ITO 25(1)(3), MUMBAI V. NEELESHWAR DEVELOPERS, MUMBAI

ITA 6588/MUM/2010

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9323 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 13-01-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 09-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASGHAR ZAIN
• Assessee Lawyers: DR K SHIVARAM
• Keywords: Sale consideration of property below Jantri Value
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUM BAI . . , , BEFORE SHRI B. R. BASKARAN, AM AND SHRI SANJAY GAR G, JM ./ I.T.A. NO. 6588/MUM/2010 ( / ASSESSMENT YEAR: 2007-08) INCOME TAX OFFICER-25(1)(3), ROOM NO. 306, 3 RD FLOOR, BLDG. C-10, PRATYAKSHAKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI-400 051 / VS. NEELESHEAR DEVELOPERS SHOP NO. C-4, SAISHAKTI COMPLEX, H. JOSHI MARG, DAHISAR (E), MUMBAI-400 067 ./! ./PAN/GIR NO. AADFN 9153 A ( ' /APPELLANT ) : ( #$ ' / RESPONDENT ) ' % & / APPELLANT BY : SHRI ASGHAR ZAIN #$ ' % & / RESPONDENT BY : DR. K. SHIVARAM & MS. NEELAM JADHAV ' () % *+ / DATE OF HEARING : 13.01.2015 ,-./ % *+ / DATE OF PRONOUNCEMENT : 11.03.2015 0 / O R D E R PER SANJAY GARG, JUDICIAL MEMBER : THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER OF THE LD. CIT(A) DATED 28.06.2010. THE REVENUE HAS AGITATED T HE ACTION OF THE LD. CIT(A) IN DELETING THE ADDITION OF RS.61,53,000/- WHICH WAS M ADE BY THE A.O. ON ACCOUNT OF ALLEGED RECEIPT OF ON-MONEY ON SALE OF FLATS. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FIRM IS ENGAGED IN THE BUSINESS OF BUILDER AND DEVELOPER. A SURVEY ACTION U/S.133A WAS CONDUCTED IN THE BUSINESS PREMISES 2 ITA NO. 6588/MUM/2010 (A.Y. 2007-08) ITO VS. NEELESHEAR DEVELOPERS OF THE ASSESSEE ON 07.02.2008. IT WAS FOUND FROM TH E ENTRIES CONTAINED IN THE BLUE COLOUR LONG NOTE BOOK THAT THE ASSESSEE HAD TRANSFERRED TH E FLATS BOOKED FOR OLD CUSTOMERS TO NEW CUSTOMERS AND IN THE PROCESS THE ASSESSEE HAD EARNE D THE PROFIT OF RS.39,39,300/- DURING THE FINANCIAL YEAR 2007-08. THE PARTNER OF THE ASSE SSEE FIRM ACCEPTED TO SURRENDER RS.39,39,300/- AS ADDITIONAL INCOME FOR A.Y. 2008-0 9. BASED ON THE ABOVE, THE A.O. PRESUMED THAT THE ASSESSEE MIGHT HAVE EARNED PROFIT DURING THE ASSESSMENT YEAR UNDER CONSIDERATION ALSO, BY WAY OF REBOOKING OF FLATS TO NEW CUSTOMERS. HE FURTHER NOTED FROM THE IMPOUNDED BLUE COLOUR LONG NOTE BOOK THAT RS.4, 250/- WAS MENTIONED ON THE TOP OF THE PAGE IN RESPECT OF FLAT NO. 202, WHEREAS THE AS SESSEE HAD AGREED TO SELL THE SAME @ RS.3,500/- PER SQ. FT. THE A.O. ALSO NOTED FROM THE IMPOUNDED NOTE BOOK THAT THE ASSESSEE HAD CANCELLED