Palmshore Hotels Pvt. Ltd. Vs ACIT (ITAT Cochin)
The Income Tax Appellate Tribunal (ITAT), Cochin Bench, has granted partial relief to Palmshore Hotels Pvt. Ltd., directing the Assessing Officer (AO) to re-examine key aspects of its income assessment for the Assessment Year (AY) 2017-18. The decision came in response to an appeal filed by the assessee against an order from the National Faceless Appeal Centre (NFAC), Delhi, dated October 4, 2024.
The case originated when Palmshore Hotels, engaged in the hotel business, did not file a regular return of income for AY 2017-18. However, the AO received information indicating the company had a turnover from services (reported in Service Tax Return) of Rs. 34,17,888, along with interest income and rental income subject to TDS. This led the AO to believe that income had escaped assessment, prompting the issuance of a notice under Section 148 of the Income Tax Act, 1961.
Despite the Section 148 notice and a subsequent notice under Section 142(1)(ii), Palmshore Hotels failed to comply or respond. Consequently, the AO completed the assessment ex parte under Section 147 read with Section 144B of the Act, determining a total income of Rs. 1,00,13,580. In this assessment, the AO estimated business income at 8% of the service tax turnover (Rs. 2,73,430), added interest income of Rs. 29,186, and rental income of Rs. 68,75,670. An unpaid loan liability of Rs. 18,04,290 was also added back to the income.
