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TMI Blog2017 (6) TMI 1283X X X X Extracts X X X X X X X X Extracts X X X X ..... on'ble ITAT vide order dated 15.06.2011 in ITA No. 55371Mu/l2009 in the case of ITO 19(3)(1), Mumbai Vs. Diamond Investment & Properties (A. Y. 2005-06) had upheld similar addition of suppressed sale consideration under similar facts and circumstances which was upheld by Hon'ble Bombay High Court under order dated 20.03.2014 in ITA No. 14 of 2014?" (3) "The appellant prays that the order of the CIT(A) on the above ground be set side and that of the AO be restored." (4) "The appellant craves leave to amend or alter any ground or add a new ground which may be necessary." 2. Rival contentions have been heard and record perused. Facts in brief are that assessee is the proprietor of M/ s Kyrus Industries, which is in the business of builders and developers. During the course of assessment proceedings, from the details filed by the assessee, the AO found that there was a difference in rates for the flat no. 701 and other flats sold by the assessee. The AO found that flat no. 701 of 1,387 sq. ft. was sold @ 41,456/- per sq. ft vide agreement dated 26.03.2008 and first payment of the sale consideration was received on 29.05.2009. Flat no. 702 of area of 710 sq. ft. was booke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions and as the flats were unsold, the appellant agreed to sell the flats at the "lowered price, accordingly, they entered into agreement for sale in Sept' 2009. Mr. Kamal Behl stated that Ms Ashwini Yardi was very much interested in buying the apartment and she entered into Agreement for Sale on 12.09.2008 for a consideration of Rs. 5.75 crore and, further when Ms. Madhu R Behl approached him in 2009 to buy a flat in the appellant's project, he could convince the appellant to conclude the transaction at a realistic price reflecting the then current market price. Accordingly, Ms Madhu R Behl entered into agreement for sale with the appellant for a total consideration of Rs. 2,10,00,000/-. The A.O., however, did not accept the above reply on the ground that the period of agreement and payments does not indicate vide variation so as to justify the wide fluctuation in rates shown and the assessee has not been able to substantiate that there was actual negotiation between the appellant and buyer in this regard. He, therefore, took the view that the comparable price for determining the sale price, which is prevailing in international transaction for comparing an uncontrolled tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 2.10 crore, has not been disputed. The AO has also not examined Shri Kamal Behl to establish that the affidavit given by him cannot be accepted. On the contrary, the appellant has stated that the first payment of Rs. 75 lac was received from Ms Ashwini Yardi on 23.06.2008, the second payment of Rs. 50 lac was received on 12.09.2008 and the third payment of Rs. 35 lac was received on 22.01.2009, i.e. total of Rs. 1,60,00,000/- was received prior to 31.03.2009, and, this fact was intimated to the AO vide letter dated 12.12.2012, however, the AO has not considered the said submission. 2.4.2 It is also seen that the decision of the ITAT, Mumbai, in the case M/s. Diamond Investment and Properties relied upon by the AO is not applicable since the facts involved in the said case was different as difference in price in case of certain flats sold to related parties was at a much lower price as compared to the flats sold to other persons. The ITAT, therefore, was by the view that the AO has discussed about the evidence in the body of assessment order that some flats in the same building have been sold to other parties at a higher price, whereas, flats to the. related parties have b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee at a price higher by Rs. 649 per sq. ft. The assessee gave reason for charging low price in the terms that the buyer of flat no. 2501 assisted in promoting assessee in respect of which the AO has made addition by comparing the rate charged with the higher rate charged in respect of other sale transactions. The assessee gave justification for lower rate in respect of each flat, such as, higher down payment; no hard bargain by the buyer; buyer is an RI; party was tenant who helped in settlement with other tenants; different amenity values; demand for a higher or lower flat; higher or lower carpet area etc. The AO brushed aside these explanations given by the assessee qua each flat sold at a lower rate by simply mentioning that such reduction was not justifiable or there was no explanation for lower rate or fabricated reasoning etc. Such rejection of the asseesse's explanation in one stroke is wholly impermissible. If the AO was not satisfied with the assessee's explanation for charging a lower rate in comparison with a higher rate of other flats, he was required to bring on record certain material to demonstrate that the assessee, in fact, charged such higher rate. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO cannot simply make addition on hypothetical basis by presuming a higher sale price by simply rejecting the assessee's explanation without cogent reasons. If this procedure is resorted, then it would amount to taxing hypothetical income instead of real income, which is obviously impermissible unless an express provision is enshrined in this regard. Coming back to the facts of the instant case, we find that the assessee tendered explanation in support of charging lower price in respect of some of the flats sold by it. The AO not only simply refused to accept such explanation without any convincing reason but also did not bring any material on record to show that the assessee in fact received higher price that declared. Under such circumstances, we are of the considered opinion that the action of the authorities below in this regard cannot be with effect from 2014-15 in respect of transfer of land or building or both which is not a capital asset. It is only during the prevalence of this provision that the Revenue has been discharged from the burden of proving that the sale price of land, or building of both is understand. Straight way, the declared sale consideration can b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of Diamond Investment Flats were sold by the assessee to the related parties, however, in the case of above all the flats were sold by the assessee to the parties not related to the assessee. After giving detailed justification, the CIT(A) has applied the proposition laid down by ITAT Mumbai Bench in case of Neelkamal Realtors & Erectors India (P) Ltd reported In (2013) 38taxman.com 195. The facts of the case were very much similar to the assessee's case. The issues before the Tribunal in the above case was whether since assessee tendered explanation in support of charging lower price in respect of some of the flats sold by it, which AO failed to controvert, addition is sustainable. The ITAT held that addition in entirety is liable to be deleted. The operative part of the order is as follows:- "It can be observed from the chart made by the AO after page no. 2 of the assessment order that he made addition by considering the rate another flat sold by the assessee vis-a-vis the rate at which flat under view was sold. For example, first item in the table is flat no. 2501 with area of 2645 sq. feet and sale consideration at Rs. 65.24 lakh. First payment for this flat was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Supreme Court from this case merit mention Section 52(2) of the IT Act, 1961 can be invoked only where the consideration for the transfer of a capital asset has been understated by the assessee or in other words the full value of the consideration in respect of the transfer in shown at a lesser figure than that actually received by the assessee and the burden of proving understatement or concealment is on the Revenue; and the sub-section has no application in the case of bona fide transaction where the consideration received by [1979] 117 ITR 371 has held that the ITO cannot fix higher sales price without any evidence. The mere to the conclusion that the assessee did charge a higher price. A survey of aforementioned judgments manifests that there is no low which obliges a trader to make the maximum profit on sales. It is trite that the onus to claim that the apparent is not real is one who so claims. Where the Revenue requires the assessee to show as to why there is a difference in the price charged from two customers and the assessee offers some plausible explanation, no addition can be made simply by holding that this explanation is fanciful. There must be something concrete ..... X X X X Extracts X X X X X X X X Extracts X X X X
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