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Income Tax Appellate Tribunal, “A” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEYAND SHRI G. MANJUNATHA
Captioned appeal has been filed by the Revenue challenging the order dated 24th January 2017, passed by the learned Commissioner (Appeals)–34, Mumbai, pertaining to the assessment year 2007–08.
The effective ground raised by the Revenue reads as under:– 2.
2 Aum Shiv Enterprises
“On the facts and in the circumstances of the case and in law, the learned Commissioner (Appeals) erred in deleting the additions of ` 1,70,00,000, made by the Assessing Officer on account of difference in sale prices of three identical flats without appreciating the facts brought on record by the Assessing Officer.”
Brief facts are, the assessee, a partnership firm, filed its return of income for the impugned assessment year on 31st October 2017, declaring total income of ` 33,92,948. In the course of original assessment proceedings, the Assessing Officer noticed that in the previous year relevant to the assessment year under dispute, the assessee had sold three immovable properties being Flat no.701, 801 and 901 in his Housing Project Shobhna Co–operative Society for a consideration of ` 2,37,00,000, ` 2,40,00,000 and ` 3,23,50,000 respectively. Noticing the difference in sale consideration of the flats, the Assessing Officer called upon the assessee to explain. In response to the query raised, though, the assessee made submissions justifying price charged for the flats, however, the Assessing Officer did not find merit in the submissions of the assessee and held that the flats sold by the assessee being similar in all respect, there is no reason for the assessee to charge lesser price for the two flats compared to the higher price charged for flat no.901. Accordingly, he concluded that the difference in the sale price between flat no.901 and other two flats must have been received by the assessee as on–money. Therefore, he
3 Aum Shiv Enterprises added back the differential amount of ` 1,70,00,000, to the income of the assessee. Being aggrieved with such addition, the assessee preferred appeal before the first appellate authority. The assessee being unsuccessful before learned Commissioner (Appeals), approached the Tribunal. After considering the submissions of the assessee, the Tribunal while deciding the appeal being ITA no.6985/Mum./2010, dated 14th August 2013, restored the issue back to the Assessing Officer with a direction to consider the additional evidence filed by the assessee and decide the issue accordingly. During the fresh assessment proceedings, the Assessing Officer, in pursuance to the directions of the Tribunal, called upon the assessee to furnish supporting evidence to justify difference in sale consideration of the three Flats. In response to the query raised by the Assessing Officer, the assessee furnished various documentary evidences such as copy of registered sale deeds, memorandum of understanding with buyer for Flat no.901 sold for the highest consideration, photographs of flats, etc. The assessee also explained in detail the reason for which there was difference in sale consideration of the Flats sold.In spite of all the evidences and explanation furnished by the assessee to justify the difference in price of flats sold, the Assessing Officer again proceeded to hold that the explanation of the assessee is not acceptable. He observed, all the three flats sold by the 4 Aum Shiv Enterprises assessee being in different floors of the same building and more or less of similar nature, there is no reason why there should be a huge difference in the sale price of the flats. Accordingly, he repeated the addition of ` 1,70,00,000, being the difference between the price of flat no.901 and other two flats and added back to the income of the assessee. Being aggrieved with such addition, the assessee preferred appeal before the first appellate authority.
After considering the submissions of the assessee in the context of facts and material on record, learned Commissioner (Appeals) found that while making the addition the Assessing Officer has completely disregarded the evidences furnished by the assessee for explaining the difference in the price of the flats. He observed, the Assessing Officer did not make any enquiry or brought any material on record to establish that the assessee had received on–money from sale of other two flats to recoup the difference in price of the Flats. Accordingly, he deleted the addition made by the Assessing Officer.
The learned Departmental Representative relied upon the observations of the Assessing Officer.
