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2023 (6) TMI 1028 - AT - Income TaxYear of taxability of gains arising on transfer of immovable property situated at Kolhapur - HELD THAT - As on perusal of clause of the sale deed it would reveal that the parties intended that the ownership of property would be transferred to the seller only upon receipt of the entire consideration by the assessee firm is condition precedent. Therefore the ratio of the decision of the Hon ble Supreme Court in the case of Kaliaperumal 2009 (2) TMI 825 - SUPREME COURT is squarely applicable to the facts of the present case. No hesitation to hold that the transfer of property had not taken place during the previous year relevant to the assessment year under consideration. Consequently the profits or gains arising on sale of such property cannot be brought to tax for the year under consideration. No illegality or perversity in the findings of the ld. CIT(A) for requiring our interference. The contention of CIT-DR that the assessee firm had received full consideration stipulated in the sale deed inclusive of alleged on-money consideration cannot be accepted for the reason that the effect of the sale deed should be considered with reference to the sale consideration stipulated in the sale deed. Therefore there is no merit in the grounds of appeal nos.1 and 2 filed by the Revenue. Payment of On-money consideration at the time of purchase of property - assessee firm had paid on-money consideration in cash over and above the sale consideration stated in sale deed based on the information received from the ACIT CC Kolhapur - HELD THAT - From the contents of letter received from ACIT CC Kolhapur it is clear that there was no reference to any document or loose sheets suggesting the payment of on-money consideration. AO had neither proved nor had brought on record any corroborative independent evidence in support of such allegation of on-money consideration as well as no independent enquiries were conducted by the AO. It is very well settled position of law that no addition can be made merely based on the information received from another AO without any independent corroborative evidence on record. No illegality and perversity in the findings of the ld. CIT(A) deleting the addition made by the AO. Thus the ground of appeal nos.3 and 4 filed by the Revenue stands dismissed. Assessment u/s 153C - transaction of alleged receipt of on-money consideration on sale of immovable property - HELD THAT - As no material was placed before us in support of contention that no approval of Pr. CIT was obtained. It is further contended that the assessment order is silent as to the approval accorded by the Pr. CIT to convert the limited scrutiny into complete scrutiny. The approval of the Pr. CIT need not form part of the assessment order if it form part of the record is sufficient the assessee firm could not discharge the onus proving that no such approval was obtained. Thus all the contentions raised by the assessee firm are devoid of merits and accordingly dismissed. As regards to the contention of the assessee firm that invalidity of the assessment order on the ground that since the assessment is based on the information received consequent to the search and seizure operations of third party the assessment should be done u/s 153(C) not under regular assessment are devoid of any merit for the reason that the assessee firm had failed to prove the existence of condition for exercise the jurisdiction u/s 153C - Moreover during the course of regular assessment proceedings any information received from third party can be used against the assessee after affording an opportunity of rebuttal. Accordingly the additional ground of appeal as well as original ground of appeal nos.1 and 2 filed by the assessee firm stands dismissed. Whether or not there was the evidence of receipt of on-money consideration on sale of property? - We are of the considered opinion that in the absence of any conclusive material brought on record by the Assessing Officer establishing the receipt of on-money consideration it cannot lead to the conclusion that the assessee had received on-money consideration. Therefore the findings of the lower authorities are hereby reversed and we direct the Assessing Officer to delete the addition.
Issues Involved:
1. Taxability of gains arising from the sale of immovable property. 2. Alleged receipt of on-money consideration. 3. Alleged on-money payment for property purchase. 4. Validity of assessment proceedings. Summary: Issue 1: Taxability of Gains Arising from the Sale of Immovable Property The assessee, a partnership firm engaged in real estate, sold a property named "Magnolia Prime Site" to M/s. Prarthana Infra for Rs. 8,53,00,000/-. The Assessing Officer (AO) included the gains from this sale in the assessment year 2014-15, arguing that the transfer occurred under section 53A of the Transfer of Property Act, 1882, r.w.s. 2(47) of the Income Tax Act, 1961. The assessee contended that the sale was incomplete as full consideration was not received, and possession was not transferred. The CIT(A) agreed with the assessee, holding that the transfer was conditional and gains should be taxed in the assessment year 2016-17 when full consideration was received. The Tribunal upheld the CIT(A)'s decision, emphasizing that the ownership transfer depended on the intention of the parties and the full payment of consideration, as per the Supreme Court ruling in Kaliaperumal vs. Rajgopal. Issue 2: Alleged Receipt of On-Money ConsiderationThe AO added Rs. 8,47,00,000/- as on-money received by the assessee based on information from a search operation and ledger entries of M/s. Prarthana Infra. The CIT(A) partially upheld this, restricting the addition to Rs. 6,97,00,000/- for the assessment year 2014-15. The Tribunal, however, found no corroborative evidence supporting the receipt of on-money by the assessee, noting that mere entries in third-party records are insufficient for such additions. Consequently, the Tribunal directed the deletion of the entire on-money addition. Issue 3: Alleged On-Money Payment for Property PurchaseThe AO added Rs. 1,05,80,000/- as on-money paid by the assessee for purchasing property from the Ulpe Family, based on information from the ACIT, CC, Kolhapur. The CIT(A) deleted this addition, citing a lack of evidence and noting that any such addition should pertain to the assessment year 2012-13 when the purchase occurred. The Tribunal upheld the CIT(A)'s decision, emphasizing the need for independent corroborative evidence. Issue 4: Validity of Assessment ProceedingsThe assessee challenged the validity of the assessment, arguing that the AO exceeded the scope of limited scrutiny without proper approval. The Tribunal dismissed this contention, noting that the alleged on-money transaction fell within the scope of the scrutiny criteria and that the assessee failed to prove the absence of necessary approvals. Conclusion:The Tribunal dismissed the Revenue's appeal and the assessee's cross-objection, while partly allowing the assessee's appeal by deleting the on-money addition. The order was pronounced on June 20, 2023.
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