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Income Tax Appellate Tribunal, DELHI BENCH ‘B’ : NEW DELHI
Before: SHRI A.T. VARKEY & SHRI PRASHANT MAHARISHI
the AO completed the assessment at Rs.42,42,654/- vide order dated 18.12.2008.
2.1 Aggrieved, assessee filed an appeal before CIT(A)-XIII, New Delhi. The ld. CIT(A) allowed the appeal of the assessee vide order dated 10.07.2009. Against the order of CIT (A), the revenue filed an appeal before the ITAT. The Tribunal vide order dated 25.02.2010 in set aside the order of the CIT(A) and restored back the matter to the file of Assessing Officer with a direction to the assessee to furnish the statement of accounts with respect to cost incurred in respect to each flat and additional work undertaken, if any.
In the second round of appeal, in the light of the direction of the Tribunal the Assessing Officer passed consequential order u/s 254 r.w.s 143(3) dated 21.09.2011 and again reconfirmed the addition made in the original assessment on the ground that the assessee has not complied with the date of hearing fixed on 12.09.2011.
4. Aggrieved, the assessee went in appeal before the ld. First appellate authority, who deleted the addition by observing as under:-
“ I have considered the submission of the appellant, issues discussed in the original assessment order, appeal order passed by my predecessor and directions of the Hon'ble IT A T. The only issue in dispute is regarding addition of Rs.41,50,000/- as unrecorded profit on sale of flats. The adverse inference was drawn on the ground that in the same complex, appellant had sold flats to different parties at different rates. It was observed by the Assessing Officer that flat sold to Dr. Rajnish Juneja was sold at Rs 22 lacs and to other parties the flats were sold at Rs.7,50,000/- to Rs.9,00,000/- and accordingly Assessing Officer applied the sale price relating to Dr. Rajnish Juneja in the case of sales made to other parties.
The submission of the appellant is that the Assessing Officer has not properly appreciated the facts and contents of the sale deed and mechanically applied the sale price relating to Dr. Rajnish Juneja in case of other parties in total disregard to legal documents placed on record. It was submitted that the higher sale price in case of Dr. Rajnish Juneja was in respect of additional work carried out at the specific requests of Dr. Rajnish Juneja and complete details of the additional work was placed on record vide letter dtd. 18/12/2008 before the Assessing Officer. In support of the above position, the appellant has furnished various documents in the paper book filed before me, which are as under :-
S.NO. PARTICULARS PAGE NO. 1. Copies of sales deed of flats 8 – 30
Copy of letter filed before assessing officer dated 18112/08 31 3. Details of Extra work carried out 32 in the flats sold to Dr. Juneja
Copy of letter of Dr. Juneja for 33 carrying out extra work
It was submitted that all these documents were furnished during the course of original assessment before the ASSESSING OFFICER. However, the Assessing Officer has not properly appreciated these facts and order was passed in a mechanical manner. In the original assessment order, the Assessing Officer has made reference to the claim of the appellant regarding additional cost incurred in respect of sale of flat to Dr. Rajnish Juneja and details of same were also furnished but these facts were not properly taken into consideration.
Further, as per contents of sale document, there is reference to sale of fully furnished flat in case of Dr. Rajnish Juneja, but in case of other parties, there is specific reference to sale of flat in semi finished condition and as such the facts in case of Dr. Rajnish Juneja and other parties are not comparable.
It is seen that the Assessing Officer has not made any verification or enquiry with the parties to whom flats were sold from Rs.7,50,000/- to Rs. 9,00,000/- and no information has been brought on record that the appellant has taken any sale considerations from these parties which is not recorded in the books. There is no material in the possession of ASSESSING OFFICER to support the allegation of unrecorded profit in the hands of the appellant. The various case laws discussed in the submission of the appellant and extracted above fully support the case of the appellant.
As per the sale deed, the appellant has disclosed full value of sale consideration and as such there is no factual or legal basis to contemplate any notional or hypothetical sale consideration in the absence of any specific evidence or material in the possession of the Assessing Officer.
In fact, the tribunal has also directed the Assessing Officer to verify the fact of additional cost incurred in respect of sale of flat to Dr. Rajnish Juneja. In the light of corroborative evidences placed on record in support of additional cost incurred by the appellant, which is supported by the sale deed made with Dr. Juneja and the letter filed by Dr. Juneja for carrying out extra work. In view of the above there is no basis for estimating extra sale considerations in the case of appellant on presumption and surmises. Hence, the addition made by the Assessing Officer of Rs.41,50,000/- is deleted.”
The revenue, being aggrieved, is in appeal before us. The only ground taken by the revenue is against the deletion of addition of Rs,41,50,000/-
Ld. DR submitted that in the first round of appeal, while setting aside the matter to the file of the AO, the Tribunal vide order dated 25.02.2010 had directed the assessee to furnish the statement of account with respect to cost incurred with respect to each flat, however, the assessee did not comply with the said direction and did not furnish any supporting documents/evidences during reassessment proceedings despite issue of several notices by the AO. He further submitted that the ld. CIT (A) was not right in admitting the fresh evidences under Rule 46A of the Act without giving opportunity to the AO to comment on the said additional evidences and deleted the addition. The ld. DR accordingly prayed that the order of the CIT (A) be set aside and that of the AO be restored.
