SHAH & CHHEDA HOMES P. LTD., NAVI MUMBAI V. CIT(APPEALS)- 15, MUMBAI

ITA 1838/MUM/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4172 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2012-2013
• Appeal Filed On: 15-10-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR MENONLD
• Assessee Lawyers: NAVIN B GANDHI LD
• Keywords: Sale consideration of property below Jantri Value; Fair market value
• Section: 143(3); 13

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI , , BEFORE HONBLE SHRI VIKAS AWASTHY, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM (HEARING THROUGH VIDEO CONFERENCING MODE) ./ I.T.A. NO. 1838 /MUM/20 20 ( / ASSESSMENT YEAR : 2012 - 13 ) SHAH & CHHEDA HOMES PVT. LTD. 4, MAHAVIR ORNATE, PLOT NO. 13B, SECTOR - 11, NEAR BALAJI GARDEN, KOPARKHAIRANE, N AVI MUMBAI - 400 709 / VS. CIT(A) 1 5 6 TH FLOOR, R. NO. 610, EARNEST HOUSE NARIMAN POINT MUMBAI - 400 021 ./ ./ PAN/GIR NO . A A ACS - 7318 - G ( / APPELLANT ) : ( / RESPONDENT ) ASSESSEE BY : SHRI NAVIN B. GANDHI LD. AR R EVENUE BY : SHRI VIJAY KUMAR MENON LD. SR. DR / DATE OF HEARING : 28 /09 /2021 / DATE OF PRONOUNCEMENT : 04/10/2021 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR (AY) 2012 - 13 ARISES OUT OF ORDER OF LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) - 15 , MUMBAI [CIT(A)], DATED 28/08/2020 IN THE MATTER OF ASSESSMENT FRAMED BY LD. ASSESSING OFFICER (AO) U/S 143(3) ON 23/03/2015. THE GROUNDS RAISED B Y THE ASSESSEE READ AS UNDER: - THE HON'BLE CIT(A) - 15,MUMBAI HAS ERRED IN CONFIRMING ADDITION MADE BY THE LD.AO [ ACIT - 8(2)(1), MUMBAI U/S 41(1)] OF RS.2,08,19,001, ON THE GROUND THAT 'LIABILITY OUTSTANDING FOR A LONG PERIOD OF TIME IS ASSESSABLE AS INCOME EVEN IF NO WRITE - BACK 2 OF LIAB ILITIES IN ITS BOOKS OF ACCOUNTS MADE AND FURTHER IF THE ASSESSEE IS UNABLE TO PROVE GENUINENESS OF LIABILITY'. THE HON'BLE CI T(A) - 15 FAILED TO CONSIDER THE FACT THAT A) IN REMAND REPORT DATED 01.10.2018 THE LD AO CONFIRMED THAT THE CONFIRMATION LETTERS O F THE CREDITORS WERE SUBMITTED BY THE ASSESSEE COMPANY DURING THE ASSESSMENT PROCEEDINGS AND ARE ON THE RECORD. B) THE COMPANY DID NOT WRITE OFF THE SAID LIABILITY OF RS . 2,08,19,001/ - IN HIS BOOKS AND CONFIRMED THAT THE SAID LIABILITY IS PAYABLE BY THE A PPELLANT COMPANY AS ON 31.03.2012. RELIEF CLAIMED THE APPELLANT COMPANY HUMBLY REQUEST YOUR HONOR TO DELETE THE ENTIRE ADDITION MADE U/S 41(1) OF RS 2,08,19,001/ - AS THE SAME IS TOTALLY INCORRECT AND HIGHLY UNJUSTIFIED . GROUND 2 THE HON'BLE CIT(A) - 15,MUMB AI HAS ERRED IN CONFIRMING A DDITION