MOHANLAL M SHAH, V. DCIT CIR 23(2),

MA 491/MUM/2012

• Counselvise Citation: [2013] 123 COUNSELVISE.COM (IT) 9873 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 8 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 04-01-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2006-2007
• Appeal Filed On: 26-07-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: PRADIP N KAPASI
• Keywords: Sale consideration of property below Jantri Value; Corroborative evidences
• Section: 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH, H, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT(MZ) AND SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER MA NO: 491/MUM/2012 ARISING OUT OF : ITA NO. 2610/M/2011 ASSESSMENT YEAR : 2006-07 SHRI MOHANLAL M. SHAH RAINBOW INDUSTRIES 25, GALA INDUSTRIAL ESTATE DUMPING ROAD MUMBAI-400 080. PAN NO.: AADPS 9483 L ADDL. COMMISSIONER OF INCOME TAX 23 (1) VASHI NAVI MUMBAI. (APPLICANT) VS. (RESPONDENT) APPLICANT BY : SHRI PRADIP N. KAPASI RESPONDENT BY : SHRI MOHIT JAIN DATE OF HEARING : 14.12.2012 DATE OF PRONOUNCEMENT : 04.01.2012 ORDER PER RAJENDRA SINGH (AM). THIS MISCELLANEOUS APPLICATION HAS BEEN FINED BY THE ASSESSE E REQUESTING FOR AMENDMENT/RECALL OF THE ORDER DATED 22 .6.2012 OF THE TRIBUNAL IN ITA NO. 2610/M/2011 FOR THE AY 2006-07. THE APPARENT MISTAKE POINTED OUT IS IN RELATION TO ADDITIONS MADE O N ACCOUNT OF SUPPRESSED SALES FROM THE CONSTRUCTION ACTIVITY. MA NO.491/M/12 ARISING OUT OF ITA NO. 2610/M/11 A.Y:06-07 2 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE WAS JOINTLY DE VELOPING A CONSTRUCTION PROJECT WITH MRS. HANSA S. SHAH, NAMED AS SUK H NIWAS PROJECT. THE AO NOTED THAT IN MANY CASES THE ASSESSEE HAD SO LD FLATS AT MUCH LOWER RATES. THE COMMERCIAL PROPERTIES HAD BEEN SOLD AT THE RATE OF RESIDENTIAL PROPERTY AND RESIDENTIAL PROPERTI ES IN SOME CASES HAD BEEN SOLD AT A RATE LOWER THAN IN EARLIER YEAR. SALE PRICE WAS ALSO MUCH LOWER THAN STAMP DUTY VALUE AND TOTAL DIFFERENCE WITH RESPECT TO STAMP DUTY VALUE WAS MORE THAN RS.1.00 CRORE. THE AO N OTED THAT THE ASSESSEE HAD SHOWN NET LOSS ON THE WHOLE PROJECT. THE AO, T HEREFORE, REJECTED THE ACCOUNTS AND ESTIMATED SUPPRESSED SALES AT RS.50. 00 LACS OUT OF WHICH RS.25.00 LACS WAS ADDED IN THE NAME OF THE ASSESSEE. 2.1. IN APPEAL, CIT(A) NOTED THAT THE AO HAD POINTE D OUT SEVERAL DISCREPANCIES WITH RESPECT TO PRICES OF DIFFERENT FLATS/SHO PS. THE EXPLANATION GIVEN BY THE ASSESSEE WAS GENERAL SUCH AS FLAT S BEING NOT AIRY, BACK SIDE LOCATION, OR NOT GETTING PROPER BUYER , OR THE PROJECT BEING JINXED AND THERE BEING SUBSTANTIAL LOAN LIABILI TY, WITHOUT ANY SUPPORTING EVIDENCE. NO COMPARABLE CASE WAS GIVEN TO SUPP ORT THE PRICE. CIT(A), THEREFORE, CONFIRMED THE ADDITION. IN FURTHER