On the other hand, ld. AR reiterated the submissions made before the ld. CIT (A) and submitted that the assessee could not attend the hearing on 12.09.2011 before the AO because the assessee did not receive the notice, therefore, question of non-compliance does not arise. He, however, submitted that the AO reconfirmed the original assessment on the same basis and the AO has not undertaken any exercise as directed by the Tribunal even though all the relevant documents were on record. He submitted that the assessee sold 4 (four) flats for a total sales consideration of Rs.46,50,000/- to four different persons (details already mentioned above) and the AO adopted value of the property sold to Dr. Rajnish Juneja as the basis for valuation of other properties sold during the year and addition was made on notional and hypothetical basis. He submitted that all these sales were through registered sale deeds and correctness of sale consideration was not in dispute. Further, he submitted that there was no finding or even allegation that assessee had received any under hand consideration and as such addition on account of unrecorded profit was without any factual and legal basis. He submitted that in the case of sale through registered sale deed, only full value of consideration was required to be adopted in the absence of any evidence for undisclosed or underhand consideration and the legal position to this effect is well settled. He further submitted that even otherwise, facts and basis of sale value was different in the case of Dr. Rajnish Juneja and other parties and this position was self evident from registered sale deed itself. He submitted that all these relevant documents were already on record. He further submitted that there were numerous alterations/extra work were made in the flat of Dr. Rajnish Juneja as per his directions and the relevant extract of Dr. Rajnish Juneja’s letter was reproduced at page 6 of the CIT (A)’s order. He submitted that the assessee charged Rs.13,16,750/- as extra amount in respect of above stated flat for extra work carried out and due to location of flat being in front side of building on wide road and various other fixtures and fittings. He further submitted that all the details of extra charges amounting to Rs.13,16,750/-were given by the assessee which were reproduced at page 6 of CIT (A)’s order. It was submitted by the Ld. AR that the Assessing Officer had not disputed that these modifications were carried out at the specific request of the party and receipt and expenses were duly recorded and accounted for in the books of account of the assessee. The ld. AR further submitted that the Assessing Officer had not brought any evidence to claim that the assessee had received any underhand sale consideration and the fact of sale consideration was in dispute in the case of buyers. He submitted that once it was established that full value of consideration had been disclosed, there was no case for any addition. In this regard, the ld. AR relied on various judicial pronouncements. Accordingly, he pleaded that the ld. CIT (A) has rightly deleted the addition. So, he does not want us to interfere in the order of the ld. CIT (A).
We have heard both the sides and perused the material on record.
We find that the only issue in dispute is regarding addition of Rs.41,50,000/- as unrecorded profit on sale of flats and the AO made the addition on the ground that assessee had sold flats to different parties at different rates. We find that the Assessing Officer observed that flat was sold to Dr. Rajnish Juneja at Rs 22 lacs and to other parties the flats were sold at Rs.7,50,000/- to Rs.9,00,000/- and accordingly, Assessing Officer applied the sale price relating to Dr. Rajnish Juneja in the case of sales made to other parties. We find that the ld. CIT (A) has observed that the Assessing Officer has not properly appreciated the facts and contents of the sale deed and mechanically applied the sale price relating to Dr. Rajnish Juneja in the case of other parties in total disregard to legal documents placed on record. We further find that the assessee has furnished following documents in the paper book before the Ld. CIT (A) regarding the additional work carried out at the specific request of Dr. Rajnish Juneja :
S.NO. PARTICULARS PAGE NO. 1. Copies of sales deed of flats 8 – 30 2. Copy of letter filed before assessing officer dated 18112/08 31 3. Details of Extra work carried out 32 in the flats sold to Dr. Juneja 4. Copy of letter of Dr. Juneja for 33 carrying out extra work We find that the ld. CIT (A) observed that these documents were furnished before the AO during the original assessment, however, the Assessing Officer has not properly appreciated these facts and order was passed without application of mind and in a mechanical manner. We further find that the ld. CIT (A) has rightly observed that as per contents of sale document, there was reference to sale of fully furnished flat to Dr. Rajnish Juneja, but in the case of other parties, there was specific reference to sale of flat in semi-finished condition and as such, the flat in the case of Dr. Rajnish Juneja and other parties are not comparable. We find that the ld. CIT (A) further observed that the AO has not made any verification or enquiry with the parties to whom flats were sold from Rs.7,50,000/- to Rs. 9,00,000/- and no information has been brought on record that the assessee has taken any extra sale considerations from these parties which was not recorded in the books of the assessee. We further take note of the fact that the ld. CIT (A) has recorded a finding of fact that there was no material in the possession of AO to support the allegation of unrecorded profit in the hands of the assessee and the Ld. DR could not controvert the said fact before us which is material to decide this issue. Further, the ld. CIT (A) has recorded a finding of fact that as per the sale deed, the assessee has disclosed full value of sale consideration and the said fact also could not be controverted by the Ld. DR before us, as such, we agree with the Ld. CIT(A) that there was no factual or legal basis to contemplate any notional or hypothetical sale consideration in the absence of any specific evidence or material in the possession of the AO to counter the stand of the assessee.
We further find that in fact, the Tribunal has also directed the AO to verify the fact of additional cost incurred in respect of sale of flat to Dr. Rajnish Juneja which exercise also the AO failed to carry out by asking from the buyers of other flats the cost they incurred to buy the flats, without doing so, the addition is based only on presumption and surmises and so the addition made by the AO was rightly deleted by the Ld. CIT(A). And we do not find any merit in the contention of the Ld. DR that the Ld. CIT(A) failed to ask for remand-report before admitting additional evidences because no new evidences were in fact filed before the Ld. CIT(A) for the first time. The evidences relied upon by the Ld. CIT(A) to delete the addition were already on the file of the AO during original assessments which were filed on 18.12.2008 as discernable from the CIT(A) order at page 11. So there was no need for the Ld CIT(A) to seek any remand report as contemplated in the Income Tax Rule. Accordingly, we do not find any infirmity in the impugned order of the Ld CIT(A) and so we uphold the order of the ld. CIT (A) and dismiss the grounds taken by the revenue.
In the result, the appeal of the revenue is dismissed.
Order pronounced in open court on this 10th day of November, 2015.