ACIT 22(2), MUMBAI V. K.S. CONSTRUCTIONS, MUMBAI

ITA 7660/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3690 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 24-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR BORA
• Keywords: Income from undisclosed sources

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI A BENCH, MUMBAI BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER. ITA. NO. 7660/MUM/2014 (ASSESSMENT YEAR:2010-11) A.C.I.T. 22(2), MUMBAI-400 012 APPELLANT VS. M/S. K. S. CONSTRUCTIONS 305, VASTU PRESTIGE, NEAR CITI MALL, LINK ROAD, ANDHERI (W), MUMBAI 400 053 RESPONDENT PAN: AAHFK1106E /BY APPELLANT : SHRI VIJAY KUMAR BORA, D.R. /BY RESPONDENT : MS. ARATI VISSANJI, A.R. /DATE OF HEARING : 10.08.2016 /DATE OF PRONOUNCEMENT : 12.08.2016 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY REVENUE AGAINST THE O RDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-30, MUMBAI, DA TED 31.10.2014 FOR A.Y. 2010-11 ON FOLLOWING GROUNDS: 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) ERRED IN DELETING THE ADDIT ION OF RS.4,16,70,874/- ON ACCOUNT OF SUPPRESSED SALE ITA NO.7660/MUM/14 A.Y. 10-11 [ACIT VS. K. S. CONSTRUCTIONS) PAGE 2 CONSIDERATION IN RESPECT OF FLAT SOLD BY THE ASSESS EE AT A LOWER RATE THAT THE OTHER FLATS IN THE SAME BUILD ING EVEN AFTER THE ASSESSEE FAILED TO JUSTIFY BEFORE TH E ASSESSING OFFICER AS TO WHY THE AFORESAID FLATS WER E SOLD AT A LOWER PRICE? 2. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LEARNED CIT(A) SHOULD HAVE UPHELD THE ADDITION OF RS.4,16,70,874/- TOWARDS SUPPRESSED SAL E CONSIDERATION WHEN THE HONBLE ITAT VIDE ORDER DATE D 15.06.2011 IN ITA NO.55378/MUM/2009 IN THE CASE OF ITO 19(3)(1), MUMBAI VS. DIAMOND INVESTMENT & PROPERTIES (A.Y.2005-06) HAD UPHELD SIMILAR ADDITIO N OF SUPPRESSED SALE CONSIDERATION UNDER SIMILAR FACTS A ND CIRCUMSTANCES WHICH WAS UPHELD BY HONBLE BOMBAY HIGH COURT ORDER DATED 20.03.2014 IN ITA NO.14 OF 2012. 2. THE FACTS OF THE CASE ARE THAT ADDITION OF RS.4. 16 CRORE WAS MADE TO THE INCOME OF ASSESSEE. ASSESSEE FIRM IS BUILDER AND DEVELOPER AND ENGAGED IN THE ACTIVITY OF BUILDI NGS AND REDEVELOPMENT OF REAL ESTATE PROJECTS. ASSESSEE DU RING THE YEAR HAS DECLARED INCOME FROM BUSINESS AND OTHER SOURCES . DURING ASSESSMENT PROCEEDINGS, ASSESSEE HAS SHOWN INCOME F ROM SALE OF COMMERCIAL UNITS LOCATED IN A COMMERCIAL COMPLEX , NAMELY, K. K. SQUARE. HE ALSO NOTICED THAT DURING YEAR 6 U NITS IN THE SAID COMPLEX HAVE BEEN SOLD, OUT OF WHICH, SALE DEE DS IN 5 WERE REGISTERED DURING F.Y.2009-10. THE DATE OF REGISTR ATION OF SALE DEED IN THE REMAINING ONE UNIT WAS IN F.Y.2005-06 R ELEVANT A.Y.2006-07. HE ALSO NOTICED THAT UNIT NO.101, DAT E OF AGREEMENT IN WHICH CASE WAS 18.12.2009, HAS BEEN SO LD @ RS. 2,94,485.29/- PER SQ. MTR. AND ON THE SAME DATE ANO THER AGREEMENT HAS BEEN ENTERED FOR SALE OF UNIT NO. 301 , WHICH HAS BEEN SOLD @ RS.34,870.97/- PER SQ. MTR. DATE OF FI RST PAYMENT ITA NO.7660/MUM/14 A.Y. 10-11 [ACIT VS. K. S. CONSTRUCTIONS) PAGE 3 IN CASE OF UNIT NO. 301, HOWEVER, WAS 07.02.2006 AS COMPARED TO 12.08.2009 IN CASE OF UNIT NO.101 SOLD TO M/S. J MD AUTO INDIA PVT. LTD. HE FURTHER NOTICED THAT UNIT NO. 3 02, DATE OF REGISTRATION IN WHICH CASE WAS 01.11.2009, HAS BEEN SOLD@ RS. 78,327.62/- PER SQ. MTR. AND THE FIRST PAYMENT FOR THE SAME HAS BEEN MADE ON 04.10.2009. HOWEVER, UNIT NO. 303 HAS BEEN SOLD TO ONE MR. ASHOK MEHRA, VIDE REGISTRATION DEED DATED 03.03.2006 @ 33,333.33/- AND THE DATE OF FIRST PAYM ENT FOR THE SAME WAS 30.12.2005. THE LAST TWO UNITS BEING 4 TH AND 5 TH FLOOR, HAVE BEEN SOLD TO OVERSEAS INFRASTRUCTURE IN DIA ALLIANCE PVT. LTD. VIDE DEED OF REGISTRATION DATED 18.11.200 9 @ 2,38,576.17/- PER SQ. MTR. THE DATE OF FIRST PAYMEN T IN THIS CASE WAS 13.07.2009. ASSESSING OFFICER CALLED FOR REASONS FOR VARIATION IN THE SALE RATE PER SQ. MTR. IN RESPECT OF ABOVE UNITS AND AFTER CONSIDERING THE ASSESSEE'S EXPLANATION, C ONCLUDED THAT ASSESSEE HAS CLAIMED THAT MARKET VALUE, AS ASS ESSED BY THE STAMP DUTY REGISTERING AUTHORITY IN THE CASE OF UNIT NO. 302 WAS RS.1,44,58,500/-, AS AGAINST AGREEMENT PRICE OF RS.1.51 CRORE, WHICH IS HIGHER THAN THE MARKET VALUE ASSESS ED BY THE STAMP DUTY REGISTERING AUTHORITY, WHEREAS, ASSESSIN G OFFICER OBSERVED THAT THE ISSUE AT HAND WAS THAT THE SALE P RICE OF UNIT NO.302 WAS MUCH LESS THAN THE PRICE AT WHICH SIMILA R COMMERCIAL UNITS HAD BEEN SOLD TO OTHER BUYERS IN T HE SAME BUILDING DURING THE SIMILAR TIME PERIOD, THEREFORE, THE CLAIM OF ASSESSEE THAT SALE PRICE OF UNIT 302 WAS HIGHER THA N THE STAMP DUTY IS NOT RELEVANT. ASSESSING OFFICER ALSO REJEC TED THE SUBMISSION OF ASSESSEE THAT UNIT NO. 302 SUFFERS FR OM DESIGN DISADVANTAGES AND IT COULD NOT GET ANY CUSTOMERS TO PURCHASE ITA NO.7660/MUM/14 A.Y. 10-11 [ACIT VS. K. S. CONSTRUCTIONS) PAGE 4 THE PREMISES OF UNIT NO. 302, THEREFORE, THE SAME W AS IN THE NATURE OF PERSONAL SALE. HE ACCORDINGLY HELD THAT THERE IS NO CONVINCING REASON FOR CHARGING LESSER RATES FROM ON E PARTICULAR BUYER COMPARED TO OTHERS IN RESPECT OF SIMILAR/IDEN TICAL PREMISES AND IT INDICATED THAT ACTUAL TRANSACTION F OR PREMISES NO. 302 MUST HAVE BEEN AT PREVAILING RATES, WHICH W ERE IN THE RANGE OF RS. 2,38,576/- TO RS. 2,94,485/- PER SQ. M TR. AND ASSESSEE HAS BEEN UNABLE TO GIVE CONVINCING EXPLANA TION FOR SUCH UN-NATURAL VARIATION IN RATES DESPITE AVAILING OPPORTUNITIES TO DO SO. ASSESSING OFFICER FURTHER OBSERVED THAT AS IS THE PREVALENT PRACTICE IN REAL ESTATE DEALING S, UNDERHAND TRANSACTIONS OF ON MONEY IN THIS CASE CANNOT BE DEN IED, ESPECIALLY WHEN THE PREVALENT MARKET RATES IN SAME BUILDING WERE MORE THAN THREE TIMES HIGHER THAN THE RATE AT WHICH PREMISES NO. 302 WAS SOLD BY ASSESSEE. HE, THEREFOR E, HELD THAT THERE WAS A