9911796707
TMI Blog2012 (9) TMI 184X X X X Extracts X X X X X X X X Extracts X X X X ..... the disallowance and the same is, therefore, upheld - against assessee. Rectification petition filed u/s 154 - addition of Rs.25 lakhs on account of understatement of sales - Held that:- As the order of the CIT(A) has been set aside and restored the issue relating to the addition of Rs.25 lakhs to the file of the AO for passing afresh orders after necessary examination the appeals filed by the assessee in relation to rectification orders have became infructuous - against assessee. - ITA No.2610 and 3069, 2611, 4579, /Mum/2011 - - - Dated:- 22-6-2012 - SHRI D.MANMOHAN, AND SHRI RAJENDRA SINGH JJ. Revenue by :Shri Sandeep Goal Assessee by :Shri Pradip P. Kapasi O R D E R PER RAJENDRA SINGH (AM) These appeals by the assessees are directed against different orders both dated 28.12.2010 in relation to the assessment orders for assessment year 2006-07 and orders dated 3.2.2011 and 18.4.2011 in relation to rectification orders passed under section 154 of the Income Tax Act, 1961 (the Act) in the two cases under reference. As the dispute raised in both the cases are identical, these appeals which were heard together, are being disposed of by a single and consolid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ify the sale considerations with the buyers by issuing summons to them. The assessee further submitted that the stamp duty value could be substituted for sale consideration only in case of computation of capital gain. In case of the assessee, the flats/shops were items of stock-intrade to which the provisions of section 50C were not applicable. The assessee also explained that the project had started long back for which the assessee had used loan liability. There were no buyers to purchase the property and the assessee had sold the property at lower rates to meet the loan liability. 2.3 The AO was however not satisfied by the explanation given by the assessee. It was observed by him that though the provisions of section 50C were not applicable, the stamp duty value could not be totally brushed aside as the same was fixed by the government authority. The AO observed that it is a rare case that any builder sells the property below the market value fixed by the stamp duty authority in the normal course. The AO also observed that though it was possible that in the peculiar facts and circumstances of the case considering the loan liabilities, some calamities, etc, the assessee may hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iscrepancy properly. The explanation given by the assessee was general such as flats being airy; location being back side or not getting proper buyer, the project being jinxed; and substantial loan liability and was not supported by any evidence. The assessee could not give comparable rates. The CIT(A) also observed that the AO had not added the entire difference with respect to the stamp duty valuation which was more than Rs.1 crore. The total addition made by the AO in respect of the project was only Rs.50 lakhs out of which Rs.25 lakhs had been added in case of the assessee. Accordingly, CIT(A) confirmed the addition made by the AO. Following the same reasonings, the CIT(A) also confirmed the addition in case of Shri Mohanlal M Shah. Aggrieved by the decision of the CIT(A), both the assessees are in appeal before the Tribunal. 2.6. Before us, the Ld. AR for the assessees reiterated the same submissions as made before the lower authorities that the assessee had not suppressed any sales and that entire value shown in the sale agreement had been declared. It was pointed out that the assessee during the assessment proceedings had repeatedly asked the AO to verify the sale consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f any supporting evidence. The ld. AR made further reference to the judgment of the Hon ble Bombay High Court in the case of Mrs. Nirmal Laxminarayan Grover Vs Appropriate Authority and ors (1997) 223 ITR 572(Bom) and the judgment of the Hon ble Rajasthan High Court in the case of Krishna Kumar Rawat and ors Vs Union of India (1995) 214 ITR 610(Raj). 2.8 As regard the stamp duty value, it was argued that the stamp duty value could be substituted for the sale consideration only in case of computation of capital gain and it is not applicable in the case of the assessee as flats/shops in this case had been held as stock-in-trade. Reliance was placed on the decision of the Mumbai Bench of the Tribunal in the case of Inderlok Hotels (P) Ltd V/s ITO (2009) 122 TTJ (Mumbai) 145 and the judgment of the Hon ble Madras High Court in the case of CIT Vs Thiruvengadam Investments (P) Ltd (320 ITR 345). As regards the alleged statement of Shri Mohanlal M Shah recorded vide order sheet noting dated 17.12.2008, the Ld. AR submitted that Shri Mohanlal M. Shah had never agreed for any addition and in fact, he had filed petition u/s 154 requesting for rectification of the order passed based on su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty value. The actual difference in each case is more than Rs.1 crore. The market value in real estate is normally higher than the stamp duty value, . Although it is also possible that in some cases the market value may be lower than the stamp duty value but in case of steep fall with respect to stamp duty value, the assessee is required to explain properly the lower sale value. In the present case the AO has pointed our certain discrepancies such as commercial properties being sold at residential rates and sale value being shown lower compared to earlier year. The assessee had given explanation, the details of which have been given earlier which is not supported by any evidence . The AO had also not made any inquiry to disprove the claim of the assessee. He made the addition of Rs.25 Lakhs in each case on the ground that the assessees had agreed for the addition. However, no such evidence has been produced before us to show that Mrs. Hansa L.Shah had agreed for any addition. Even in case of Shri Mohanlal M Shah, the assessment in whose case had been made later, the assessee denied soon after he received the assessment order that he had agreed for addition of Rs.25 lakhs vide ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confirmed the addition of Rs.23,298/- aggrieved by which the assessee is in appeal before the Tribunal. 3.1 Before us, the ld. AR for the assessees submitted that interest had been paid only on the opening balance of loans and in the past, no disallowance had been made by the AO and therefore no disallowance could be made in respect of opening balance. The Ld. DR on the other hand, placed reliance on the orders of the authorities below. 3.2 We have perused the records and considered the material carefully. The dispute is regarding the disallowance of interest at the rate of 50% of the interest claimed by the assessee. The AO had disallowed the interest on the ground that the assessee could not prove the nexus between the borrowed funds and user thereof for business. The case of the assessee is that the interest had been paid only in respect of opening balance of loan and in the earlier year there was no disallowance of interest and therefore no disallowance could be made this year. We are agree with the assessee that in case no disallowance is made in earlier year, no disallowance cans be made in the year in relation to opening balance. This aspect needs verification. We, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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