ANWAR GULMHUSEIN LALANI, MUMBAI V. ITO WD 20(1)(1), MUMBAI

ITA 8569/MUM/2011

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6330 (ITAT-MUMBAI)
• Duration Of Justice: 7 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 19-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATISH CHANDRA RAJORE
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A MUMBAI BEFORE SHRI C.N. PRASAD (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 8569/MUM/2011 ASSESSMENT YEAR: 2007 - 08 ANWAR GULAMHUSEIN LALANI 219, SAGAR AVENUE, S.V. ROAD, ANDHERI (W), MUMBAI - 400058. VS. ITO WD. 20(1)(1), PIRAMAL CHAMBERS, PAREL, MUMBAI - 400012. PAN NO. AAAPL4708L APPELLANT RESPONDENT ASSESSEE BY : MR. DEEPAK TRALSHAWALA , AR REVENUE BY : MR. SATISH CHANDRA RAJORE , DR DATE OF HEARING : 01 /1 1 /2018 DATE OF PRONOUNCEMENT : 28/01/2019 ORDER PER N.K. PRADHAN, AM THIS IS AN APPEAL FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEAR IS 2007 - 08 . THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 31 , MUMBAI [IN SHORT CIT(A)] AND ARISES OUT OF THE ASSESSMENT COMPLETED U/S 143(3) OF THE INCOME TAX ACT 1961, (THE ACT). 2. THE LD. COUNSEL OF THE ASSESSEE SUBMITS THAT HE WOULD NOT LIKE TO PRESS THE 1 ST GRO UND OF APPEAL. ACCORDINGLY, THE SAID GROUND OF APPEAL IS DISMISSED AS NOT PRESSED. ANWAR GULAMHUSEIN ITA NO. 8569/MUM/2011 2 WE THEN DEAL WITH THE 2 ND GROUND OF APPEAL WHICH IS AS UNDER: HOLDING THAT THE APPELLANT SUPPRESSED HIS SALE PROCEEDS IN A FLAT SOLD TO HIS WIFE IN THE BUILDING GEETANJAL I WITHOUT PROVIDING ANY EVIDENCE OF CASH RECEIVED FROM HER, EVEN WHEN THE TRANSACTION WAS AT A RATE HIGHER THAN THAT VALUED BY THE STAMP DUTY AUTHORITIES AND WITHOUT GOING INTO THE SPECIFIC TERMS AND CONDITIONS OF SALE, THE PAYMENT SCHEDULE AND THE LOCATI ON OF THE FLAT. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE, A DEVELOPER FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR (AY) 2007 - 08 ON 31.10.2007 DECLARING NIL INCOME. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFF ICER (AO) OBSERVED THAT THE ASSESSEE HAD ENTERED INTO AN AGREEMENT WITH MRS. NASEEM ANWAR LALANI (HIS WIFE) FOR SALE OF FLAT NO. 501 & 502 ADMEASURING 1519 SQ. FT. FOR A NET CONSIDERATION OF RS.1,83,00,000/ - . SIMILARLY, THE ASSESSEE HAD ENTERED INTO AN AGREEMENT WITH MR. SHAHID SHAUKAT SARKAR FOR SALE OF FLAT BEARING NO. 601 & 602 VIDE AGREEMENT DATED 24.07.2006 AND 30.12.2006 RESPECTIVELY. AS PER THE AO, THE TOTAL AREA SOLD BY THE ASSESSEE TO HIS WIFE AND MR. SARKAR WAS EXACTLY THE SAME. HOWEVER, THERE WAS A DIFFERENCE OF RS.37,00,000/ - IN THE SALE CONSIDERATION CHARGED BETWEEN THE FLATS SOLD TO HIS WIFE AND MR. SARKAR. IN RESPONSE TO A QUERY RAISED BY THE AO TO EXPLAIN THE ABOVE DIFFERENCE, THE ASSESSEE SUBMITTED THAT (I) THERE IS A GAP OF NEARLY 5 MONTHS BETWEEN THESE TWO TRANSACTIONS, (II) THE FLAT SOLD TO SHRI SARKAR IS ON A HIGHER FLOOR, AND (III) THE PAYMENTS FROM HIS WIFE WERE RECEIVED ON A DOWN PAYMENT OF RS.1,83,00,000/ - WITH THE ENTIRE PAYMENT BEING RECEIVED IN SPAN OF TEN D AYS, WHEREAS THE PAYMENTS