MADE BY THE LD.AO [ACIT - 8(2) (1)], MUMBAI OF RS. 1,04,38,981/ - ON THE GROUND THAT 'THE ASSESSEE HAS RECEIVED ON MONEY ON THE FLATS SOLD TO CERTAIN BUYERS AT LOWER RATES THAN THE OTHERS DURING THE YEAR UNDER CONSIDERATION '. THE HON'BLE CIT(A) - 15 HAS FAILED TO CONSIDER THE FACT THAT A) MAJORITY OF FLAT OWNERS CONFIRMED ON OATH THE SALE CONSIDERATION OF THE FLAT PURCHASED BY HIM VIDE RESPECTIVE AFFIDAVITS, WHICH W ERE SUBMITTED BEFORE THE LD . AO DURING THE ASSESSMENT PROCEE DINGS AND B) THERE IS NO DIRECT AND INDIRECT OR REMOTE EVIDENCES OF RECEIPT OF ON MONEY AND THE ON MONEY THEORY OF THE LD AO IS MERE GUESS WORK , ASSUMPTION AND SURMISE . C) THE AGREEMENT VALUE OF ALL THE FLATS SOLD DURING THE YEAR UNDER APPEAL WAS FAR M ORE THAN THE STAMP DUTY VALUE. RELIEF CLAIMED THE APPELLANT COMPANY HUMBLY REQUEST YOUR GOOD HONOR TO DELETE THE ENTIRE ADDITION OF RS 1,04,38,981/ - WHICH IS BASELESS, TOTALLY INCORRECT AND NOT JUSTIFIED. AS EVIDENT THE ASSESSEE IS AGGRIEVED BY CONFIRMATI ON OF CERTAIN ADDITION U/S 41(1) AS WELL AS BY ANOTHER ADDITION OF ALLEGED ON - MONEY ON SALE OF FLATS . 2. THE LD. AR ADVANCED ARGUMENTS TO ASSAIL BOTH THE ADDITIONS AS CONFIRMED IN THE IMPUGNED ORDER. THE LD. DR SUBMITTED THAT THE APPEAL IS LIABLE TO BE DIS MISSED. 3. HAVING HEARD RIVAL SUBMISSIONS AND AFTER CAREFUL CONSIDERATION OF MATERIAL ON RECORD, OUR ADJUDICATION TO THE SUBJECT MATTER OF APPEAL WOULD BE AS GIVEN IN SUCCEEDING PARAGRAPHS. 3 4. THE MATERIAL FACTS ARE THAT THE ASSESSEE BEING RESIDENT CORPORA TE ASSESSEE IS STATE TO BE ENGAGED AS BUILDER. AN ASSESSMENT WAS FRAMED FOR THE YEAR U/S 143(3) ON 23/03/2015 WHEREIN CERTAIN ADDITIONS WERE MADE IN THE HANDS OF THE ASSESSEE AND THE SAME ARE THE SUBJECT MATTER OF APPEAL BEFORE US. REMISSION / CESSATION OF TRADING LIABILITY U/S 41(1) 5.1 IT TRANSPIRED THAT THE ASSESSEE HAD LONG OUTSTANDING SUNDRY CREDITORS AGGREGATING TO RS.208.19 LACS AS DETAILED IN PARA - 4 OF THE ASSESSMENT ORDER. THE LD. AO, INVOKING THE P ROVISIONS OF SEC.41(1), SHOW - CA U S E D THE ASSESSEE A S TO WHY THE SAME MAY NOT BE ADDED TO THE INCOME OF THE ASSESSEE. THE ASSESSEE DEFENDED THE S A ME B Y SUBMITTING TH AT THE LIABILITIES HAVE NOT BEEN WRITTEN - OFF AND NO BENEFIT HAS BEEN RECEIVED WHATSOEVER BY WAY OF REMISSION OR CESSATION OF TRADING LIABILITY . THE OUTSTANDING AMOUNTS WERE PAYABLE BY THE ASSESSEE A T THE YEAR - END. HOWEVER, REJECTING THE SAME, THE AM OUNT WAS ADDED TO THE INCOME OF THE ASSESSEE U/S 41(1). 