DIFFERENCE OF 48 DAYS IN REGISTRATION O F PREMISES NO. 302 AND 301 (01.11.2009 AND 18.12.2009 RESPECTIVELY ). ASSESSING OFFICER CAME TO CONCLUSION THAT IN RESPEC T OF UNIT NO. 302, MR. PARESH P. SHAH WAS ASKED TO SUBMIT DETAILS OF TRANSACTION WITH ASSESSEE AND FROM THE SAID DETAILS SUBMITTED BY HIM, IT WAS FOUND THAT FIRST PAYMENT IN CASE OF UNIT NO. 302 WAS MADE ON 04.10.2009 AND THE ENTIRE PAYMENT WAS M ADE ON 24.11.2009 AND IN CASE OF M/S. JMD AUTO INDIA PVT. LTD. TO WHOM PREMISES NO. 101, HAS BEEN SOLD, FIRST PAYMENT CAME ON 19.08.2009 AND THE ENTIRE PAYMENT WAS MADE ON 04.11 .2009. HE, THEREFORE, HELD THAT TWO TRANSACTIONS ARE COMPA RABLE, IN VIEW CASE OF ALMOST IDENTICAL TIMING AND SINCE ASSE SSEE COULD NOT PROVIDE PLAUSIBLE REASON FOR SUCH VIDE VARIATIO N IN RATES, HE ITA NO.7660/MUM/14 A.Y. 10-11 [ACIT VS. K. S. CONSTRUCTIONS) PAGE 5 APPLIED THE RATE AT WHICH FIRST FLOOR (PREMISES NO. 101), HAS BEEN SOLD, FOR THE PURPOSE OF DETERMINING THE ACTUA L SALE RATE FOR UNIT NO. 302. ACCORDINGLY, RATE OF 2,94,485.29/ - PER SQ. MTR., WAS ADOPTED BY HIM FOR COMPUTING THE SALE PRI CE OF UNIT NO. 302 (192.78 SQ. MTR.) AND DIFFERENCE OF RS. 4,1 6,70,874/- WAS TREATED BY HIM AS UNACCOUNTED INCOME OF ASSESSE E FROM SALE OF UNIT NO. 302, AND ADDED SAME TO THE INCOME OF ASSESSEE. 2.1 MATTER WAS CARRIED BEFORE THE FIRST APPELLATE A UTHORITY, WHEREIN VARIOUS CONTENTIONS WERE RAISED ON BEHALF O F ASSESSEE AND HAVING CONSIDERED THE SAME, CIT(A) GRANTED RELI EF TO ASSESSEE. 2.2 SAME HAS BEEN OPPOSED BEFORE US ON BEHALF OF RE VENUE INTER ALIA SUBMITTED THAT CIT(A) ERRED IN DELETING THE ADDITION OF RS.4,16,70,874/- ON ACCOUNT OF SUPPRESSED SALE CONS IDERATION IN RESPECT OF FLAT SOLD BY ASSESSEE AT A LOWER RATE THAT THE OTHER FLATS IN THE SAME BUILDING EVEN AFTER ASSESSEE FAIL ED TO JUSTIFY BEFORE THE ASSESSING OFFICER AS TO WHY THE AFORESAI D FLATS WERE SOLD AT A LOWER PRICE? IN THE FACTS AND CIRCUMSTAN CES OF THE CASE, CIT(A) SHOULD HAVE UPHELD THE ADDITION OF RS. 4,16,70,874/- TOWARDS SUPPRESSED SALE CONSIDERATION . ACCORDINGLY, ORDER OF CIT(A) BE SET ASIDE AND THAT OF ASSESSING OFFICER BE RESTORED. ON THE OTHER HAND, LD. AUTHORI ZED REPRESENTATIVE SUPPORTED THE ORDER OF CIT(A). 2.3 AFTER GOING THROUGH RIVAL SUBMISSIONS AND PERUS ED THE MATERIAL ON RECORD, WE FIND THAT ISSUE BEFORE US IS WITH REGARD ITA NO.7660/MUM/14 A.Y. 10-11 [ACIT VS. K. S. CONSTRUCTIONS) PAGE 6 TO ADDITION OF RS.4,16,70,874/-. IT IS NOT IN DISP UTE THAT SALE PRICE OF UNIT NO.302 IS HIGHER THAN THE STAMP DUTY VALUATION. HE ALSO ACCEPTED THE VARIATION IN RATES FOR SALE OF UNIT NOS. 301, 302 AND 4 TH & 5 TH FLOOR, VIS--VIS SALE RATE OF UNIT NO.101. AS DISCUSSED EARLIER, BESIDES UNIT NO.302, THE DATE OF AGREEMENT FOR UNIT NO.301 AND 4 TH & 5 TH FLOOR WAS ALSO FALLING IN F.Y.2009- 10 RELEVANT TO A.Y. 2010-11. ASSESSING OFFICER OBS ERVED THAT AS IS A PREVALENT