TaxTMI 
TaxTMI 
2024 (2) TMI 831
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.... considering the value for the purpose of stamp duty at Rs. 2,77,87,868/- as sale consideration against the actual sale consideration of Rs. 1,51,00,000/- and ignoring the 90% payment made by the seller within 4-5 days of agreement dated 10.09.2008 prior to registration date of 21.03.2014. 2. Under the fact and circumstances of the case the Learned CIT(A) has erred in applying the provisions of section 43CA(1) of the Income Tax Act, 1961 ignoring the proviso to section 43CA(3) and 43CA(4) of the Income Tax Act, 1961. 3. The appellant begs permission to add amend or alter any of the grounds of appeal before the hearing of appeal." 2.1 In ITA No. 752/JP/2023, the assessee has taken following additional grounds; Additional Ground No.1 On the facts and in the circumstances of the case and in law, the Learned CIT(A) has erred in dismissing the appeal of the assessee without considering the detailed submission made before him on 19/11/2021. Additional Ground No.2 On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in sustaining the addition of Rs. 1,26,87,868/- made under section 43CA of the I....
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....e assessee has declared total revenue from operation of Rs. 1,51,00,000/-. Apart from it the assessee has shown other income of Rs. 48,58,057/-. The assessee has declared total revenue receipt from the sale of property to Shri Rajendra Kumar Kedia. Perusal of sale deed, the ld. AO noted that the sub-registrar has adopted the sale consideration of property sold at Rs. 2,77,87,868/-. However, the assessee has shown sale consideration of property at Rs. 1,51,00,000/-. The assessee was asked to furnish the justification of sales consideration less than the value adopted by the Sub-Registrar. The assessee has submitted written reply stating that "assessee is engaged in the business of construction and real estate and the immovable property sold by the assessee is its stock in trade and not capital asset (thus, section 50C is not applicable)". The assessee has sold the property in question for a value below the value assessed for stamp duty. The agreement as well as the consideration for the property has been done/ received in the preceding year by banking mode (major payment). The immovable asset being held as stock in trade, section 43CA was not applicable considering the fact that the....
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..... 2,77,87,868/- based on valuation by the stamp authority is correct. Thus, the addition of Rs. 1,26,87,868/- is made to the total income of the assessee u/s 43CA is upheld. The ground of the appellant is dismissed." 5. As the assessee has not received any relief from the first appellate authority, the assessee prefers the present appeal on the grounds so raised and reiterated herein above. In support of the various grounds so raised the ld. AR appearing on behalf of the assessee has placed their written submission which is extracted in below; "The assessee is a private limited company engaged in the business of real estate. The assessee filed return declaring total income of Rs. 16,08,560/- for assessment year 2014-15 on 30/09/2014. The case was selected for limited scrutiny under CASS. The assessment stands completed on total income of Rs. 1,42,96,430/-, vide order u/s 143(3) dated 31/10/2016, by making an addition of Rs. 1,26,87,868 under section 43 CA of the Income Tax Act, 1961, being the difference in the value/sale consideration of the of property as shown by the assessee at Rs. 1,51,00,000/- and value adopted by the Sub- Registrar for stamp duty purposes at Rs. ....
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....Valuation Authority. However, the Learned Assessing Officer did not accept the submissions of the assessee, nor the case was referred the matter of valuation to the Valuation Cell of the Department in view of the provisions of Sec. 43 CA(2) read with section 50C(2)(a) of the IT Act,1961. The Learned Assessing Officer had straight way made an addition of Rs. 1,26,87,868/- (Rs.2,77,87868 - 15100000) u/s 43CA of the Income Tax Act,1961. No effective opportunity was granted to the assessee for putting the defense. Further the Learned Assessing Officer has also not followed the statutory procedure laid down u/s 43CA of the Income Tax Act, 1961. Against the assessment order, the assessee preferred appeal before the ld CIT(A). The learned CIT(A), NFAC, vide order appellate order dated 06/12/2023, dismissed the appeal of the assessee, without even considering the detailed submissions filed online by the assessee on 19.11.2021. Aggrieved with the order of the Learned CIT(A), the assessee has filed appeal before the Hon'ble Tribunal. The assessee, while filing of appeal before the Hon'ble Tribunal , due to inadvertence, could not take grounds of appeal which go to t....
