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ITO, Ward 11 (2) , New Delhi Versus M/s. Express Towers Pvt. Ltd.,

2016 (1) TMI 305 - ITAT DELHI

Addition as unrecorded profit on sale of flats - AO made the addition on the ground that assessee had sold flats to different parties at different rates - CIT(A) deleted the addition - Held that:- CIT (A) has rightly observed that as per contents of sale document, there was reference to sale of fully furnished flat to Dr. Rajnish Juneja, but in the case of other parties, there was specific reference to sale of flat in semi-finished condition and as such, the flat in the case of Dr. Rajnish Junej .....

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s no material in the possession of AO to support the allegation of unrecorded profit in the hands of the assessee and the Ld. DR could not controvert the said fact before us which is material to decide this issue.

Further, the ld. CIT (A) has recorded a finding of fact that as per the sale deed, the assessee has disclosed full value of sale consideration and the said fact also could not be controverted by the Ld. DR before us, as such, we agree with the Ld. CIT(A) that there was no fa .....

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sessee : Shri R.S. Singhvi, CA For The Revenue : Shri Hemant Gupta, Senior DR ORDER PER A.T. VARKEY, JUDICIAL MEMBER : This appeal, at the instance of the revenue, is directed against the order of the Commissioner of Income-tax (Appeals)-XIII, New Delhi dated 04.05.2012 for the assessment year 2006-07. 2. The assessee company is engaged in the business of building construction. During the year, the assessee declared a turnover of ₹ 46.50 lakhs and shown a net profit of ₹ 1.46 lakhs. .....

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eement, the basement and ground floor was to be given to Shri Arun Kumar whereas the title of 1st, 2nd and 3rd floor of the property would be with the assessee. It was submitted that during the year under consideration, the assessee sold 1st and 2nd floor of the said property to the following persons for a total consideration of ₹ 46,50,000/- : (i) Shri Jagmohan Singh ₹ 7,50,000/- (ii) Ms. Kailash Wanti ₹ 8,00,000/- (iii) Shri Jaswant Singh ₹ 9,00,000/- (iv) Shri Rajnish .....

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road; some alterations were carried out in the flat as per customer s requirement; and the work of fixing Italian Marble, cupboard and all fittings was got done as desired by the customer. After going through the submissions made by the assessee, the AO was not agreement to the arguments advanced by the assessee for justifying the different prices charged for similar properties in the same building. He further observed that no evidences were produced to substantiate the contentions raised by the .....

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ty sold to Shri Rajnish Juneja for ₹ 22 lakhs as the rate for valuation of the other properties sold by the assessee during the year and thus, the AO held that the total consideration receivable for the report sales was ₹ 88 lakhs. Thus, he made addition of ₹ 41,50,000/- (Rs.88,00,000/- minus ₹ 46,50,000/- = ₹ 41,50,000/-) as the difference amount brought to tax as unreported profits as the assessee had not furnished any compelling reasons for transacting its busine .....

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and restored back the matter to the file of Assessing Officer with a direction to the assessee to furnish the statement of accounts with respect to cost incurred in respect to each flat and additional work undertaken, if any. 3. In the second round of appeal, in the light of the direction of the Tribunal the Assessing Officer passed consequential order u/s 254 r.w.s 143(3) dated 21.09.2011 and again reconfirmed the addition made in the original assessment on the ground that the assessee has not .....

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e was drawn on the ground that in the same complex, appellant had sold flats to different parties at different rates. It was observed by the Assessing Officer that flat sold to Dr. Rajnish Juneja was sold at ₹ 22 lacs and to other parties the flats were sold at ₹ 7,50,000/- to ₹ 9,00,000/- and accordingly Assessing Officer applied the sale price relating to Dr. Rajnish Juneja in the case of sales made to other parties. The submission of the appellant is that the Assessing Offic .....

