ACIT, New Delhi V. Manali Malik, New Delhi

ITA 3888/DEL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 82196 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 19-11-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 27-07-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained cash credit
• Section: 131; 12; 2

Judgement Text

DELHI BENCH E : NEW DELHI BEFORE SHRI PRAMOD KUKMAR, ACCOUNTANT MEMBER AND SHRI A. T. VARKEY, JUDICIAL MEMBER ITA NO. 3888 /DEL/ 2012 (ASSESSMENT YEAR: 2009 - 10 ) ACIT CIRCLE - 25(1), NEW DELHI VS. MANALI MALIK 32 - C/75, WEST PUNJABI BAGH, NEW DELHI PAN:AFHPM1186P (APPELLANT) (RESPONDENT) O R D E R PER A. T. VARKEY, JUDICIAL MEMBER THIS IS AN APPEAL FILED AGAINST THE ORDER OF THE LD CIT(A) - XXIV, NEW DELHI DATED 25.05.2012 FOR THE ASSESSMENT YEAR 2009 - 10. 2. THE GROUNDS OF APPEAL ARE AS UNDER: - (I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN LAW AS WELL AS IN FACTS IN DELETING THE ADDITION ON ACCOUNT OF PROFIT EARNED BY WAY OF UNDERSTATED VALUE OF PROPERTY TRANSFER AMOUNTING TO RS 87,09,122/ - . (II) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN LAW AS WELL AS IN FACTS IN TREATING AN AMOUNT OF RS 2,19,054/ - AS CAPITAL GAIN WHICH ESCAPED AS SESSMENT IN THE SALE TRANSACTION OF 1 ST & 2 ND FLOOR OF JASOLA PROPERTY . (III) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN LAW AS WELL AS IN FACTS IN DELETING AN ADDITION OF RS 2,50,000/ - ON ACCO UNT OF UNEXPLAINED CASH CREDIT. 3. APROPOS GROUND NOS.1 AND 2 PERTAINING TO DELETION OF ADDITION OF RS.87,09,122/ - WHICH WAS ADDED ON ACCOUNT OF PROFIT EARNED BY WAY OF UNDERSTATED VALUE OF PROPERTY TRANSFERRED. 4. THE FACTS AS STATED BY THE LD CIT(A) IS THAT THE ASSESSEE AND HER LATE HUS BAND SHRI ANIL KUMAR ENTERED INTO ENTERED INTO A COLLABORATION AGREEMENT ON 23.06.2005 WITH TWO BUILDERS NAMED SH. TRILOCHAN SINGH KHURANA AND SH. SHAILESH BHALLA TO CONSTRUCT A BUILDING CONSISTING OF BASEMENT, GROUND FLOOR, 1 ST FLOOR AND 2 ND FLOOR . AS PER COLLABORATION AGREEMENT BASEMENT AND G ROUND APPELLANT BY : SANDEEP SAPRA, ADV. RESPONDENT BY : J.P. CH A NDRAKER , SR. DR PAGE 2 OF 5 FLOOR AFTER CONSTRUCTION WILL REMAIN WITH THE OWNERS. 1 ST FLOOR WILL GO TO SH. SHAILESH BHALLA AND 2 ND FLOOR WITH TERRACE TO SH. TR ILOCHAN SIN GH KHURANA . AS A RESULT THE APPELLANT AND HER LATE HUSBAND WI LL RECEIVE AN AMOUNT OF RS.25 LAKHS OUT OF WHICH AN AMOUNT OF RS.5 LA KH WAS GIVEN IN ASSESSMENT YEAR . THE APPELLANT'S HUSBAND DIED ON 01.02. 200 7. MR. SHAILESH BHALLA GOT THE 1 ST FLOOR REGISTERED IN HIS NAME ON 2 ND JUNE, 2008 FOR RS.32 LAKHS TAKING INTO CONSIDERATION THE CIRCLE RATE WHO PAID THE APPELLANT AMOUNT OF RS. 10 LAKHS INCLUDING THE CONVERSION COST OF LEASE HOLD LAND TO FREE HOLD. MR. TIRLOCHAN SINGH KHURANA GOT THE 2 ND FLOOR WITH TERRACE REGISTERED IN THE NAME OF HIS WIFE SHOWIN G HIMSELF AS THE C ONFIRMING PARTY FOR A SUM OF RS. 29.50 LAKHS . 