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....Having not done this, the order passed by the Learned CIT(A) is in violation of the principles of natural justice and, therefore, the same deserves to be quashed. The following case-laws are quoted in support :- (1) Kishan Lal v. UOI [1998] 97 Taxman 556 (SC) A speaking order reduces arbitrariness. A reasoned order speaks for itself. It embodies in itself the principles of natural justice. (2) ACCT Contract and Leasing Quota v. Shukla & Bros. [2010] (4) JT 35 (SC) It shall be obligatory on the part of the judicial or quasi-judicial authority to pass a reasoned order while exercising statutory jurisdiction. In the absence of a reasoned order, it would become a tool for harassment. (3) S. N. Mukherjee v. Union of India AIR 1990 SC 1984 "Keeping in view the expanding horizon of the principles of natural justice, we are of the opinion, that the requirement to record reason can be regarded as one of the principles of natural justice which govern exercise of power by administrative authorities" (4) Woolcombers of India Ltd. v. Woolcombers Workers' Union AIR 1973 SC 2758 "...The giving of reasons in support of their c....
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.... 2 1,34,90,000 Ch.No.141213 15/09/2008 ICICI Bank C Scheme, Jaipur 3 14,94,900 Ch.No.352562 19/03/2004 Vijaya Bank, Vidhyadhar Nagar, Jaipur 4. 15,100 Adjustment of TDS vide challanNo.48378 dated 20/03/2014 HDFC Bank Thus, the peculiar feature of the case is that 90% of the sale consideration was received within just five days of the agreement executed on 10/09/2008. Thus, it is clear that the agreement to sell was executed on 10/09/2008 whereas the provisions of Section 43CA have become effective from 01/04/2014, i.e. from assessment year 2014-15. The provisions of section 43 CA are quoted below :- "43CA (1) Where the consideration received or accruing as a result of the transfer by an assessee of an asset (other than a capital asset), being land or building or both, is less than the value adopted or assessed or assessable by any authority of a State Government for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessable shall, for the purposes of computing profits and gains from transfer of such asset, be deemed to be the full value of the consideration received or accr....
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....would not have anticipated or visualized the enactment of new provisions of Sec. 43 CA from assessment year 2014-15 while executing the agreement to sell on 10/09/2008. The plea of the assessee, therefore, is that the provisions of Sec. 43CA are not applicable in the facts and circumstances of the case and the Learned Assessing Officer has erred in making the impugned addition by invoking Sec. 43 CA. The Learned CIT(A) also erred in sustaining the impugned addition made by the Learned Assessing Officer without considering the facts of the case and detailed submission made by the assessee. The Hon'ble Tribunal is, therefore, requested to delete the addition made by the Learned Assessing Officer and sustained by the Learned CIT(A). The following case-laws are cited in support :- (1) M/s Reegal Construction Vs. ITO (ITAT,"A" Bench, Kolkata)ITA No.354/Kol/2023 Order dt. 13/07/2023 The Hon'ble ITAT by placing reliance on the decision of the Hon'ble High Court of Bombay in the case of PCIT vs. Swananda Properties (P) Ltd. [2019] 111 taxmann.com 94 (Bombay) allowed the appeal of the assessee holding that since the provisions to section 43CA have been introdu....
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.... were entered into prior to 31.03.2013. Further, this is assessees plea that difference is only 5% between the ready recokner rate and sale consideration. Hence, this is assessees plea that the same has to be ignored on the touchstone of ITAT, Mumbai decision in the case of Krishna Enterprises vs ITA No.2133/M/2019 5 ACIT. I am of the considered opinion that the asessees succeeds on both the counts. Hence, I set aside the orders of the authorities below and decide the issue in favour of the assessee. (5) Disha Construction Vs. JCIT 25(2),Mumbai ITAT, D Bench, Mumbai Date Order : 17/06/2021 The Hon'ble Tribunal observed that .."section 43CA cannot be made applicable to the facts of the present case. By the plain language of this provision it is not retrospective. Thus, there is no statutory provision based on which the stamp duty valuation could have been made a basis in the present case." The ratio of the aforesaid decisions are squarely applicable to the facts of the assessee's case. The assessee had entered into the sale agreement for sale of the immovable property for a consideration of Rs. 1,51,00,000/- on 10/09/2008, i.e. much earlier to enactmen....
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....ble to the case of the assessee as the sale agreement was executed on 10/09/2008, much before the enactment of provisions of Section 43CA w.e.f. 01/04/2014 and, therefore, the addition made by the Learned Assessing Officer deserves to be deleted. Apart from this submission, the assessee pleads that 90% of the sale consideration stood received by the assessee within five days of the date of agreement as stated supra. Remaining consideration was also received by the assessee before 31/3/2014. At the time of execution of the agreement, the assessee could not have visualized that a new enactment will become effective from 01/04/2014. It is further submitted that the Learned Assessing Officer has also failed to appreciate the fact that the provisions of Sec. 43CA are pari materia the provisions of Sec. 50 C of the Income Tax Act, 1961 except that the provisions of Sec. 50C applies to transfer of a capital asset being land or buildings or both whereas Sec. 43CA applies to transfer of an asset, other than capital asset, being land or building or both. The provisions of Section 43 CA applicable for the year under consideration are quoted below :- [Special provision for fu....
