2017 (6) TMI 785

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.... a hotel. Earlier, one of the partners of the firm Mr. Jagdish Bhatt had started construction for the purpose of running a hotel by the name Hotel Celebration as properitory concern. Substantial portion of the construction was carried on between 01.04.2004 and 31.03.2004. Construction continued in the next financial year also. For some point, the proprietor wanted to transfer the business of running the hotel. The present petitioner-partnership firm was constituted, who took over the under-construction hotel business on 20.09.2005. According to the petitioner, some finishing work was left out, which was done by the partnership firm after the said date. The return of the erstwhile proprietor for the assessment year 2005-06 was taken in scrut....

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....7 i.e. 31.12.2008. During the course of assessment proceedings total value of land and building was declared by assessee was Rs. 64,11,464/- for land and building up to 20.09.2005 and Rs. 66,87,372/- at the end of year i.e. 31.03.2005. 3. The valuation officer prepared report on 02.12.2011 and submitted it on 08.12.2011 determining total cost of investment Rs. 1,82,16,349/- for financial year 2004-05 and 2005-06 against declared cost of Rs. 66,87,372/- by the assessee firm. 4. During the course of assessment proceedings, the firm made submission vide letter dated 30.10.2008 as under: "Shri Jagdishchandra P.Bhatt originally commenced the business in the name of Hotel Celebration as proprietary concern. With a view to broad base the activ....

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....     Construction during FY 2004.05 & 2005.06 F.Y 2004.05 F.Y 2005.06 Total cost declared by the assessee in books of account 66,87,372 41,13,293 25,74,079   Total cost of construction for building as per valuers report 1,82,16,349 Proportionate cost 1,12,04,577 Proportionate cost Rs. 70,11,772   Table B Total Expenditure during F.Y. 2005.06 detailed in books Expenditure debited by Partner during F.Y. 2005.06 Expenditure debited by the partner during F.Y. 2005-06 25,74,079 22,98,171 2,75,908 Proportionate Expenditure during F.Y. 2005-06 as per valuation report On partner's account Proportionate Expenditure during F.Y. 2005.06 as per valuation report. On Firm's account Proportion Expe....

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....ing Officer, in the connected case, the DVO's report dated 08.12.2011 suggests that total investment in construction of Rs. 1.82 crores was made between 01.04.2004 and 01.07.2005. 6. The petitioner partnership firm came into picture only on 20.09.2005 when it took over the hotel business. The partnership can be made accountable for the cost of construction after the said date. Since the Assessing Officer relies only on the DVO's report it is difficult to appreciate how he contends that the present petitioner had made any unaccounted investment in construction. If we peruse the reasons recorded by him more minutely, we find that a rather unconventional approach was adopted by the Assessing Officer to project the cost of construction....