TaxTMI 
TaxTMI 
2024 (2) TMI 831
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.... 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 Income Tax Act, 1961, ignoring the fact that the date of agreement for sale of the immovable prop....
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....,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 transaction of sale was over in preceding year only. The copy of ledger of customer Mr. Rajendra Kumar Kedia along with the copes of ser....
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....ssessee 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. 2,77,87,868/-. Aggrieved with the assessment order, the assessee preferred an appeal before the Learned CIT(A). the Learned CIT(A), NFAC, Delhi, vide ord....
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....ad 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 the root of the matter. Separate application has been filed for admitting the additional grounds. It is submitted that the additional grounds arise out of the order of the Learned Assessing Officer/CIT(A) and do not require any additional evidence. The same ....
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....er 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 conclusions by the judicial and quasi-judicial authorities when exercising initial jurisdiction is essential for various reasons. First, it is calculated to prevent unconscious unfairness or arbitrariness in reaching the conclusions. The very search for reasons will put the authority on the alert and minimise the chances of unconscio....
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....hat 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 accruing as a result of such transfer. (2) The provisions of sub-section (2) and sub-section (3) of section 50C shall, so far as may be, apply in relation to determination of the value adopted or assessed or assessable under sub-section (1). (3) Where the date of agreement fixing the value of consideration for transfer of the asset and the date of registration of such transfer of asset are not the same, the value referred to in sub-section....
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....ade 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 introduced w.e.f. 01.04.2014 and the 'agreement to sell' was entered prior to the 1st April 2014 and therefore, the condition of payment or part payment of consideration on or before the date of agreement cannot be imposed back-dated as the assessee could not have foreseen the introduction of section 43CA. (2) Indexone Tradecone (P) Ltd Vs. DCIT (2018) 172 ITD 396 (ITAT Jaipur) "The provisions of section 43CA have been inserted by the Finance Act, 2013 w.e.f 01.04.2014 relevant to assessmen....
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....5(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 enactment of provisions of Sec. 43CA in the statute w.e.f. 01/04/2014 applicable from assessment year 2014-15. Then how the assessee could foresee and visualize these provisions enacted from assessment year 2014-15 at the time of executing the agreement on 10/09/2008. That apart, the peculiar feature of the case is that in the case of the assessee, 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) Further, th....
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....t 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 full value of consideration for transfer of assets other than capital assets in certain cases. 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 considera....
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....fficer 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. [Explanation 1].-For the purposes of this section, "Valuation Officer" shall have the same meaning as in clause (r) of section 2 of the Wealth-tax Act, 1957 (27 of 1957). [Explanation 2.-For the purposes of this section, the expression "assessable" means the price which the stamp valuation authority would have, notwithstanding anything to the contrary contained in any other law for the time being in force, adopted or assessed, if it were referred to such authority for the purposes of the payment of stamp duty.] (3) Subject to the provisions contained in sub-section (2), where the value ascertained under sub-section (2) exceeds the value adopted or assessed 53[or assessable] by the sta....
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....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 valuation of the property to the Valuation Cell before completing the assessment. Having not done so, the Learned Assessing Officer has violated the statutory provisions and mandatory procedure as laid down in Sec. 43CA/50C(2) of ther IT Act, 1961. This has rendered the assessment proceedings invalid. Even in a case where no such prayer for referring the case to Valuation Cell is made by the assessee, the Assessing Officer, discharging a quasi-judicial function, is duty bound to act fairly and give a fair treatment to the assessee by giving him an option to follow the course provided by law as held by the Hon'ble Kolkata High Court in the case of CIT Vs. Sunil Kumar Agarwal 372 ITR 0083 (Cal). The observations of the Hon'ble Court is reproduced below ....
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....ere 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 an option to follow the course provided by law. In the light of discussion made above, the Hon'ble Tribunal may kindly observe that the Learned Assessing Officer failed to follow the mandatory procedure laid down in Sec. 40CA(2) with reference to sub-section (2) & (3) of Section 50 C of the IT Act, 1961. The Hon'ble Kolkata High Court in the aforesaid case of Shri Sunil Kumar Agarwal observed that even in a case where no prayer is made by the assessee, the Learned Assessing Officer, who is a quasi-judicial authority, is duty-bound to act fairly and to give a fair treatment to the assessee by him an option to follow the course provided by the law to avoid miscarriage of justice. The provisions of Sec. 43 CA read with section 50 C enshrines a right of the assessee for m....
