2025 (9) TMI 81 - AT - Income Tax

Addition under s.43CA sustained where flat sold below stamp-duty value; taxpayer failed to contest valuation or produce evidence

Mukesh Vasantkumar Chandan Versus ITO 20 (2) (1) 2nd Floor, Piramal Chambers

Mukesh Vasantkumar Chandan Versus ITO 20 (2) (1) 2nd Floor, Piramal Chambers - TMI ISSUES PRESENTED AND CONSIDERED 1. Whether addition of a difference between consideration declared in sale deed and government stamp duty value can be brought to tax under section 43CA of the Income-Tax Act where the assessee fails to produce evidence to rebut the stamp valuation. 2. Whether additions made under section 41(1) and ad-hoc disallowance under presumptive section 44AD, which were partly disallowed by the CIT(A), remain live issues before the Tribunal. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Applicability of section 43CA where sale consideration is less than stamp duty valuation Legal framework: Section 43CA treats the value adopted or assessed by the stamp valuation authority as the full value of consideration for transfer of capital assets where the consideration recorded in the transfer instrument is less than the stamp duty valuation, making the stamp valuation prima facie taxable unless the assessee adduces evidence to the contrary. Precedent Treatment: The judgment contains no reference to or reliance upon prior judicial precedents; the Tribunal proceeded on statutory scheme and facts on record. Interpretation and reasoning: The Tribunal noted that the assessee sold a flat for the consideration shown in the sale deed (lower figure) while the government stamp duty valuation adopted a higher value; the assessing officer made an addition equal to the difference under section 43CA. The CIT(A) confirmed that addition after observing the assessee had not produced any evidence of proceedings before the stamp valuation authority or other material to rebut the stamp duty valuation. The assessee did not appear before the Tribunal to substantiate any contrary case. Given absence of documentary evidence or successful challenge to the stamp valuation, the Tribunal found no infirmity in treating the stamp duty valuation as the full value of consideration under section 43CA and upheld the addition. Ratio vs. Obiter: Ratio - Where the consideration recorded in the transfer instrument is less than the stamp duty valuation and the assessee fails to produce evidence or challenge the valuation, the assessing authority is entitled to adopt the stamp duty valuation as full value of consideration under section 43CA and make a corresponding addition to income. Obiter - No broader pronouncements were made about evidentiary standards for contesting stamp duty valuations beyond the factual observation that absence of any evidence or appeal weighed against the assessee. Conclusions: The addition under section 43CA of the difference between stamp duty valuation and declared sale consideration is sustainable in the absence of evidence from the assessee contesting the stamp valuation; the Tribunal dismissed the appeal on this ground and affirmed the addition. Issue 2 - Status of grounds relating to section 41(1) and section 44AD additions Legal framework: Section 41(1) deals with income previously allowed but subsequently recovered and its treatment; section 44AD prescribes presumptive taxable income for eligible businesses and related presumptive additions or disallowances where applicable. Precedent Treatment: The Tribunal did not analyze legal precedent on sections 41(1) or 44AD because those issues had been resolved in favour of the assessee by the CIT(A) and thus were not contested further before the Tribunal. Interpretation and reasoning: The Tribunal observed that CIT(A) had already granted relief to the assessee in respect of the additions made under section 41(1) and the ad-hoc disallowance under section 44AD; as those grounds were no longer live, the Tribunal treated them as misconceived or infructuous for present proceedings and did not adjudicate them on merits. Ratio vs. Obiter: Ratio - When an appellate authority has granted relief on particular grounds and the appellant does not pursue meaningful contestation at the subsequent level (including non-appearance), those grounds may be treated as disposed and need not be remitted for fresh adjudication. Obiter - The decision does not address substantive applicability of sections 41(1) or 44AD to the facts beyond noting the prior relief. Conclusions: Grounds contesting additions under sections 41(1) and 44AD were dismissed as misconceived/infructuous because CIT(A) had already allowed relief; the Tribunal did not disturb that relief and confined adjudication to the section 43CA issue. Cross-references and Procedural Observations The Tribunal emphasized the procedural consequence of the assessee's failure to furnish evidence before the assessing officer, CIT(A), and the Tribunal, and noted multiple adjournment requests and ultimate non-appearance; this absence of prosecution contributed to the upholding of the section 43CA addition. The Tribunal relied on the statutory mechanism in section 43CA as applied to the undisputed stamp duty valuation and the lack of contrary material from the assessee.