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TMI Blog2020 (5) TMI 647X X X X Extracts X X X X X X X X Extracts X X X X ..... was more than that the sale deed mentioned. The assessee has also claimed a sum to have been incurred for the repair and maintenance of the property. The said claim of the assessee has been denied on the ground that no specific bills and vouchers were produced. The assessee submitted before the AO that in the office of the Registering Authority / Tehsildar the report of the approved valuer was submitted, wherein, the value of the building was mentioned and the stamp duty accordingly accepted by the Assistant Collector. These submissions of the assessee find mention at page 8 of the assessment order. AO totally ignored the above submissions of the assessee. Moreover, the AO has held that the value of the property was more than that was depicted in the sale deed but he had not initiated any action for corresponding addition to the income of the seller. Because of the aforesaid discrepancies and ambiguities in the valuation report, the reliance on the same was wrongly placed by the lower authorities, whereas, the record furnished by the assessee in the office of Tehsildar for determining the value has been disregarded without any reasons - registered valuer assessed / determ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned CIT(A) has wrongly confirmed addition of ₹ 1854476/-u/s 69 on the basis of DVO's report only. 2. That the learned CIT(A), while confirming addition of ₹ 1854476/-, has wrongly failed to appreciate submissions made. 3. That the learned CIT(A), while confirming addition of ₹ 1854476/, has wrongly concluded that reference to Valuation Officer was made u/s 142A was in order. 4. That the learned CIT(A) has wrongly confirmed initiation of penalty proceedings u/s 271 (1 )(b) without appreciating written submissions made. 5. That the learned CIT(A) has wrongly confirmed action of ITO in adopting status of assessee firm as AOP without appreciating written submissions made in this regard. 6. That the learned CIT(A) has wrongly confirmed action of ITO in framing assessment u/s 144 in place of section 143(3) simply on the ground of non-production of account books without appreciating assessee's written submissions made. 7. That the learned CIT(A) has wrongly confirmed addition of ₹ 942000/-on account of Room Rent without appreciating written submissions made. 8. That the learned CIT(A) has wrongly confirmed addition of &# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Patiala on 31.01.2008 / 04.02.2008 for estimating the cost of investment in the hotel building. On the basis of the report of the Valuation officer, the Assessing Officer made an addition of ₹ 18,54,476/- on account of investment in the hotel building u/s 69 of the I.T.Act. 4. Being aggrieved by the above order of the Assessing Officer, the assessee preferred appeal before the CIT(A) but remained unsuccessful on this issue, hence, the assessee has come in appeal before us. 5. We have heard the rival contentions of the Ld. Authorized Representatives of both the parties and have also gone through the record. As per the facts of the case, the assessee earlier on 4.10.2005 had taken the hotel on lease for 99 years for a lease consideration of ₹ 30 lacs paid by way of six demand drafts of ₹ 5 lacs each. Subsequently, the said 99 years lease was converted to a sale deed on 31.8.2006 for a total consideration of ₹ 29.75 lacs. The Assessing Officer referred the matter for valuation to the Govt. Valuer invoking the provisions of section 142A of the Act. On the basis of the report of the valuer, the Assessing Officer ascertained the value of the hotel land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vouchers were produced. On the other hand, the case of the assessee was that an advance of ₹ 5 lacs was given to Shri Rajan and that he spent the aforesaid amount on the improvement / repairs to make the property salable. On the other hand, the specific plea was raised by the assessee that the Collector at the time of determining the value of the property has relied upon the report of the registered valuer for the purpose of payment of stamp duty. The assessee submitted before the Assessing Officer that in the office of the Registering Authority / Tehsildar the report of the approved valuer was submitted, wherein, the value of the building was mentioned and the stamp duty accordingly accepted by the Assistant Collector. These submissions of the assessee find mention at page 8 of the assessment order. However, the Ld. Assessing Officer totally ignored the above submissions of the assessee. Moreover, the Assessing Officer has held that the value of the property was more than that was depicted in the sale deed but he had not initiated any action for corresponding addition to the income of the seller. Under the circumstances, because of the aforesaid discrepancies and