COMMISSIONER OF INCOME-TAX Vs. HOTEL SAMRAT

JUDGEMENT

(1.) THE question raised in the connected appeals filed by the Revenue is whether the Tribunal was justified in allowing the miscellaneous petition to recall the earlier order and dismiss the appeals filed by the Revenue. The respondent -assessee was engaged in the business of running a bar hotel as a partnership firm. During the survey conducted various records were recovered including the price list maintained by the bar hotel for retail sale of liquor. Statements were recorded from the managing partner, the hotel manager and also a supplier. The Assessing Officer found from the recovered materials and the statements that the gross profit conceded was incorrect and the gross profit received by the assessee was 60 per cent. for the year 1997 -98, 70 per cent. for the year 1998 -99 and 75 per cent. for the year 1999 -2000. Assessments were accordingly completed on an estimation basis under Section 144 of the Income -tax Act, 1961. On appeal, the Commissioner of Income -tax (Appeals) reiving on the judgment of this Court in Paul Mathews and Sons v. CIT reported in : [2003] 263 ITR 101 held that the statements recorded under Section 133A(3)(iii) of the Income -tax Act have no evidentiary value and, therefore, he cancelled the estimation made by the Assessing Officer and refixed the gross profit at 35 per cent. In the appeals filed by the Department, the assessee did not appear during hearing. The Tribunal, however, heard the appellant -Department, perused the records and partly allowed the appeals by refixing the gross profit at 40 per cent. for the first year, 45 per cent, for the next year and at 50 per cent. for the last year. The assessee thereafter filed an application to set aside the ex parte order and for rehearing, which was allowed by the Tribunal. However, after rehearing the parties the Tribunal also following the judgment of this Court above referred to, recalled their earlier order and dismissed the Department's appeals against which these appeals are filed.

(2.) WE have heard standing counsel appearing for the appellant and advocate Sri V.S. Jayakumar appearing along with advocate Sri S. Arun Raj for the respondent -assessee. During hearing, we felt that the decision of this Court in Paul Mathews and Sons reported in [2003] : 263 ITR 101 above referred to does not lay down the correct position of law because, in our view, statement recorded under Section 133A(3)(iii) though cannot be treated as independent evidence like evidence recorded under Section 132(4), has corroboratory value in assessment and statement recorded under the said provision can be even relied on by the assessee. In other words, the decision of this Court that the statement recorded under the above provision does not have evidentiary value, in our view, does not lay down the correct law. However, since counsel for the respondent -assessee does not rely on the above decision, we proceed to consider these cases on the merits without referring the matter for consideration to a Full Bench because by the operation of the latter part of the section, such statement has relevance for assessment and other proceeding under the Act.