IN ANWAR GULAMHUSEIN ITA NO. 8569/MUM/2011 3 RESPECT OF FLATS SOLD TO MR. SARKAR WERE RECEIVED OVER A PERIOD OF 2 YEARS FROM DECEMBER 2006 TO MARCH 2008. THE AO WAS NOT CONVINCED WITH THE ABOVE EXPLANATION OF THE ASSESSEE FOR THE REASON THAT FLAT NO. 602 WAS SOLD BY AN AGREEMENT DATED 30.12.2006 FOR RS.98,00,000/ - . THE PURCHASER HAD PAID RS.90,00,000/ - ON 06.12.2006 I.E. BEFORE THE AGREEMENT DATE. THE FINAL PAYMENT OF RS.8,00,000/ - WAS MADE ON 12.02.2007 I.E. IN A SPAN OF 2 MONTHS. STILL THE ASSESSEE SOLD THE FLAT AT A H IGHER RATE I.E. RS.14,583/ - PER SQ. FT. AGAINST THE SALE OF FLAT @ RS.12,047/ - PER SQ. FT. TO HIS WIFE. THE AO FURTHER FOUND THAT THE PAYMENT FOR FLAT NO. 601 WAS SPREAD OVER A PERIOD OF 11 MONTHS ONLY I.E. UPTO 15.01.2008 AND NOT MARCH 2008 AS CLAIMED BY THE ASSESSEE. HOLDING THAT THE SO - CALLED DOWN PAYMENT IS WITHIN THE FAMILY, THE AO OBSERVED THAT IT SAME DOES NOT DRAW ANY SIGNIFICANCE. ON THE BASIS OF THE ABOVE REASONS, THE AO BROUGHT TO TAX THE DIFFERENCE OF RS.37,00,000/ - . 4. AGGRIEVED BY THE ORDE R OF THE AO THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A). IT IS OBSERVED BY THE LD. CIT(A) THAT THE GEETANJALI BUILDING CONSTRUCTED BY THE ASSESSEE , HAVING 7 STORYES HAS IN TOTAL 14 RESIDENTIAL FLATS OR UNITS OUT OF WHICH 6 UNITS/FLATS OR 3 STORYES W ERE GIVEN TO THE ORIGINAL OWNER OF THE RE - DEVELOPED BUILDING AND THE REMAINING 8 FLATS WERE SOLD BY THE ASSESSEE . THE DETAILS OF THE FLAT IN DISPUTE ARE MENTIONED BELOW: FLAT NO. NAME OF THE BUYERS DATE OF SALE SALE CONSIDERATION 401 & 402 NASEEM LALANI (WIFE) 24.07.2006 RS. 1,83,00,000/ - ANWAR GULAMHUSEIN ITA NO. 8569/MUM/2011 4 601 SHAHID S. SARKAR 30.12.2006 RS. 1,20,00,000/ - 602 SHAHID S. SARKAR 30.12.2006 RS. 98,00,000/ - AGREEING WITH THE REASONS GIVEN BY THE AO THAT THE SALE CONSIDERATION SHOWN BY THE ASSESSEE IN RESPECT OF SALE OF FLATS TO HIS WIFE IS COMPARATIVELY LOWER TO THE SALE PRICE SHOWN IN RESPECT OF SUCH OTHER PARTIES, THE LD. CIT(A) DISMISSED THE APPEAL FILED BY THE ASSESSEE. 5. BEFORE US, THE LD. COUNSEL OF THE ASSESSEE SUBMITS THAT IN THE CASE OF MRS. NASEEM LALANI, THE ENTIRE AMOUNT OF RS.1,83,00,000/ - WAS RECEIVED DURING THE PERIOD 06.07.2006 TO 18.07.2006. THUS THE ENTIRE PAYMENT WAS RECEIVED BEFORE THE AGREEMENT WAS SIGNED ON 24.07.2006. IT IS STATED BY HIM THAT IN THE CASE OF MR. SARKAR, THE E NTIRE PAYMENT OF RS.2 , 20 ,00,000/ - WAS RECEIVED DURING THE PERIOD 06.12.2006 TO 15.03.2008. IT IS FURTHER STATED BY HIM THAT THOUGH MR. SARKAR DID PAY A SUM OF RS.1 , 02 ,00,000/ - IN DECEMBER 2006, STILL RS.1 , 30 ,00,000/ - WAS DUE FROM HIM AT THE TIME OF SIGNING THE AGREEMENT WITH HIM. HENCE DUE TO DEFERMENT OF PAYMENT BY MR. SARKAR, A HIGHER PRICE WAS CHARGED TO HIM. REFERRING TO THE READY RECKONER OF 2007, IT IS STATED THAT THE ASSESSEE SOLD HIS FLATS AT RATES MUCH HIGHER THAN THE GOVERNMENT RATE. THE LD. COU NSEL FURTHER SUBMITS THAT THE FLAT SOLD TO HIS WIFE WAS ON A LOWER FLOOR I.E. ON THE 5 TH FLOOR, WHILE THOSE TO MR. SARKAR WERE ON THE 6 TH FLOOR. FLATS ON HIGHER