Laxmichand Jagshi Vora vs Commissioner of Income Tax and Others

J.P. Devadhar, J.—The petitioner is aggrieved by the order passed by the CIT on 28th Feb., 2012 under s. 264 of the IT Act, 1961 (for the short ''Act'') whereby the revision application filed in connection with an addition made in the assessment order under s. 143(3) dt. 27th Dec., 2010 has been rejected. The assessment year involved herein is asst. yr. 2008-09.

For the assessment year in question, the return of income was filed by the assessee declaring total income of Rs. 99,489 on which tax paid was nil.

In the scrutiny assessment proceedings for the asst. yr. 2008-09 pursuant to a query raised by the AO, the assessee by his letter dt. 10th Dec., 2010 specifically informed the AO that no immovable property was sold or purchased during the assessment year in question. When confronted with the information received from the office of the Sub-Registrar, Thane, the assessee by its letter dt. 23rd Dec, 2010 admitted to have purchased flat No. A46 by paying cash amount of Rs. 9,74,775. By the said letter, the assessee offered to pay tax on the entire cash amount of Rs. 9,74,775 paid to the developer and also agreed to pay tax on the amount of the stamp duty and the registration charges paid thereon. In accordance with the above statement, the assessment order was passed on 27th Dec, 2010 and after initiating penalty proceedings, penalty under s. 271(1)(c) of the Act was imposed by order dt. 22nd June, 2011.

On 3rd Oct., 2011, the assessee filed an application under s. 264 of the Act by stating that the addition of Rs. 9,74,775 was not justified as that amount was not paid to the builder in the asst. yr. 2008-09, but was paid to the builder during the period from 22nd May, 1994 to 4th May, 2008. Since, the documentary evidence to that effect could not be traced out at the relevant time and the same is now traced out, the assessee requested the CIT to reduce the addition of Rs. 9,74,775 which was added in the assessment order for asst. yr. 2008-09.

By the impugned order, the CIT has rejected the application. Hence, the present writ petition.

The grievance of the assessee is that since the evidence regarding the payment of Rs. 9,74,775 in the earlier years was not readily available, the assessee had erroneously stated that the said amount was paid in cash in the assessment year in question. As the documents now traced out clearly establish that the statement made by the assessee in his letter addressed to the AO was erroneous, the CIT ought to have allowed the revision application filed by the assessee. According to the petitioner, the flat No. A46 was allotted to him in lieu of payments made by him during the period from 1994 to 2008 in respect of flat No. B92 and therefore, the addition of the said amount asst. yr. 2008-09 is unjustified.

We see no merits in the above contention. From the order of the CIT, it is seen that there is total inconsistency in the stand of the assessee at every stage. Initially, when asked as to whether any immovable property was purchased or sold in the asst. yr. 2008-09, the assessee by his letter dt, 10th Dec., 2010 denied to have purchased or sold any immovable property in the assessment year in question. When confronted with a copy of the agreement dt. 7th March, 2008 received from the office of the Sub-Registrar, Thane, the assessee came round and by its letter dt. 23rd Dec, 2010 voluntarily offered to pay tax on the amount of Rs. 9,74,775 paid in cash to the builder as also the stamp duty and registration charges borne by the assessee. Accordingly, the assessment order was passed.

The contention of the assessee that the payments in question were made to the builder not in the asst. yr. 2008-09, but in the earlier years has been rightly rejected by the CIT because, firstly, the payments made in the earlier years if any related to purchase of flat No. B92 on the 9th floor and not in respect of flat No. A46 on the 4th floor. If the amounts paid on 7th March, 2008 were in fact paid in the earlier years, the same would have found place in the agreement dt. 7th March, 2008. It is relevant to note that on 4th March, 2008 (page 62 of the petition) the assessee claims that there was corrigendum letter issued by the builder to the effect that flat No. A46 on the 4th floor is being allotted to the assessee, in lieu of flat No. B92 on the 9th floor as per the earlier allotment letter dt. 22nd May, 1994. If the corrigendum letter was issued on 4th March, 2008, then the same would have found place in the agreement, which was executed on 7th March, 2008. In the absence of any indication in the agreement dt. 7th March, 2008 to the effect that the payments made prior to the asst. yr. 2008-09 is the consideration paid for the Flat No. A46, it is impossible to accept oral contention of the assessee which is contrary to the document on record. Moreover, if the corrigendum letter was in fact issued by the builder 4th March, 2008 to the effect that flat No. A46 was issued in lieu of flat No. B92, the assessee would not have admitted by his letter dt. 23rd Dec., 2010 that the consideration for flat No. A46 under agreement dt. 7th March, 2008 was paid in cash and offer that amount to tax. In view of the categorical admission on the part of the assessee that the amounts of Rs. 9,74,775 were paid in cash, in our opinion, the entire case sought to be made out by the assessee is only an afterthought and therefore, no fault can be found in the order of the CIT in rejecting the revision application of the assessee.

Counsel for the petitioner-assessee strongly relied upon the judgment of the Gujarat High Court in the case of C. Parikh and Co. Vs. Commissioner of Income Tax, Baroda, . In our opinion, the said judgment has no relevance to the facts of the present case. In that case, admittedly over-assessment was made due to the assesee''s mistake and accordingly it was held that the CIT was empowered to grant relief. In the present case, facts on record suggest that the claim now made is contrary to the facts on record and clearly an afterthought. Hence, the decision of the Gujarat High Court in the case of C. Parikh & Co. (supra) is distinguishable on facts.

Strong reliance was also placed by counsel for the assessee on the decision of the Kerala High Court, in the case of Parekh Brothers Vs. Commissioner of Income Tax and Others, . In that case, deduction was not claimed during the assessment proceeding or appeals therefrom. In such a case, when an application was made under s. 264 of the Act, it was held that the CIT ought to have considered the claim of the assessee. In our opinion, the said decision has no bearing on the facts of the present case, as the documents now sought to be produced before the CIT do not in anyway support the case of the assessee that the agreement dt. 7th March, 2008 related to purchase of flat No. A46 in lieu of flat No. B92 which the assessee had agreed to purchase in the year 1994. Accordingly, the decision of the Kerala High Court is distinguishable on facts. For the aforesaid reasons, we see no merits in the writ petition and the same is hereby dismissed.