2019 (2) TMI 1924 - AT - Income Tax

Tribunal Upholds CIT(A) Decision on Revenue's Appeal, Deletion of Accommodation Entry & LTCG Addition

The Tribunal upheld the CIT(A)'s decisions, dismissing the Revenue's appeal. The addition on account of accommodation entry was deleted as the assessee ... Addition on account of accommodation entry - information received from the Director General of Income Tax (Investigation), Mumbai intimating that the assessee company is one of the beneficiaries in the accommodation entry operation carried out by Shri Praveen Jain in Mumbai - HELD THAT:- Assessee is engaged in the construction of multi storage building. In the usual course of business, the assessee was receiving the advances for flats. The advance from M/s. Josh Trading Co. Pvt. Ltd. was also received in the usual course. The assessee has given the address, PAN number and confirmation of the parties. The advance was received through banking channel - when the deal did not materialize, the advance was returned also by banking channel. All these facts are not disputed by the Revenue. A.O. has not made any enquiry himself to rebut the submission of the assessee. It is not the case that the address given by M/s. Josh Trading Co. Pvt. Ltd. is bogus or that the A.O. has made an enquiry and the said M/s. Josh Trading Co. Pvt. Ltd. has not responded. In these circumstances, in our considered opinion, the assessee has discharged the onus cast upon him. The A.O. has not brought on record any cogent material for the proposition that the advance received was bogus. It is settled law that the addition based upon surmise and conjecture de hors any enquiry whatsoever is not sustainable. Hence, in our considered opinion, there is no infirmity in the order of the ld. CIT(A). Accordingly, we uphold the same. Addition on account of long term capital gain - CIT(A) deleted the addition - HELD THAT:- The assessee had sold Tenement situated at Mumbai to the purchaser and also right of piece or parcel of tit-bit plot adjacent to the said tenement to the same purchaser. The tenement and the land were sold through two agreements. This was because there were some disputes with the purchaser. The agreement of the lease deed shows that as per the terms of the lease agreement, the lease tit-bit land is to be held by the leaseee only along with the tenement and not separately. In the case of transfer of tenement, the tit-bit area will automatically get transferred. The above makes it abundantly clear that the tit-bit land was to be sold along with the tenement and it was only due to some dispute that the agreement for the tit-bit land was entered later on. The A.O. has found difference in the stamp valuation of the tit-bit land at the time of registration. The assessee has received the entire consideration in July 2011. The stamp valuation of tit bit land as on 31.03.2012 was ₹ 1,49,44,020/-. Hence, if both the agreements are considered in cohesive manner, it will be found that the total stamp duty valuation comes to ₹ 1,37,37,500/- and ₹ 1,49,44,020/- as compared to the sale consideration received by the assessee totaling to ₹ 2,20,000/- + ₹ 80,000/-. If this is considered, the sale value received is higher than the combined stamp duty value of the property. On this account, the ld. CIT(A) is correct in deciding the issue in favour of the assessee. Applicability of section 50C - A.O. has invoked the provision of section 50C in the context of tit-bit leasehold land. It is admitted that it is a lease hold land and it has been held by the ITAT, Mumbai Bench in the case of Atul G Puranik [2011 (5) TMI 576 - ITAT, MUMBAI] that section 50C cannot be invoked on transfer of lease hold rights. Since there is no dispute that the impugned tit bit land was under lease, this decision fully applies and the application of section 50C in this case by the A.O. is not justified. Issues Involved:1. Addition on account of accommodation entry.2. Addition on account of long term capital gain (LTCG).Issue-wise Detailed Analysis:1. Addition on account of accommodation entry:The Revenue challenged the deletion of an addition of Rs. 1,00,00,000 made by the Assessing Officer (AO) on account of the assessee being a beneficiary of an accommodation entry. The AO based this addition on information from the Director General of Income Tax (Investigation), Mumbai, indicating that the assessee received Rs. 1,00,00,000 from M/s. Josh Trading Co. Pvt. Ltd. (JTC) as part of accommodation entry operations run by Shri Praveen Kumar Jain Group.During assessment, the assessee explained that the amount was an advance payment for a flat, which was later refunded when the deal did not materialize. The AO, however, rejected this explanation, considering it an afterthought and added the amount as unexplained accommodation entry.The Commissioner of Income Tax (Appeals) [CIT(A)] found that the assessee provided sufficient documentary evidence, including confirmation from JTC, PAN, and address, showing the transaction was an advance for a flat and the amount was refunded through banking channels. The CIT(A) noted that the AO did not conduct further inquiries to disprove the assessee's claims and relied solely on information from the Investigation Wing.The CIT(A) cited several case laws emphasizing that additions based on presumption and without direct evidence are not sustainable. The Tribunal upheld the CIT(A)'s decision, noting that the AO did not provide any cogent material to prove the transaction was bogus and that the assessee had discharged its onus by providing all necessary details.2. Addition on account of long term capital gain (LTCG):The AO observed discrepancies in the assessee's computation of LTCG from the sale of a tenement and adjacent tit-bit plot. The assessee sold Tenement No.B 38/149 and a tit-bit plot for Rs. 3,00,00,000 but used different agreements due to disputes with the purchaser. The AO noted that the stamp duty value of the tit-bit plot at the time of registration in 2014 was higher than the sale consideration received in 2011.The AO applied the provisions of Section 50C of the Income Tax Act, which mandates that the sale consideration should be the value adopted by the Stamp Duty Authorities if it is higher than the actual sale proceeds. Consequently, the AO recomputed the LTCG at Rs. 2,30,44,395 instead of the Rs. 1,61,00,375 declared by the assessee.The CIT(A) deleted the addition, noting that the tenement and tit-bit plot were required to be sold together as per the lease agreement, and the total sale consideration was higher than the combined stamp duty valuation. The CIT(A) also highlighted that Section 50C could not be invoked for leasehold rights, citing jurisdictional case laws.The Tribunal upheld the CIT(A)'s decision, confirming that the sale consideration received was higher than the combined stamp duty value and that Section 50C was not applicable to leasehold rights. The Tribunal found no infirmity in the CIT(A)'s order and dismissed the Revenue's appeal.Conclusion:The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decisions on both issues. The addition on account of accommodation entry was deleted due to lack of direct evidence and proper documentation provided by the assessee. The addition on account of LTCG was deleted as the total sale consideration was higher than the stamp duty valuation, and Section 50C was not applicable to leasehold rights.