5.2 DURING APPELLATE PROCEEDINGS, THE ASSESSEE DREW ATTENTION TO THE CONFIRMATION LETTERS OF T HE CREDITORS AS FILED BEFORE LD. AO AND SUBMITTED THAT THE AMOUNTS WERE STILL PAYABLE. THE AFORE SAID FACT WAS ALSO CONFIRMED BY LD. AO IN THE REMAND REPORT. ANOTHER PERTINENT FACT BROUGHT TO THE NOTICE WAS THAT AFTER PAYMENT / CERTAIN ADJUSTMENT OF RS.13.7 3 LACS IN FINANCIAL YEAR 2016 - 17, THE BALANCE AMOUNT PAYABLE TO THE CREDITORS FOR RS.194.51 LACS WAS FOUND TO BE NOT PAYABLE AS ON 31/03/2018 AND THE SAME WAS, THEREFORE WRITTEN - BACK IN AY 2018 - 19 AND OFFERED TO TAX. HOWEVER LD. CIT(A), OBSERVING THAT THE AFORESAID AMOUNT COULD HAVE BEEN OFFERED EARLIER, CONFIRMED THE ACTION OF LD. AO. AGGRIEVED THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4 5.3 FROM THE FACTUAL MATRIX AS ENUMERATED HEREINABOVE, WE FIND THAT NO CASE OF REMISSION OF CESSATION OF TRADING LIABIL ITY COULD BE MADE OUT BY REVENUE AGAINST THE ASSESSEE. THE ASSESSEE HAD FILED CONFIRMATION OF THE SUNDRY CREDITORS AND THE AMOUNTS WERE SHOWN AS PAYABLE IN THE BOOKS OF ACCOUNTS. THERE WAS NO WRITE - BACK OF THE AMOUNTS EITHER BY THE ASSESSEE OR BY THE SUNDR Y CREDITORS. THIS IS FURTHER FORTIFIED BY THE FACT THAT CERTAIN PAYMENTS / ADJUSTMENTS HAVE BEEN DONE IN SUBSEQUENT FINANCIAL YEAR AND THE BALANCE AMOUNT HAS BEEN OFF ERED TO TAX WHEN THE LIABILITY H A S ACTUALLY CEASED. THEREFORE, THE FACTS OF THE CASE DO NO T CONVINCE US TO CONFIRM THE IMPUGNED ADDITION U/S 41(1). BY DELETING THE SAME, WE ALLOW THIS GROUND OF APPEAL. ADDITION ON ACCOUNT OF ALLEGED ON - MONEY 6.1 THE ASSESSEE SOLD 6 FLATS DURING THE YEAR AS DETAILED IN PARA 5.1 OF THE ORDER. THE SALE OCCURRED E VENLY THROUGHOUT THE YEAR . THOUGH THE AREA OF THE FLATS WAS QUITE SIMILAR , HOWEVER, THERE WAS VARIATION IN RATE PER SQUARE FEET RANGING FROM 4428 PER SQUARE FEET TO 6958 SQUARE FEET. THE ASSESSEE SUBMITTED THAT THE FLATS WERE SOLD AT PREVAILING MARKET PRIC ES AS PER NEGOTIATIONS WITH THE RESPECTIVE BUYERS. EACH OF THE FLAT WAS SOLD OVER AND ABOVE THE STAMP DUTY VALUE OF THE FLAT. THE VARIATION IN RATES WAS BOUND TO ARISE DUE TO LOCATION OF THE FLAT, FLOOR - RISE, VIEW OF THE SURROUNDINGS FROM THE FLAT, COMPLIA NCE TO VASTU - SHASTRA, URGENCY AND NEED OF THE BUYER, SITUATION OF THE SITE AND REPUTATION OF THE BUILDER. HOWEVER, SINCE THERE WAS VAST DIFFERENCE IN THE SALE PRICES PER SQUARE FEET, LD. AO ADOPTING UNIFORM BENCHMARKING RATE OF 6958 PER SQUARE FEET, WORKED OUT DIFFERENTIAL OF RS.104.38 LACS AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE AS ALLEGED ON - MONEY ON SALE OF FLATS. 