2018 (5) TMI 1837 - AT - Income Tax

Suppressed receipt on account of alleged on money - Stamp Duty value is lower than the amount declared under sale - HELD THAT - No enquiry is made from the purchaser of Gala No.10. In our view the purchaser of Gala No.10 was a crucial witness on the basis of whose transaction the difference/variation of sale price was added to through any light if any on money was paid. No enquiry from other purchaser was carried out by Assessing Officer though the assessee has furnished the details of all the purchasers. The onus to claim that apparent is not real is on one who so claims. When the AO requires the assessee to show-cause as to why there is difference between two purchasers and that the assessee offered explanation no addition can be made simply discarding his explanation. There must be something concrete evidence to show that the version given by assessee is not correct. It is settled law that no addition can be made on hypothetical basis or presuming a higher sale price by simply rejecting the contention without cogent reason. Moreover the higher rate of building No.3 was disclosed by assessee in his books of accounts rather it was not discovered by the assessing officer. In our view the addition was made by assessing officer merely on assumption and presumption basis and without any evidence. - Decided in favour of assessee

Summary

Issues Involved:
1. Addition of variance in sale price of flats.
2. Allegation of receiving 'on money' based on conjecture and surmises.
3. Lack of concrete evidence to support the addition made by the Assessing Officer.

Issue-wise Detailed Analysis:

1. Addition of variance in sale price of flats:
The assessee, a partnership firm engaged in building and development, filed its return of income for the assessment year 2012-13. The Assessing Officer noted a significant variation in the sale price per square foot between two buildings sold by the assessee: Building No. 3 was sold at Rs. 5025 per sq. ft. while Building No. 10 was sold at Rs. 1948 per sq. ft. The Assessing Officer added Rs. 2,52,65,247 to the assessee's income, alleging the receipt of 'on money' due to this variance. The Commissioner (Appeals) confirmed this addition.

2. Allegation of receiving 'on money' based on conjecture and surmises:
The assessee argued that the higher sale price for Building No. 3 was justified due to the exclusive use of an adjoining 12,000 sq. ft. recreational area, which was handed over to the buyer. The buyer of Building No. 3 confirmed the sale price and exclusive use of the adjoining area in response to a notice under section 133(6). The Assessing Officer, however, did not issue a similar notice to the buyer of Building No. 10. The addition was made solely based on the price variance without concrete evidence, relying on conjecture and surmises.

3. Lack of concrete evidence to support the addition made by the Assessing Officer:
The Tribunal noted that the Assessing Officer failed to provide concrete evidence of the alleged 'on money' received by the assessee. The burden of proof lies on the Revenue to establish that the assessee received more consideration than disclosed. The Tribunal found that the Assessing Officer's addition was based on assumptions and lacked substantial proof. The Tribunal also referenced several legal precedents, including the Supreme Court's decision in K.P. Varghese v. ITO, which emphasized that the burden of proving understatement of consideration is on the Revenue.

Conclusion:
The Tribunal concluded that the Assessing Officer's addition was unjustified and based on assumptions without concrete evidence. The appeal of the assessee was allowed, and the addition of Rs. 2,52,65,247 was deleted. The Tribunal emphasized the need for concrete evidence to support any claims of 'on money' and rejected the addition made on hypothetical grounds. The appeal was decided in favor of the assessee, allowing all grounds of appeal raised.