2022 (5) TMI 171 - AT - Income Tax

Assessment u/s 153C - Undisclosed capital gain - seized document found, the price consideration of sale of property was mentioned at Rs.2,72,00,000/-, whereas as per the sale deed the sale price was Rs.2,01,00,000/-- HELD THAT - CIT (A) enhanced this amount on some wrong presumption by taking the sale consideration received by another co-owner, Mrs. Priya Suri which is out-rightly incorrect, because as per records the property was owned by two sisters and both have received half the share and hence it cannot be clubbed in hands of assessee. Even this not the case of the Assessing Officer nor there is anything in record. Therefore, the enhancement made by the ld. CIT (A) at the threshold is deleted. Entire basis of addition is based on the seized paper wherein the amount mentioned as against the amount mentioned in the sale deed - Once the assessee had given the reasons as to why the amount received by the assessee was lower than the agreed sale price and not only that, when the AO has made his enquiry directly from the purchaser u/s 133 (6), who has also confirmed that it has purchased the property at the same price i.e. Rs.2,01,00,00/-, then we do not find any reason as to why the addition should be made on such seized document. Apart from that, agreement to sell mentions Rs.2,42,50,000/- and not Rs.2,72,00,000/-. Now, whether the property was agreed to be sold at Rs.2,01,00,000/- or Rs.2,72,00,000/- (as per seized document), but fact of the matter is that property was actually sold at Rs.2,01,00,000/- which has been declared by the assessee in the computation of income as long term capital gain which has also been admitted by the purchaser. Thus, there cannot be any presumption till any contrary material is found form the purchaser also that there was payment over and above the agreed price in the sale deed. Accordingly, on merits, grounds no.2 3 are allowed.

Summary

Issues Involved:
- Jurisdiction of the assessing officer under section 153C of the Income-tax Act, 1961
- Addition of undisclosed long-term capital gain and unaccounted sales consideration
- Validity of charging interest under sections 234A and 234B of the Income Tax Act, 1961

Jurisdiction of the Assessing Officer:
The appeal was filed against the order passed by the ld. CIT (Appeals)-XXXI, New Delhi for the quantum of assessment under section 153C of the Income-tax Act, 1961 for the Assessment Year 2008-09. The grounds of appeal challenged the jurisdiction of the assessing officer in framing the assessment order under section 153C without proper jurisdiction, satisfaction, approval, and compliance with mandatory conditions. The appellant contended that the assessment order was illegal, void ab initio, contrary to law, beyond jurisdiction, and should be quashed.

Addition of Undisclosed Capital Gain and Unaccounted Sales Consideration:
The case involved a search and seizure operation under section 132 of the Act at various premises, leading to the discovery of documents indicating a property sale at Sainik Farms. The assessing officer relied on seized documents to assume a higher sale price of the property, resulting in the addition of Rs. 71,00,000 as unexplained capital gain. The ld. CIT (A) upheld this addition and further enhanced it by Rs. 2,73,00,000 based on incorrect presumptions regarding the sale consideration. The appellant argued that the property was actually sold at a lower price than presumed, supported by details provided to the authorities and the confirmation from the purchaser at the actual sale price of Rs. 2,01,00,000. The Tribunal found the basis for the addition to be the seized document, which did not align with the actual sale price, leading to the deletion of the enhancement made by the ld. CIT (A) and allowing the grounds challenging the additions.

Validity of Charging Interest under Sections 234A and 234B:
The issue of charging interest under sections 234A and 234B of the Income Tax Act, 1961 was raised in one of the grounds of appeal. Since the Tribunal had already deleted the additions on merits, the legal issue regarding the levy of interest was considered academic and dismissed as infructuous. The appeal was partly allowed, and the interest issue was not specifically addressed due to its consequential nature.

This detailed analysis of the judgment highlights the key issues of jurisdiction, addition of undisclosed capital gain, unaccounted sales consideration, and the validity of charging interest under relevant sections of the Income Tax Act, 1961. The Tribunal's findings on each issue and the grounds for allowing or dismissing the appellant's contentions are thoroughly examined, providing a comprehensive understanding of the legal judgment.