B.BHUVANESWARI,CHENNAI vs. ITO, CHENNAI

This appeal by the assessee is directed against the order passed by the Ld. Commissioner of Income Tax (Appeals)-4, Chennai dated 24.10.2016 in IT Appeal No.117/2015-16/A.Y.2011-12/CIT(A)-4/ for the assessment year 2011-12.

The assessee has raised several grounds in her appeal, however the crux of the issue is that the Ld.CIT(A) has erred in sustaining the order of the Ld.AO who had treated the difference between the amount of purchase consideration of the undivided share of land stated in the purchase deed and purchase agreement amounting to Rs.10,80,000/- as unexplained investment U/s. 69 of the Act.

The brief facts of the case are that the assessee is an individual earning salary income and capital gains, filed her return of income for the relevant assessment year on 10.06.2011 admitting income of Rs.2,26,516/-. During the relevant assessment year, the assessee had sold her land on 26.04.2010 for Rs.13,00,000/- and purchased a residential flat from a builder for Rs.27,70,000/-. In the sale agreement the assessee had stated the cost of the undivided share of land as Rs.7,20,000/- (UDS 400 sq.ft. @ 1800/- per sq.ft.). However in the purchase deed dated 28.03.2013, document No.2124 the sale consideration for the 400 sq.ft., undivided share of land was shown as Rs.18,00,000/-. Therefore the Ld.AO opined that the difference of Rs.10,80,000/- (18,00,000-7,20,000) should be treated as the undisclosed investment of the assessee and accordingly he made addition. On appeal, the Ld.CIT(A) also subscribed to the view of the Ld.AO by observing as under: “17. Regarding the first issue, it has been contended by the appellant that the difference in the value of sale consideration had occurred because of the fact that at the time of registration of the said land on 28/03/2013, the guideline value of the property had increased tor stamp duty purposes for which the value of the land/UDS was taken at Rs.18 lakhs. Hence, as argued by the Ld. A.R., this value of Rs.18 lakhs was only a guideline value and not an actual consideration. I have considered the submissions of the appellant and, accordingly, have examined the photo copy of the relevant Sale Deed dated 8/03/2013. It is noticed that at page 4, para 3, of the Sale Deed, it is clearly mentioned as, •• Whereas Vendor's Power Agent has offered to convey the 400 ft.", Undivided Share in the Schedule "A "property, which is more fully described in Schedule "S" hereunder by way of absolute sale to the PURCHASER for the Sale Consideration of Rs.18,00,000/- net free from all encumbrances." Further, at page 5, para one, it clearly reads that, " whereas in pursuance of what is mentioned above and in consideration of the sum of Rs.18,00,000/- already paid by the PURCHASER to the VENDOR'S Power Agent, the receipt of which the VENDOR'S Power Agent had by admitted and acknowledge and discharge the PURCHASER from for the payment, thereof and the VENDORS do hereby sell, Grant, convey, and assign up to the purchaser ........”

At the outset the Ld.AR submitted that the assessee had paid total consideration of Rs.27,70,000/- for acquiring the new asset and to that extend the assessee is entitled for the benefit of deduction U/s.54 of the Act and there is no scope for making addition towards undisclosed unexplained investment. The Ld. AR further requested that the matter may be remitted back to the file of Ld.AO so that the assessee and her representative would be able to explain the entire transaction vividly. The Ld. DR vehemently opposed to the submission of the Ld.AR and requested for sustaining the orders of the Revenue authorities.

We have heard the rival submissions and carefully perused the materials available on record. From the orders of the Revenue authorities, it is not clearly coming out as to the actual investment made by the assessee for acquiring the new flat. Only by examining the sale deed for purchase of the undivided share in land amounting to Rs.18,00,000/- alone would not suffice for arriving at the total cost of acquisition of the residential house. Unless the total cost of acquisition of the new asset is documentarily established the eligible deduction U/s.54 of the Act, cannot be computed. Therefore in the interest of justice, we remit back the matter to the file of Ld.AO for de-nova consideration.

In the result, the appeal of the assessee is allowed for statistical purposes.