INCOME TAX ACT, 1961

Section 69

Income from undisclosed sources - Addition under section 69 - Unexplained investment in hotel building -

Assessee was running a small hotel. Pursuant to survey, copy of lease deed for 99 years was found, which was converted later on to a sale deed. It was found that building in question was sold at an amount lesser than amount of lease after a period of about 11 months from date of leasing out. Assessee also claimed capital expenditure after acquiring the absolute ownership of hotel building but had failed to produce any bills in support of the said expenses. On basis of report of DVO, AO made addition on account of investment in hotel building under section 69. Held: Perusal of report of Government valuer revealed that he took cost of construction/fair market value as on date when said lease deed was converted to sale deed. It was not case of valuer that building was newly constructed on date, rather, valuer mentioned categorically that date of construction was not known. He even failed to estimate the age of the building as on the date of valuation. Under circumstances, said report of valuer could not be relied upon. Even, it was found that, AO referred matter to government valuer only because the 99 years lease deed was converted to a sale deed at the almost same price. It was not a matter of suspicion as 99 years lease was almost sale of property itself. Thus, it could not be said that actual value of property was more than that sale deed mentioned. Addition made was not sustainable.

REFERRED : CIT v. S. Khader Khan Son (2013) 352 ITR 480 (SC) : 2012 TaxPub(DT) 3089 (SC)

FAVOUR : In assessee's favour

A.Y. :

INCOME TAX ACT, 1961

Section 133A(1)

SUBSCRIBE FOR FULL CONTENT