2021 (5) TMI 378 - AT - Income Tax

Appeal challenges inclusion of disputed amount in sale consideration, questions interest liability.

The appeal was filed against the CIT (A)'s order confirming the addition of Rs. 43,68,495/- made by the assessing officer. The appellant disputed the ... LTCG - gains on sale of transferable development rights (TDR’s) - HELD THAT:- We note that in the transaction between assessee and the buyer for sale of TDR, an amount has been paid to the alleged confirming party. Neither assessee is unable to explain the reason why the amount was payable to the confirming party, nor is there is any evidence that is brought on record as to why it necessary for the confirming party to be the part of the agreement. AO issued notice under section 133 (6) to the buyer of TDR, no response was received. However, merely because the buyer did not respond to the queries raised by the Ld.AO and it cannot be a reason to assume that the said amount is income in the hands of assessee. We are therefore remanding this issue back to the Ld.AO. AO shall carry out all necessary investigation as under - AO shall call upon the alleged confirming party and record statements. Needless to say that assessee shall be granted any opportunity of cross-examining the alleged confirming party. AO shall call upon the buyer to seek information in respect of the transaction and to verify the details in accordance with law. Any other enquiries /investigations, deem fit and proper. Based upon the above the Ld.AO shall consider the issue in accordance with law. Needless to say that proper opportunity of being heard shall be granted to the parties concerned in order to assay ascertained the true nature of the said transaction. We may caution the Ld.AO that income has to be taxed in the hands of the person to whom it belongs. Merely on surmises and conjunctures the sale amount cannot be taxed in the hands of any assessee. With the above direction we remand this issue to the Ld.AO to carry out de novo assessment, and to pass detailed order in accordance with law. Grounds raised by assessee stands allowed for statistical purposes. Issues:1. Addition of Rs. 43,68,495/- confirmed by CIT (A)2. Sale consideration of Transferable Development Right (TDR) discrepancy3. Confirmation party's entitlement over TDR4. Justification of addition based on conjecture5. Liability to pay interest u/s 234B and u/s 234CAnalysis:1. The appeal was filed against the CIT (A)'s order confirming the addition of Rs. 43,68,495/- made by the assessing officer. The appellant argued that this amount was not part of the negotiated sale consideration with the buyer. The authorities below held that the confirming party did not have any right over the TDR, and hence the addition was justified.2. The CIT (A) erred in determining the sale consideration of the TDR at Rs. 2,18,42,471/- instead of the actual amount of Rs. 1,74,73,976/- received by the appellant. This discrepancy led to a dispute regarding the correct valuation of the TDR in the hands of the appellant.3. The confirming party, to whom a sum of Rs. 43,68,495/- was paid, was questioned for their entitlement over the TDR. The absence of a prior contract or agreement between the confirming party and the appellant raised concerns about the legitimacy of the payment made to them.4. The addition of Rs. 43,68,495/- was challenged on the grounds of lack of concrete evidence supporting the claim that this amount belonged to the appellant. The appellant argued that the addition was based on conjecture and should not have been upheld by the authorities.5. The appellant disputed the liability to pay interest under sections 234B and 234C, claiming that there was no additional tax liability as determined by the assessing officer. The ambiguity regarding the rate, period, and quantum of interest levied necessitated a review of the interest calculation and its applicability in the given circumstances.This detailed analysis of the judgment highlights the key issues raised in the appeal and the arguments presented by the appellant against the CIT (A)'s decision. The discrepancies in the valuation of the TDR, the legitimacy of the confirming party's entitlement, and the justification for the addition of a specific amount were thoroughly examined, leading to a remand of the case for further investigation and assessment by the assessing officer.