ACIT Vs Dianco (ITAT Surat)
ITAT Surat held that addition under section 56(2)(x) on the Income Tax Act unsustainable as addition made in casual manner without considering payment made on account of various amenities.
Facts- The assessee is a firm, engaged in the business of buying and selling real estate properties. The assessee filed its return of income declaring NIL income. The case was selected for scrutiny. During the assessment, AO noted that the assessee has purchased two flats. AO on the basis of area of flats worked out the cost and was of the view that the assessee has made excess payment against both the flats and worked out the difference of the alleged excess payment of Rs. 85,72,204/-. AO further noted that at the time of execution of transfer deed, there was a difference in the value adopted by Stamp Valuation Officer and the value declared by the assessee with regard to both the flats.
CIT(A) allowed the appeal. Being aggrieved, revenue has preferred the present appeal.
Conclusion- Held that the Assessing Officer has not gone into such basic details and made addition in a casual manner without understanding the nature whether such addition could really be made and deleted the addition. We find that the ld. CIT(A) appreciated the facts of the case in a proper perspective. The Assessing Officer while making the addition has not considered the payments made on account of various amenities like electricity connection, water connection, common facilities of various amenities provider by the builder/developer.
FULL TEXT OF THE ORDER OF ITAT SURAT
1. This appeal by the Revenue is directed against the order of learned Commissioner of Income Tax (Appeals)-4, Surat (in short, the ld. CIT(A)) dated 20/05/2022 for the Assessment Year (AY) 2018-19. The Revenue has raised following grounds of appeal:
“(i) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.85,72,204/- made by the Assessing Officer on account of inflated cost of properties purchased by observing that the addition was made totally on wrong footing and the same was not warranted by adopting the basic price and without considering the extra amounts for water connection, electricity connection, society charges, etc., ignoring the fact that the value of property was fixed as per the allotment and the assessee has not furnished any details or evidences to substantiate the extra charges incurred/inflated cost.
(ii) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.2,61,47,515/- made by the Assessing Officer under Sec.56(2)(x) of the Act without appreciating the fact that the agreement for sale was entered only on 31st March 2017 for both the properties and hence the valuation as on the said date is applicable.
(iii) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs.2,61,47,515/- made by the Assessing Officer under Sec.56(2)(x) of the Act without appreciating the fact that mere an application for booking dated 23rd May, 2011 cannot be treated as “agreement fixing the amount of consideration for the transfer of immovable property.” which has no legal sanctity or cannot be enforced by law.
(iv) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in taking contradictory views while deleting the addition made by the Assessing Officer of Rs.85,72,204/- on account of inflated cost of properties and also addition of Rs.2,61,45,515/- under Sec.56(2)(x) of the Act in respect of the same properties, without appreciating the overall facts of the case, and on one hand by considering the value @ Rs.11,000/- per Sq. Ft. adopted by the AO for making the addition of Rs.85,72,204/- as inappropriate and on the other hand, taking the jantri value of Rs. 11,036/- per Sq. Ft. for giving relief for addition made of Rs.2,61,45,515/-.
(v) It is, therefore, prayed that the order the Ld. CIT(A)-4, Surat may be set aside and that of the AO may be restored to the above extent.
(vi) The appellant craves leave to add, alter, amend and/or withdraw any ground(s) of appeal either before or during the course of hearing of the appeal.”
2. Brief facts of the case are that the assessee is a firm, engaged in the business of buying and selling of real estate properties. The assessee filed its return of income for A.Y. 2018-19 on 24/09/2018 declaring NIL income. The case was selected for scrutiny. During the assessment, the Assessing Officer noted that the assessee has purchased two flats i.e. flat No. 103 and 307 in Sunstone Project at Shastri Nagar, Bandra (E), Mumbai. The Assessing Officer asked certain details about such flats i.e. area, date of purchase, rate of purchase and other details. The assessee filed its reply dated 22/03/2021 and submitted that they have made booking @ Rs. 11,000/- per square feet in May 2011. The Assessing Officer on the basis of area of flats worked out the cost and was of the view that the assessee has made excess payment against both the flats in the following manner:
