2025 (2) TMI 643 - AT - Income Tax

Adoption of sale price of commercial space - CIT(A) upheld the sale consideration taken by the assessee contending that the statement of other parties cannot be the basis for the AO to make addition specially when the AO has not brought on record any concrete evidence to show that the assessee has actually sold the commercial space @ Rs. 3, 000/- per sq. ft. - HELD THAT - AO could not bring any material on record to show that the assessee received any consideration over and above what has been shown in the registered sale deed. AO also failed to bring on record any comparable sale instance to show that the sale price of the commercial space was more than the price recorded in the registered sale deed. We are of the considered opinion that the sale price of Rs. 3, 000/- per sq. ft. taken by the AO merely on the basis of some statements without bringing any concrete material in support of his claim is not correct. Accordingly we do not find any reason to interfere with the impugned order of CIT(A) qua this issue and consequently ground nos.3 4 of the Revenue stand dismissed. Disallowance of reimbursement of expenditure - assessee received sum as their share in a JV firm on account of reimbursement of expenses - Addition made as assessee failed to prove actual incurring of expenses - HELD THAT - Similar issue was came before the co-ordinate bench of the Tribunal in case of Vinod Narappa Reddy 2020 (10) TMI 354 - ITAT BANGALORE wherein the ITAT has held that the Revenue cannot take the contrary view which has been taken in a group of assessees to the determinant to the assessee before us. The law abhor uncertainty and selective approach against any individual. Therefore without going into the merits of the case respectfully following the decision (supra) we hold that the Revenue cannot take the contrary view which has been taken in case of M/s. YKH to the determinant to the assessee before us. Addition on account of out of court settlement of their dispute and offered the same as income in their books of account - AO added the same to the total income of the assessee contending that the assessee could not produce necessary explanation / evidence in support of their claim - HELD THAT - We have also gone through the statement of P L account placed and schedule of revenue from other sources placed referred by the AR and found that the assessee has already offered Rs. 83 lakhs as income during A.Y. 2016-17. Therefore we are of the considered opinion that as Rs. 83 lakhs has already taken as income by the assessee the addition made by the Ld. AO on the same income leads to double taxation in the hands of the assessee which is not allowable as per the Act. Therefore we uphold the order of Ld. CIT(A) deleting the addition. Addition of expenditure incurred on account of sale of commercial space - assessee did not produce any bills / vouchers / evidence in support of the claim - HELD THAT - After going through all the vouchers/bills/evidences in support of expenditure CIT(A) has given factual finding of his order that the expenditure incurred by the assessee are mostly by cheque / banking channel and the assessee furnished details of all these expenses and accordingly deleted the addition made by the Ld. AO. Therefore decision CIT(A) is based on proper evaluation of evidence. As far as the objection of the Ld. DR regarding not calling of remand report is concerned where the evidence filed are from independent source and are sufficient to decide the matter and no defect or shortcoming in the said evidence is brought on record then we do not find any merit in the said objection of Revenue. Accordingly we do not find any infirmity in the order of Ld. CIT(A) and therefore we uphold the order of Ld. CIT(A). Accordingly the appeal of the Revenue is dismissed.

ISSUES PRESENTED and CONSIDERED

The Tribunal considered several core legal questions in the appeals filed by the Revenue:

1. Whether the Ld. CIT(A) erred in deleting the disallowance of expenditure amounting to Rs. 6.49 crores without adjudicating the issue.

2. Whether the Ld. CIT(A) was correct in upholding the sale consideration of commercial space at Rs. 2,596/- per sq. ft. instead of Rs. 3,000/- per sq. ft. as contended by the Revenue.

3. Whether the Ld. CIT(A) erred in deleting the addition of Rs. 2.5 Crores towards reimbursement of expenses.

4. Whether the Ld. CIT(A) erred in deleting the addition of Rs. 83 lakhs received from M/s. YKH Builders towards an out-of-court settlement.

5. Whether the Ld. CIT(A) erred in allowing the expenditure claim of Rs. 6.23 crores without providing the Assessing Officer an opportunity to examine the evidence.

ISSUE-WISE DETAILED ANALYSIS

1. Deletion of Disallowance of Expenditure of Rs. 6.49 Crores

The Tribunal noted that the Ld. CIT(A) had adjudicated the issue in a separate order under section 154 read with section 250 of the Act, rendering the Revenue's ground infructuous. Thus, no separate adjudication was required.

2. Sale Consideration of Commercial Space

The Revenue contended that the sale price should be Rs. 3,000/- per sq. ft. based on statements from involved parties. However, the Ld. CIT(A) upheld the sale consideration at Rs. 2,596/- per sq. ft. as per registered sale deeds and the value accepted by the stamp duty authority. The Tribunal agreed with the Ld. CIT(A), emphasizing that the Assessing Officer failed to provide concrete evidence of sales at Rs. 3,000/- per sq. ft. and dismissed the Revenue's grounds.

3. Reimbursement of Expenses

The Tribunal reviewed the case where the assessee received Rs. 2.5 Crores as reimbursement of expenses. The Ld. AO doubted the expenses due to lack of separate entries in the JV firm's returns. The Ld. CIT(A) deleted the addition, noting similar treatment in the case of M/s. YKH, where the Revenue did not appeal. The Tribunal, following the principle of consistency, found no reason to differ from the Ld. CIT(A)'s decision and dismissed the Revenue's grounds.

4. Addition of Rs. 83 Lakhs from M/s. YKH Builders

The Tribunal examined the addition of Rs. 83 lakhs, which the assessee claimed was already included in their income. The Ld. CIT(A) deleted the addition, and the Tribunal agreed, noting that the amount was indeed offered as income, preventing double taxation. Thus, the Tribunal dismissed the Revenue's ground.

5. Allowance of Expenditure Claim of Rs. 6.23 Crores

The Tribunal considered the Revenue's objection that the Ld. CIT(A) allowed the expenditure claim without a remand report. The Ld. CIT(A) found that the expenditure was mostly incurred through banking channels, and the assessee provided sufficient evidence. The Tribunal upheld the Ld. CIT(A)'s decision, noting that the evidence was independently verifiable and sufficient to support the claim, dismissing the Revenue's appeal.

SIGNIFICANT HOLDINGS

The Tribunal's significant holdings include:

- The Tribunal upheld the Ld. CIT(A)'s decision to accept the sale consideration based on registered sale deeds, rejecting the Revenue's reliance on statements without concrete evidence.

- The Tribunal emphasized the principle of consistency, noting that the Revenue cannot take contradictory stances in similar cases, as seen in the reimbursement of expenses issue.

- The Tribunal confirmed that the addition of Rs. 83 lakhs would result in double taxation, which is impermissible under the Act.

- The Tribunal supported the Ld. CIT(A)'s evaluation of evidence regarding the expenditure claim of Rs. 6.23 crores, noting the adequacy of the provided documentation and the lack of necessity for a remand report.

In conclusion, the Tribunal dismissed all appeals filed by the Revenue, affirming the Ld. CIT(A)'s decisions across the issues presented.

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