PRACTICE IN REAL-ESTATE DEALINGS, UN DERHAND TRANSACTIONS OF ON MONEY IN THIS CASE CANNOT BE DEN IED, ESPECIALLY WHEN THE PREVALENT MARKET RATES IN THE S AME BUILDING WERE MORE THAN THREE TIMES HIGHER THAN THE RATE AT WHICH PREMISES NO. 302 WAS SHOWN TO BE SOLD BY ASSE SSEE. HOWEVER, ASSESSING OFFICER HAS NOT BROUGHT ANY EVID ENCE ON RECORD TO SHOW AS TO HOW THE EXPLANATION OF ASSESSE E THAT THERE IS LOCATIONAL DISADVANTAGES IN THE CASE OF UNIT NO. 302, WHICH HAS BEEN DULY RECORDED BY HIM, WAS NOT CORRECT. AS SESSING OFFICER HAS NOT BROUGHT ANY EVIDENCE TO ESTABLISH T HAT THERE HAS BEEN ON MONEY TRANSACTION FOR SALE OF SAID UNIT NO. 302. IT IS NOT A CASE OF TRANSACTION BETWEEN RELATED PARTIE S. ASSESSEE ALSO INFORMED THE ASSESSING OFFICER THAT UNIT NO. 3 02 SOLD AT A VALUE WHICH WAS SUBSTANTIALLY HIGHER THAN THE MARKE T RATE COMPUTED BY THE STATE GOVERNMENT OF MAHARASHTRA, HE NCE, ONLY REASON WHY FLAT NO. 101 COMMANDED HIGHER PRICE COMPARED TO OTHER FLATS WAS THAT THE SAID UNIT HAD LOCATIONAL ADVANTAGE OF ENTIRE FLOOR SUITABLE FOR A CAR SHOW R OOM COMPARED TO UNIT NO. 302. IN THE LIGHT OF THE ABOV E FACTS, CIT(A) OBSERVED THAT THERE WAS NO CASE MADE OUT BY ASSESSING OFFICER THAT THE SALE PRICE WAS BELOW THE PRICE DEC LARED BY THE ITA NO.7660/MUM/14 A.Y. 10-11 [ACIT VS. K. S. CONSTRUCTIONS) PAGE 7 STATE GOVERNMENT OF MAHARASHTRA OR BELOW THE MARKET PRICE. ASSESSING OFFICER HAD SIMPLY APPLIED THE DIFFERENTI AL IN RATES FOR BOOKING OF UNIT NO. 101 AND 302A FOR ARRIVING AT TH E ACTUAL BOOKING RATE FOR UNIT NO.302. THE ADDITION MADE BY ASSESSING OFFICER WAS THEREFORE SIMPLY ON THE BASIS OF DIFFER ENCE IN THE RATE IN BOOKING OF UNIT NO.101. CIT(A) RELIED ON T HE DECISION OF MUMBAI ITAT IN CASE OF NELKAMAL REALTORS & ERECTORS INDIA (P) LTD. REPORTED IN (2013) 38 TAXMAN.COM 195 (MUMBAI T RIB) AND HELD THAT ASSESSING OFFICER HAS NOT CONTROVERTED TH E EXPLANATION FURNISHED BY ASSESSEE DURING COURSE OF ASSESSMENT PROCEEDINGS TO EXPLAIN THE REASONS FOR CHARGING LOW ER PRICE IN RESPECT OF UNIT NO.302 SOLD VIS--VIS RATE/PRICE FO R UNIT NO.101. IN VIEW OF ABOVE, CIT(A) RIGHTLY DELETED THE ADDITI ON OF RS.4,16,70,874/-. THIS REASONED FACTUAL FINDING OF CIT(A) NEEDS NO INTERFERENCE FROM OUR SIDE BECAUSE TRANSAC TION IN QUESTION IS AS PER SAME VALUATION OF THE CONCERNED STATE DEPARTMENT. SAME IS UPHELD. 3. IN THE RESULT, THE APPEAL FILED BY REVENUE IS DI SMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 12 TH DAY OF AUGUST, 2016. SD/- SD/- ( RAJESH KUMAR ) (SHAILENDRA KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBE R MUMBAI: DATED 12/08/2016 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- 1. / REVENUE 2. / ASSESSEE ITA NO.7660/MUM/14 A.Y. 10-11 [ACIT VS. K. S. CONSTRUCTIONS) PAGE 8 3. !'!#$ % / CONCERNED CIT 4. %- / CIT (A) 5.-./00#$, #$, !' / DR, ITAT, MUMBAI 6./4567 / GUARD FILE. BY ORDER / , / !, #$, !'