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Income Tax Appellate Tribunal, MUMBAI BENCH “A” MUMBAI
Before: SHRI C.N. PRASAD & SHRI N.K. PRADHAN
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’).
The Ld. counsel of the assessee submits that he would not like to press the 1st ground of appeal. Accordingly, the said ground of appeal is dismissed as not pressed.
Anwar Gulamhusein We then deal with the 2nd 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 “Geetanjali” 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 location 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 Officer (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 days, whereas the payments in Anwar Gulamhusein 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 higher 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 order 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 were 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/- 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.
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 entire 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. counsel further submits that the flat sold to his wife was on a lower floor i.e. on the 5th floor, while those to Mr. Sarkar were on the 6th 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 the sale deeds. Finally, it is Anwar Gulamhusein 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 deleted.
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 confirmed. Thus the Ld. DR supports the order passed by the Ld. CIT(A).
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 reiterated. 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, though 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 5th floor, while those to Mr. Sarkar were on the 6th floor. Also two stilt car parks were sold 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 In the instant case, there is no denying the fact that complete details were filed 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, amenities 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 disprove the contentions of the assessee with regard to the above factors, we are inclined to delete the addition of Rs.37,00,000/-.