TMI Blog2006 (4) TMI 232X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 12-11-1998 does mention about the amount calculated at the rate of Rs. 1,250 per sq. ft., the final agreement of sale made between the assessee and the customer is not at this rate. In the presence of some conflict in this regard and in absence of any further supporting evidence, it should be the final written sale agreement executed by both the parties which should be taken into account - except making estimates on the basis of that letter, the revenue has not done anything cogent enough to buttress the claim that sale was actually made at Rs. 1,250 per sq. ft. The Assessing Officer has neither brought about the comparative figures in the locality nor had the matter been referred to the Valuation Cell to arrive at the value thereof. It is concluded that in this case the revenue has not cogently proved that estimated sale price is the actual sale consideration. Reliance has been placed by the lower authorities on letters which are contradicted by the actual sale deed executed. The books and records have not been rejected; rather for one project, the amount recorded in the books has been made by the Commissioner of Income-tax (Appeals) as the basis to delete the same esti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received by the owner of the land only. The assessee constructed residential building consisting of flats on the ground, first, second and third floors on the said plots, even though it was allowed to construct the flats on the ground and first floors only. The Assessing Officer noted that in letters to some of the prospective buyers the rate has been mentioned at Rs. 1,250 per sq. ft. One of the buyers Shri Srinivas Gopal an of the ground floor flat of the Plot No. 13 was found by the Assessing Officer to have mentioned to bank for obtaining loan that, amount paid was at the rate of Rs. 1,250 per sq. ft. to the assessee and as per Assessing Officer, because the assessee did not cooperate in the enquiry at the time of original assessment, the Assessing Officer adopted the aforesaid rate of Rs. 1,250 per sq. ft. for all the flats sold during the year, in both the buildings. The Assessing Officer calculated the sale receipts of the year and determined the unaccounted receipts at Rs. 39,30,448. 4. Upon assessee's appeal, the learned CIT(A) noted that before considering as to whether there was any unaccounted consideration in respect of flats other than the one sold to Shri Srinivas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer, which is not in accordance with any rules of evidence or jurisprudence. 7. Subsequently, the learned CIT(A) considered the assessee's plea that flats on first, second and third floor would fetch a lower price than a flat on ground floor in view of commercial potential of the ground floor flats and also the non-availability of the facility of lift in the building, could not be countered by the Assessing Officer. To strengthen the argument of upper floor flats fetching lower sale consideration, it was argued by the Authorised Representative that the second and third floor flats of the building were unapproved constructions. Since those flats were unapproved constructions, it involved the risk of demolition by the municipal authorities and in any case they were liable to pay penalty/compounding fees to municipal authorities if they wanted to compound the violation of bye-laws. It was stated by the assessee that in all a total penalty of Rs. 3,25,000 had to be paid for the unapproved construction by the purchasers. 8. In this regard, the learned Commissioner of Income-tax (Appeals) held that, After considering all facts of the case, I am of the view that if disc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r not and the addition was made presuming that assessee sold the flats at the same rate at which he sold the flat where it was owner of the land." 11. We have heard the rival contentions and perused the relevant records. We find that except for some letters, the revenue has no evidence whatsoever to support the contention that flats were, sold at the rate of 1,250 per sq. ft. It is also noted that this is a case of assessment under section 143(3) and not a block assessment. The basic edifice of revenue's addition in this regard consist of letters of the assessee to prospective buyers and letter given by one of the customers to the bank. As regards the amount of Rs. 1,250 per sq. ft. mentioned in the letter, we find that the final agreement for sale was executed at a different amount duly signed by both the parties. The explanation for this is that these letters were prior to finalization and execution of written agreement and it is the finally executed sale deed which should prevail in this regard. As regards the letter and the agreement given by the customer to the bank, it is noted that the agreement attached with this letter is also not signed by the assessee. Though the lette ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e also found that the Assessing Officer did not conduct any independent enquiry relating to the value of the property purchased. He merely relied on the statement given by the seller. If he would have taken independent enquiry by referring the matter with the Valuation Officer, the controversy could have been avoided. Failing to refer the matter was a fatal one." 14. Considering the present case through the prism of aforesaid, we find that except making estimates on the basis of that letter, the revenue has not done anything cogent enough to buttress the claim that sale was actually made at Rs. 1,250 per sq. ft. The Assessing Officer has neither brought about the comparative figures in the locality nor had the matter been referred to the Valuation Cell to arrive at the value thereof. 15. As regards the relevance of the letter to bank, we find that Hon'ble jurisdictional High Court in the case of CIT v. N. Swamy [2000] 241 ITR 363 (Mad.) has held that, "The burden of showing that the assessee had undisclosed income is on the revenue. That burden cannot be said to be discharged by merely referring to the statement given by the assessee to a third party in connection with a tr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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