APPEAL, THE TRIBUNAL NOTED THAT SEVERAL DISCREPANCIES HAD BEEN POINT ED OUT BY THE AO WHICH WERE NOT EXPLAINED WITH PROPER EVIDENCE. THE TRIBUNAL OBSERVED THAT TRANSACTIONS IN REAL ESTATE WERE DIFFEREN T FROM TRADE IN OTHER GOODS. IN NORMAL TRADE, IN CASE, THE ASSESSEE INFLAT ES THE PURCHASES WITH A VIEW TO REDUCE PROFIT, THE SELLER OF COR RESPONDING GOODS HAS TO SHOW HIGHER SALES AND MORE INCOME, AND THER EFORE, TRANSACTION CAN BE CROSS CHECKED. IN CASE OF REAL ESTIMATE, UNDERSTATEMENT OF SALES BY AN ASSESSEE HELPS THE BUYER IN UNDERSTATEMENT OF INVESTMENT AND IN INTRODUCTION OF UN ACCOUNTED MONEY. THUS UNACCOUNTED TRANSACTIONS BENEFIT BOTH PARTIE S AND MA NO.491/M/12 ARISING OUT OF ITA NO. 2610/M/11 A.Y:06-07 3 THEREFORE, SALE BILL OR AGREEMENT IN SUCH CASE CAN NOT BE RELIED UPON. THERE WERE SEVERAL DISCREPANCIES WHICH COULD NOT BE EXPLAI NED BY GIVING PROPER EVIDENCE. THE TRIBUNAL, THEREFORE, HEL D THAT THE SALE ACCOUNT COULD NOT BE ACCEPTED AS RELIABLE. THE TRIBUNAL ALSO OBSERVED THAT THE JUDGMENTS CITED BY THE LD. AR WERE DISTINGUI SHABLE ON FACTS. THE TRIBUNAL FURTHER OBSERVED THAT AFTER REJECTING TH E ACCOUNTS THE ESTIMATE HAD TO BE MADE BY AO BASED ON SOME MATERIAL. IN THIS CASE NEITHER THE ASSESSEE HAD EXPLAINED LOW SALE PRICE WITH P ROPER EVIDENCE NOR AO HAD COLLECTED MATERIAL SUCH AS COMPARATIVE CASE TO SUPPORT THE ADDITION. THE TRIBUNAL, THEREFORE, SET ASIDE THE ORDE R OF CIT(A) AND RESTORED THE MATTER TO THE AO FOR PASSING A FRESH ORDER AFTER NECESSARY EXAMINATION AND AFTER ALLOWING OPPORTUNITY OF HEARI NG TO THE ASSESSEE. AGGRIEVED BY THE DECISION, THE ASSESSEE HAS FILED THE MISCE LLANEOUS APPLICATION. 4. BEFORE US, THE LD. AR SUBMITTED THAT THE JUDGMENTS CITED BY THE ASSESSEE BEFORE THE TRIBUNAL WERE DIRECTLY ON THE ISSUE AN D WERE NOT DISTINGUISHABLE AND, THEREFORE, FOLLOWING THESE JUDGME NTS, NO ADDITION WAS REQUIRED TO BE MADE. IT WAS ALSO SUBMITTED THAT EV EN IF THE ORDER WAS SET ASIDE AND RESTORED TO AO, THE TRIBUNAL COULD HAV E DIRECTED THE AO TO MAKE ADDITION ONLY ON THE BASIS OF UNACCOUNTED RE CEIPTS AND NOT ON THE BASIS OF COMPARATIVE CASES. IT WAS THUS SUBMITTED THA T THERE WAS APPARENT MISTAKE IN THE ORDER OF THE TRIBUNAL WHI CH SHOULD BE CORRECTED. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND SUBMITTED THAT THE TRIBUNAL HAD PASSED A REASONED AND SP EAKING ORDER AND THERE WERE NO APPARENT MISTAKES. THE TRIBUNAL HAD NO POWER TO REVIEW ITS OWN DECISION AND, THEREFORE, THE MISCELLANEO US APPLICATION SHOULD BE REJECTED. MA NO.491/M/12 ARISING OUT OF ITA NO. 2610/M/11 A.Y:06-07 4 5. WE HAVE PERUSED THE RECORDS AND CONSIDERED MATTER CARE FULLY. THE DISPUTE RAISED IN THE APPEAL WAS REGARDING THE ADD ITION MADE BY THE AO ON ACCOUNT OF SUPPRESSED SALES IN RESPECT OF FLATS / SHOPS SOLD BY THE ASSESSEE. THE AO HAD NOTED SEVERAL DISCREPANCIES SUCH A S THE COMMERCIAL PROPERTIES BEING SOLD AT THE SAME RATE AS THAT OF RESIDENTIAL PROPERTIES; RESIDENTIAL PROPERTIES AT RATE LOWER THAN THE SALE RATE OF THE EARLIER YEAR; THE SALE PRICE BEING MUCH LO WER THAN THE STAMP DUTY VALUE WITH THE TOTAL DIFFERENCE OF RS.1 CROR E. FOR THESE REASONS, THE AO REJECTED THE BOOKS OF ACCOUNT AND MADE E STIMATED ADDITION OF RS.25 LACS ON ACCOUNT OF SUPPRESSED SALES. THE C IT(A) HAD CONFIRMED THE ADDITION. THE TRIBUNAL NOTED THAT THE VARIOUS DISCREPANCIES POINTED OUT BY THE AO HAD NOT BEEN EXPLA INED BY THE ASSESSEE WITH PROPER EVIDENCE AND ONLY GENERAL EXPLANATI ON HAD BEEN GIVEN. THE TRIBUNAL ALSO OBSERVED THAT THE TRANSACTIONS IN REAL ESTATE WERE DIFFERENT FROM THE TRANSACTIONS IN BUSINESS OF TRADI NG IN OTHER GOODS. IN NORMAL TRADING IN GOODS, IN CASE THE ASSESSEE IN FLATES THE PURCHASE PRICE WITH A VIEW TO REDUCE PROFIT, THE SAME COU LD BE CROSS CHECKED WITH A SELLER WHO WOULD BE OBVIOUSLY, EFFECTED A S HE WOULD HAVE TO SHOW HIGHER SALE AND HIGHER PROFIT. BUT IN CASE OF REAL ESTATE, UNDERSTATEMENT OF SALES BY AN ASSESSEE HELPS THE BUYER IN UNDERSTATEMENT OF INVESTMENTS AND THUS IN INTRODUCTION O F UNACCOUNTED MONEY. THEREFORE, IN CASE OF REAL ESTATE SAL E BILLS OR AGREEMENTS CANNOT BE RELIED UPON AS UNACCOUNTED TRANSACTIO NS BENEFIT BOTH THE PARTIES. THE ASSESSEE HAD RELIED UPON SEVERAL JU DGMENTS WHICH HAD BEEN DISTINGUISHED BY THE TRIBUNAL. THE TRI BUNAL, THEREFORE, CONFIRMED THE REJECTION OF ACCOUNTS. AS REGARDS ESTIMATION OF SUPPRESSED SALES, THE TRIBUNAL OBSERVED THAT IN THIS CASE N EITHER THE ASSESSEE HAD EXPLAINED THE LOW SALE PRICES BY SUPPORTING EV IDENCE NOR THE AO HAD COLLECTED ANY MATERIAL SUCH AS COMPARATIVE CAS E TO SUPPORT MA NO.491/M/12 ARISING OUT OF ITA NO. 2610/M/11 A.Y:06-07 5 THE ADDITION. THE TRIBUNAL, THEREFORE, RESTORED THE MATTER TO THE FILE OF AO FOR PASSING AFRESH ORDER AFTER NECESSARY EXAMINATION A ND AFTER ALLOWING OPPORTUNITY OF HEARING TO THE ASSESSEE. 5.1 THE LD.AR OF THE ASSESSEE POINTED OUT THAT THE JUDG MENTS CITED BY THE ASSESSEE WERE DIRECT TO THE POINT AND NOT DISTIN GUISHABLE AND FOLLOWING THOSE JUDGMENTS NO ADDITION SHOULD BE MADE A ND THEREFORE, THERE WAS AN APPARENT MISTAKE IN ORDER. IT HAS ALSO BEE N SUBMITTED THAT THE ADDITION COULD BE MADE ONLY ON THE BASIS OF U NACCOUNTED SALES AND NOT ON THE BASIS OF COMPARABLE CASES. WE HAVE CAREFULL Y CONSIDERED THE SUBMISSIONS OF THE ASSESSEE, WE DO NOT AGREE WITH THE LD.AR THAT THE JUDGMENTS WERE NOT DISTINGUISHABLE. IN THE CASE OF ITO VS. PANCHAVATI ARCADE & ORS. [(2006) 104 TTJ (HYD) 736 ], THE SALES HAD BEEN MADE TO KITH AND KIN OF THE ASSESSEE AT LOWER RATE. THE TRIBUNAL OBSERVED THAT THE ASSESSEE