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sing Officer. In support of the above position, the appellant has furnished various documents in the paper book filed before me, which are as under :- S.NO. PARTICULARS PAGE NO. 1. Copies of sales deed of flats 8 - 30 2. Copy of letter filed before assessing officer dated 18112/08 31 3. Details of Extra work carried out in the flats sold to Dr. Juneja 32 4. Copy of letter of Dr. Juneja for carrying out extra work 33 It was submitted that all these documents were furnished during the course of or .....

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re is reference to sale of fully furnished flat in case of Dr. Rajnish Juneja, but in case of other parties, there is specific reference to sale of flat in semi finished condition and as such the facts in case of Dr. Rajnish Juneja and other parties are not comparable. It is seen that the Assessing Officer has not made any verification or enquiry with the parties to whom flats were sold from ₹ 7,50,000/- to ₹ 9,00,000/- and no information has been brought on record that the appellant .....

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any notional or hypothetical sale consideration in the absence of any specific evidence or material in the possession of the Assessing Officer. In fact, the tribunal has also directed the Assessing Officer to verify the fact of additional cost incurred in respect of sale of flat to Dr. Rajnish Juneja. In the light of corroborative evidences placed on record in support of additional cost incurred by the appellant, which is supported by the sale deed made with Dr. Juneja and the letter filed by D .....

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ile of the AO, the Tribunal vide order dated 25.02.2010 had directed the assessee to furnish the statement of account with respect to cost incurred with respect to each flat, however, the assessee did not comply with the said direction and did not furnish any supporting documents/evidences during reassessment proceedings despite issue of several notices by the AO. He further submitted that the ld. CIT (A) was not right in admitting the fresh evidences under Rule 46A of the Act without giving opp .....

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e AO reconfirmed the original assessment on the same basis and the AO has not undertaken any exercise as directed by the Tribunal even though all the relevant documents were on record. He submitted that the assessee sold 4 (four) flats for a total sales consideration of ₹ 46,50,000/- to four different persons (details already mentioned above) and the AO adopted value of the property sold to Dr. Rajnish Juneja as the basis for valuation of other properties sold during the year and addition .....

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ed to be adopted in the absence of any evidence for undisclosed or underhand consideration and the legal position to this effect is well settled. He further submitted that even otherwise, facts and basis of sale value was different in the case of Dr. Rajnish Juneja and other parties and this position was self evident from registered sale deed itself. He submitted that all these relevant documents were already on record. He further submitted that there were numerous alterations/extra work were ma .....

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0/-were given by the assessee which were reproduced at page 6 of CIT (A) s order. It was submitted by the Ld. AR that the Assessing Officer had not disputed that these modifications were carried out at the specific request of the party and receipt and expenses were duly recorded and accounted for in the books of account of the assessee. The ld. AR further submitted that the Assessing Officer had not brought any evidence to claim that the assessee had received any underhand sale consideration and .....

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the only issue in dispute is regarding addition of ₹ 41,50,000/- as unrecorded profit on sale of flats and the AO made the addition on the ground that assessee had sold flats to different parties at different rates. We find that the Assessing Officer observed that flat was sold to Dr. Rajnish Juneja at ₹ 22 lacs and to other parties the flats were sold at ₹ 7,50,000/- to ₹ 9,00,000/- and accordingly, Assessing Officer applied the sale price relating to Dr. Rajnish Juneja .....

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cific request of Dr. Rajnish Juneja : S.NO. PARTICULARS PAGE NO. 1. Copies of sales deed of flats 8 - 30 2. Copy of letter filed before assessing officer dated 18112/08 31 3. Details of Extra work carried out in the flats sold to Dr. Juneja 32 4. Copy of letter of Dr. Juneja for carrying out extra work 33 We find that the ld. CIT (A) observed that these documents were furnished before the AO during the original assessment, however, the Assessing Officer has not properly appreciated these facts a .....

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he AO has not made any verification or enquiry with the parties to whom flats were sold from ₹ 7,50,000/- to ₹ 9,00,000/- and no information has been brought on record that the assessee has taken any extra sale considerations from these parties which was not recorded in the books of the assessee. We further take note of the fact that the ld. CIT (A) has recorded a finding of fact that there was no material in the possession of AO to support the allegation of unrecorded profit in the .....

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