2015 (8) TMI 116 - AT - Income Tax

Addition as long term capital gain on sale of his share in the property - AO based his conclusion on the plea that one of the co-owners have sold his shares in the said land for a higher consideration, as compared to the consideration shown by assessee - Held that - We found that without making any independent enquiry from the market, the AO has assumed that assessee has received the same amount of sale consideration as was received by other co-owners. No cogent material was brought on record to substantiate its stand by the AO, nor the CIT(A) to the effect that assessee has actually received sale consideration more than what has been mentioned in the sale deed. In the interest of justice and fairplay, we restore this ground back to the file of AO with a direction to the AO to make enquiry so as to find out any sale consideration received by the assessee in excess of sale consideration mentioned in the sale deed. It is pertinent to mention here that as per contention of ld. AR the sale consideration received by the assessee as per the sale deed was more than the registration value determined by the sub-registrar, therefore, it is more important to bring cogent material on record for arriving at a definite conclusion with regard to the excess amount received on sale which has not been recorded in the books of account - Decided in favour of assessee for statistical purposes.

Summary

Issues involved: Cross appeals filed by the assessee and revenue against the order of CIT(A) for the assessment year 2006-07 regarding the addition of long term capital gain on the sale of property.

Analysis:
1. Assessee's Appeal: The AO added Rs. 43,50,000 as long term capital gain on the sale of the assessee's share in the property, alleging that the consideration received was higher than the amount stated in the sale deed. The CIT(A) upheld the AO's decision. The assessee contended that they only received Rs. 2.66 crores as per the sale agreement and no additional consideration was received. The AR argued that the higher price shown by another co-owner was due to coercive tactics. The Tribunal found discrepancies in the consideration received by the co-owners and directed the AO to investigate further to determine the actual amount received by the assessee, considering the registration value and lack of concrete evidence supporting the AO's claim.

2. Revenue's Appeal: The revenue contested the deletion of Rs. 10,13,000 on account of sale consideration of land by the CIT(A). The CIT(A) dismissed the addition due to lack of concrete evidence. The revenue's appeal was dismissed based on CBDT instruction, as the tax effect was below Rs. 3 lakhs. Consequently, the appeal of the assessee was allowed for statistical purposes, and the revenue's appeal was dismissed.

In conclusion, the Tribunal directed the AO to conduct a thorough inquiry to ascertain the actual consideration received by the assessee, considering discrepancies in the sale transactions of co-owners. The revenue's appeal was dismissed due to insufficient evidence, and the assessee's appeal was allowed for statistical purposes.