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TMI Blog2009 (12) TMI 714X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of undervaluation of sale price of the property based on rent capitalisation method." The assessee is engaged in the business of real estate, i.e., as builders/ estate and property developer. The assessee filed a return of income declaring income of Rs. 19,43,380. The Assessing Officer noted that the assessee was owning one property as its stock-in-trade, which was sold for a sum of Rs. 100 lakhs. The said property was purchased on October 30, 2003, for a sum of Rs. 80 lakhs. The purchase price and other expenses incurred for acquiring this property were worked out at Rs. 96,65,300. The property was given on rent to M/s. Joy International Management Academy P. Ltd. for a monthly rent of Rs. 2 lakhs with effect from August 1, 2004. Lat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... substitute the fair market value of the property for the actual consideration received by the assessee. Reliance was placed on several courts' decisions including that of the hon'ble Delhi High Court in the case of CIT v. Smt. Nilofer I. Singh [2009] 309 ITR 233. The learned Commissioner of Income-tax (Appeals) held that even if the Assessing Officer had an apprehension that the property was undervalued, there is no evidence or supporting circumstances based on other similar transaction or incriminating evidence of "on money" which could support the estimation for actual receipts arrived at by the Assessing Officer. Merely on suspicion and by applying the rent capitalisation method, it cannot be upheld that the actual sale consideration re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd above the said sale price. Reference is invited to paragraphs 3.8 and 3.9 of the assessment order. The Assessing Officer has referred to the decision of the Delhi Bench of the Income-tax Appellate Tribunal in the case of Hanemp Proper- ties P. Ltd. v. Asst. CIT [2006] 285 ITR (AT) 26 ; [2006] 101 ITD 19 in support. The Commissioner of Income-tax (Appeals) did not accept the version of the Assessing Officer holding that there is no provision for making a reference to the Departmental Valuation Officer for arriving at the sale proceeds of stock-in-trade. When a remand report was sought from the Assessing Officer as regards the applicability of section 69 or 69B application of which is a condition precedent to section 142A it is stated th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... executed by it. There is no provision in section 28 to substitute the accrued consideration for market value of such consideration. The Assessing Officer has simply applied the Wealth-tax Rules for valuing the property but has neither examined the purchaser nor has independently found out whether the assessee has received any consideration over and above the stated consideration. Except the suspicion or an opinion that the property is undervalued, no material is available to the Assessing Officer to presume that any "on money" was received by the assessee or that anything over and above the stated consideration accrued to the assessee. Where the asset sold by the assessee is a capital asset, the income from which is chargeable as capital g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee can be taxed under section 28 of the Act. Since there is no finding that the consideration received by the assessee on sale of stock-in-trade is over and above the stated consideration, the Assessing Officer is not justified in making any addition by estimating the fair market value. The issue is no more res integra. The sanctity of the sale price vis-a-vis its fair market value is covered in favour of the assessee by the following decisions: (1) CIT v. Gulshan Kumar (Decd.) [2002] 257 ITR 703 (Delhi) ; (2) CIT v. Ms. Sushila Mittal [2001] 250 ITR 531 (Delhi) ; (3) Dev Kumar Jain v. ITO [2009] 309 ITR 240 (Delhi) ; and (4) CIT v. Smt. Nilofer I. Singh [2009] 309 ITR 233 (Delhi). The decision of Hanemp Properties P. Ltd. v. Asst. CI ..... X X X X Extracts X X X X X X X X Extracts X X X X
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