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2015 (11) TMI 649 - BOMBAY HIGH COURT

2015 (11) TMI 649 - BOMBAY HIGH COURT - TMI - Addition made by reducing the sale - estimating the net profit @ 3% of the total sale - CIT(A) deleted the addition confirmed by ITAT - Held that:- Case made out by Mr.Suresh Kumar on behalf of the Revenue is being urged before us for the first time. The Revenue was not able to point out from the record the submission that the expenditure incurred in respect of suppressed sale were already included as a part of the cost in preparing food items which .....

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al, is in any way perverse. - Decided against revenue. - Income Tax Appeal No. 1953 of 2013 - Dated:- 26-10-2015 - M S Sanklecha And G S Kulkarni, JJ. For the Appellant : Mr.Suresh Kumar, Adv ORDER P.C. 1. This appeal under Section 260A of the Income Tax Act, 1961 (the 'Act') challenges the order dated 12 October 2007 passed by the Income Tax Appellate Tribunal (the 'Tribunal'). The appeal relates to the Assessment Year 2001-02. 2. The Revenue has urged the following question of .....

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ts total income at ₹ 1.59 lakhs. In its return of income the assessee had declared its sale of food and liquor at ₹ 2.91 lakhs. The Assessing Officer by order dated 26 March 2004 held that there was suppression of sale of liquor / food items and in particular icecreams, gulab jamun and paneer items to the extent of ₹ 1.78 crores. The aforesaid suppression of sale was arrived at on the basis of Assessing Officer's own estimate of the quantum of raw material required to prepa .....

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as concerned, the CIT (Appeals) by its order dated 21 July 2004 reduced the suppressed sale from ₹ 1.78 crores to ₹ 1.50 crores. Further it held that the expenses incurred in respect of preparing food items on suppressed sale was not taken in account. Thus, he applied a net profit ratio of 3% as against 1.64% adopted by the assessee. On the above basis profits of the respondentassessee was worked out at ₹ 4,50,000/. 5. Both, the Revenue as well as the assessee being aggrieved b .....

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s given detailed reasons as to why the workings of the Assessing Officer cannot be upheld in toto. For the sake of brevity we do not reproduce these detailed calculations. Suffice to say that the learned Departmental Representative was not able to controvert or point out any specific infirmity in the estimates made by the CIT(A). The findings of the first appellate authority can be summarized as follows: i) the estimates of suppression of sales of liquor, suppression of sale of food item and ice .....

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rchase of vegetables etc. adopted by the Assessing Officer i.e. at ₹ 10 per k.g. were very low; v) the percentage of wastage allowed by the Assessing Officer was also very low; vi) The quantum of good preparation that can be sold by the restaurant against the utilization of 1 k.g. of material, as estimated by the Assessing Officer is excessive and not practicable; vii) There should be reasonable allowance for spoiled and state food items; viii) The fact that the assessee was employing 30 s .....

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y way of quarter bottles, half bottles etc. Such calculation of pegwise sales results in overestimation of sale of liquor items; xii) Cost of paneer, cost of purchase of gulab jamun and cost of purchase of icecream were not allowed or discussed in the assessment order." The Tribunal held that it is incorrect to tax the entire turnover as income and for that purpose reliance was placed on the decision of the Tribunal in the case "Overseas Chinese Cousine Vs. ACIT". In the above fac .....

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