The learned Authorised Representative taking us through the order passed by the Tribunal while restoring the issue back to the Assessing Officer submitted, after considering the evidences available
5 Aum Shiv Enterprises on record, the Tribunal was satisfied that the reasons on the basis of which the Assessing Officer has made the addition was incorrect. He submitted, without making any enquiry, the Assessing Officer simply relying upon the price charged for flat no.901 sold to Shri N.R. Murthy, has formed an opinion that the other two flats were also sold in same price. He submitted, when the Assessing Officer has not made any enquiry or brought on record any material to establish that the difference in price of flats have been received by the assessee as on– money from the buyers, no addition could have been made. Solely for the reason the Tribunal has restored the issue to the Assessing Officer for examining the evidences and deciding the issue. He submitted, in the fresh assessment proceedings, the Assessing Officer has again committed the same mistake as neither he has examined the evidences furnished by the assessee nor made any enquiry to verify the authenticity of assessee’s claim. Therefore, he submitted, learned Commissioner (Appeals) was justified in deleting the addition made by the Assessing Officer purely on the basis of presumption and surmises.
We have considered rival submissions and perused the material on record. Insofar as the primary facts are concerned, there is no dispute that the assessee had sold three flats to three different buyers in the same building. The details of the flats sold and consideration received are as under:–
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Flat no.701 ` 2,37,00,000 Flat no.801 ` 2,40,00,000 Flat no.901 ` 3,23,50,000
While completing the original assessment, the Assessing Officer was of the view that the sale consideration received by the assessee in respect of flat no.701 and flat no.801, were much less than the sale consideration of Flat no.901. Accordingly, on that basis alone, he added back an amount of ` 1,70,00,000, on account of difference in sale price of flats. However, when the dispute reached the Tribunal, in the order referred to above, the Tribunal after examining the facts on record found the explanation of the assessee in respect of difference in price between flat no.901 and other flats plausible as in respect of Flat no.901, sold to Shri N.R. Murthy, the assessee had entered into a specific memorandum of understanding (MoU) much earlier. The Tribunal also found that the difference in price of Flat no.901, was also due to the fact that the said apartment is at a higher elevation and there was a clear view from the apartment. Further, the special price charged for the said flat was not only for the floor which the buyer has selected but also for all the facilities provided to him. On going through the facts on record, the Tribunal was prima facie of the view that the Assessing Officer was not correct in making the addition simply on the basis that Flat no.901, was sold at a higher price. Further, the Tribunal
7 Aum Shiv Enterprises also observed that the Assessing Officer did not establish with corroborative evidence that the assessee has received any on–money towards the difference in price of flats. However, considering the fact that certain additional evidences were furnished by the assessee, the Tribunal restored the issue to the Assessing Officer for deciding afresh in the light of the evidences filed. On a perusal of the impugned assessment order, we are of the firm view that the Assessing Officer has not complied to the directions of the Tribunal. The additional evidences furnished by the assessee, such as, letter from Shri N.R. Murthy, confirmation from the buyers of flat no.701 and flat no.801, affidavit, MoU etc. have not at all been examined by the Assessing Officer. When the seller and the buyers of the flats have unequivocally denied of involvement of any on–money in sale of flats, the Assessing Officer was duty bound to make proper enquiry and establish on record through corroborative evidences that on–money has changed hands between the assessee and the buyers of other two flats to account for the difference in price charged for flat no.901. Absolutely no enquiry has been conducted by the Assessing Officer either with the buyer of other two flats or brokers or any other source to establish on record that the assessee has received any amount over and above the declared sale consideration. No material has been brought on record by the Assessing Officer to disprove or controvert the evidences filed
8 Aum Shiv Enterprises by the assessee including the confirmations of the buyers. In such circumstances, merely relying upon the sale price of flat no.901, the Assessing Officer cannot make addition on account of alleged on– money received by the assessee towards sale of other flats. Therefore, the disputed addition having been made by the Assessing Officer merely on presumption and surmises without being supported by any corroborative evidence, learned Commissioner (Appeals), in our view, was justified in deleting the addition. Grounds raised by the Revenue are dismissed.
In the result, Revenue’s appeal is dismissed. Order pronounced in the open Court on 03.07.2019