5. DURING THE ASSESSMENT PROCEEDINGS, THE AO ISSUED SUMMONS TO BOTH THE BUILDERS, VIZ. SH. SHAILESH BHALLA AND SH. TRILOCHAN SINGH KHURANA. SH. SHAILESH BHALLA ATTENDED THE OFFICE OF THE AO IN RESPONSE TO SUMM ONS U/S 131 OF THE INCOME TAX ACT , 1961(HEREIN AFTER THE ACT) ON 19.10.2011 AND HIS STATEMENT WAS RECORDED UNDER OATH, WHEREIN HE STATED THAT THE APPELLANT HAD BEEN PAID RS.25 LACS FOR BOTH THE 1 ST AND 2 ND FLOORS, OUT OF WHICH HE HAD PAID RS.12.50 LACS. HE FURTHER STATED THAT A TOTAL AMOUNT OF RS.70 LACS WAS SPENT ON THE WHOLE PROJECT. THE AO ALSO GATHERED FROM THE APPELLANTS SUBMISSION DATED 19.12.2011 THAT THE INDEXED COST OF THE PLOT FOR THE RELEVANT AS SESSMENT YEAR 2009 - 10 CAME TO RS.1,57,18,244/ - . WITH THE INFORMATION IN HIS POSSESSION , THE AO WORKED OUT THE CAPITAL GAINS EARNED BY THE APPELLANT AS UNDER: - INDEXED COST OF LAND FOR EACH FLOOR @ 25% RS.1,57,18,244.00/4 = RS.39,29,561.00 COST OF CONSTRUCTION FOR EACH FLOOR @ 25% RS.70,00,000.00 / 4 = RS.17,50,000.00. TOTAL COST OF EACH FLOOR = RS. 56,79,561.00 COST OF 1 ST AND 2 ND FLOOR = RS.1,13,59,122.00 ADD: NOTIONAL PROFIT ON CONSTRUCTION OF BASEMENT AND GROUND FLOOR = RS. 35,00,000.00 TOTAL COST INCURRED = RS.1,,48,59,122.00 LESS: SALE VALUE OF 1 ST AND 2 ND FLOOR DECLARED = RS.61,50,000.00 THUS; TOTAL UNDERSTATED SALE VALUE (DIFFERENCE) = RS. 87,09,122.00 PAGE 3 OF 5 6. THE LD CIT(A) ON CONSIDERATION OF THE ABOVE FACTS HELD AS UNDER: - 4.2 I HAVE CAREFULLY PERUSED THE ASSESSMENT ORDER AND THE LOGIC OF THE AO IN MAKING THE ADDITION OF RS.87.09.122/ - TO THE INCOME OF THE APPELLANT BEING UNDERSTATEMENT IN THE SALE PRICE OF THE 1ST AND 2ND FLOOR OF JASOLA PROPERTY. I HAVE ALSO VERY CAREFULLY PERUSED THE SUBMISSIONS MADE BY THE APPELLANT. I AM OF THE CONSIDERED OPINION THAT WHILE MAKING HIS CALCULATIONS, THE AO HAS JUMBLED UP CERTAIN FACTS, AS A RESULT OF WHICH HE HAS MISLED HIMSELF AND HAS JUMPED TO CERTAIN CONCLUSIONS . IN MY VIEW, THERE ARE ONLY TWO COSTS TO BE CONSIDERED IN A BUILDING, NAMELY, THE COST OF LAND AND THE COST OF CONSTRUCTION. IN A MULTI - STORIED BUILDING, THESE COSTS HAVE TO BE PROPORTIONATELY CONSIDERED IN ACCORDANCE WITH THE SALE DEEDS. 4.3 THE BUILDI NG CONSTRUCTED ON THE PLOT AT JASOLA CONSISTS OF A BASEMENT, GROUND FLOOR, 1 ST FLOOR AND 2 ND FLOOR. THE AO HAS DIVIDED THE LAND PROPORTIONATELY AMONGST THE FOUR @ 25% EACH. A PERUSAL OF THE SALE DEED MAKES IT CLEAR THAT THIS IS NOT SO. THE PROPORTIONATE LA ND FOR THE BASEMENT IS 10% AND THE PROPORTIONATE LAND FOR THE GROUND, 1 ST AND 2 ND FLOOR IS 30% EACH. THUS, THE INDEXED COST OF THE PLOT OF LAND, BEING RS.1,57,18,244/ - (WHICH HAS NOT BEEN DISPUTED BY THE AO) WILL HAVE TO BE DIVIDED ACCORDINGLY. 