2013 (4) TMI 603 - AT - Income Tax

Revision of orders prejudicial to revenue - search - Revenue in exercise of her powers u/s 263 of the Income-tax Act found that there was an undisclosed consideration to the extent of Rs.9 lakhs since the property was immediately mortgaged for Rs.10 lakhs by the purchaser. As per revenue the taxpayer sold the property for Rs.1 lakhs to Shri RV Radhakrishnan. It appears Shri RV Radhakrishnan availed a loan of Rs.10 lakhs from Kerala State Co-operative Bank by mortgaging that property. The loan availed was subsequently passed on to Welcare Hospital as loan. Welcare Hospital repaid the loan with interest. Held that - Direction was issued to A.O. to examine whether the taxpayer has received any amount more than what was disclosed in the registered sale deed. If any material is available on record to suggest that the taxpayer has received more amount than what was disclosed in the sale deed then that amount has to be treated as sale consideration and be brought to tax for the assessment year 2005-06. This Tribunal is of the considered opinion that there cannot be any addition for assessment year 2008-09 in respect of the sale of property on 31-03-2005. With the above observations the order of the Administrative Commissioner is confirmed and the appeal filed by the taxpayer dismissed.

Summary

Issues:
Determining undisclosed consideration in a property sale transaction for assessment year 2005-06, revisional jurisdiction under section 263 of the Income-tax Act, potential double addition for the same transaction in different assessment years.

Analysis:
The appeal pertains to a taxpayer who is a partner in various partnership firms, involving a property sale transaction and subsequent loan availed against the property. The Administrative Commissioner exercised revisional jurisdiction under section 263 of the Income-tax Act, finding undisclosed consideration in the property sale. The taxpayer's representative argued that the sale consideration was correctly disclosed, and the addition made by the Administrative Commissioner was unjustified. It was contended that a similar addition was made for a subsequent assessment year, leading to a potential double addition. The taxpayer's representative emphasized the need for consistency in the treatment of the transaction across assessment years.

On the contrary, the Departmental Representative argued that the loan availed by the purchaser against the property indicated an understatement of the sale consideration, justifying the revisional jurisdiction exercised by the Administrative Commissioner. The Departmental Representative highlighted the need to rectify any inconsistencies in the assessment of the transaction across different assessment years.

Upon reviewing the submissions and available material, the Tribunal found that the assessing officer had presumed an understatement of sale consideration based on the loan amount availed against the property. However, the Tribunal noted that the assessing officer failed to establish that the actual sale consideration exceeded the disclosed amount in the registered sale deed. The Tribunal emphasized that the sale consideration disclosed in the registered sale deed should be considered prima facie evidence unless proven otherwise. It was observed that the addition made by the assessing officer was speculative and lacked proper factual examination.

The Tribunal concurred with the Administrative Commissioner's decision that any addition should be specific to the assessment year in which the sale took place, i.e., 2005-06, and not extended to subsequent assessment years. The Tribunal directed the assessing officer to reevaluate whether the taxpayer received any additional amount beyond the disclosed sale consideration, emphasizing the need for concrete evidence to support any such addition. The Tribunal clarified that no addition should be made for the assessment year 2008-09 concerning the same property sale transaction on 31-03-2005.

In conclusion, the Tribunal upheld the Administrative Commissioner's order, dismissing the taxpayer's appeal while instructing the assessing officer to conduct a thorough examination to determine any additional sale consideration for the assessment year 2005-06, based on concrete evidence.