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....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 Tax Vs. R Damodaran (High Court of Madras (2001) 247 ITR 0698) Valuation for stamp duty purposes by the Sub-Registrar of the properties cannot be the guiding factor for determining the value of gifted immovable property - The re-opening of the assessment was, therefore, invalid. (v) Commissioner of Income Tax Vs. Krishan Kumar &Ors. Rajasthan High Court (2009) 315 ITR 0204 Stamp Valuation Authority's rates of property fixed for purposes of registration of sale deeds cannot, by itself, be taken to be the price for which the property was purchased for the purpose of computing undisclosed income under s. 158BB-Under s. 158BB, the computation of undisclosed income is to be made on the basis of the evidence found as a result of search, or requisition of books of account, or other documents, and such other materials or information, as are available with the....
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....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 the case of the assessee, the Learned Assessing Officer failed to refer the matter of valuation to the Valuation Cell as as laid down in Sec. 43CA(2) read with Sec. 50C(2) of the Income Tax Act, 1961. Without referring the matter to Valuation and without bringing any material on record to establish that the assessee had received amount other than the sale consideration as per the sale deed, the Learned Assessing Officer proceeded to make the impugned addition of Rs. 1,26,87,868/-. The aforesaid decisions rendered by various courts, including the jurisdictional High Court, lays down that the valuation of the Stamp Valuation Authority is not required to be adopted as the valuation of the property as a rule of thumb. In the light of discussion made above, the Hon'ble Tribunal is, therefore, requested to delete the addition so made by the Learned Assessing Officer. Now the regular grounds No. 1 & 2, being int....
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....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 the IT Act, 1961. The Learned Assessing Officer denied the benefit of Sec. 43CA(3) and (4) to the assessee without considering these vital facts. The Learned CIT(A) also erred in sustaining the addition made by the Learned AO without considering the aforesaid facts and legal position and the detailed submission filed before him. The Hon'ble Tribunal is, therefore, requested to consider the submission made above and grant relief to the assessee by deleting the addition made by the Learned Assessing Officer. Conclusion From the detailed submissions made above, the Hon'ble Tribunal would kindly appreciate that the Learned Assessing Officer erred in making the impugned addition of Rs. 1,26,87,868/- by invoking the provisions of Section 43 CA of the IT Act, 1961 and the ld CIT(A) grossly erred in sustaining the addition, ignoring the facts 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, when the provisions of Sec. 43CA have become effect....
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....ssion for taking the addition grounds., which are as under :- 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 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, when the provisions of Sec. 43CA have become effective and, as such, the assessee would not have foreseen these provisions at the time of executing agreement to sell that it has to receive the sale consideration by any other mode other than cash before the date of agreement. Additional Ground No.3 On the facts and in the circumstances of the case and in law, the Learned CIT(A) has erred in not quashing the assessment order on account failure to follow the mandatory procedure laid down in Sec. 43CA(2) with reference to sub-sectio....
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.... goes to the very jurisdiction of the matter-It is not only the right of the parties but also the duty of the Tribunal to consider the question of limitation notwithstanding the fact that it is not raised before it-Additional ground admitted. (vii) Sunil Kumar Pugalia (HUF) Vs. ITO (2009) 120 TTJ 1001 (Jodh) Appeal (Tribunal)- Additional ground-Admissibility-Ground challenging jurisdiction of AO to initiate reassessment proceedings not raised before AO or CIT(A)-Being a pure question of law can be raised before the Tribunal for the first time." 6.1 Apropos to the additional ground the ld. AR of the assessee submitted that the because the assessee has received the money to the extent of 90% in just five days of agreement in 2008 the valuation of the property be considered based of the year 2008. The matter was not referred to the DVO to verify correct value of the property in 2008. The ld. AR of the assessee based on the above contention relied upon the written submission so filed and summarily submitted that since 90 % of the payment received within 5 days the provision of section 43CA is not appliable as the said provision was not in the statue book and even though the stamp ....