4.4 AS PER THE STATEMENT RECORDED BY THE AO OF SH. SHAILESH BHALLA U/S. 131 OF THE ACT, THE TOTAL CONSTRUCTION COST OF THE PROJECT CAME TO RS.70 LACS AND THE PROPORTIONATE COST FOR EACH FLOOR CAME TO RS.17,50,000/ - . THIS CALCULATION IS NOT IN DISPUTE. WHAT IS ALS O NOT IN DISPUTE IS THE FACT THAT THE SALE CONSIDERATION FOR THE 1 ST FLOOR AS PER THE SALE DEED AT PREVAILING CIRCLE RATE WAS RS.32 LACS AND FOR THE 2ND FLOOR WAS RS.29,50,000/ - , TOTALLING UP TO RS.61,50,000/ - . 4.5 WITH THE ABOVE FACTS IN HAND, IF WE APP LY THE CASE LAWS QUOTED BY THE APPELLANT IN HER FAVOUR, NAMELY, IN THE CASES OF CHANDANI BHOCHAR (SUPRA) AND RANJ (SUPRA), WE COME TO A CONC1US'ION THAT IF THE SALE DEED HAS BEEN REGISTERED AT THE PREVAILING CIRCLE RATE OR AT AN AMOUNT ABOVE THE PREVAILING CIRCLE RATE, THEN, THE AO HAS NO OPTION BUT TO ACCEPT THE SAME, UNLESS, HE HAS CONCLUSIVE EVIDENCE TO PROVE THAT MONIES OVER AND ABOVE THE SALE PRICE HAVE ACTUALLY EXCHANGED HANDS. IN THE INSTANT CASE, THE AO DOES NOT HAVE ANY SUCH CONCLUSIVE EVIDENCE. TH E APPELLANT HAS GIVEN AN AFFIDAVIT THAT SHE WAS TO RECEIVE RS.25 LACS FROM BOTH THE BUILDERS, NAMELY, SH. SHAILESH BHALLA AND SH. TIRLOCHAN SINGH KHURANA. THIS WAS ALSO CONFIRMED BY SH. SHAILESH BHALLA IN HIS STATEMENT RECORDED UNDER OATH U/S. 131 BEFORE T HE AO. HOWEVER, FOR THE SAKE OF DOCUMENTATION, WHILE REGISTERING THE SALE DEEDS, THE TOTAL COST FOR BOTH THE FLOORS CAME TO RS.61,50,000/ - AS PER THE PREVAILING CIRCLE RATE (RS.32 LACS FOR THE 1 ST FLOOR AND RS.29,50,000/ - FOR THE 2 ND FLOOR). THIS AMOUNT IS INCLUSIVE OF THE PROPORTIONATE LAND COST AS WELL AS THE COST OF CONSTRUCTION AS PER THE PREVAILING CIRCLE RATES, SINCE, THE STAMP DUTY HAS BEEN CALCULATED BY THE APPROPRIATE AUTHORITY AT THESE RATES, THIS AMOUNT CAN, AT THE MOST BE INCREASED BY A SUM OF R S.35 LACS, WHICH IS THE PROPORTIONATE COST OF CONSTRUCTION FOR THE BASEMENT AND GROUND FLOOR BY THE TWO BUILDERS, FOR WHICH THE PLOT PAGE 4 OF 5 OWNERS DID NOT PAY ANYTHING. THUS, THE TOTAL AMOUNT OF SALE PRICE FOR BOTH THE 1 ST AND 2 ND FLOORS OF THE JASOLA PROPERTY CA N BE HIKED UP TO RS.96,00,000/ - (RS.61,00,000/ - BEING REGISTERED SALE PRICE AND RS.3S LACS BEING ADMITTED COST OF CONSTRUCTION OF BASEMENT AND GROUND FLOOR). NO OTHER ADDITION TO THIS AMOUNT IS POSSIBLE, UNLESS AND UNTIL THE AO HAS SPECIFIC AND CONCLUSIVE EVIDENCE TO PROVE THAT MONIES HAVE EXCHANGED HANDS OVER AND ABOVE THIS AMOUNT. NO SUCH EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE AO. 4.6 AS AGAINST THIS SALE PRICE