed the assessment determining the income from liquor at 5% of the liquor turnover. The AO also was aware that the assessee should be selling other items of food to the customers. Therefore he estimated the sales of food items @ Rs.6 lakhs and estimated the income @ 4% which worked out to Rs.24,000/-. The AO also found that the capital balance in the partner's account was credited with a total sum of Rs.33,89,827/-. As the assessee did not provide the source of income of the partners to make the above investment the AO added Rs.33,89,827/- u/s.68 of I.T. Act.
3. Aggrieved the assessee came up on appeal before the CIT(A). The profit on the liquor business was estimated by the CIT(A) following the decision of the Co-ordinate Bench, M/s. Amaravathi Wine Shop in ITA No.1196/Hyd/2011 dt.08.06.2012 wherein it has been decided that the net profit has been estimated @ 5% of the purchase or stock put for sale subject to the condition that it will not be less than the income returned by the assessee. This determination of income from the liquor business has been accepted by the assessee and the department
4. The first issue on which the assessee has come up an appeal is determination of Rs.24,000/- as against Rs.4,868/- declared by the assessee. Before us the assessee had filed the profit and loss account and the balance sheet. In the asset side furnished by the assessee we see an item `gas fitting and kitchen items' @ Rs.1,36,889.65. They have also claimed depreciation on kitchen 3 ITA.No.26/Hyd/2013 M/s. Meghana Restaurant & Bar, Warangal items to the extent of Rs.10,618 on the WDV of Rs.1,47,578. This would show that the assessee is also dealing with some food items. The assessee has not provided any information regarding the particulars of other income shown at Rs.4,868/- even at the time of remand report called for by the CIT(A). There was also no specific explanation about the income before us. Therefore, we feel that the order of CIT(A) estimating the income from supply of food @ Rs.24,000/- is not unreasonable and we confirm the same. The appeal of the assessee on this issue is dismissed.
5. The next issue on appeal is regarding the addition of Rs.33,89,827/- being the amount shown as brought in by the Parners and credited to their capital account. The individual partners have been credited with different amounts. Before the AO the assessee had not furnished any proof regarding the creditworthiness of the partners to introduce this amount. In the course of appellate proceedings, the CIT(A) called for remand report from the AO in connection with the additional information supplied by the assessee regarding the source of the various partners. While in the remand report the AO had extracted the explanation furnished by the assessee in respect of source of income from various partners he was not satisfied with the completeness of the explanation. The assessee filed information on 17.11.11 and the AO completed his remand report on 28.2.12. The assessee further clarified various points raised by the AO vide their letter dt.18.5.12 to the CIT(A) explaining in detail the source of investment by the various partners. The CIT(A) did not accept the same and confirmed the addition of Rs.33,89,827/- u/s 68.
4ITA.No.26/Hyd/2013 M/s. Meghana Restaurant & Bar, Warangal
6. Aggrieved the Assessee is in appeal before us. The learned Counsel for the assessee submitted before us that another opportunity should be given in order to furnish the source of various partners together with bank accounts, particulars of sale of land by partners etc.,
7. The learned D.R. objected to the plea of the learned Counsel for assessee and relied on the decision of the Hon'ble Madras High Court in the case of CIT vs. Krishnaveni Ammal (1986) 158 ITR 826 (Mad.).
8. We have heard both the parties and perused the material available on record. While determining whether the partners have sufficient source to make an investment of Rs.33,89,827/- the Assessing Officer seems to have come to the conclusion that the partners have no source of income to make any investment at all in the firm and added the entire amount. The assessee had not taken the opportunity of explaining the full details of source of the partners in the course of assessment proceedings or the appellate proceedings. We, therefore, dismiss the appeal of the assessee following the ratio of the decision in the case of CIT vs. Krishnaveni Ammal (supra) wherein it has been held as follows :
"Judicial authority can accept any statement of an assessee, when that is the only piece of evidence available in that particular case, and order assessment on such sole evidence. But when even according to the assessee there is other documentary evidence of corroborative value and the same is within the reach of the assessee, in such a case the judicial body cannot act on such interested testimony of the assessee 5 ITA.No.26/Hyd/2013 M/s. Meghana Restaurant & Bar, Warangal alone. The law of evidence mandates that if the best evidence is not placed before the Court, an adverse inference can be drawn as against the person who ought to have produced it."
9. In the result, appeal of the assessee is dismissed.
Order pronounced in the open Court on 27.09.2013.
Sd/- Sd/- (CHANDRA POOJARI) (SMT. ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER Hyderabad, Date 27.09.2013 VBP/-
1. M/s. Meghana Restaurant & Bar, C/o. S. Venkat Reddy, 1-1-110, Prashanth Nagar, NIT P.O., Warangal - 506 004.
2. ACIT, Circle-1, Warangal
3. CIT(A)-VI, 6A, I.T. Towers, A.C. Guards, Hyderabad - 500 004.
4. CIT-VI, Hyderabad
5. D.R. ITAT 'A' Bench, Hyderabad.