AND REBOOKED FOUR FLATS DURING THE YE AR. HE ALSO NOTED THAT THE ASSESSEE BOOKED FOUR NEW FLATS DURING THE YEAR. THE A.O. FUR THER NOTED THAT AS PER AIR INFORMATION, THE ASSESSEE EXECUTED REGISTERED AGREE MENTS TO SELL THE FLATS AT AN AGGREGATE RATE OF RS.2,800/- TO RS.3,500/- PER SQ. FT., WHERE AS THE MARKET VALUE ADOPTED BY THE STAMP DUTY AUTHORITY WAS HIGHER. THE ASSESSEE CONTENDED B EFORE THE A.O. THAT FLAT NO. 202 WAS NOT TRANSFERRED TO NEW CUSTOMER BUT THE ALLOTTEE HA D INFORMED THE ASSESSEE THAT IF ANYBODY WOULD OFFER PRICE OF RS.4,250/- PER SQ. FT., THE SA ME COULD BE RESOLD. IT WAS ALSO CONTENDED THAT THE PROJECT WAS STOPPED AND THERE WAS NO FURTH ER COMMENCEMENT CERTIFICATE ABOVE 10 TH FLOOR THAT DURING THE COURSE OF SURVEY, A DECLARAT ION WAS MADE TO THE EFFECT THAT ON RECEIPT OF APPROVAL FOR TRANSFER FROM THE ORIGINAL ALLOTTEE TO THE NEW ALLOTTEE, TRANSFER CHARGES WERE RECEIVED DUE TO RECEIPT OF ADDITIONAL CC UPTO 12 TH FLOOR. THE ASSESSEE ALSO ENCLOSED AN AFFIDAVIT CUM REQUEST FORM FROM FOUR TR ANSFEREES WHO DECLARED THAT THEY HAD NOT PAID ANY AMOUNT IN CASH FOR TRANSFER FEE OR AS CONSIDERATION OF SUCH TRANSFER. IT WAS FURTHER CONTENDED THAT ONLY BECAUSE THERE WERE SOME ENTRIES FOR RECEIPT OF AMOUNT DURING THE PERIOD RELEVANT TO A.Y. 2008-09, THE ASSESSEE A DMITTED ADDITIONAL INCOME, WHEREAS, THERE WAS NO SUCH ENTRY OF ANY TRANSACTION EVIDENCI NG ANY RECEIPT OF TRANSFER CHARGES OR EXTRA AMOUNT UPTO 30.03.2007 IN THE IMPOUNDED NOTE BOOK. THE A.O., HOWEVER, DID NOT AGREE WITH THE CONTENTION OF THE ASSESSEE AND OBSER VED THAT IN THE REAL ESTATE BUSINESS IT IS THE OPEN SECRET THAT CASH ELEMENT IS INVOLVED AND F URTHER THAT AS PER SECTION 50C OF THE 3 ITA NO. 6588/MUM/2010 (A.Y. 2007-08) ITO VS. NEELESHEAR DEVELOPERS INCOME TAX ACT, WHILE COMPUTING CAPITAL GAIN, THE M ARKET VALUE AS PER STAMP VALUE AUTHORITIES HAS TO BE ADOPTED. SINCE IN THE CASE OF THE ASSESSEE, THERE WAS DIFFERENCE BETWEEN THE AGREEMENT VALUE AND THE MARKET VALUE AS PER THE STAMP DUTY AUTHORITIES, HE REJECTED THE AFFIDAVIT OF FOUR CUSTOMERS AND HELD T HAT THE ASSESSEE WOULD HAVE TRANSFERRED OR SOLD THE FLAT @ RS.3,750/-, I.E., AT THE MARKET VALUE ADOPTED BY THE STAMP DUTY AUTHORITIES AND TAXED THE DIFFERENCE BETWEEN THE AG REEMENT VALUE AND THE STAMP DUTY VALUE WHICH WAS ARRIVED AT RS.61,53,500/-, TREATING THE SAME AS ON-MONEY RECEIVED IN RESPECT OF BOOKED AND REBOOKED FLATS. 