2003 (1) TMI 248 - AT - Income Tax

Issues Involved:
1. Determination of the correct sale consideration of the house property at 34, Club Road, Ludhiana.
2. Deletion of the addition made on account of long-term capital gain.

Issue-wise Detailed Analysis:

1. Determination of the Correct Sale Consideration of the House Property at 34, Club Road, Ludhiana

Background:
The Revenue challenged the sale consideration of the house property situated at 34, Club Road, Ludhiana, claiming it to be Rs. 46,68,000 for the assessment year 1994-95 and Rs. 41,68,000 for the assessment year 1993-94, against Rs. 36,80,000 declared by the assessee.

Facts and Evidence:
- The assessee sold the property for Rs. 36,80,000 as per an agreement dated 18th July 1992.
- A search and seizure operation revealed loose papers indicating payments totaling Rs. 35,68,000 in cash and through bank pay orders, and an additional sum of Rs. 6 lacs paid through pay orders.
- The AO concluded that the total sale consideration was Rs. 41,68,000 (Rs. 35,68,000 + Rs. 6,00,000).

Assessee's Argument:
- The payments on the loose papers corresponded with the dates of registration deeds, except for Rs. 15,00,000 on 16th Feb 1993, which was not relevant to any event.
- The assessee argued that the Rs. 15,00,000 was not paid to him but was possibly withdrawn by the purchaser for future use, including renovation.

CIT(A)'s Observations:
- The CIT(A) noted that the AO did not provide sufficient evidence to prove that the Rs. 15,00,000 was paid to the assessee.
- The CIT(A) found that the payments for renovations were not separately withdrawn and the Rs. 15,00,000 might have been used for renovation and balance payment.
- The CIT(A) concluded that the sale consideration was Rs. 36,80,000, not Rs. 41,68,000.

Tribunal's Analysis:
- The Tribunal agreed with the CIT(A) that there was no concrete evidence that the Rs. 15,00,000 was paid to the assessee.
- The Tribunal noted the inconsistency in the AO's approach, as the sale consideration was accepted as Rs. 36,80,000 in the wealth-tax returns for the same assessment years.
- The Tribunal upheld the CIT(A)'s decision, confirming the sale consideration at Rs. 36,80,000.

2. Deletion of the Addition Made on Account of Long-term Capital Gain

Background:
The Revenue contested the deletion of Rs. 3,39,048 added by the AO as long-term capital gain based on the alleged higher sale consideration.

Facts and Evidence:
- The AO based the addition on the presumed higher sale consideration of Rs. 41,68,000.
- The CIT(A) deleted the addition, accepting the sale consideration as Rs. 36,80,000.

Assessee's Argument:
- The assessee argued that the AO did not have sufficient evidence to justify the higher sale consideration.
- The assessee provided evidence, including the civil suit filed by the broker, indicating the agreed sale consideration was Rs. 36,80,000.

CIT(A)'s Observations:
- The CIT(A) found that the broker's civil suit and the wealth-tax returns supported the sale consideration of Rs. 36,80,000.
- The CIT(A) noted the AO's failure to examine the purchaser regarding the utilization of the Rs. 15,00,000.

Tribunal's Analysis:
- The Tribunal upheld the CIT(A)'s reasoning and deletion of the addition.
- The Tribunal emphasized the lack of concrete evidence from the AO to support the higher sale consideration.
- The Tribunal confirmed that the sale consideration was Rs. 36,80,000, and the addition of Rs. 3,39,048 was rightly deleted.

Conclusion:
The Tribunal dismissed both appeals filed by the Revenue, upholding the CIT(A)'s orders that the sale consideration of the house property was Rs. 36,80,000 and the deletion of the addition made on account of long-term capital gain was justified.

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