TaxTMI 
TaxTMI 
2014 (4) TMI 309
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....r valuation of sales in case of flats and shops without appreciating the facts that the assessee failed to explain the discrepancy during assessment proceedings" On the facts and in the circumstances of the case and law, the Learned CIT(A) has admitted additional evidences regarding the re-conciliation of discrepancy in expenses pointed out by the Assessing Officer in Profit and Loss account without following the procedure laid down in Rule 46A of the Income-tax Rule 1962." 3. Rival contentions have been heard and record perused. Facts in brief are that assessee is engaged in the business of builder and developer. By rejecting books of accounts u/s.145(2), the AO made addition by estimating income of 15% on sale proceeds and work-in-progress. By the impugned order the Cit(A) substantially deleted the addition. In this appeal the Revenue is basically aggrieved for deleting the major part of the addition made by the AO by rejecting the books of accounts. The facts emerged from the order of the lower authorities are that while verifying the total purchase account of A.Y. 2006-07, the AO found that total expenditure ofRs.17,73,105/- did not match with the expenditure shown in Pro....
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....ed the various reasons given by the Assessing Officer for rejecting the book result. I find that AO has rejected entire book result on a very flimsy ground as none of the reasons except variation in selling price and value determined by the Stamp duty authorities, is factually correct. The observation in para 4 of the assessment order is apparently wrong because of the obvious facts that in Profit & Loss A/c Appellant has shown total purchase expenditure of Rs.7,20,442/- and there is a debit of expenditure of material and labour of Rs.9,46,185/-. While mentioning the details of expenditure of current year in para 4 of the assessment order, Ld. AO has wrongly presumed expenditure appearing at Sl. No. 1,27,28 and 62 as purchase of material whereas, the fact is that these are the labour charges. If these mistakes are rectified, then net purchase comes to Rs.7,20,442/- only. It appears that Ld. AO has not properly verified the labour charges of Rs.9,46,185/- while mentioning the total expenditure appearing on various bills. The reconciliation statement submitted by Ld. AR is found to be correct hence, the finding of the Ld. AO in para 4 of the assessment order is unsubstantiated-one. M....
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....ously, some facts draw attention that as compared to selling price of earlier year, even later on, there is a considerable variation of selling price as compared to the market value ascertained by the Stamp Duty Authority. However, the explanation that Flat No. A-304 sold out in 'A- Wing' to the old tenants allotted flat and booking was done at the time of agreement only, hence the selling price could not be expected to be more being a peculiar cause and Appellant was under obligation of the old tenants for taking NOC for development of project somewhat convincing one. Furthermore, there is minor variation in respect of market value taken by Stamp duty authority and price shown by the appellant in respect of flat No. B-312, the arguments of Ld. AR is found acceptable because this flat was also booked in December 2003. As regards flat No. D-204, the explanation of the appellant! AR is also found convincing-one that it was sold out in the month of March, 2004 to a Corporator of the area as this flat was purchased in his wife's name who had helped the appellant in completion of various formalities and completion of project. To that extent, the arguments of the Ld. AR are a....
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.... one cannot expect that variation in selling price cannot be added to the total income of the appellant because it is based on presumption. It is pertinent to mention that this presumption is not without any basis or convincing evidence. Ld. AR himself given the details of such variation 111 para 6 of his written argument dated 23.11.2010. Therefore, this variation can be taken for assessment. Accordingly, AO is directed to take the additional income of Rs.8.34.648/as against the estimated income of Rs.1,40,59,278/-." 5. Against the above order of CIT(A), the Revenue is in appeal before us and the assessee has also filed Cross Objection for sustaining the addition of Rs.8,34,648/-. 6. We have considered rival contentions, carefully gone through the orders of the authorities below and found from record that the assessee is a builder and developer. During the year under consideration the assessee has completed its project of slum area. This project was started in the year 2003 and the same was completed during the assessment year 2007-08 under consideration. The entire profit on sale of project was shown only during the year under consideration. The AO after observing as under ....
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....-vis value adopted by Sub-Registrar for Stamp Duty, he sustained addition of Rs.8,34,648/-. 6.2 After considering the entire material placed on record vis-à-vis nature of assessee's business, who is a builder and developer, we find that the flat sold by the assessee during the year constituted its stock-in-trade, there is no justification for making any addition by taking the value adopted by Sub Registrar for Stamp Duty purchased as per provisions of Section 50C. Since the flat so sold constituted stock-in-trade, there is no justification for upholding the addition on the basis of notional value determined by Stamp Duty authorities as against actual sale price received by the assessee, insofar as there is no evidence on record to hold that assessee was in respect of consideration in excess of what was stated in the sale-deed. Provisions of Section 43CA was introduced by Finance Act, 2013, so as to bring to tax net full value of consideration on transfer of assets other than capital assets w.e.f.1-4-2014 i.e. A.Y.2014-15. Since in the instant case the assessee is a builder, the flats so sold are not its capital assets but stock-in-trade. Thus, there is no justification on....