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2013 (3) TMI 124 - HC - Income TaxAssessment of rental income - whether be assessed under the head “income from business” or “income from house property” - Held that:- Substantial question of law is to be answered in the negative in favour of the Revenue and against the assessee in view of the judgment of CIT Vs. M/s Ansal Housing Finance and Leasing Co. Ltd. & Ors. [2012 (11) TMI 323 - DELHI HIGH COURT] wherein held that the rental income should not be assessed under the head “income from business” but under the head “income from house property”. Whether the sale consideration disclosed by the assessee on sale of shops should be accepted ? - assessee is engaged in the business of construction of commercial complexes - Held that:- It is not correct to say that the assessee did not satisfactorily answer the queries raised by the AO on noticing the absence of registered sale documents, variations in sale prices of shops in the same floor, sale of shops to sister concerns, etc. They have all been answered by the assessees accordingly. Neither the CIT (Appeals) nor the Tribunal found anything amiss in those replies/ submissions. The power of the AO to raise valid queries on the basis of the facts or unusual features noticed by him must be conceded. The features noticed by him in the assessees’ business certainly constitute a starting point of inquiry. They are, however, not to be taken as evidence or material showing any suppression or understatement of the sale price. If on further probe, AO was able to unearth any evidence or material on the basis of which actual suppression of the sale price could be found, then the additions made on that basis would be valid. It is not open to AO merely on the basis of what he perceives to be the market conditions, to make additions to the sale price or the profits, without any evidence of understatement. These principles have been kept in mind by the Tribunal and, therefore, its order cannot be faulted or branded as perverse in holding that the sale consideration disclosed by the assessee on sale of shops should be accepted. Also there is no other provision in the Act permitting the AO to enhance the profits or the sale price except section 50C and section 92BA. Section 50C does not apply to the present case as it applies only to a case of capital gains. Section 92BA also does not apply as it came into force only from the assessment year 2012-13. Moreover, it applies only to such domestic transactions as may be prescribed by the competent authority. Addition on the basis of “notorious practice” prevailing in real estate circles that in all property transactions there is non-disclosure of the full consideration - Held that:- This cannot per se constitute the basis of the addition as in Lalchand Bhagat Ambica Ram vs. CIT (1959 (5) TMI 12 - SUPREME COURT) the Supreme Court disapproved the practice of making additions in the assessment on mere suspicion and surmises or by taking note of the “notorious practice” prevailing in trade circles - in favour of the assessee - appeals filed by the revenue are partly allowed.
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