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....a result of such transfer. (2) Without prejudice to the provisions of sub-section (1), where- (a) the assessee claims before any Assessing Officer that the value adopted or assessed ^51[or assessable] by the stamp valuation authority under sub-section (1) exceeds the fair market value of the property as on the date of transfer; (b) the value so adopted or assessed ^51[or assessable] by the stamp valuation authority under sub-section (1) has not been disputed in any appeal or revision or no reference has been made before any other authority, court or the High Court, the Assessing Officer may refer the valuation of the capital asset to a Valuation Officer and where any such reference is made, the provisions of sub-sections (2), (3), (4), (5) and (6) of section 16A, clause (i) of sub-section (1) and sub-sections (6) and (7) of section 23A, sub-section (5) of section 24, section 34AA, section 35 and section 37 of the Wealth-tax Act, 1957 (27 of 1957), shall, with necessary modifications, apply in relation to such reference as they apply in relation to a reference made by the Assessing Officer under sub-section (1) of section 16A of that Act. ....
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....r passed by AO accepting stamp duty value without waiting for report of DVO is liable to be set aside-By virtue of the powers under s. 153(3)(ii) the AO is directed to proceed with the assessment of capital gain immediately after the valuation report is filed by the authority to whom the matter was referred by the respondent at the instance of the assessee (ii) Commissioner of Income Tax Vs. Chandni Bhuchar (High Court of Punjab & Haryana) (2010) 232 ITR 0510 In the absence of any admissible evidence valuation done stamp duty authorities could not be taken as actual sale consideration and the value shown in the sale deed had to be accepted. (b) There is infringement of right of the assessee on account of failure of the Learned Assessing Officer to refer the case to Valuation Cell During the course of assessment proceedings, the assessee, vide letter dated 29/08/2016, had submitted that the immovable property was sold below the stamp duty value adopted by the Stamp Valuation Authority. Therefore, in view of the provisions of Sec. 43 CA read with section 50C(2)(a) of the IT Act, 1961, the Assessing Officer was required to refer the matter of valuat....
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....s, have given an option to the assessee to have the valuation made by the departmental valuation officer contemplated under Section 50C. As a matter of course, in all such cases the assessing officer should give an option to the assessee to have the valuation made by the departmental valuation officer. 9. For the aforesaid reasons, we are of the opinion that the valuation by the departmental valuation officer, contemplated under Section 50C, is required to avoid miscarriage of justice. The legislature did not intend that the capital gain should be fixed merely on the basis of the valuation to be made by the District Sub Registrar for the purpose of stamp duty. The legislature has taken care to provide adequate machinery to give a fair treatment to the citizen/taxpayer. There is no reason why the machinery provided by the legislature should not be used and the benefit thereof should be refused. Even in a case where no such prayer is made by the learned advocate representing the assessee, who may not have been properly instructed in law, the assessing officer, discharging a quasi judicial function, has the bounden duty to act fairly and to give a fair treatment by giving him....
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....ed from higher stamp duty paid thereon. Higher stamp duty could have been paid for various reasons. In the absence of proof of under valuation, it is not possible to ignore sale price mentioned in sale deed which is accepted for computing market value. (ii) Mrs. Nirmal Laxminarayan Grover Versus Appropriate Authority & Ors Bombay High Court (Nagpur Bench) (1997) 223 ITR 0572 Purchase of immovable property - Fair market value - The test is of a prudent buyer and a prudent seller and the rates determined by the State Government for purpose of checking evasion of stamp duty are not a good guide. (iii) Commissioner of Gift Tax Vs. R Jawahar (High Court of Madras) 217 ITR 0059 Valuation for stamp duty purposes by the Sub-Registrar of properties cannot be the guiding factor for determining the value of gifted immovable property.... Tribunal holding that different between returned value of gift and the value of the Sub-Registrar's is not a deemed gift - Finding of Tribunal based on an earlier judgment and also on the fact that considered received by assessee was fair and reasonable - No referable question arises. (iv) Commissioner of Gift T....