OF RS.96,50,000/ - , THE TOTAL COST TO THE APPELLANT IS ONLY THE PROPORTIONATE COST OF LAND FOR THE 1 ST AND 2 ND FLOORS OF THE JASOLA PROPERTY, SINCE, SHE HAS NOT INCURRED ANY AMOUNT ON THE CONSTRUCTION OF THE PROPERTY. AS DISCUSSED EARLIER IN PARA 4.3, THE INDEXED COST OF THE PLOT OF LAND HAS BEEN CALCULATED BY THE APPELLANT AT RS.1,57,18,244/ - , (WHICH INCLUDES ALLOTMENT PRICE OF RS.1,19,20,000/ - + STAMP DUTY OF RS.8,03,110/ - + FREE - HOLD CHARGES OF RS.2,40,390/ - , TOTALLING UP TO RS.1,29,63,500/ - , THE INDEXED COST OF WHICH FOR THE RELEVANT ASSESSMENT YEAR 2009 - 10 COMES TO RS.1,57,18,244/ - ). PROPORT IONATE OF LAND FOR THE 1 ST AND 2 ND FLOORS OF THE JASOLA PROPERTY COMES TO 30% EACH AS PER THE REGISTERED SALE DEED. THUS, THE PROPORTIONATE INDEXED COST OF LAND FOR THESE TWO FLOORS COMES TO RS.94,30,946/ - (60% OF RS.1,57,18,244/ - ). 4.7 IN THE LIGHT OF TH E DISCUSSION IN THE ABOVE TWO PARAGRAPHS 4.5 & 4.6,THE CAPITAL GAIN ACCRUING TO THE APPELLANT IN THE SALE TRANSACTION OF 1 ST AND 2 ND FLOORS OF JASOLA PROPERTY COMES TO RS.96,50,000/ - RS.94,30,946/ - = RS.2,19,054/ - . IN MY OPINION THIS IS THE AMOUNT WHICH HA VE ESCAPED ASSESSMENT AND WHICH NEEDS TO BE BROUGHT TO TAX UNDER LTCG. THE ADDITION OFRS.87,09,122/ - IS THE REFORE DELETED. 7. HAVING CONSIDERED THE RIVAL SUBMISSIONS, WE FIND THE ADDITION MADE IS ENTIRELY BASED ON MISCONCEPTIONS. THERE IS NO EVIDENCE AS TO UNDERSTATEMENT OF CONSIDERATION EVEN AFTER EXAMINATION OF THE PURCHASER OF THE PROPERTY ON OATH . THUS ANY NOTIONAL CALCULATION CANNOT BE A BASIS TO MAKE ANY ADDITION ON CONSIDERATION OF UNDER CONSIDERATION. ACCORDINGLY WE ARE IN AGREEMENT WITH THE CONCL USION OF THE LD CIT(A) THAT THE CAPITAL GAIN HAD TO BE COMPUTED AT RS.2,19,054/ - AND THUS ADDITION MADE OF RS.87,09,122/ - WAS CORRECTLY DELETED. 8. IN THE RESULT THE GROUND IS DISMISSED. 9. THE NEXT GROUND IS IN RELATION TO RS.2,50,000/ - BEING CASH DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE. THE LD CIT(A) HAS DELETED THE ADDITION BY RELYING UPON THE CASH - FLOW STATEMENT, HOWEVER, WE FIND FROM THE ORDER OF THE AO THAT SUCH CASH - FLOW STATEMENT WAS NOT FURNISHED AT THE ASSESSMENT STAGE AND THUS IN THE INTEREST OF JUSTICE, IT IS FOUND APPROPRIATE TO REMIT THE MATTER PAGE 5 OF 5 BACK TO THE FILE OF AO FOR FRESH EXAMINATION OF THE ISSUE AFTER GRA N TING ADEQUATE OPPORTUNITY OF THE ASSESSEE. 10 . AS A RESULT THE GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 11 . IN THE RESULT THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 3 . 12 .2014. - S D / - - S D / - ( PRAMOD KUKMAR ) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 2 3 / 12 / 2014 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI