Assessee's appeal allowed, deletion of additions for under-valuation of property and forfeited amount.

The Tribunal allowed the appeal filed by the assessee, directing the deletion of both additions: Rs. 45.50 lakhs on account of alleged under-valuation of property and Rs. 1.30 crores on account of the forfeited amount not received.

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Issues Involved:
1. Addition of Rs. 45.50 lakhs on account of alleged under-valuation of property.
2. Addition of Rs. 1.30 crores on account of forfeited amount not received by the assessee.

Detailed Analysis:

1. Addition of Rs. 45.50 lakhs on account of alleged under-valuation of property:

The assessee sold her undivided 12.5% share in a property at 11B, Jungpura, New Delhi to her son for Rs. 74.50 lakhs. The Assessing Officer (AO) compared this with the sale of a 25% share in the same property by another family member to the assessee's son for Rs. 2.40 crores. The AO concluded that the sale by the assessee was undervalued and made an addition of Rs. 45.50 lakhs, being the difference between the value of 12.5% share at Rs. 1.20 crores and the sale value of Rs. 74.50 lakhs.

The CIT(A) upheld this addition, reasoning that the property was grossly undervalued and the transaction was not at arm's length, despite the property being sold at the prevailing circle rate and the portion sold being at the back side of the building.

The Tribunal found merit in the assessee's argument that the property was sold at the prevailing market rate and the AO did not invoke the provisions of section 50C nor refer the matter to the DVO. The Tribunal noted that the AO had no material evidence to show that the assessee received more than the amount mentioned in the sale deed. The Tribunal concluded that the addition made by the AO was based on presumption and surmises and directed the AO to delete the addition.

2. Addition of Rs. 1.30 crores on account of forfeited amount not received by the assessee:

The assessee sold a property at 264, Industrial Area, Phase III, Okhla, New Delhi for Rs. 39.30 crores but reported the sale consideration as Rs. 37,59,20,845/- due to Rs. 1.50 crores forfeited by the buyer and brokerage of Rs. 20,79,155/-. The AO rejected the claim of forfeiture and made an addition of Rs. 1.30 crores based on information obtained from the buyer, M/s Hero Corporate Services Ltd., which indicated that Rs. 1,29,51,720/- was still payable to the assessee.

The CIT(A) upheld the addition, stating that the amount was still outstanding in the buyer's books and the non-receipt of the amount did not change the character of the receipt.

The Tribunal found that the sale deed explicitly mentioned that Rs. 2.50 crores was retained by the buyer to be released upon the fulfillment of certain obligations by the assessee. Since the assessee could not fulfill these obligations, the amount was forfeited by the buyer. The Tribunal concluded that the non-receipt of the amount due to non-fulfillment of obligations meant it could not be part of the apparent consideration. The Tribunal directed the AO to delete the addition but clarified that if the assessee receives any amount from the forfeited sum in the future, it should be taxed in the year of receipt.

Conclusion:

The Tribunal allowed the appeal filed by the assessee, directing the deletion of both additions: Rs. 45.50 lakhs on account of alleged under-valuation of property and Rs. 1.30 crores on account of the forfeited amount not received. The decision was pronounced in the open court on 08.06.2021.

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