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.... furnish any explanation despite several opportunities provided at the time of assessment. I also do not find that appellant has made any claim before the Ld. AO that the matter of valuation should be referred to valuation officer. Accordingly, I find that the sale consideration of property sold as adopted by Ld. AO at Rs. 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." From the records and orders of the lower authority the non-disputed fact related to the challenged addition is that the assessee company entered into an agreement on 10/09/2008 with Shri Rajendra Kumar Kedia to sell the immovable property consisting of unit no. 115 to 118 on first floor and unit no. 201 to 218 on second floor of Arcade Building constructed on plot no. K- 12, Malviya Marg, C-Scheme, Jaipur for a consideration of Rs. 1,51,00,000/-. The total consideration was received as under :- S.No Amount (Rs) Mode of payment Date Bank 1 1,00,000 Cash 14/08/2008 -- 2 1,34,90,000 Ch.No.141213 15/09/2008 ICICI Bank C Scheme, Jaipur 3 1....
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....tamp value of the year 2008 is to be adopted not on the date when the sell deed is made considering the specific exclusion given in the provision of section 43CA of the Act. Before the ld. CIT(A) the assessee could not take the legal grounds of appeal which go to the root of the matter therefore, the same is taken by filling a prayer for raising the additional legal ground and as the additional grounds arise out of the order of the Learned Assessing Officer/CIT(A) and do not require any additional evidence being the legal ground in nature the bench has admitted the same for deciding the issue in the present case. In support of the additional ground the ld. AR of the assessee submitted that the assessee had filed a detailed reply along with paper book before the Learned CIT(A) on 19/11/2021, vide acknowledgement No.856678541191121. In the remarks column of e-proceedings response form, the assessee had also submitted that if the CIT(A) requires further clarification on the issue, the assessee is ready to file the same. A copy of the detailed reply submitted is available on Paper Book Page No.35-43. However, Learned CIT(A) has not made any discussion in respect of the various points ....
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.... as under:- "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 accruing as a result of such transfer. (2) The provisions of sub-section (2) and sub-section (3) of section 50C shall, so far as may be, apply in relation to determination of the value adopted or assessed or assessable under sub-section (1). (3) Where the date of agreement fixing the value of consideration for transfer of the asset and the date of registration of such transfer of asset are not the same, the value referred to in sub-section (1) may be taken as the value assessable by any authority of a State Government for the purpose of payment of stamp duty in respect of such transfer on the date of the agreement. (4) The provisions of su....
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....als with the exception circumstance that is present in this case and also support the following case laws: 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 introduced w.e.f. 01.04.2014 and the 'agreement to sell' was entered prior to the 1st April 2014 and therefore, the condition of payment or part payment of consideration on or before the date of agreement cannot be imposed back-dated as the assessee could not have foreseen the introduction of section 43CA. Indexone Tradecone (P) Ltd Vs. DCIT (2018) 172 ITD 396 (ITAT Jaipur) "The provisions of section 43CA have been inserted by the Finance Act, 2013 w.e.f 01.04.2014 relevant to assessment year 2014-15 and if we look at the provisions of sub-section (3) and sub-section (4), it emphasizes a scenario where the date of agreement fixing value of consideration for transfer of the assets and date of registration a....
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..... Thus, there is no statutory provision based on which the stamp duty valuation could have been made a basis in the present case." The provision of section 43CA and case laws cited herein above support the contentions so raised and the facts of the case is that 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 enactment of provisions of Sec. 43CA in the statute w.e.f. 01/04/2014 applicable from assessment year 2014-15. That apart, the peculiar feature of the case is that in the case of the assessee received 90% of the sale consideration 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) Further, the balance consideration of Rs. 14,94,000/- was also received on 19/03/2014 at the time of final sale deed. Thus, the assessee would not have anticipated or predicted the enactment of new provisions of Sec. 43 CA from assessment year 2014-15 while executing the agreement to sell on 10/09/2008 and even the provision of section 43CA (3) deals with such a situation. The reve....