GULABI DEVI Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) ONE K.P. Gupta was an assessee under the Income-tax Act. He along with his wife constructed a building which now houses the Apsara Hotel. When the matter regarding investment in the construction of the hotel was taken up by the Income-tax Officer, the petitioners could explain the investment to the tune of Rs. 1,19,700 only but, according to the Income-tax Officer, the total cost of construction of the hotel worked out to Rs. 1,57,608. Thus, the unexplained investment was to the tune of Rs. 38,000 which was to be added in the hands of the petitioner and his wife. This order is contained in annexure "2". A revision was filed under Section 264 of the Income-tax Act before the Income-tax Commissioner. The revision was dismissed by the order contained in annexure "3". The prayer is to quash the order passed by the Income-tax Officer (annexure "2") and also the revisional order (annexure "3").

(2.) A perusal of the order as contained in annexure "3" shows that the point raised by the petitioners in revision was that the Income-tax Officer did not take into consideration the fact that the hotel was constructed under the personal supervision of the assessee and that the cost of electricity and sanitary fittings could not have been more than 10% of the cost of the building. It was also said that the extra cost of mosaic flooring should have been taken at the rate of Rs. 2.30 per sq. ft. only. It further appears that the learned Commissioner, while dismissing the revision, did not consider these aspects at all. He was of the view that the construction cost at Rs. 1,57,608 as fixed by the Income-tax Officer was low. According to him, the cost should have been Rs. 1,55,000 plus 25% of the cost towards electricity and sanitary fittings. He was also of the view that the cost of construction for the 4th floor was Rs. 24 per sq. ft. and for the 5th floor Rs. 22 per sq. feet. He was, therefore, of the view that the cost of construction as fixed by the Income-tax Officer was low. He accordingly dismissed the revisional application.