Addition under s.43CA upheld for flats sold below stamp value; prior booking without non-cash payment gives no relief

ITAT Jaipur upheld the addition under s.43CA on the differential between the declared sale consideration and stamp duty valuation for three flats sold below circle rate. The assessee argued that prior booking/agreements made before 01.04.2013 excluded the transactions from s.43CA. The Tribunal held that under s.43CA(3)-(4), the benefit of a prior agreement arises only where consideration is received at the time of agreement other than in cash and transfer is recognized on execution of a registered sale deed. As the sale deeds were executed after 01.04.2013 and full consideration was not received through account payee cheque at agreement stage, s.43CA applied and the addition was confirmed.

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Issues Involved:
Challenging addition under section 43CA of the Income Tax Act, 1961.

Analysis:
1. The appeal was filed against the order of CIT(A) confirming the addition made by the AO under section 43CA. The assessee contended that the agreement for sale of flats was entered into before the introduction of section 43CA, thus the provision should not apply. However, the AO and CIT(A) disagreed, leading to the appeal before ITAT.

2. The assessee argued that the sale consideration was decided before the introduction of section 43CA, and the sale deeds were executed after. The assessee relied on judicial pronouncements and contended that the provision should have a prospective effect, and the addition made by the AO should be deleted. Various judgments were cited to support this argument.

3. The Department, on the other hand, argued that the sale deed occurred after the introduction of section 43CA, justifying the addition. The ITAT considered both parties' contentions and examined the facts of the case, where the assessee sold three flats below the Fair Market Value. The ITAT noted that the sale deeds were registered during the relevant year, and the assessee failed to establish that the consideration was received before the introduction of section 43CA.

4. The ITAT analyzed the provisions of section 43CA, which deem the value adopted for stamp duty as the full consideration if it is less than the actual consideration. The ITAT observed that the legislature provided a remedy when the agreement precedes the sale deed. The ITAT upheld the applicability of section 43CA in the present case, emphasizing that the transfer through sale deed occurred during the relevant assessment year.

5. Referring to a previous case involving the same assessee, the ITAT concluded that the facts and circumstances did not warrant the deletion of the addition made under section 43CA. Consequently, the appeal of the assessee was dismissed, and the ITAT upheld the orders of the lower authorities.

In conclusion, the ITAT affirmed the addition under section 43CA, emphasizing the importance of the date of the sale deed for determining the applicability of the provision, despite the prior agreement. The judgment highlighted the legislative intent behind section 43CA and the need to comply with its provisions based on the timing of the actual transfer through a registered document.

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