2015 (3) TMI 48 - AT - Income Tax

Unexplained investments in a residential flat - gap of eight years for transfer of title - CIT(A) deleted the addition - Held that - It is surprising that one would wait for nearly eight years for transfer of title. The parties generally, to ensure performance, retain a part of the consideration pending the completion of any part of the contract, which may include an aspect or part of construction work, or even execution of agreement and its registration, only upon which there is transfer of title. However, that would not by itself imply that purchase had not occurred earlier, and that it had occurred only along with, i.e., the said transfer, about 8 years later. Further, there is nothing to show that the purchase cost exceeded the stated consideration of ₹ 4 lakhs, or that any part thereof, whatever be its value, was paid during the relevant year, or that it (the said year) witnessed anything apart from the execution of the agreement and its registration. Deferring the date of possession to the year 2003, i.e., after the date of occupancy certificate, would not also advance the Revenue s case, which, as made out, is without any credible evidence or legal basis. The Revenue referred to a statement by the builder dated 26.12.2011, charging the first appellate authority to have proceeded by ignoring the facts brought out thereby. The same, which may well be relevant, is neither on record nor do we find any reference thereto in the assessment order itself. In fact, we find the assessee to have per the statement of facts before the said authority specifically contended that no adverse view could be drawn on the basis of statement u/s. 131 by the promoter, Bombay Stone Quarries, copy of which had also not been supplied to him, i.e., without affording an opportunity for cross examination. There is no reference to this statement in the impugned order, even as the A.O. s reliance thereon is admitted. It is unfortunate that the parties did not bring the same to our notice during the hearing. The tribunal in deciding an issue before it, is to answer all the grounds raised, taking into account all the relevant facts. In fact, we observe this to be an aspect of the issue arising for adjudication, though assumed in the form of a ground. The matter would therefore warrant being restored back to the file of the ld. CIT(A) for reconsideration - Also estore the matter qua the deletion of ₹ 1,80,230/-, towards payment of stamp duty and registration charges during the relevant year, back to the file of the first appellate authority for adjudication in accordance with law per a speaking order - Decided in favour for assessee for statistical purposes.

Summary

Issues involved:
Maintainability of addition in the sum of Rs. 35,14,230 made by the Assessing Officer on account of alleged investment in a residential flat purchased by the assessee.

Detailed Analysis:

1. Issue of Addition in the Sum of Rs. 35,14,230:
The primary issue in this appeal pertains to the addition of Rs. 35,14,230 made by the Assessing Officer on account of alleged investment in a residential flat purchased by the assessee. The Commissioner of Income Tax (Appeals) partly allowed the assessee's appeal contesting the assessment under section 143(3) of the Income Tax Act, 1961. The assessee purchased a flat in 1999, but the sale agreement and registration were in 2008. The Assessing Officer doubted the payment timeline and considered the year of registration as the year of payment. The assessee provided details of payment made, totaling Rs. 7 lakhs, towards two flats in the building. The possession of the flat was confirmed in 2000. The addition was deleted by the CIT(A), stating that the AO applied section 50C inappropriately. The Revenue challenged this decision, leading to the current appeal.

2. Inconsistencies in the Assessee's Case:
The Tribunal observed inconsistencies in the assessee's case, questioning how possession was given in 2000 when the occupancy certificate was issued in 2003. The Tribunal highlighted that possession involves various incidents like payment of maintenance charges, address changes, etc., which were not adequately explained by the assessee. The delay in transferring the title for eight years raised doubts. However, the Tribunal noted that delay in title transfer does not negate the purchase. The Revenue referenced a statement by the builder, but its absence in the record raised procedural concerns. The Tribunal emphasized the need for natural justice and directed a reevaluation by the CIT(A) considering all relevant facts.

3. Reevaluation of Payment of Stamp Duty and Registration Charges:
Another aspect of the appeal involved the addition of Rs. 1,80,230 for stamp duty and registration charges, paid during the relevant year. The CIT(A) did not provide a basis for deleting this addition, and the submissions were silent on this matter. The Tribunal decided to restore this issue to the CIT(A) for proper adjudication, ensuring both parties have the opportunity to present their case.

In conclusion, the Tribunal disposed of the Revenue's appeal, directing a reevaluation of the addition related to the purchase cost and the payment of stamp duty and registration charges. The decision emphasized adherence to legal principles and the opportunity for both parties to present their arguments effectively.