2021 (5) TMI 345 - AT - Income Tax

Unaccounted sales of car parking area - addition on account of unaccounted sale of car parking area which was not included in the sale of agreements of the flats - CIT-A deleted the addition - HELD THAT - CIT(A) has allowed the claim of the assessee on the basis of the finding given by his predecessor while completing the assessment for the AY 2012-13 by virtue of order dated 21/08/2017 in which 99% of the total estimated sale of parking area was added by the AO and only 1% added in the AY 2013-14 i.e in the present Assessment year. CIT(A) has reproduced the finding for the AY 2012-13 in his order in question which need not to be repeated again. Nothing came into the notice that there is any change or variation in the order passed by the Ld.CIT(A) for the AY 2012-13. in which the claim of the assessee regarding sale of parking was allowed to the extent of 99%. Needless to say that in the present assessment year the claim of 1% is only in question. The facts are not distinguishable at this stage. Moreover the claim of the assessee has been confirmed by the Hon ble ITAT Mumbai 2019 (2) TMI 1411 - ITAT MUMBAI for the AY 2012-13 vide order dated 19/12/2018. Taking into account all these facts and circumstances we are of the view that the Ld.CIT(A) has decided the matter of controversy judiciously and correctly which is not liable to be interfere with at this appellate stage. Unaccounted income on FSI sale - CIT-A deleted the addition - Addition was raised on account of unsigned agreement - HELD THAT - The claim of the assessee was for the sale consideration of Rs. 14 crores only. Seized material nowhere speaks that the cash transaction was of Rs. 7.5 crores. Comparison of documents nowhere speaks about the difference of Rs. 7.5 crores alleged to be paid in cash. The Appellant prepared the draft agreement with Jainam Developers to initiate the business deal which was not signed by the assessee as well as Jainam Developers. The sale amount was shown to the tune of Rs. 21.50 crores and the deal nowhere seems finalized being not corroborated by any other document on record. After a long time the deal was finalized to the extent of Rs. 40 crores which was offered to tax. At this time authority determined the market value of the property to the tune of Rs. 13, 08, 92, 000/-. The payment of Rs. 14 crores mentioned at page 150 -153 of the paper book. The Ld. AO issued notice to the Jainam Developers who confirmed the deal to the tune of Rs. 14 crores. The Ld. AO raised the addition of Rs. 7.5 crores on the basis of assumption as well as difference between signed and unsigned documents. Addition cannot be raised on the basis of unsigned agreement specifically when the transaction is not corroborated by any other evidence on record. Loose papers are also not liable to be taken into consideration to raise the addition except corroborated by any other piece of evidence on record and in this regard we also find the support of decision of CIT vs Dharmdev Finance Pvt. Ltd 2014 (4) TMI 1005 - GUJARAT HIGH COURT and Pradeep Amrutlal Runwal 2015 (12) TMI 958 - ITAT PUNE - we are of the view that the Ld.CIT(A) ) has decided the matter of controversy judiciously and correctly which is not liable to be interfere with at this appellate stage. Accordingly we affirm the finding of the CIT(A) on this issue and decided the issue in favour of the assessee and against the revenue.

Summary

Issues Involved:
1. Deletion of addition made on account of unaccounted sales of car parking area.
2. Deletion of addition made on account of unaccounted income on FSI sale.

Issue-wise Detailed Analysis:

Issue No. 1: Deletion of Addition of Rs. 8,17,500/- on Account of Unaccounted Sales of Car Parking Area

The revenue challenged the deletion of Rs. 8,17,500/- made on account of unaccounted sales of car parking area. The Assessing Officer (AO) had rejected the books of account under Section 145 of the I.T. Act, 1961, on the grounds that the firm sold parking slots/garages to buyers of flats in Golden Nest Phase XV, which were not included in the sale agreements. The AO based this on seized material, including allotment letters and a hard disk, which indicated that the firm charged Rs. 3,50,000/- for each parking slot. The AO added this amount as 'income from other sources' since the sale of parking was deemed illegal per the Supreme Court's decision in Nahal Chand Lalchand Pvt. Ltd. v Panchal Cooperative Housing Society Ltd. The AO also rejected the assessee’s argument that the parking charges were included in the sale price of the flats and thus accounted for in the books.

The Commissioner of Income Tax (Appeals) [CIT(A)] deleted the addition, relying on the previous assessment year (AY 2012-13) where 99% of the total estimated sales of parking was added by the AO, and only 1% was added in AY 2013-14. The CIT(A) found that the addition made by the AO was based on surmises and conjectures, with no concrete evidence of cash transactions outside the books. The CIT(A) also noted that the assessee had included an amount of Rs. 3,13,30,000/- on account of the sale of parking in the sales account for AY 2013-14. The Income Tax Appellate Tribunal (ITAT) upheld the CIT(A)'s decision, finding no change or variation in the facts from the previous year and confirming that the CIT(A) had decided the matter judiciously and correctly.

Issue No. 2: Deletion of Addition of Rs. 7,50,00,000/- on Account of Unaccounted Income on FSI Sale

The revenue challenged the deletion of Rs. 7,50,00,000/- made on account of unaccounted income on FSI sale. The AO had based the addition on an unsigned draft agreement found during the search, which mentioned a total sale consideration of Rs. 21.5 crores, whereas the assessee had shown only Rs. 14 crores in the books. The AO inferred that the difference of Rs. 7.5 crores was received in cash.

The CIT(A) examined the seized documents and found that the unsigned agreement was merely a draft and not finalized. The seized ledger and advance tax calculations consistently supported the assessee's claim of a Rs. 14 crore consideration. The CIT(A) noted that there was no corroborative evidence of the Rs. 7.5 crores being paid in cash, and the partner of the assessee firm had reiterated in a statement under Section 132(4) that the deal was not finalized and the amount of Rs. 14 crores was booked tentatively for advance tax purposes.

The CIT(A) concluded that the AO's inference was without evidence and directed the deletion of the addition. The ITAT upheld the CIT(A)'s decision, emphasizing that additions cannot be based on unsigned agreements or assumptions without corroborative evidence. The ITAT also cited various judicial precedents supporting the principle that loose papers or unsigned documents cannot be the sole basis for additions unless corroborated by other evidence.

Conclusion:

The ITAT dismissed the revenue's appeal, affirming the CIT(A)'s decisions on both issues. The deletions of Rs. 8,17,500/- on account of unaccounted sales of car parking area and Rs. 7,50,00,000/- on account of unaccounted income on FSI sale were upheld, as the additions were found to be based on assumptions and conjectures without sufficient evidence. The CIT(A)'s findings were deemed judicious and correct, and the ITAT found no reason to interfere at the appellate stage.