This article delves into the details of the case involving ACIT, Circle-5(1), New Delhi, as the appellant, and Bistro Hospitality Pvt. Ltd., New Delhi, as the respondent. The case pertains to the assessment year 2014-15 and is identified by ITA No. 1335/DEL/2020. The appeal was filed on 30th June 2020, with the final tribunal order being pronounced on 19th October 2022.
The case centers around the assessment of income tax for Bistro Hospitality Pvt. Ltd. for the year 2014-15. The appeal was filed by the Additional Commissioner of Income Tax (ACIT), Circle-5(1), New Delhi, against the order dated 12th February 2020 passed by the Commissioner of Income Tax (Appeals)-2, New Delhi. The primary issues in the appeal were related to the disallowance of service tax claimed in the Profit & Loss account, rejection of the consumption of foods and beverages claimed, and disallowance of certain expenses treated as capital in nature.
The case was heard by Shri Shamim Yahya, Accountant Member, and Shri Narender Kumar Choudhry, Judicial Member, at the Delhi Bench ‘A’ of the Income Tax Appellate Tribunal (ITAT), New Delhi, through video conferencing. The hearing was scheduled for 4th October 2022, where the department was represented by Sh. Jitendra Chand, Sr. DR. Despite several notices, the respondent did not appear for the hearing.
The appellant raised the following grounds in their appeal:
The tribunal analyzed the issues in detail. The assessing officer had made three primary additions: disallowance of service tax claimed in the Profit & Loss account, rejection of the consumption of foods and beverages claimed, and disallowance on account of certain expenses claimed as revenue but treated as capital in nature. The Commissioner of Income Tax (Appeals) had partly affirmed these additions, leading to the current appeal.
The tribunal noted that the respondent (Bistro Hospitality Pvt. Ltd.) did not appear for the hearing despite several notices. The tribunal decided to proceed with the case ex-parte, considering the material available on record.
The assessing officer had disallowed the service tax claimed by the respondent in their Profit & Loss account. The Commissioner of Income Tax (Appeals) had affirmed this disallowance. The tribunal found no reason to interfere with this decision, as the respondent had not provided sufficient evidence to justify their claim.
The assessing officer had rejected the consumption of foods and beverages claimed by the respondent, citing the absence of stock records and quantitative details. The Commissioner had reduced the disallowance from 20% to 10%, providing partial relief to the respondent. The tribunal upheld this decision, noting that the respondent failed to provide the necessary stock records and quantitative details, which are essential for verifying the accuracy of the consumption claimed.
The assessing officer had disallowed certain expenses claimed by the respondent as revenue, treating them as capital in nature. These expenses included the purchase of air conditioners, pipes, cables, kitchen equipment, and other items that provide enduring benefits. The Commissioner had affirmed this disallowance but allowed depreciation on the capital expenditure. The tribunal agreed with the Commissioner’s decision, noting that the nature of the expenses warranted their treatment as capital expenditure.
In addition to the quantum appeal, the department had also filed a penalty appeal against the respondent. The penalty was imposed for furnishing inaccurate particulars of income and for concealment of income. The Commissioner had deleted the penalty, citing that the disallowance was based on an estimated basis and that no information provided by the respondent was found to be inaccurate. The tribunal upheld the Commissioner’s decision, finding no basis for the penalty given the circumstances of the case.
In conclusion, the tribunal dismissed both the quantum appeal and the penalty appeal filed by the department. The decisions of the Commissioner of Income Tax (Appeals) were affirmed, and the respondent was not found guilty of furnishing inaccurate particulars or concealing income. The tribunal’s decision highlights the importance of maintaining accurate records and providing sufficient evidence to support claims in income tax assessments.
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