ITO 19(3)(3), MUMBAI V. SHILESH P DHAIIRYAWAN, MUMBAI

ITA 823/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7910 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 06-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR A K NAYAK
• Keywords: Corroborative evidences

Judgement Text

, INCOME-TAX APPELLATE TRIBUNAL -EBENCH MUMBAI , , BEFORE S/SH.RAJENDRA,ACCOUNTANT MEMBER AND AMARJIT SINGH,JUDICIAL MEMBER ./I.T.A./823/MUM/2015, / ASSESSMENT YEAR: 2010-11 INCOME TAX OFFICER-19(3)(3) ROOM NO.303,3 RD FLOOR, PIRAMAL CHAMBERS, PAREL, LALBAUG MUMBAI-400 012. VS. SHRI SHAILESH P. DHAIRYAWAN 7, DHAIRYA HOUSE,242, 7THE RD. KHAR(W) MUMBAI-52. PAN:AAAPD 5713 D ( /APPELLANT ) ( / RESPONDENT) / REVENUE BY: DR. A.K. NAYAK -DR /ASSESSEE BY: NONE / DATE OF HEARING: 22/03/2017 / DATE OF PRONOUNCEMENT:24.03.2017 PER RAJENDRA, AM - CHALLENGING THE ORDER OF THE CIT(A)-30,MUMBAI,DATED -03.11.2014, THE ASSESSING OFFICER(AO) HAS FILED THE PRESENT APPEAL.ASSESSEE-A N INDIVIDUAL,FILED HIS RETURN OF INCOME ON 01/10/2010,DECLARING TOTAL INCOME AT RS.7.77 LAKHS. THE AO COMPLETED THE ASSESSMENT,ON 28/03/2013, U/S.143 (3) OF THE ACT,DETERMINING HIS INCOME AT RS.1.54 CRORES. 2. EFFECTIVE GROUND OF APPEAL IS ABOUT DELETING THE AD DITION OF RS. 53.05 LAKHS MADE ON ACCOUNT OF RATE DIFFERENCE IN FLATS SOLD BY THE ASS ESSEE. DURING THE ASSESSMENT PROCEEDINGS,THE AO FOUND THAT ONE OF THE PROJECTS OF THE ASSESSEE N AMELY JAI MILIND WAS COMPLETED DURING THE YEAR,THAT THERE WAS VARIATION IN THE RATES OF T HE FLATS SOLD BY THE ASSESSEE IN THE PROJECT.HE DIRECTED THE ASSESSEE TO EXPLAIN THE REASONS FOR TH E VARIATION IN THE SALE PRICES OF THE FLATS. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE, T HE AO OBSERVED THAT THERE WAS VARIATION IN THE RATE OF SALES PER SQ.FT. RANGING FROM RS. 10,47 8/- TO RS. 10, 970/-. HE ASKED THE ASSESSEE AS TO WHY THE SELLING RATE SHOULD NOT BEEN DETERMIN ED AS PER THE TRIBUNAL ORDER IN THE CASE OF DIAMOND INVESTMENT. AS PER THE AO,NO SATISFACTORY E XPLANATION WAS FILED BY THE ASSESSEE IN THAT REGARD. HE HELD THAT THE ASSESSEE HAD SOLD FLA T NUMBER 201 @ 14, 970/-PER SQ.FT. AND FLAT NUMBER 101 @ 12,500/-,THAT FLAT NUMBER 202 AND 601 WERE SOLD @ 14,890/- AND AT 10, 478/- RESPECTIVELY, THAT THE ASSESSEE HAD BOOKED THE FLAT S AT DIFFERENT RATES, THAT THE ASSESSEE HAD TAKEN ON MONEY IN CASH FOR BOOKING THE FLATS, THAT THE ONUS WAS ON THE ASSESSEE TO ESTABLISH THAT NEGOTIATION HAD OCCURRED BECAUSE OF WHICH THER E WAS DIFFERENCE IN SELLING RATE, THAT HE HAD FAILED TO DISCHARGE THE ONUS, THAT INFERENCE HA D TO BE DRAWN ON THE BASIS OF CIRCUMSTANCIAL 823/M/15(10-11) SHAILESH P. DHAIRYAWAN 2 EVIDENCES.HE WORKED THE DIFFERENCE OF THE PROJECT A T THE HIGHER SIDE OF BOOKING RATE I.E.AT RS.14,970/- PER SQ.FT..ACCORDINGLY,THE ADDITIONAL S ALES INCOME AMOUNTING TO RS.53.05 LAKHS,BEING EARNED BY THE ASSESSEE,BUT NOT OFFERED FOR TAXATION, WAS ADDED TO HIS TOTAL INCOME. 