INCOME TAX OFFICER Vs. TEK CHAND
INCOME TAX APPELLATE TRIBUNAL
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M.A.A. Khan, Judicial Member -
(1.) THIS is an appeal by revenue from the order dated 27-3-1991 whereby the CIT (A), Jodhpur deleted an addition of Rs. 1,25,225 representing the difference between the cost of construction of a hotel building as per books of account of the assessee and that estimated by the Assessing Officer (A.O.) on the basis of the report of Departmental Valuation Officer (DVO).
(2.) The assessee owns a building at Suratgarh, Distt. Sri Ganganagar and derives business income from running a hotel called Ashoka Hotel therein. According to the assessee after demolition of the old structure the constuction and renovation of the building in question was started in March 1986 and completed in all respects in the month of July 1987. He had allegedly maintained a complete record, on day-to-day basis, of all the expenditure incurred on the demolition, construction and renovation of the hotel building. On the basis of such record the position of expenditure incurred came to the following :-
As per item wise details of the expenditure incurred on the constuction of the hotel building, the cost of construction came to Rs. 2,08,000 which was reflected in the regularly maintained books of account of the assessee.
(3.) THE assessee declared the cost of construction of the hotel building at Rs. 2,08,000 as per his books of account. This declaration was also supported with the report of Sri R.N. Goyal, a registered valuer, dated 3-2-1987. Sri Goyal had estimated the cost of constuction at Rs. 2,07,803. THE Assessing Officer did not accept the cost of construction as declared by the assessee and called for the advisory report from the DVO. THE DVO in his first report dated 23-6-1988 estimated the cost of construction at Rs. 4,11,000 but on second reference, necessitated on assessee's objection, he estimated such cost at Rs. 3,80,225 vide his report dated 2-3-1990. THE AO accepted the second report of the DVO and therefore considered the difference between the cost of construction as shown by the assessee in his books at Rs. 2,55,000 and that estimated by the DVO at Rs. 3,80,225 as representing the unexplained investment by the assessee in the construction of the hotel building. He accordingly made an addition of Rs. 1,25,225 under Section 69 of the Income tax Act, 1961 (THE Act') to the total income of the assessee.;
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