INCOME TAX ACT, 1961

Section 143(3)

Assessment - Additions to income - AO made addition on account of net of understatement of sale consideration as well as understatement of expenditure under collaboration agreement - No cogent material bought by AO

Assessee entered collaboration agreement with 'S' for developing residential flats. As per AO there was wide variation between the sale price of the flat shown by assessee and what was prevalent in market. Accordingly, AO made addition on account of net of understatement of sale considration as well as understatement of expenditure under collaboration agreement.Held: Addition has been made by AO on the basis of mere presumptions. Market value of flat determined by the AO was without any evidence. The cost of construction was determined by without any evidence. AO had not supported his order with any evidence of incurring expenditure by assessee. He did not also tak expert opinion of departmental valuer, if he had any doubt about actual cost of construction incurred by assessee. AO has also not made any enquiry with the buyers of flats about price paid by them. Further, AO did not submit what kind of enquiry he had made with real estate dealers of that area. He also did not deal with what kind of enquiry the inspector deputed has conducted. Obviously inspector deputed could not have given value of flat sold as he had not an expert. In view of all these facts, and in absence of any material with respect to unaccounted expenditure or any on money received by assessee on sale of flats. Further, the assessee supported the cost of construction with the registered valuers report, no addition could be sustained.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2012-13

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