3. IN APPEAL, THE LD. CIT(A) DELETED THE ADDITIONS SO MADE BY THE A.O. OBSERVING THAT NO INCRIMINATING MATERIAL WAS FOUND AGAINST THE ASS ESSEE SHOWING RECEIPT OF ANY ON- MONEY BY THE ASSESSEE. THE RELEVANT PART OF THE FIN DINGS OF THE LD. CIT(A) IS REPRODUCED AS UNDER: 3.6 I HAVE CONSIDERED THE SUBMISSIONS OF THE REPRE SENTATIVE AND THE STAND TAKEN BY THE A.O. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE AO, WAS UNDER THE IMPRESSION THAT THE APPELLANT TRANSFERRED FOUR FLAT S TO NEW CLIENTS DURING THIS YEAR AND FURTHER BOOKED FOUR NEW FLATS TO THE ORIGINAL C LIENTS DURING THIS YEAR AS PER PAGE 3 OF THE ASSESSMENT ORDER. AS FAR AS BOOKING O F NEW FLATS DURING THIS YEAR IS CONCERNED, THE AO HAS NOT REFERRED TO ANY, IMPOUNDE D MATERIAL FROM WHICH IT COULD BE GATHERED THAT THE APPELLANT ACTUALLY RECEI VED ON-MONEY. THE A. O. HAS NOT REFERRED TO ANY SUCH IMPOUNDED MATERIAL AND UNL ESS THE A.O. PROVES THAT THE APPELLANT ACTUALLY RECEIVED ON-MONEY, NO ADDITION COULD BE MADE MERELY BASED ON ASSUMPTION. AS CONTENDED BY THE REPRESENTATIVE, SECTION 50C CANNOT BE APPLIED WHILE COMPUTING INCOME UNDER THE HEAD 'BUSINESS' AND IT IS SEEN THAT THE AO. WAS GUIDED BY THE AIR INFORMATION AS PER WHICH THERE WA S DIFFERENCE BETWEEN THE SALE VALUE AND THE MARKET VALUE. IN THE ABSENCE OF ANY E VIDENCE, THE AO IS NOT JUSTIFIED IN ADOPTING HIGHER SALE VALUE THAN WHAT WAS STATED IN THE REGISTERED AGREEMENTS UNLESS THERE IS SPECIFIC PROVISION IN THE ACT TO TH IS EFFECT LIKE SECTION 50C WHILE COMPUTING THE CAPITAL GAINS. THE CONTENTS OF THE RE GISTERED DOCUMENTS SHALL BE TAKEN AS TRUE AND CORRECT UNLESS PROVED OTHERWISE A ND IT IS FOR THE PERSON WHO ALLEGES SO TO PROVE THE CONTRARY. THE AO HAS NOT PR OVED THAT THE CONTENTS OF THE REGISTERED DOCUMENTS WERE INCORRECT AND THE APPELLA NT ACTUALLY RECEIVED EXTRA MONEY AND, THEREFORE, THE ADDITION IN RESPECT OF NE W FLATS BOOKED DURING THE YEAR CANNOT BE SUSTAINED. I ACCEPT THE PLEA OF THE REPRE SENTATIVE THAT THE ADDITION HAS BEEN MADE MERELY BASED ON SUSPICION AND ASSUMPTION WITHOUT BRINGING ANY MATERIAL ON RECORD. FURTHER, THE APPELLANT HAS FILE D THE AFFIDAVITS FROM ALL THE CUSTOMERS STATING THAT THEY HAVE NOT PAID ANY CASH TO THE APPELLANT BUT THE AO 4 ITA NO. 6588/MUM/2010 (A.Y. 2007-08) ITO VS. NEELESHEAR DEVELOPERS REJECTED THE SAME ON THE GROUND THAT THEY WERE IDEN TICAL IN NATURE AND CONTAINED SIMILAR LANGUAGE. IF THE APELLANT HAS PREPARED THE AFFIDAVIT AND GOT IT SIGNED BY THE CUSTOMERS, THE SAME HAS TO BE IDENTICAL AND IN SIMI LAR LANGUAGE WHICH WOULD NOT PROVE THAT THE AFFIDAVITS ARE FALSE. THE AO IS NOT JUSTIFIED IN MAKING ADDITION AND THE SAME IS DELETED. 