The Income Tax Appellate Tribunal ( ITAT ), Mumbai bench, while upholding the addition made under section 68 of the Income Tax Act, 1961, observed that the assessee failed to produce documentary evidence to establish the genuineness of Hotel Business income.
The assessee, Sanjib Sudhir Pradhan, had undergone the original assessment under section 143(3) read with section 147 of the Act, completed on 18/10/2011, assessing the total income at Rs. 4,12,590. Subsequently, a notice dated 07/05/2012 under section 148 of the Act was issued and served on the assessee.
During the reassessment proceedings, it was noted that the assessee had shown Hotel Management Business in the case of Shri Sanjib Sudhir Pradhan in his individual capacity.
Furthermore, it was observed that the assessee did not disclose the place from where he conducted this business. The balance sheet also lacked any fixed assets that could be used as a hotel, and the profit and loss account did not indicate payment of rent for the use of rented premises.
The assessee was asked to produce documentary evidence in support of his business. Since the assessee failed to produce any documentary evidence despite various opportunities, the Assessing Officer concluded that the assessee did not carry out any genuine business transaction during the relevant year.
Consequently, the AO treated the amount of Rs. 14,15,620 appearing in the books of account under the head Hotel Management Charges as an unexplained cash credit and added the same to the total income of the assessee under section 68 of the Act.
Aggrieved, the assessee filed a further appeal before the CIT( A ), who dismissed the grounds raised by the assessee on this issue, stating that the assessee, claiming to run a catering business, failed to provide the address of the service receiver—a necessary practice in the catering business. Subsequently, the assessee filed a second appeal before the tribunal.
The counsel for the assessee submitted that he was running a catering business, and the income declared in the profit and loss account as Hotel Management Charges arises from the same. According to the original assessment order, no addition was made in respect of Hotel Management Charges. The counsel for revenue supported the order of lower authorities.
The tribunal observed that the assessee had not discharged its onus to satisfactorily prove the incurring of expenditure for running the alleged Hotel Management Business. Moreover, the ledger account of the Hotel Management receipts and salary paid to the staff was not furnished by the assessee in the year under consideration. Therefore, in the absence of satisfactory documentary evidence, the plea of the assessee was rejected, and the addition made by the AO under section 68 of the Act was upheld.
After reviewing the facts and records, the two-member bench of Om Prakash Kant ( Accountant member ) and Sandeep Singh Karhail ( Judicial Member ) upheld the addition made under section 68 of the Income Tax Act due to failing to produce documentary evidence to establish the genuineness of Hotel Business income.
Rituja Pawar Deswal, counsel for the assessee, and P.D. Chogule, counsel for revenue, were present during the proceedings.
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