FLOORS HAVE BETTER LIGHT AND VIEW AND THEREFORE, ALWAYS COMMAND A HIGHER PRICE. ALSO IT IS STATED THAT TWO STILT CAR PARKS WERE SOLD TO MR. SARKAR, WHILE ONE WAS SOLD TO THE ASSESSEE S WIFE AND THE SAME IS CLEAR FROM THE COPIES OF T HE SALE DEEDS. FINALLY , IT IS ANWAR GULAMHUSEIN ITA NO. 8569/MUM/2011 5 STATED THAT THERE WAS ACTUAL TRANSFER OF MONEY FROM THE WIFE TO THE ASSESSEE AND IT WAS NOT JUST A BOOK ENTRY. IN VIEW OF THE ABOVE SUBMISSIONS, THE LD. COUNSEL ARGUES THAT THE ADDITION OF RS.37,00,000/ - MADE BY THE AO BE DE LETED. 6. ON THE OTHER HAND, THE LD. DR SUBMITS THAT THE SALE CONSIDERATION SHOWN BY THE ASSESSEE IN RESPECT OF HIS WIFE IS MUCH LOWER THAN THE SALE CONSIDERATION RECEIVED FROM MR. SARKAR AND THEREFORE, THE ADDITION OF RS.37,00,000/ - MADE BY THE AO BE CON FIRMED. THUS THE LD. DR SUPPORTS THE ORDER PASSED BY THE LD. CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. THE REASONS FOR OUR DECISION ARE GIVEN BELOW. THE FACTUAL DETAILS IN THE INSTANT CASE MAY BE REITERA TED. IN THE CASE OF MRS. NASEEM LALANI, THE ENTIRE AMOUNT OF RS.1 , 83 ,00,000/ - WAS RECEIVED IN THE PERIOD 06.07.2006 TO 18.07.2006. IT WAS RECEIVED BEFORE THE AGREEMENT WAS SIGNED ON 24.07.2006. IN THE CASE OF MR. SARKAR, T HOUGH HE DID PAY A SUM OF RS.1 , 02 , 00,000/ - IN DECEMBER 2006, STILL RS.1 , 30 ,00,000/ - WAS DUE FROM HIM AT THE TIME OF SIGNING OF AGREEMENT. THE FLAT SOLD TO HIS WIFE WAS ON A LOWER FLOOR I.E. ON THE 5 TH FLOOR, WHILE THOSE TO MR. SARKAR WERE ON THE 6 TH FLOOR. ALSO TWO STILT CAR PARKS WERE S OLD TO MR. SARKAR, WHILE ONE WAS SOLD TO ASSESSEE S WIFE AS EVIDENT FROM THE SALE DEEDS. ALSO, THE ASSESSEE HAS SOLD HIS FLATS AT RATES MUCH HIGHER THAN THE GOVERNMENT RATE. ANWAR GULAMHUSEIN ITA NO. 8569/MUM/2011 6 IN THE INSTANT CASE, THERE IS NO DENYING THE FACT THAT COMPLETE DETAILS WERE FI LED BY THE ASSESSEE BEFORE THE AO. THIS IS EVIDENT FROM THE ASSESSMENT ORDER. IN SUCH A SITUATION, THE ONUS WAS ON THE AO TO ESTABLISH THAT THERE WAS SUPPRESSION OF SALES TO THE TUNE OF RS.37,00,000/ - . INSTEAD OF MAKING INQUIRY/VERIFICATION, THE AO HAS RESORTED TO MAKING AN ADDITION ON ARITHMETICAL DIFFERENCE. THE SAME IS NOT SUPPORTED BY ANY MATERIAL EVIDENCE. THERE IS NO DISPUTE THAT DIFFERENCE IS SALE CONSIDERATION WOULD ARISE BECAUSE OF SITUATION OF FLAT IN DIFFERENT FLOORS, PAYMENT SCHEDULES, AMENIT IES ETC. IN THE INSTANT CASE, THE DIFFERENCE HAS ARISEN BECAUSE OF LOCATION OF FLATS IN DIFFERENT FLOORS, PAYMENT SCHEDULES AND AMENITIES PROVIDED. A FINDING OBVIOUSLY SHOULD REST ON EVIDENCE. THIS IS NOT SO IN THE INSTANT CASE. AS THE AO HAS FAILED TO D ISPROVE THE CONTENTIONS OF THE ASSESSEE WITH REGARD TO THE ABOVE FACTORS, WE ARE INCLINED TO DELETE THE ADDITION OF RS.37,00,000/ - . 8. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28/01/2019. SD/ - SD/ - (C.N. PRA SAD) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 28/01/2019 RAHUL SHARMA, SR. P.S. ANWAR GULAMHUSEIN ITA NO. 8569/MUM/2011 7 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (SR. PRIVATE SECRETARY) ITAT, MUMBAI