9911796707
TMI Blog2006 (4) TMI 232X X X X Extracts X X X X X X X X Extracts X X X X ..... . However, there was sale of residential flats in two of the buildings only during the previous year relevant to the assessment year under consideration. One of the two buildings was in South Tank Square Street, Triplicane area of Chennai (hereinafter referred to as 'Plot No. 13') which was a plot of land measuring 1718 sq. ft. and the other building, though in Triplicane area of Chennai was more than 1 km. away from the Plot No. 13 (which is referred to as 'Plot No. 171' hereafter in this order). This Plot No.171 measured 4010 sq. ft. whereas assessee had acquired the complete rights in the first plot (Plot No. 13), in the case of second plot, the assessee did not own the plot of land, nor held any interest in the land, which meant that the assessee did not receive (nor was entitled to receive) any consideration in respect of any right in the plot of land, and was received by the owner of the land only. The assessee constructed residential building consisting of flats on the ground, first, second and third floors on the said plots, even though it was allowed to construct the flats on the ground and first floors only. The Assessing Officer noted that in letters to some of the prosp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he prospective buyer to get an enhanced credit. The truthfulness of this documentary evidence is attempted to be rebutted only by his words of mouth, which is neither admissible in view of provisions of the Evidence Act, nor sufficient. 6. Thereafter, the learned CIT(A) observed that in the background of above facts, we have to see as to what better evidence the Assessing Officer could have produced or should have brought on record. Passing of extra consideration is almost always in cash for which no records are kept. Return of income is taken up for scrutiny much after the end of the accounting period and therefore we cannot expect the Assessing Officer to produce any facts evidencing physical movement of cash/extra consideration. He can only produce circumstantial evidence. To expect anything more would amount to putting an impossible burden of proof on the Assessing Officer, which is not in accordance with any rules of evidence or jurisprudence. 7. Subsequently, the learned CIT(A) considered the assessee's plea that flats on first, second and third floor would fetch a lower price than a flat on ground floor in view of commercial potential of the ground floor flats and also the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 617 respectively. It may be clarified here that while working out the aforesaid rates, recoveries made for additional work done have been excluded. Thus, it is seen that assessee has shown more than 20 per cent mark up on the cost of construction, which to my mind is imminently reasonable. Therefore, assessee cannot be accused of having concealed any sales/revenue in respect of 5 flats shown to have been built and sold during the previous year under consideration. Accordingly, I have no hesitation whatsoever in holding that the addition made by the Assessing Officer in respect of 5 flats at site No. 171 (listed in the Annexure to the assessment order on serial Nos. 8-12) was unwarranted and unjustified. The addition was made without collecting the relevant material. For example, it was not ascertained as to whether assessee was the owner of the land or not and the addition was made presuming that assessee sold the flats at the same rate at which he sold the flat where it was owner of the land." 11. We have heard the rival contentions and perused the relevant records. We find that except for some letters, the revenue has no evidence whatsoever to support the contention that flats ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r on-money transacted in property purchased by the assessee. The assessment was based upon conflicting statement of the seller. The Hon'ble High Court affirmed the following findings:- "We find that it is the uniform view of the courts and also held by the Apex Court in K.P. Varghese v. ITO [1981] 131 ITR 597 the burden of proving actual consideration in such transaction is that of the revenue. Considering the entire gamut of the case, we find that the revenue has failed to discharge its duties and as held by the learned Commissioner of Income-tax (Appeals) instead made up a case on surmises and conjectures which cannot be allowed. Under the circumstances, we do not find any infirmity in the order of the learned Commissioner of Income-tax (Appeals) and we uphold the appellate order in this regard." The Hon'ble High Court further added that: "We also found that the Assessing Officer did not conduct any independent enquiry relating to the value of the property purchased. He merely relied on the statement given by the seller. If he would have taken independent enquiry by referring the matter with the Valuation Officer, the controversy could have been avoided. Failing to refer the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ually not been identified nor correlated with overall book keeping. The revenue authorities have to categorically state that books of account are not reliable. No inference in this regard can be made by such tongue-in-cheek statements regarding the veracity of the books. Moreover, with regard to the second project, the Commissioner of Income-tax (Appeals) has accepted the figures in books as produced by the assessee. 18. Thus, we conclude that in this case the revenue has not cogently proved that estimated sale price is the actual sale consideration. Reliance has been placed by the lower authorities on letters which are contradicted by the actual sale deed executed. The books and records have not been rejected; rather for one project, the amount recorded in the books has been made by the Commissioner of Income-tax (Appeals) as the basis to delete the same estimated addition by the Assessing Officer. The revenue has neither taken assistance of its Valuation Cell nor brought about comparative figures. Thus, the revenue has failed in proving that the actual consideration is the one as estimated by the lower authorities. In fact, the remark by the Commissioner of Income-tax (Appeals) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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