3.AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PR EFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA). BEFORE HIM,THE ASSESSEE MADE SUBMISSIONS WITH REGARD THE DIFFERENCE IN SALE PRICES RECOVERED FROM THE CUSTOM ERS. AFTER CONSIDERING THE ORDER OF THE AO AND THE SUBMISSIONS OF THE ASSESSEE, THE FAA HELD T HAT THE AO HAD NOT BROUGHT ON RECORD ANY EVIDENCE TO SHOW THAT ON MONEY HAD PASSED FROM THE HANDS OF THE PURCHASER TO THE SELLER AT THE TIME OF BOOKING FLATS OR LATER ON, THAT HE HAD NOT CARRIED OUT ANY ENQUIRY IN THE CASE OF BUYER OF THE SELLER TO FIND OUT AS TO WHETHER ANY O N MONEY HAD BEEN TAKEN BY THE ASSESSEE FOR BOOKING THE FLATS,THAT NO CIRCUMSTANTIAL EVIDENCES WERE BROUGHT ON RECORD TO SUGGEST THAT BENEFIT OF UNDER-RATE HAD BEEN GIVEN TO SOME OF THE PURCHASER FOR EXTRANEOUS REASONS FOR CONSIDERATION.REFERRING TO THE ORDER OF THE TRIBUNA L IN THE CASE OF DIAMOND INVESTMENT,RELIED UPON BY THE AO, HE HELD THAT FACTS OF THAT CASE WER E TOTALLY DIFFERENT,THAT IN THAT MATTER DIFFERENCE IN PRICE IN CASE OF CERTAIN FLATS SOLD T O RELATED PARTIES WAS AT A MUCH LOWER PRICE AS COMPARED TO THE FLATS SOLD TO OTHER PERSONS,THAT TH E ASSESSEE HAD SOLD ALL THE FLATS TO UNRELATED PARTIES, THAT THE AO HAD NOT BROUGHT ON RECORD TO P ROVE THAT THE FLATS WERE SOLD BELOW MARKET PRICE, THAT HE HAD SIMPLY APPLIED THE DIFFERENTIAL RATES FOR BOOKING OF UNIT NUMBER 201 AND 101, 202 AND 601 FOR ARRIVING AT THE ACTUAL BOOKING RATE FOR THE ABOVE UNITS. HE REFERRED TO THE CASE OF NEELKAMAL REALTORS AND ERECTORS INDIA PRIVA TE LTD. (38 TAXMAN.COM. 195) AND HELD THAT THE AO HAD NOT CONTROVERTED THE EXPLANATION FU RNISHED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDING FOR CHARGING LOWER PRICE I N RESPECT OF 3 UNITS SOLD VIS A VIS THE RATE/PRICE FLAT NUMBER 201. FINALLY, HE DELETED THE ADDITION MADE BY THE AO RELYING UPON THE ABOVE ORDER OF THE TRIBUNAL. 4. BEFORE US,THE DEPARTMENTAL REPRESENTATIVE(DR)SUPPOR TED THE ORDER OF THE AO. NONE APPEARED ON BEHALF OF THE ASSESSEE,AS STATED EARLIE R.FROM THE PERUSAL OF THE AVAILABLE MATERIAL, ONE THING IS CLEAR THAT THE AO HAS NOT MADE ANY ENQ UIRY ABOUT THE RATE DIFFERENCE.HE COMPARED THE RATE OF ONE FLAT WITH THE OTHER FLATS AND APPLIED THAT PARTICULAR RATE IN A MECHANICAL WAY.BUSINESSES IS NOT CARRIED OUT ON PRI NCIPLES OF ARITHMETIC ADDITIONS/ SUBTRACTIONS/MULTIPLICATIONS.IT IS A DYNAMIC ACTIVI TY.THERE COULD BE SEVERAL REASONS FOR CHARGING DIFFERENT RATES FOR DIFFERENT FLATS.SIZE O F THE FLAT,ITS LOCATION AND DIRECTIONAL ADVANTAGES ARE SOME OF THE FACTORS FOR DECIDING