2023 (3) TMI 476 - AT - Income Tax

Addition made by enhancing the sale consideration of the property sold - determination of value of sale consideration for the purpose of capital gains u/s 50C - CIT(A) confirming 10% of the total addition made by the Ld. AO in respect of sale of flats and the addition in respect of Commercial space has also been confirmed to 10% instead of 20% - HELD THAT:- As in the present case, since, the assessee has taken the sale consideration at a higher value than the price fixed as per the Stamp Duty Act and hence, the AO arbitrarily enhancement of the sale consideration without any basis is unwarranted and against the mandate.

CIT(A) has misinterpreted the provision of section 50C, that there is no restriction on adopting a higher value than the stamp duty valuation, even there 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.

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. 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 capital gains u/s 50C of the Act. Therefore, the addition made on the basis of presumption, assumption and conjecture would not be sustained under the law.

We hold that the decision of the Ld. CIT(A) that the ends of justice would be made, if the addition in this case is restricted to 10% of the total addition made by the AO in respect of sale of flats and the addition in respect of commercial space is also restricted to 10% instead of 20% made by the AO is infirm and perverse to the facts on record and against the law. Accordingly, the estimated addition of Rs. 18,17,621/- in respect of flats, and Rs. 5,32,690/- respect of commercial space of Palm Island, (18,17,621/- + 5,32,690/- = 23,50,311/-) is deleted.