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2020 (5) TMI 647 - AT - Income TaxAddition u/s 69B on the basis of DVO's report only - Unexplained investment in the hotel building - 99 years lease deed was converted to a sale deed - HELD THAT:- In the case in hand, a perusal of the report of the government valuer reveals that the valuer has taken the cost of construction / Fair market value as on 31.8.2006. It is not the case of the valuer that the building was newly constructed on the date, rather, the valuer has mentioned categorically that the date of construction is not known. He even has failed to estimate the age of the building as on the date of valuation. Under the circumstances, the said report of the valuer cannot be relied upon. Even, we find that the Assessing Officer has formed his opinion to refer the matter to the government valuer only because the 99 years lease deed was converted to a sale deed at the almost at the same price. This, in our view, is not a matter of suspicion as 99 years lease is almost the sale of the property itself. This fact, in our view, is not sufficient to hold that the actual value of the property 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 / determined the value of the property at a later date without taking into consideration the actual facts and circumstances of the case. In view of the above, the addition made by the lower authorities on this issue is not sustainable and the same is accordingly ordered to be deleted. Disallowance of expenses - addition based on incriminating loose papers found in course of survey proceedings carried out u/s 133A(1) - estimation of the actual income of the assessee from room rent and refreshment bills - AO 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 has adopted the average rate of ₹ 600/- per room - HELD THAT:- No reason to interfere in the above order of the Assessing Officer so far as the estimation of the room rent is concerned. However, the Assessing Officer having estimated the room rent should have given the deduction of the expenditure claimed at ₹ 1,52,626/- on water and electricity charges and ₹ 45,000/- on food material. AO has allowed only ₹ 1 lac against this, which does not seems to be justified. We, therefore, partly allow this ground. Estimation of restaurant income - HELD THAT:- AO has taken the restaurant income at ₹ 600/- per day, however, considering the overall facts and circumstances, and the plea of the assessee that on most of the days hotel remains vacant, the restaurant income is directed to be estimated at ₹ 500/- per day. The Assessing Officer is direct to restrict the addition accordingly on this issue.
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