THE RATES.NOW A DAYS WAS TO COMPLIANCE ALSO 823/M/15(10-11) SHAILESH P. DHAIRYAWAN 3 PLAYS A ROLE IN DECIDING THE PRICE TO BE PAID BY TH E BUYERS. GENERALLY THE FLATS AT LOWER FLOORS WOULD COMMAND LOWER PRICE THAN THE UPPER FLOOR FLAT S. FLATS HAVING LARGER AREA GENERALLY FETCH LESSER PRICE AS COMPARED TO THE FLATS OF SMAL LER AREAS. THERE CAN BE SEVERAL SUCH REASONS FOR VARIATION IN THE PRICES. THE AO HAS NOT CONSIDE RED ANY OF SUCH FACTORS AND HAD APPLIED A MATHEMATICAL FORMULA.WE DO NOT KNOW HOW HE HAD ARRI VED AT THE CONCLUSION THAT ON MONEY WAS CHARGED BY THE ASSESSEE.IF AN AO WANTS TO TAX A PARTICULAR INCOME,IT IS HIS DUTY TO BRING ON RECORD SOME EVIDENCE TO PROVE THAT THE AMOUNT IN QUESTION WAS PART OF THE INCOME THAT HAD ACCRUED OR ARISEN TO AN ASSESSEE.IN THE CASE UNDER CONSIDERATION, THE AO HAS NOT CARRIED OUT ANY EXERCISE IN THAT REGARD.HE HAS MADE AN ALLEGATI ON WITHOUT ANY SUPPORTING EVIDENCE. THE ASSESSEE HAD STATED THAT TWO OF THE FLATS WERE SOLD TO EXISTING MEMBERS OF THE OLD BUILDING AND THAT ADDITIONAL CONCESSIONS TO THE EXISTING MEMBERS HAD TO BE GIVEN FOR THE REDEVELOPMENT OF THE PROJECT.THE AO HAD NOT TAKEN THIS VITAL FACT IN TO CONSIDERATION.WE FIND THAT THE FAA HAS CLEARLY HELD THAT FACTS OF THE CASE RELIED UPON BY THE AO WERE TOTALLY DIFFERENT FROM THE FACTS OF THE CASE UNDER CONSIDERATION.IN THAT CASE, IT WA S ESTABLISHED THAT FLATS SOLD BY THE ASSESSEE TO HIS RELATIVES WERE SOLD AT LOWER PRICES AS COMPA RED TO THE FLATS SOLD TO OTHER BUYERS. CONSIDERING,THOSE PECULIAR FACTS OF THE CASE THE TR IBUNAL HAD UPHELD THE ADDITION MADE BY THE AO.IN OUR OPINION,THE CASE RELIED UPON THE AO IS OF NO HELP TO HIM. IN THESE CIRCUMSTANCES, WE HOLD THAT ORDER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL OR FACTUAL INFIRMITY.CONFIRMING THE SAME, WE DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE AO. BEFORE PARTING,WE WOULD LIKE TO MENTION THAT IT IS A CASE THAT FALLS UNDER THE CATEGORY OF FRIVOLOUS AND UNNECESSARY LITIGATION. WE ARE UNABLE TO UNDERSTAND AS TO HOW THE AUTHORITIES PROCESSING AND AUTHORISING THE FILING OF SECOND APP EAL HAVE ENDORSED THE VIEW OF THE AO FOR CHALLENGING THE ORDER OF THE FAA.IT APPEARS THAT AP PEAL WAS FILED WITHOUT APPLICATION OF MIND AND IN A ROUTINE MATTER. WE HOPE THAT IN FUTURE SUC H FRIVOLOUS APPEALS WOULD NOT BE FILED. A RESULT, APPEAL FILED BY THE AO STANDS DISMISSED. . ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH MARCH , 2017. 24 2017, SD/- SD/- ( / AMARJIT SINGH ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; /DATED : 24.03.2017. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR BENCH, ITAT, MUMBAI / , , . . . 823/M/15(10-11) SHAILESH P. DHAIRYAWAN 4 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.