2022 (3) TMI 251 - AT - Income Tax

Suppressed receipts of alleged on-money based on comparison of rate of sale price per square feet of two different shops sold at two different times - HELD THAT - There is a time gap of almost 9 months in the sale of both the shops. Naturally, most probably, shop sold in the month of March, 2013 have the higher price compared to shop sold earlier and it depends mostly on the position of the shop in the structure of market. AO has neither enquired from the buyers of the shops nor enquired from the stamp value authorities that whether the transactions made by the assessee are at market rate or not. Further, during the year the assessee has shown sales of approximately ₹ 4,21,00,000/- and has earned profit of ₹ 52 crores, the Assessing Officer could not find any defect in the books of account or any other evidence about on-money earned on sale of units . Therefore, the addition made by the learned Authorised Representative was without any basis. Merely because of the reason of difference in the sale price of two different properties on two different times having differing locational advantages, in absence of any incriminating evidence cannot be compared and then result into the hands of the assessee as addition on account of on-money . - Decided in favour of assessee.

Summary

Issues:
Appeal against addition of suppressed receipts based on alleged 'on-money' in the sale of two shops at different times.

Analysis:
The appeal was filed against the addition of ?3,59,855 as suppressed receipts due to alleged 'on-money' in the sale of two shops at different times. The Assessee argued that the addition lacked evidence and was based on conjectures and surmises. They contended that the price difference was influenced by various factors such as market conditions, buyer's choice, location, and payment terms. The Assessing Officer noted the variance in selling rates and asked for justification, leading to the addition. The CIT(A) upheld the addition, prompting the appeal.

The Tribunal examined the case where the Assessee sold two shops with a significant time gap and price difference. The Assessee sold shop no.2 for ?9,90,000 and shop no.7 for ?11,75,000 after 9 months. The Assessing Officer compared the average selling prices and made the addition without verifying market rates or buyer information. The Tribunal observed that the shop locations and time gap could justify the price difference. The Assessee's substantial sales and profits further weakened the 'on-money' allegation. The Tribunal found the addition baseless, distinguishing it from a previous case involving related parties.

Conclusively, the Tribunal directed the Assessing Officer to delete the ?3,59,555 addition, ruling in favor of the Assessee. The appeal was allowed, emphasizing the lack of substantial evidence to support the 'on-money' claim.

This detailed analysis highlights the key arguments, findings, and reasoning behind the Tribunal's decision to overturn the addition of suppressed receipts based on alleged 'on-money' in the sale of the two shops at different times.