MIGHT HAVE INTENTION ALLY SOLD THE PROPERTY AT A LOWER RATE TO KITH AND KIN. THE PRESEN T CASE IS DISTINGUISHABLE AS NO SALES TO KITH AND KIN ARE INVOLVED . IN THE CASE OF DEEPCHAND AND CO. VS ACIT [(1995) 51 TTJ (BOM) 421] T HE ADDITION HAD BEEN MADE ONLY ON THE BASIS OF THE STATEMENT OF PA RTIES AT THE TIME OF SEARCH AND THE SAID STATEMENTS WERE FOUND BY TR IBUNAL TO BE MADE UNDER PRESSURE AND FORCE AND ACCORDINGLY, THE ADDI TION BASED ON SUCH STATEMENT, WHICH HAD BEEN RETRACTED, WERE DELETED. THERE WERE NO OTHER DISCREPANCIES POINTED OUT IN THAT CASE AS WAS I N THE PRESENT CASE. IN CASE OF INDERLOK HOTELS (P) LTD. VS. ITO [(2009) 122 TTJ 145 (MUM.)], ADDITION HAD BEEN MADE ON ACCOUNT OF SALE OF CAR PARKING. TRIBUNAL NOTED THAT THERE WAS COMPOSITE SALE OF FLAT AN D CAR PARK AND THERE WAS NO EVIDENCE TO SHOW THAT SEPARATE PRICE HAD B EEN RECEIVED FOR CAR PARK. THEREFORE, ADDITION WAS NOT UPHELD. THE CASE IS OBVIOUSLY, DIFFERENT FROM THE PRESENT CASE. IN CASE OF TRIVENGADAM INVESTMENTS PVT. LTD. (328 ITR 325), THE ISSUE WAS, WHETHER SECTIO N 50C COULD BE MA NO.491/M/12 ARISING OUT OF ITA NO. 2610/M/11 A.Y:06-07 6 APPLIED TO THE CASE OF BUSINESS PROFIT IN REAL ESTATE WHI CH IS NOT THE ISSUE IN PRESENT CASE. THE JUDGMENT OF HONBLE GUJARAT HI GH COURT IN CASE OF KRISHNA KUMAR RAWAT & ORS. (214 ITR 610) RELATE D TO PRE- EMPTIVE PURCHASE PROPERTY BY APPROPRIATE AUTHORITY. T HE HIGH COURT NOTED THAT VALUATION OF PROPERTY WAS BASED ON PROPER MATERIAL AND THE PURCHASER HAD BEEN GIVEN SUFFICIENT OPPORTUNITY AND T HEREFORE THE PRE- EMPTIVE PURCHASE HAD BEEN UPHELD. THE CASE OBVIOUSLY IS NOT APPLICABLE IN CASE OF THE ASSESSEE. SIMILARLY, THE CASE OF N IRMAL LAXMINARAYAN GROVER (223 ITR 572) ALSO RELATED TO PR E-EMPTIVE PURCHASE OF PROPERTY AND THE COURT FOUND THAT THERE W AS NO RELEVANT MATERIAL FOR THE CONCLUSION THAT THERE WAS UNDER NO VA LUATION OF THE PROPERTY. THE CASE IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. THUS, ALL THE JUDGMENTS CITED WERE RIGHTLY HELD BY TH E TRIBUNAL AS DISTINGUISHABLE. THE TRIBUNAL HAD PASSED A REASONABLE A ND SPEAKING ORDER FOR COMING TO THE PARTICULAR CONCLUSION, AND THE TRIBUNAL HAS NO POWER TO REVIEW ITS OWN ORDER. WE, THEREFORE, SEE NO APPARENT MISTAKE IN THE ORDER AND THE MISCELLANEOUS APPLICATION IS THUS RE JECTED. 6. IN THE RESULT THE MISCELLANEOUS APPLICATION OF THE ASSE SSEE STANDS REJECTED. 7. ORDER PRONOUNCED IN THE OPEN COURT ON 04.01.2013 SD/- SD/- (D. MANMOHAN) ( RAJENDRA SINGH ) VICE PRESIDENT ACC OUNTANT MEMBER MUMBAI, DATED : 04.01.2013. JV., RASIKA COPY TO: THE APPLICANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR H BENCH MA NO.491/M/12 ARISING OUT OF ITA NO. 2610/M/11 A.Y:06-07 7 TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.