ambi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in to the hotel on 27.10.2006 and checked out on 29.10.2006, but no corresponding entry in this regard was found recorded in the guest index. Sh. Naresh Chandey failed to offer any convincing explanation in respect of the said omission. Further, a register known as quity register was found in which catering orders received from the customers were found recorded. But no corresponding entries in respect of the rent received from booking of those rooms were found recorded. Sh. Naresh Chandey admitted that almost 1/3rd of the income was not being recorded in the regular books out of the room rent received in off season. The assessee failed to produce the regular books of accounts and other related documents during the course of assessment proceedings, therefore, assessment was framed u/s 144 of the I.T. Act and the rental income of the assessee was determined at ₹ 9,42,000/- after taking into consideration the statement of Sh. Naresh Chandey. Further, during the course of survey operation, it was also noticed that the bills for food items were not being issued to the customers and the receipts from the sale of food items were being kept outside the regular books of accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He, accordingly estimated the actual income of the assessee from room rent and refreshment bills. He accepting the contention of the assessee has given an allowance for vacancy for the whole year and not only for the off season to the tune of 40% of the total capacity. So far as the rates are concerned, the Assessing Officer has taken the rates as fixed by the Tourism Department, whereas, the plea of the assessee is that the assessee has recorded actual rates. Further, the plea of the assessee is that the average rate of room booking is ₹ 300 per day. The plea of the Ld. Counsel for the assessee is also that even the restaurant bills have been excessively esteemed by the Assessing Officer. However, the Assessing Officer has taken note of the rates fixed by the Tourism Department at ₹ 1,000 /- to ₹ 1,100/- per room, however, giving benefit of doubt to the assessee that sometimes the rooms are booked at a lower rate than the rates fixed by the Tourism Department, the Assessing Officer, therefore, has adopted the average rate of ₹ 600/- per room. We, therefore, do not find any reason to interfere in the above order of the Assessing Officer so far as the estimat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. AO for imposing the penalty u/s the Act on addition of ₹ 9,42,000/- on account of income from room rent even when the said imposition of penalty was not warranted. 5. That on law, facts and circumstances of the case, the Worthy CIT (A) was not justified in confirming the action of Ld. AO for imposing the penalty u/s 271(l)(c) of the Act on addition of ₹ 1,59,339/- on account of food and restaurant sale even when the said-imposition of penalty was not warranted. 6. That.on the facts, circumstances and legal position of the case, the impugned penalty order deserves to be quashed since the appellant has not been any specific limb of sec. 271(l)(c ) in the show cause notice, in quantum assessment order and also in the penalty order. 7. That the appellant craves leave for any addition, deletion or amendment in the grounds of appeal on or before the disposal of the same. 17. We find that this appeal is time barred by 221 days. However, a separate application for condonation of delay has been filed, wherein, the plea has been taken that the impugned order of the CIT(A) was not served on any authorized person of the assessee and since the assessee did not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20. At the outset, Ld. Counsel for the assessee has submitted that he does not press ground Nos. 3 4 of the appeal, the same are, therefore, dismissed as not pressed . 21. Ground Nos. 5 6 are general in nature and does not require any specific adjunction. 22. Now we are left with only ground Nos. 1 2. Vide ground No.1 the assessee has agitated the addition of ₹ 4,50,000/- made on account of discrepancy in room rent, whereas, vide ground No.2, the assessee has agitated the action of the CIT(A) in confirming the addition to the extent of ₹ 50,000/- on account of discrepancies found in the food sale. So far as ground No.1 is concerned, in view of our findings given above, we direct that the room rent be estimated after giving benefit of the expenditure incurred as directed while deciding Ground No. 7 of the assessee s appeal for assessment year 2007-08. So far as ground No. 8 is concerned, out of the total addition made by the Assessing Officer of ₹ 1 lac, the Ld. CIT(A), after giving benefit of the expenditure, has restricted the addition to ₹ 50,000/-. We do not find any infirmity in the order of the CIT(A), in this respect and the same ..... X X X X Extracts X X X X X X X X Extracts X X X X
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