3.7 REGARDING FOUR FLATS WHICH THE AO HAS TAKEN AS TRANSFERRED TO NEW ALLOTTEES DURING THIS YEAR, IT IS SEEN THAT THE FLAT NO. 202 WAS NOT AT ALL RESOLD TO NEW PERSON. THIS IS EVIDENT FROM THE ENTRIES CONTAINED IN THE I MPOUNDED MATERIAL ITSELF FOR FLAT NO.1603 AND 702 IN WHICH THE NAMES OF THE NEW ALLOT TEES HAVE BEEN WRITTEN AT THE BOTTOM OF THE PAGE WITH THE RATE OFFERED BY THE NEW CUSTOMER WHEREAS IN RESPECT OF FLAT NO.202 THERE IS NO SUCH ENTRY REGARDING THE NA ME OF NEW PERSON. THUS MERELY BECAUSE ON THE TOP OF THE PAGE, A SUM OF RS.4,250 W AS WRITTEN, THE AO CANNOT ASSUME THAT THE SAME WAS TRANSFERRED TO SOME UNKNOW N PERSON @ RS.4,250. THE PLEA OF THE REPRESENTATIVE THAT THE ORIGINAL ALLOTT EE WAS READY TO TRANSFER THE FLAT TO ANY NEW PERSON @ RS.4,250 HAS TO BE ACCEPTED BY COM PARING THE ENTRIES IN THE IMPOUNDED MATERIAL. THE EXPLANATION OFFERED BY THE APPELLANT WAS REASONABLE AND ACCEPTABLE WHEREAS THE AO REJECTED THE SAME WITHOUT COMPARING THE ENTRIES RELATED TO FLAT NO. 1603 AND 702. REGARDING FLAT NO . 702 AND 1603, IT IS SEEN THAT THE APPELLANT TRANSFERRED THESE FLATS TO NEW PERSONS AN D THE NAME OF THE PERSON, HIS MOBILE NUMBER AND NEW RATE ARE ENTERED IN THE SAME PAGE AND FURTHER IT IS EVIDENT FROM THE IMPOUNDED MATERIAL THAT THE EXTRA AMOUNT W AS PAID TO THE ORIGINAL ALLOTTEE. AS CONTENDED BY THE REPRESENTATIVE FOR FL AT NO. 1603, THE APPELLANT RECEIVED RS.8 LAC FROM THE ORIGINAL ALLOTTEE @ RS.3 ,000/- PER. SQ. FT. WHEREAS WHEN THE SAME WAS TRANSFERRED TO THE NEW PERSON @ RS.3,1 00/- THE APPELLANT PAID RS.9,09,000/- BY CHEQUE NO.0252360 AND DIFFERENCE O F RS.1,09,000/- REPRESENTS THE DIFFERENCE IN THE RATE AT RS. 100 PER SQ.FT. FO R 1,090 SQ.FT. THUS THERE ARE ENTRIES IN THE IMPOUNDED MATERIAL ITSELF TO SHOW THAT WHATE VER EXTRA AMOUNT RECEIVED FROM THE NEW ALLOTTEE WAS PAID TO THE ORIGINAL ALLOTTEE . SIMILARLY, THERE ARE ENTRIES FOR PAYMENT OF EXTRA AMOUNT OF RS.1,66,500/- IN RESPECT OF FLAT NO.702. REGARDING FLAT NO.703, IT IS SEEN THAT THE OLD RATE WAS RS.3,350/- PER SQ.FT. WHEREAS IT WAS TRANSFERRED @ RS.3,000/- PER SQ.FT. AND, THEREFORE, IT CANNOT BE SAID THAT THERE WAS ANY PROFIT BY TRANSFERRING THE FLAT TO THE NEW PERS ON. THUS EVIDENCES AVAILABLE IN THE IMPOUNDED MATERIAL CLEARLY INDICATE THAT THE AP PELLANT DID NOT RECEIVE ANY EXTRA AMOUNT AS CONTENDED BEFORE THE AO. I FIND THAT THE AO MERELY BASED ON SUSPICION, DOUBT AND ASSUMPTION MADE ESTIMATED ADDITION WHICH IS NOT CORRECT. THE APPELLANT CONTENDED BEFORE THE AO THAT NO EXTRA AMOUNT WAS RE CEIVED DURING THIS YEAR AND THERE ARE NO ENTRIES FOR RECEIPT OF SUCH EXTRA MONE Y IN THE IMPOUNDED MATERIAL AND THE AO HAS NOT BROUGHT ON RECORD THE EXACT