MUKESH MALHOTRA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) BY this judgment, we propose to dispose of six appeals, particulars whereof are given in the heading (of this judgment), at Shimla and also because all these appeals were admitted on the same substantial question of law, which is as follows : "Whether the learned Tribunal has misread and misconstrued the material on record in estimating the hotel receipts and whether the findings based without any material are sustainable in law -

(2.) FACTS relevant for the disposal of all the appeals may be noticed. Appellants, in all the six appeals, are members of a single family. They are running three hotels in the same complex at Shimla. The hotel complex abuts on The Mall Road opposite the Tourism Department lift. The proprietors of the three hotels are income -tax assessees. They filed income returns for the year 1994 -95. In respect of one hotel, return showed income of Rs. 2,98,936 for the year 1994 -95. It appears that IT authorities were not satisfied with the income shown in the return. A search and seizure operation, incriminating documents and information were found in the course of such search and seizure. Assessment for the year 1994 -95, in view of the seizure made during the search, was completed by the AO, under s. 143(3) of the IT Act. Income was assessed at Rs. 15,48,357, which, inter alia, included trading addition of Rs. 11,46,703, on account of suppression of hotel receipts, under s. 145(2) of the Act. and other connected matters to the following effect : "The next question that arises for consideration is as to the quantum of additions. The AO has worked out the average receipts per day on the basis of rates approved by the Tourism Department at Rs. 15,000. This has been questioned by the assessee and on the basis of data available to us, the average room rent works out to Rs. 10,000 approximately. It is thus evident that the estimate made by the AO is excessive. Since the head of the family, namely Shri B.N. Malhotra has approached the Settlement Commission and settled the dispute about the concealed income, we consider it appropriate to set aside the assessments and remit the same to the file of the AO for purposes of determination of additions in the cases of the assessees in the respective assessment years keeping in view the disclosure made by Shri B.N. Malhotra before the Settlement Commission. The decision of the Settlement Commission shall be kept in mind for making reasonable additions in the cases of the present assessees, the sons of Shri B.N. Malhotra."

(3.) AFTER the remand of the case, AO worked out the occupancy days at 105 and the daily hire charges @ Rs. 10,425 and thus the total income was assessed at Rs. 10,94,625, in respect of one of the hotels about which return was filed for the year 1994 -95, as aforesaid. Similarly, in other cases also, number of working days were worked out at 105 and daily income was assessed at different rates on the basis of rates approved by the Tourism Department and assessment orders were passed not only in respect of the year 1994 -95, but also in respect of the year 1995 -96 qua all the three hotels and thus there were six assessment orders.