TaxTMI 
TaxTMI 
2023 (3) TMI 476
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....d. AO in respect of sale of flats and the addition in respect of Commercial space has also been confirmed to 10% instead of 20% made by the Ld. AO without citing any reason for the same. 3. The appellant craves leave to add, amend, alter or otherwise raise any other ground of appeal." 3. Grounds of appeal in ITA No. 35/Asr/2022 "1. That the Learned Commissioner of Income tax, (Appeals)-5, Ludhiana passed order Under section 250(6) of the Income tax Act, 1961 merely on assumptions, presumptions, surmises and conjectures, without appreciating the factual, legal and statutory position of the Law and facts of the case. 2. That on the facts and circumstances of the case, the Ld. CIT(A) has erred in confirming 10% of the total addition made by the Ld. AO in respect of sale of flats without citing any reason for the same. 3. The appellant craves leave to add, amend, alter or otherwise raise any other ground of appeal." 4. Grounds of appeal in ITA No. 36/Asr/2022 "1. That the Learned Commissioner of Income tax, (Appeals)-5, Ludhiana passed order Under section 250(6) of the Income tax Act, 1961 merely on assumptions, presumptions, surmises ....
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....rther mentioned that as per the submission, the assessee derived income from sale & purchase of timber, rental income, income from other sources, besides income from capital gain. During the assessment, it was seen that the assessee entered into an agreement executed on 29th of January, 2008 between the family members on one hand known as 'owners and co-owners' and M/s. Ridhi Sidhi Infra Projects Pvt. Ltd. on other hand, known as 'Developer' and reproduced the relevant part & clauses of the agreement as per which, the land was to be provided by the assessee & his family members and the Developer agreed to develop the property into multistory commercial mall, office, residential flats etc. The cost of contribution as land by the assessee family was taken as 35% in respect of Portion-A and balance 65% by the developer and similarly, the cost of land for Portion B & C was 30% and the balance 70% by the developer and accordingly, the commercial project for Portion-A be shared in the ratio of 35: 65 with the owners and developers respectively and for Portion B & C, the residential flats will be shared in the ratio of 30:70. As per the AO, vide reply dated 21.08.2017, the....
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....tioned that in absence of plausible explanation and keeping in view the agreement entered by the assessee with the developer, the highest selling price shown by the assessee is being adopted in this case. It is also mentioned that it was a common practice by real-estate developers country-wide that they sell the space on per square feet rate basis which is missing in this case. It is further mentioned that from the document, it was seen that from the same super area flat, comprising same number of bed rooms, the registration have been done on varied amount which was an attempt on the part of the buyer/seller to suppress the actual value of the properties. It is also mentioned that in some cases, the cost of flat of similar dimensions has been shown to be just 40% of the cost of adjacent flat on the same floor which definitely create suspicion. Therefore, in the absence of any valuation of the flat (method of working of sale value adopted), provided by the assessee, the value of the highest amount registered for similar dimension flats, tower-wise was taken to arrive at per square feet value on the sale of flats. The AO gave examples of the cases where different values for same area....
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....f consideration. As per the AR, in the instant case, the full value of the ^consideration has been adopted by the stamp value authority as per the prevalent circle rate and sale deeds are registered on the basis of the same. It is also submitted that since the sale consideration has been recorded by the appellant as per the rate prescribed u/s 50C, the AO cannot substitute any other value for the purpose of computing Capital Gain and circle rate would be deemed to be full value of consideration. It is also submitted that the price of finished/unfinished flats are determined by the developers M/s. Ridhi Sidhi Infra Projects Pvt. Ltd. and sale consideration were also received by the developer directly from the buyers and the assessee got his share from the developers as reimbursement, as specified in the agreement, from time to time. Regarding the addition of Rs. 10,65,380/-, in respect of the commercial property, the AR submitted that the AO enhanced the value by 20% on estimated basis without citing any reason for the same. As per the AR, the assessee got the valuation done at the time of sale from the registered/Approved Valuer who determined the total value of the commercial prop....
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....the assessee has also declared the same. Regarding the commercial mall, under the name & style of Palm Island, the AO mentioned that he has taken the value @120% (20% increase over the value taken by the assessee) stating it to be reasonable keeping in mind, the rates prevailing in the same area, without any instance of any property sold or the actual rate in the area. It is however also a realty of the market that in this type of transactions of sale of flats/commercial space, there is always an element of cash payment involved, which are not recorded as it suits to both the buyer and the seller, which is apparent in this case from the wide variation in the prices of flat of same size and similar locations. Minor variation can be due to the factors as discussed above but the wide variation points to the fact that some part of the consideration in respect of flat shown as sold on lower price, has not been recorded on papers and taken in cash. Although there is no direct proof of the same on record, but the circumstantial evidence in the shape of higher price for similar size flat at same floor and same locations/situations indicate that such things (i.e. the cash payment) were invo....
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....llowed." 8. The Ld. Counsel submitted that the Learned Commissioner of Income tax, (Appeals)-5, Ludhiana passed order Under section 250(6) of the Income tax Act, 1961 merely on assumptions, presumptions, surmises and conjectures, without appreciating the factual, legal and statutory position of the Law and facts of the case and that he has erred in confirming 10% of the total addition made by the Ld. AO in respect of sale of flats and 10% of 20% addition in respect of Commercial space made by the Ld. AO without appreciating the facts and citing any specific reasons. He argued that the appellants case was selected for limited scrutiny to examine the Long Term Capital Gain, however the AO has made addition estimating additional value over and above circle rate without referring to DVO u/s 50C of the Act, on estimated basis for the Flats on basis of floor etc and open commercial space which has been confirmed by The Ld. CIT(A) on presumption and surmises without rebuttal to the contentions and clauses of agreement, the contention raised by the appellant assesse. He pleaded that such estimated additions may be deleted. 9. Per contra, the Ld DR although supported the impugned orde....
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....e was no direct evidence or proof of the same on record, taking shelter of the circumstantial evidence in the shape of higher price for similar size flat at same floor and same locations/situations and that such things (i.e. the cash payment) were involved in this case merely on presumption and conjectures without bringing corroborative material documantary evidence on record to rebuttal of the submissions of the assessee appellant. Merely, estimating the income even without quoting a specific instance of circumstantial evidence, partly confirming the addition to meet the ends of justice in this case by restricting addition to 10% as against 20% of the total addition made by the AO in respect of sale of flats in respect of commercial space is held to be perverse to the fact on record. 13. Thus, it is evident from the above that neither the AO nor the Ld. CIT(A) have brought on record any direct evidence to prove that extra consideration has been received by the appellant over and above the consideration as per sale agreement. Further, the Ld. CIT(A) failed to rebut the contention of the Ld. AR on the issue of determination of value of sale consideration for the purpose of capita....