5 6.2 DURING APPELLATE PROCEEDINGS, THE ASSESSEE, INTER - ALIA, DREW ATTENTION TO ITS LETTERS DATED 21/01/2013 & 15/03/2015 AS FILED BEFO RE LD. AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHEREIN THE REASONS FOR SELLING THE FLATS AT DIFFERENT RATES WERE EXPLAINED. THE ASSESSEE ALSO SUBMITTED THAT AGGREGATE SALE CONSIDERATION OF RS.421.07 LACS WAS MUCH HIGHER THAN THE AGGREGATE STAMP DUTY VALUE OF RS.295.31 LACS. THE ASSESSEE HAD ALSO FILED AFFIDAVIT OF THREE BUYERS DURING ASSESSMENT PROCEEDINGS WHEREAS AFFIDAVIT OF ANOTHER BUYER WAS FILED DURING APPELLATE PROCEEDINGS. THUS, IT WAS THE SUBMISSION THAT THE ADDITION WAS MADE ON ASSUMPTIONS, SURMISES AND ESTIMATES. THE LD. AO, IN THE REMAND REPORT, SUBMITTED THAT SALE CONSIDERATION OF EACH OF THE F LAT WAS HIGHER THAN FAIR MARKET VALUE. THE FACT OF AFFIDAVIT OF THREE BUYERS WAS ALSO CONFIRMED. HOWEVER, FINDING LARGE VARIATION IN THE SALE PRICE, LD. CIT(A) CHOSE TO CONFIRM THE ADDITION. AGGRIEVED THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 6.3 FROM THE FACTUAL MATRIX AS ENUMERATED HEREINABOVE, WE FIND THAT ALL THE FLATS SOLD BY THE ASSESSEE HAS BEEN SOLD AT MUCH HIGHER PRICES THAN THE STAMP DUTY VALUE OF EACH OF THE FLAT AND THEREFORE, THE PROVISIONS OF SEC.50C WERE NOT APPLICABLE TO THE FACTS OF THE CASE. THE ASSESSEE HAS SOLD THE FLATS EVENLY THROUGHOUT THE YEAR IN PRICE RANGE OF 4428 PER SQUARE FEET TO 6958 SQUARE FEET. THE FACTORS LEADING TO VARIATION IN THE SALE PRICE WERE DULY EXPLAINED BY THE ASSESSEE BEFORE LD. AO WHICH COULD NOT BE DISPUTED AND NO FACT BASED FINDINGS COULD BE RENDERED TO CONTROVERT THE SAME. IN FACT, THE AFFIDAVITS OF 4 BUYERS CONFIRMING THE SALE PRICE HAVE BEEN FILED BY THE ASSESSEE. THE ASSESSEE HAS DULY DISCHARGED THE ONUS OF PROVING THAT THE SALE CONSIDERATION AS ACTUALLY RECEIVED BY THE ASSESSEE WAS REFLECTED IN THE SALE AGREEMENT AS WELL AS 6 IN THE BOOKS OF ACCOUNTS . IT IS ALSO EVIDENT THAT NO FURTHER INVESTIGATIONS H AVE BEEN CARRIED OUT BY LOWER AUTHORITIES TO REBUT THE DOCUMENTS OF THE ASSESSEE AND BRING ON RECORD ANY CONTRARY EVIDENCE TO PROVE TRANSFER OF EXCESS SALE CONSIDERATION TO THE ASSESSEE, IN ANY MANNER. THUS THE CONCLUSION THAT THAT ALL THE FLATS WOULD HAVE BEEN SOLD AT HIGHEST PRICES IS NOTHING MORE THAN AN ASSUMPTION OF LD. AO. HENCE, WE ARE INCLINED TO DELETE THE SAME. THIS GROUND STAND ALLOWED. CONCLUSION 7. THE APPEAL STAND ALLOWED IN TERMS OF OUR ABOVE ORDER. ORDER PRONOUNCED ON 4 TH OCTOBER, 2021. SD/ - SD/ - ( VI KAS AWASTHY ) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 04/10/2021 SR.PS, DHANANJAY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.