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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: SHRI C.N. PRASAD & SHRI RAJESH KUMAR
Per Rajesh Kumar, Accountant Member:
The present appeal has been preferred by the assessee against the order dated 13.08.2014 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 1998-99.
The issue raised in ground No.1 & 2 is against the assessment order passed under section 143(3) read with section 254 of the Income Tax Act(hereinafter referred to as The Act) being illegal as in the case of assessee late Shri Karianna M. Shetty who was an individual assessed under GIR No.634 was
After hearing both the parties and perusing the material on record, we are of the opinion that the issue needs to be examined at the level of AO as we find merits in the submissions of the ld AR that assessee was an individual as has been stated in the assessment order, page No.1, item No.5 whereas, the PAN No.AADFN3167C used is that of a firm. Accordingly the issue is restored to the file of then AO with a direction to verify the same and pass the proper order after affording a reasonable opportunity of hearing to the assessee. Accordingly, the issue raised in ground No.1 & 2 is allowed for statistical purpose.
The issue raised in ground No.3 is against the confirmation of addition of Rs.3 lakhs made to the income of the assessee by the AO on account of unexplained investments by the assesee.
The facts in brief are that the assessee was running a hotel and AO observed from the balance sheet that there were no assets which are required for operating a dance bar. Accordingly, the AO added Rs.3 lakhs as unexplained investment to the income of the assessee on the ground that there was no assets appearing in the balance sheet of the assessee such as furniture & fixtures, utensils, A.C. etc. which were essential in the running of a dance bar. Accordingly, the AO estimated the investments in assets at Rs.3 lakhs and added the same to the income of the assessee which was also upheld by the Ld. CIT(A).
3 Late Shri Karianna M. Shetty 6. After hearing both the parties and perusing the material on record, we observe that the assessee was doing the business since long i.e. more than 50 years and all the items of furniture & fixtures, utensils, A.C. were fully depreciated in the books of accounts over the years. The Ld. A.R. therefore vehemently submitted before us that since the business of the assessee was existing from more than 50 years there was hardly any assets left in the books of accounts. Moreover, the Ld. A.R. submitted that the authorities below have failed to point out any specific item which was found to be on account of unexplained investments. The Ld. D.R., on the other hand, relied on the order of Ld. CIT(A). Under these facts and circumstances when the case of the assessee is more than 50 years old and assessee is no more and in absence of any speaking and reasoned order we are left with no option but to delete the addition made on account of unexplained investments. Accordingly, we set aside the order of Ld. CIT(A) and direct the AO to delete the same.
The issue in ground No.4 is against upholding of income at Rs.1,95,000/- by Ld. CIT(A) as against the estimation of income at Rs.3,90,000/- by the AO.
The AO observed that during the course of assessment proceedings that the cost of snacks and aerated water debited to the P&L account is highly disproportionate to the sale of alcohol and wine declared by the assessee as income. The AO also noted that there was a possibility that this being a dance bar that money received by the dancing ladies from the customer was shared with the owner and accordingly he estimated the income of Rs.4,50,000/- and after allowing
In the appellate proceedings, the Ld. CIT(A) reduced the income by 50% and directed the AO to make the addition of Rs.1,95,030/-. While doing so ,Ld. CIT(A) observed that the observation of the AO that owner was sharing the money received by the dancing ladies from the customers is not beyond imagination and thus confirmed the part addition.
After hearing both the parties and perusing the material on record, we observe that the addition made by the AO and as sustained by the Ld. CIT(A) at Rs.1,95,030/- is purely a conjuncture and estimation without any material. In our opinion, the authorities below have failed to bring on record any concrete proof or evidence to corroborate their observations. Accordingly, we set aside the order of Ld. CIT(A) and direct the AO to delete the addition.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 17.12.2019.