ACIT Vs Ankit Chirag Developers Pvt. Ltd. (ITAT Jodhpur)
The Income Tax Appellate Tribunal (ITAT), Jodhpur Bench, recently dismissed appeals filed by the Assistant Commissioner of Income Tax (ACIT) against Ankit Chirag Developers Pvt. Ltd. for the assessment years 2011-12 and 2012-13. The Tribunal upheld the decision of the Commissioner of Income Tax (Appeals) [CIT(A)] to delete an addition of Rs. 36,51,800/- made by the Assessing Officer (AO) on account of alleged understatement of sale consideration for flats. The ruling underscored the principle that additions cannot be based solely on uncorroborated loose papers or assumptions without concrete evidence.
Case Origin: Search, Seizure, and Initial Addition
The case originated from a search and seizure operation conducted under Section 132A of the Income Tax Act, 1961, at the business premises of Ankit Chirag Developers Pvt. Ltd., a real estate company, and the residential premises of its directors on March 10, 2010. During this operation, certain loose papers (pages 8 to 10 of Annexure AS, Exhibit-4) were seized from the assessee’s office.
The Assessing Officer, interpreting calculations found on these loose papers, inferred an understatement of sale consideration for three flats sold during the assessment year 2011-12. The AO confronted Shri Ankit Jain, who handled sales and marketing for the assessee, and recorded his statement under Section 131 on April 21, 2010. Despite Shri Ankit Jain’s explanations, the AO estimated the total sale consideration of the three flats at Rs. 79,96,800/- (at Rs. 26,65,600/- per flat) against the Rs. 43,45,000/- declared by the assessee in its books (Rs. 14,00,000/-, Rs. 15,45,000/-, and Rs. 14,00,000/- respectively). This led to an addition of Rs. 36,51,800/- as understatement of sales.
