HOTEL KUMAR PALACE Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) CM Misc. No. 22700 of 2004 1. For the reasons stated in the application, it is allowed and the delay in filing the appeal is condoned. IT Appeal No. 336 of 2004 This appeal, by the assessee, under Section 260A of the IT Act, 1961 (for short, 'the Act'), is directed against order dt. 19th March, 2004, passed by the Income -tax Appellate Tribunal, Amritsar Bench (for short, 'the Tribunal') in appeal Nos. 8 and 16/Asr/2003, in respect of the block period 1st April, 1998 to 17th Nov., 1999 [reported as Hotel Kumar Palace v. Dy. C1T (2005) 93 TTJ 629.]. According to the assessee, the order involves the following substantial question of law : Whether, under the facts and circumstances of the case, the Tribunal was justified in upholding the addition of Rs. 50,000 on the true interpretation of the provisions of Chapter XIV -B for making an assessment of undisclosed income for the block period without being based on any evidence or material found during the course of the search relatable to this addition of Rs. 50,000.

(2.) THE background facts, giving rise to the appeal, in brief, are as follows : The assessee, a partnership firm, is engaged in the business of hotelier, catering and giving on hire crockery and furniture, under the name and style of M/s Hotel Kumar Palace. On 17th Nov., 1999, a search under Section 132 of the Act was conducted at the business premises of the assessee. During the course of search, it declared an undisclosed income of Rs. 8,18,864. - - - - In its return of income, for the aforementioned block period, the assessee declared income from catering business at Rs. 4,74,000. While completing assessment for the said period, the AO estimated the income from catering at Rs. 6 lacs, inter alia, on the basis that crockery were shown to have been issued 176 times during the period from 29th Oct., 1995 to 22nd Oct., 1999, meaning thereby that at least 100 times catering would have been done by the assessee. Estimating a gathering of approximately 300 persons at each of the functions and applying a profit rate of Rs. 20 per person, the AO worked out an undisclosed income of the assessee on this account at Rs. 1,50,000.

(3.) NOT being satisfied, the assessee as well as the Revenue took the matter in further appeal to the Tribunal. By the impugned order, the Tribunal has upheld the view taken by the CIT(A). Hence, the present appeal.