2014 (1) TMI 973 - AT - Income Tax

Suppression of sales consideration - Held that - The AO has taken the stamp value of property as determined by the stamp valuation authority - There was made no actual verification of the carpet area of the flats in question but the same was increased/ converted into built up area in a mechanical manner on the basis of formula as reproduced above. Merely because the assessee/purchaser had to pay the stamp duty as per the departmental instructions at a higher rate on the basis of so increased saleable area calculated on the basis of above departmental instruction/formula, that itself can not be a sufficient basis for the revenue authorities to hold that the actual sale consideration of the flats was more than that was mentioned in the sale agreement, especially, in the absence of any other evidence/incriminating material brought by the Assessing Officer - it was mentioned in the agreement that the value/cost of balcony area was inclusive in the sale value of the carpet area and the said area was excluded for the purpose of calculating the carpet area, then under such circumstances, the reasonable inference can be that the cost of balcony area has been taken into consideration and embedded into, while fixing the rate of carpet area exclusive of area of balconies. The conclusions arrived at by the lower authorities are based on conjectures and surmises and not based on any plausible evidence - The burden is on the Revenue to prove that actual consideration was more than that was disclosed by the assessee, which in this case the Revenue has failed to discharge - Decided in favour of assessee. Genuineness of unsecured loan - Held that - The assessee has submitted that the necessary details like confirmation letters from the creditors, copies of their income tax returns, ledger account etc were filed - The assessee had produced the required evidence before the Assessing Officer but the Assessing Officer failed to take notice of the same - The issue has been restored for fresh adjudication.

Summary

Issues involved:
1. Discrepancy in sale price between sale agreement and stamp duty valuation.
2. Addition of loan amounts under section 68.

Issue 1: Discrepancy in sale price between sale agreement and stamp duty valuation:
The appeal was filed by the assessee against the CIT(A)'s order concerning the assessment year 2006-07. The assessing officer noted a significant difference between the sale price in the sale agreement and the stamp duty valuation for 12 flats. The assessing officer added the difference of Rs. 1,10,58,909 to the assessee's income, alleging suppression of sale price. The CIT(A) upheld this addition, citing discrepancies in carpet area calculations and market value. The assessee argued that the stamp duty valuation method was mechanical and did not reflect the actual sale price. They also highlighted factors affecting the flat prices, such as lack of parking space and noise pollution. The tribunal found the authorities' conclusions based on conjecture and surmises without concrete evidence. Referring to the burden of proof on the revenue, the tribunal set aside the addition, as the revenue failed to prove extra consideration beyond the sale agreement amount.

Issue 2: Addition of loan amounts under section 68:
The assessing officer added unsecured loan amounts of Rs. 1,00,000 and Rs. 3,00,000 from two creditors to the assessee's income due to non-verification of loan transactions' genuineness. The CIT(A) upheld the addition, stating that mere filing of details was insufficient to prove the transactions' genuineness. The assessee contended that necessary details were submitted, but the assessing officer overlooked them. The tribunal noted that the assessee had provided confirmation letters, income tax returns, and ledger accounts, which the assessing officer failed to consider. Consequently, the tribunal remanded the issue back to the assessing officer for fresh adjudication, emphasizing the need for proper verification and a speaking order on the matter.

In conclusion, the tribunal ruled in favor of the assessee on both issues, setting aside the additions made by the assessing officer and CIT(A) regarding the sale price discrepancy and loan amounts. The tribunal emphasized the importance of concrete evidence and proper verification in tax assessments, ensuring a fair and just determination of income.