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....om undisclosed sources-Unexplained investments-Purchase of agricultural land-Deletion of addition-Tribunal deleted addition made by AO on account of unexplained investment in purchase of agricultural land on basis of sale agreement and other documents found and impounded during course of survey u/s 133 in which sale consideration was specified amount- Held, while computing undisclosed income, rates of property fixed by Stamp Valuation Authority for purposes of registration of sale deeds, could not be taken to be price for which property was purchased-In absence of evidence on record, higher price for sale of land could not be presumed from consideration shown in registered sale deeds and rates of property fixed by Stamp Valuation Authority for registration purposes could not be taken to be price for which property might had been sold-There was no justification for AO to estimate selling price of land at Rs. 40 per sq.ft. instead of Rs. 20 per sq.ft. and for CIT(A) to presume selling price at 22 per sq.ft-Tribunal committed no error in allowing appeal of assessee-Revenue's appeal dismissed. The ratio of these decisions are squarely applicable to the facts of the case. In th....
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....t five days of the date of execution of the agreement on 10/09/2008, i.e. by 15/09/2008 through cheque. Though technically the assessee did not receive the part of consideration before the execution of agreement, but the same was received within five days. The delay of just five days is negligible. For all the intents and purposes, the spirit of the provisions of sub-section (3) & (4) of Sec. 403CA stands fulfilled. In these circumstances, the value of consideration should have been taken as on the date of agreement and not the value taken by the stamp valuation authority at the time of registration on 21/3/2014. The Learned Assessing Officer should have considered the spirit of the provision, particularly when the agreement was executed on 10/09/2008, much earlier to 01/04/2014, when the provisions of Section 43CA became effective from AY assessment year 2014-15. The registration was done almost five and half years later than the date of agreement whereas 90% of the consideration stood received within just five days of the agreement executed on 10/09/2008. When the facts of the case are taken in totality, the assessee is entitled to relief as provided u/s 43CA(3) & (4) of....
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....he Learned Assessing Officer and sustained by the Learned CIT(A). Ground No.3 The assessee begs permission to add, amend or alter all or any grounds of appeal before or at the time of hearing. The Hon'ble Tribunal is requested to consider the additional grounds taken above and also the submissions made and case-laws cited and decide the appeal in favour of the assessee and oblige." 6. The ld. AR of the assessee has also moved a petition raising the additional ground as the additional ground being technical in nature considering the specific following prayer of the assessee the same is accepted: "In this case, appeal for assessment year 2014-15 stands filed on 11/12/2023. However, while filing the appeal, due to inadvertence, following grounds could not be taken. These grounds are purely of legal nature and arise out of the order of the learned Assessing Officer/learned CIT(A). These go to the root of the matter. These additional grounds do not require any additional evidence. Therefore, the Hon'ble Tribunal may kindly give permission for taking the addition grounds., which are as under :- Additional Ground No.1 On the....
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....AT can admit additional ground of appeal later on in case the issue raised is legal and goes to the root of the matter. (vi) Jora Singh Vs. ITO (2010) 42 DTR 409 (Lucknow) Admissibility of additional ground ........ validity of assessment. Notice u/s 148 issued even when lime limit of issuing notice u/s 143(2) was available. A pure question of law - additional ground is admitted. (v) CIT Vs. Kerala State Co-operative Marketing Federation Learned. (1992) 193 ITR 624 (Ker) An appellant before the Tribunal can raise any new or additional point for the first time in appeal before the Tribunal. (vi) Mahindra & Mahindra Ltd. Dy. CIT (2009) 122 TTJ 577 (Mub)(SB) Appeal (Tribunal)-Additional ground-Question of limitation-Special Bench having been constituted for deciding the question of limitation on the request of Revenue, the objection as to raising of additional ground by assessee is not maintainable now Further, there can be no embargo on any party to raise a legal ground for the first time before the Tribunal provided the relevant material for deciding that question already exists on record and no further investigation of facts is ....
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.... record. The brief fact of the present case is that the assessee is a private limited company engaged in the business of real estate. The assessee filed a return of income declaring total income of Rs. 16,08,560/- for assessment year 2014-15 on 30/09/2014. The case was selected for limited scrutiny under CASS. The assessment stands completed on total income of Rs. 1,42,96,430/-, vide order u/s 143(3) dated 31/10/2016, by making an addition of Rs. 1,26,87,868 under section 43CA of the Income Tax Act, 1961, being the difference in the value of sale consideration of the of property as shown by the assessee which at Rs. 1,51,00,000/- and value adopted by the Sub-Registrar for stamp duty purposes at Rs. 2,77,87,868/-. This addition made by the ld. AO was challenged before the ld. CIT(A) / NFAC the Learned CIT(A), NFAC, Delhi, vide order dated 06/12/2023, dismissed the appeal of the assessee by observing that ; From the Assessment Order, it is also clear that the assessee received part payment by cheque on 15.09.2008 i.e., after the date of agreement. The assessee received only cash of Rs. 1,00,000/- at the time of agreement. Therefore in the case of assessee, the provision of s....
