2008 (6) TMI 548 - HC - Income Tax

Whether in the facts and circumstances of the case the Tribunal was right in deleting the addition made by the assessing officer on the income of the 3 flat complexes promoted by the assessee? Held that - Both the authorities have given concurrent finding that additions were made only by comparing with the project of M/s Alacrity Housing Limited and that assessment could not be made on surmises and conjectures. The findings given by both the authorities are that the revenue did not prove that the assessee has collected on money on the sale of flats and also there is no proof that the assessee had made unaccounted investments or credits etc. Therefore it is clear that the concurrent findings are based on valid material and evidence. It is a question of fact and not a perverse order. The learned counsel appearing for the revenue is also unable to produce any material evidence to take a contrary view. Hence no error or infirmity in the order of the Tribunal warranting interference. Appeal dismissed.

Summary

Issues:
Whether the Tribunal was right in deleting the addition made by the assessing officer on the income of the 3 flat complexes promoted by the assessee?

Analysis:
The appeal involved a dispute regarding the addition made by the Assessing Officer on the income of three flat complexes promoted by the assessee. The Assessing Officer added a total of Rs. 31,53,887 in respect of three projects based on a comparison with another promoter, Alacrity Housing Limited. The revenue contended that the Tribunal erred in deleting this addition, as the assessee had admitted discrepancies in the sale price. However, both the Commissioner of Income Tax (Appeals) and the Appellate Tribunal upheld the assessee's position. The Commissioner (Appeals) found that the location, quality of construction, target market, and other factors differed significantly between the assessee's projects and those of Alacrity Housing Limited. The Tribunal concurred, stating that the additions were made on surmises and conjectures without concrete evidence. The authorities emphasized that assessments must rely on proven facts and evidence, not presumptions. They concluded that the revenue failed to provide any evidence to justify the additions, leading to the deletion of the same.

The Assessing Officer's additions were based on comparing the sale proceeds of the assessee's projects with those of Alacrity Housing Limited. However, both the Commissioner (Appeals) and the Appellate Tribunal found that the projects were not comparable due to various factors like location, target market, and construction quality. They highlighted that assessments cannot be made on presumptions alone and must be supported by concrete evidence. The authorities noted the absence of proof that the assessee received on money or engaged in unaccounted investments. The Tribunal upheld the deletion of the additions, emphasizing the lack of evidence provided by the revenue to support their claims. The decision was based on factual analysis and the principle that assessments should be grounded in verified facts, not assumptions.

The concurrent findings of both the Commissioner (Appeals) and the Appellate Tribunal supported the assessee's position, emphasizing the lack of concrete evidence to justify the additions made by the Assessing Officer. They highlighted the differences between the projects of the assessee and Alacrity Housing Limited, concluding that the additions were speculative and lacked factual basis. The authorities stressed the importance of factual evidence in assessments and the need to avoid making judgments based on assumptions. The Tribunal's decision was deemed valid and in accordance with the law, as it was supported by factual analysis and a lack of evidence from the revenue to counter the assessee's claims. Consequently, the appeal was dismissed, affirming the Tribunal's decision to delete the additions made by the Assessing Officer.