TMI Blog2003 (1) TMI 251X X X X Extracts X X X X X X X X Extracts X X X X ..... re was wide variation in room rent receipts and electricity expenses claimed from month to month. The detail of room rent and electricity expenses is tabulated at p. 2 of the assessment order. He found wide variation in the electricity consumed and low occupancy shown by the assessee. 3. The AO then considered laundry bills of various months and compared them with room rent shown by the assessee. This is tabulated at p. 3 of the assessment order. Here again, wide variation was found and expenses claimed did not match with the receipts. He compared room rent receipts and expenses on dry-clean of towels and held that occupancy of the hotel on the basis of expenses should be 45.45 per cent against 25.32 per cent shown by the assessee. He co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... winter months but at the same time the variation would not be so much as was noticed in the case of the appellant. In the month of June, room rent receipt per rupee of electricity expenditure was more than Rs. 21, whereas in the months, of December and January, it was only Rs. 2. Similarly, in the month of June, room rent receipts against per rupee of laundry expenditure worked out to be Rs. 56, whereas in the months of December and January, these worked out to be only Rs. 10. Such a large fluctuation was not possible and no sufficient reasons were given by the appellant for explaining such variations. The only inference which the AO could draw from such facts was that assessee had not correctly shown the room rent receipts. It is further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under s. 145 of the Act but held that addition made was excessive. Having regard to the view taken by the appellate authority in the case of Baljis of Shimla, etc., the learned CIT(A) held that it would be fair and reasonable to compute income from kitchen by applying multiple of 100/45 to expenses disclosed by the assessee. The learned CIT(A) ordered accordingly. 7. Both the parties are aggrieved and are in appeal. We have heard the rival submissions of the parties and examined them in the light of material available on record. This has to be accepted that hotel is a seasonal business in hill stations like Manali. The peak season is in summer and in a place like Kulu-Manali it is October-December. The other period of the year is a lean ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d did not tally with the room rent shown. This anomaly was also put to the assessee and was not shown to have been explained. At any rate, the objection raised by the AO was relevant and should have been considered by the learned CIT(A) also while deciding the issue in appeal. It is not shown to have been considered. In the above background, we find substance in the arguments raised by the learned Departmental Representative that the learned CIT(A) did not give any basis for reducing the addition form Rs. 11,16,157 to Rs. 2 lakhs. All the same, we do not approve of the entire addition of Rs. 11,16,157, as formula adopted by the AO cannot be said to be fair and reasonable. In our considered opinion, the learned CIT(A) should re-examine and r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ple of 100/45 applied to kitchen expenses for estimating kitchen receipts. He argued that all the expenses were fully vouched and, therefore, books of account could not be rejected unless defects were found in the accounts and in this case, no defects have been pointed out by the Revenue authorities. We have no quarrel with the proposition advanced by the learned counsel for the assessee. However, we are of the view that in the present case, the AO was justified in holding that income was not properly disclosed by the assessee in the books of account. He pointed out anomaly and gave reasons for rejecting the books of account. We have already discussed above various discrepancies in the accounts of the assessee. On the facts and in the circu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... restricted to inadmissible items and is fully justified. We confirm the impugned order of the CIT(A) in respect of this disallowance. 14. In the last ground of appeal, the assessee has challenged the disallowance of Rs. 2,850 representing 1/8th of the van expenses. It was argued by the learned counsel for the assessee that partners of the hotel were staying at far away places and had no occasion to make use of van for personal purposes. Therefore, the disallowance made was unjustified. We are, however, of the view that use of van for personal purposes in this case could not be ruled out and disallowance of 1/8th of expenses cannot be said to be unreasonable or un-maintainable. The disallowance is accordingly upheld. This ground of appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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