Tribunal rules in favor of assessee on revenue's appeal, citing lack of evidence and estimation basis

The Tribunal dismissed the revenue's appeals and allowed the assessee's appeal regarding the addition on account of differences in rates charged to customers compared to market rates. The Tribunal found the addition was based on estimation without proper inquiry and deleted it, citing lack of cogent evidence. The issue of alleged bogus purchases was decided in favor of the revenue. Additional grounds were not addressed as a result of the decision on the second issue. The Tribunal applied similar findings in another appeal and ruled in favor of the assessee.

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Issues Involved:
1. Addition on account of difference in rate per sq.ft. charged to various customers vis-à-vis market rates.
2. Disallowance on account of alleged bogus purchases.

Detailed Analysis:

Issue No. 1: Addition on account of difference in rate per sq.ft. charged to various customers vis-à-vis market rates

The assessee challenged the disallowance of Rs. 1,38,65,636/- due to differences in the rate per sq.ft. charged to various customers compared to market rates on the booking date. The assessee argued that the addition was based on surmises and conjectures, and the variation in rates was due to factors like market conditions, sale of furnished vs. unfurnished flats, and bargaining. The Assessing Officer (AO) calculated the difference in rates, allowing a 15% discount, and added Rs. 3,13,85,432/- to the income, which the CIT(A) reduced to Rs. 1,38,65,636/-.

The Tribunal found that the AO made the addition on an estimation basis without proper inquiry and relied on the decision in the case of Triveni Construction Vs. DCIT & Group concerns (ITA. No.3779/Mum/2017 & Others), where it was held that without cogent evidence of on-money receipts, such additions are not justified. The Tribunal noted that section 43CA, which deals with the difference between the sale consideration and stamp duty value, was not applicable for the assessment year in question (A.Y. 2012-13). Consequently, the Tribunal deleted the addition and decided the issue in favor of the assessee.

Issue No. 2: Disallowance on account of alleged bogus purchases

This issue was not pressed by the assessee's representative, and hence, it was decided in favor of the revenue against the assessee.

Issue No. 3 & 4: Additional Grounds

Since Issue No. 2 was decided in favor of the assessee, Issues No. 3 and 4 were considered academic and were not addressed.

ITA No. 4400/Mum/2017

The facts and issues in this appeal were similar to those in ITA No. 3787/M/2017. Therefore, the Tribunal applied the same findings and dismissed the revenue's appeal while allowing the assessee's appeal.

Conclusion

The Tribunal ordered the appeals filed by the revenue to be dismissed and the appeal filed by the assessee to be allowed, with the order pronounced in the open court on 13/01/2020.

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