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.... prior to the A.Y. 2014- 15. The immovable property was sold in the year under consideration at below the stamp duty value adopted by the Stamp Valuation Authority and the agreement to sale was executed by an agreement dated 10/09/2008 and on the date of agreement the assessee has not received any amount by an account payee cheque and therefore, the revenue contended that the provision of section 43CA not applicable. Whereas, the assessee contended the agreement was executed in 2008 and the consideration to the extent 90 % is received by the assessee by an account payee cheque the assessee cannot expect that the law will change and even though the matter of valuation was also not referred to the Valuation Cell of the Department in view of the provisions of Sec. 43 CA(2) read with section 50C(2)(a) of the IT Act,1961. The assessee also contended that no effective opportunity was granted to the assessee for putting the defense and not followed the statutory procedure laid down u/s 43CA of the Income Tax Act, 1961 by the ld. AO. The ld. CIT(A) does not appreciate the facts available on record, even though the facts were already on record that the assessee has executed an agreeme....
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....ining the addition of Rs. 1,26,87,868/- made under section 43CA of the Income Tax Act, 1961, ignoring the fact that the date of agreement for sale of the immovable property is 10/09/2008, which is much prior to the Assessment Year 2014-15, the assessee would not have foreseen the provision. Even the provision of section 43CA gives exception that if the agreement fixing the value of consideration for transfer of asset and the date of registration of such transfer of asset are not the same, the value referred as on the date of agreement be considered for the payment of stamp duty on the date of such agreement, which in this case is of year 2008. The agreement to sell the immovable property for a consideration of Rs. 1,51,00,000/- was executed on 10/09/2008. Further, 90% of the total consideration was also received by the assessee within five days of the execution of agreement, which is evident from the details of payments as quoted herein above. Thus, the peculiar feature of the case is that 90% of the sale consideration was received within just five days of the agreement executed on 10/09/2008. Thus, the agreement to sell was executed on 10/09/2008 whereas the provisions of Section ....
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....xecuting the agreement on 10/09/2008. That apart, it is of much significance that in the case of the assessee, wherein 90% of the sale consideration was received within just five days of the date of agreement on 10/09/2008, i.e. by 15/09/2008 (Rs. 100000 on 14/08/2008 in cash and Rs. 1,34,90,000 through cheque on 15/09/2008). Copy of bank account reflecting the above payment is available on Paper Book Page No. 43-49. Further, the entire balance consideration of Rs. 14,94,000/- was also received on 19/03/2014. Copy of ledger account of the buyer, Shri Rajendra Kedia is available on Paper Book Page No. 51-52. These facts already on record cannot be ignored when even the provision of the law deals with such situation. The assessee would not have anticipated or visualized the enactment of new provisions of Sec. 43 CA from assessment year 2014-15 while executing the agreement to sell on 10/09/2008. The plea of the assessee, therefore, is that the provisions of Sec. 43CA are not applicable in the facts and circumstances of the case and the Learned Assessing Officer has erred in making the impugned addition by invoking Sec. 43 CA without dealing with the provision of the act read with the....
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....ent to sell for transfer of an asset which has been executed on or after 1st April, 2013 and thus, not applicable in the instant case." PCIT Vs. Swananda properties (P) Ltd (2019 111 taxmann.com 94 The Hon'ble High Court observed the provisions in the form of Sec. 43 CA has been introduced with effect from 1st April, 2014 and by plain language of this provision, it is not retrospective M/s Spenta Enterprises Vs. ACIT I.T.A. No. 2133/Mum/2019 Order dated 27/1/2022 "....I note that this is assessees plea that section 43CA was introduced w.e.f. 01.04.2013 and the agreement under consideration were entered into prior to 31.03.2013. Further, this is assessees plea that difference is only 5% between the ready recokner rate and sale consideration. Hence, this is assessees plea that the same has to be ignored on the touchstone of ITAT, Mumbai decision in the case of Krishna Enterprises vs ITA No.2133/M/2019 5 ACIT. I am of the considered opinion that the asessees succeeds on both the counts. Hence, I set aside the orders of the authorities below and decide the issue in favour of the assessee. Disha Construction Vs. JCIT 25(2),Mumbai, ITAT, D....