TaxTMI 
TaxTMI 
2023 (3) TMI 1539
X X X X Extracts X X X X
X X X X Extracts X X X X
....The firm is engaged in the construction of residential and commercial properties in Mumbai. The Assessing Officer during the assessment proceedings called for the hard copy of the Return of Income, Tax Audit Report u/s. 44AB, Form 3CD, audited financial statements and relevant details and the same was verified and placed on record. During the course of assessment proceedings, Assessing Officer observed that assessee has sold immovable properties (flats) for consideration lower than the market price of the said flats adopted for stamp duty purposes. Accordingly, show cause notice was issued to the assessee to explain the above difference along with supporting documents. The Assessing Officer issued the show cause notice dated 16.12.2016 with the table, for the sake of clarity it is reproduced below: - Sr. No Flat Project name Market Value (1) Sale Price (2) Difference (1 - 2) 1. 702 Gaurau Paradise 69,16,000 56,78,500 12,37,500 2. 602 Gaurav Paradise 69,16,000 48,47,500 20,68,500 3. 701 Gaurau I Paradise 48,75,000 34,47,500 14,27,500 4 804 Gaurav Excellency 45,79,000 45,77,370 1,630 5 904....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ntions and Ld.CIT(A) has summarized the same as under: - (i). The appellant has not received any cash consideration out of the books. The Ld. Assessing Officer has failed to discharge its onus by neither bringing on record any evidence that the assessee has received any cash nor proving the under statement of income. Therefore, the assessing officer cannot make any addition u/s 43CA of the Act. For this proposition, the appellant has relied on the decision of Hon. Supreme Court in the case of K. P Varghese vs ITO 1981 (9) TMI 1- Supreme Court. (ii). The Ld. Assessing Officer failed to appreciate that in most cases, the difference was less than 10% of the stamp duty value and as such no addition should have been made. For this proposition the appellant has relied on following case laws: a. Chanderprakash Jhunjhunwala vs DCIT ITA No. 2351/Kol/2017 (Kolkata) b. Buttepatil Properties vs ITO ITA No. 682/Pun/2018 (ITAT Pune) (iii). Sub Sec. 2 of sec. 43CA, mandates that where assessee claims that value adopted or assessed by the stamp duty authority exceeds the fair market value of the property, then, Assessing Officer is duty bound to refer t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....llency. These flats were newly constructed by the developer and therefore the claim that the flats situated in same building are having difference market value, cannot be accepted. The table reproduced in the assessment order clearly suggests that many flats situated in Gaurav Excellency are sold at a value almost matching with the stamp duty valuation but for some flats, the difference was almost 30%. For example, for flat no. 904, the difference in stamp duty valuation and the consideration was only Rs. 1,630/- however, on the other hand for flat no. 1204, the difference in the stamp duty valuation and the consideration comes to Rs. 4,17,510/- which comes to 28.68% of the consideration shown in the books of accounts. Such huge variation is not justifiable. The appellant has relied upon certain case laws wherein the Hon. Judicial Authorities have held that the Assessing Officer should have referred the properties for valuation to DVO however, the facts of the case in hand are completely different because in the present case because firstly, the appellant itself is not claiming that the market value of flats is lower than the stamp duty valuation and secondly, in the same building ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....enhanced tolerance limit of 10% is applicable w.e.f. AY 2021-22 as provided in the statute. In this situation, the benefit of tolerance limit to the extent of 5% only can be given to the appellant and not to the extent of 10% as claimed by the appellant. The limit of 10% was revised by the legislature only w.e.f. AY 2021-22 as provided in the statute and explained in the Explanatory Circular to the Finance Act 2020 and certainly this tolerance limit of 10% cannot be given a retrospective effect. In none of the case laws relied upon by the appellant, it is held that the tolerance limit of 10% is to be given a retrospective effect. 8.3 A perusal of the table reproduced in para 4 above suggest that the difference in the sale consideration shown by the appellant and the valuation adopted by the stamp valuation authority for flat no. 804, 904, 1102, 1103, 1401, 1003 and 1004 is Rs. 1,630, Rs. 1,630/-, Rs. 1,265/-, Rs. 1,265/-, Rs. 18,000/-, Rs. 1,450/- and Rs. 1,000/-. The difference between the sale consideration shown by the appellant and the valuation as per stamp valuation authority is nominal and, in my opinion, should be ignored while applying the provisions of sec. 43CA ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he same to the total income of appellant-assessee. 2. That on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in upholding the Ld. A.O.'s action in rejecting the valuation of property as adopted by the appellant as per the circumstances and further in not referring the matter to the valuation officer u/s 50C, before confirming the addition of Rs. 25,57,100/- under section 43CA. 3. Without prejudice to the above, the appellant had made a declaration under the IDS scheme 2016, amounting to Rs. 11,75,00,000/- which covers all the discrepancies over the period. 4. Appellant craves leave to add, alter, modify or delete any of the grounds of appeal." 9. At the time of hearing, Ld. AR of the assessee has not pressed Ground No. 1, accordingly, same is dismissed as such. 10. With regard to Ground No. 2, Ld. AR of the assessee submitted that the Finance Act, 2018 w.e.f. A.Y. 2019-20 onwards has amended provisions of section 43CA and accordingly, difference of allowance is increased from 5% to 10%, the difference amount between stamp duty and reported sale consideration to the extent of 10% is allowable. He submitted that the above....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... "3.3. ......... But we find that there is a proviso introduced by the Finance Act 2018 w.e.f. A.Y. 2019-20 onwards and which was later amended by the Finance Act 2020 applicable from A.Y. 2021-22, which states that if the difference between the stamp duty value and the reported sale consideration is not more than 10% then, the reported sale consideration shall have to be accepted and no addition in terms of 43CA is required to be made. We find that this amendment has been held to be retrospective in operation by the Co-ordinate Bench decision of this Tribunal in the case of Maria Fernandez Cheryl vs. ITO reported in 123 taxmann.com 252 wherein it was held that amendment made in scheme to Section 50C(1) of the Act by inserting the proviso thereto and by enhancing tolerance band for variations between sale consideration vis a vis stamp duty valuation from 5% to 10% are effective from date on which section 50C itself was introduced i.e. from 01/04/2003 and therefore, having retrospective applicability thereon. The language of provisions of Section 50C are exactly pari materia with provisions of Section 43CA of the Act. Hence, though the aforesaid decision was rendered in the contex....