NATURE O F ENTRY WHICH WOULD PROVE THAT THE APPELLANT ACTUALLY RECEIVED EXTRA AMOUNT IN THE ABSENCE OF WHICH THE ADDITION CANNOT BE SUSTAINED. IN VIEW OF THE ABOVE DISCUSSIO N, I ACCEPT THE PLEA OF THE REPRESENTATIVE THAT THERE ARE NO ENTRIES IN THE IMP OUNDED MATERIAL TO PROVE THAT THE APPELLANT ACTUALLY RECEIVED ANY EXTRA AMOUNT WHILE BOOKING/REBOOKING FLATS AS 5 ITA NO. 6588/MUM/2010 (A.Y. 2007-08) ITO VS. NEELESHEAR DEVELOPERS MENTIONED BY THE AO. AS THE ADDITION HAS BEEN MADE PURELY ON THE BASIS OF ASSUMPTION, THE SAME IS DELETED. THUS THE AO SHALL DELETE THE ADDITION OF RS.61,53,500/-. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE ALS O GONE THROUGH THE MATERIAL ON RECORD. A PERUSAL OF THE ABOVE REPRODUCED FINDINGS OF THE LD. CIT(A) REVEALS THAT THE LD. CIT(A) HAS GIVEN A CATEGORICAL FINDING THAT NO EVID ENCE OR MATERIAL WAS FOUND DURING THE SURVEY ACTION TO SHOW THAT THE ASSESSEE HAD RECEIVE D ANY ON-MONEY IN RESPECT OF FLATS BOOKED DURING THE FINANCIAL YEAR UNDER CONSIDERATIO N. THE ASSESSEE HAD ALSO EXPLAINED THE FIGURES AND THE ENTRIES MADE IN THE IMPOUNDED BLUE COLOUR LONG NOTE BOOK. THE LD. CIT(A) HAS OBSERVED THAT THE ENTRIES IN THE IMPOUND ED BLUE COLOUR LONG NOTE BOOK SHOWED THAT WHATEVER EXTRA AMOUNT WAS RECEIVED FROM THE NEW ALLOTTEES, THE SAME WAS PAID TO THE ORIGINAL ALLOTTEES. IT HAS ALSO BEEN OB SERVED BY THE LD. CIT(A) THAT THE A.O. HAD NOT BROUGHT ON RECORD ANY MATERIAL EVIDENCE WHI CH WOULD PROVE THAT THE ASSESSEE HAD RECEIVED ANY EXTRA MONEY IN ADDITION TO WHAT HAD BE EN DISCLOSED IN THE BLUE COLOUR LONG NOTE BOOK. HE, THEREFORE, HELD THAT THE ADDITION CA NNOT BE MADE BY THE A.O. MERELY ON THE BASIS OF ASSUMPTIONS AND PRESUMPTIONS. THE LD. DR C OULD NOT BRING BEFORE US ANY NEW FACT OR EVIDENCE TO POINT OUT ANY DEFECT IN THE WEL L REASONED OBSERVATIONS MADE BY THE LD. CIT(A). WE, THEREFORE, DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) AND THE SAME IS, THEREFORE, UPHELD. 5. IN THE RESULT, THE APPEAL OF THE REVENUES IS DIS MISSED. 1/*2 ( % 1 % * 34 ORDER PRONOUNCED IN THE OPEN COURT ON MARCH 11, 201 5 SD/- SD/- (B. R. BASKARAN) (SANJAY GARG) / ACCOUNTANT MEMBER / JUDICIAL MEMBER ' ) MUMBAI; 5 DATED : 11.03.2015 (. ../ ROSHANI , SR. PS 6 ITA NO. 6588/MUM/2010 (A.Y. 2007-08) ITO VS. NEELESHEAR DEVELOPERS ! ' #$%& ' &$ / COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT 2. #$ ' / THE RESPONDENT 3. ' 6* ( ) / THE CIT(A) 4. ' 6* / CIT - CONCERNED 5. 9( #* :; , + :; / , ' ) / DR, ITAT, MUMBAI 6. < =) / GUARD FILE ! ( / BY ORDER, )/(* + (DY./ASSTT. REGISTRAR) , ' ) / ITAT, MUMBAI