SIDDHARTH PROPERTIES,PUNE vs. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-3, PUNE, PUNE

This appeal by the assessee is directed against the order dt. 25-04-2023 passed by the CIT(A) in National Faceless Appeal Centre (NFAC) u/s.250 of the Income-tax Act, 1961 (hereinafter also called ‘the Act’) in relation to the assessment year 2017-18.

The first two grounds were not pressed by the ld. AR. The same, therefore, stand dismissed.

The third ground is against the confirmation of addition of Rs.11,027/- made by the Assessing Officer (AO) u/s.43CA of the Act on account of difference between the sale consideration received by the assessee and stamp valuation.

The facts apropos this ground are that the assessee, a builder, sold a flat below the circle/stamp value. Considering the provisions of section 43CA, the AO made an addition of Rs.11,027/- towards difference between the stamp value and the price at which the flat was sold by the assessee. The ld. CIT(A) affirmed the addition, against which the assessee has come up in appeal before the Tribunal.

Having heard the rival submissions and gone through the relevant material on record, it is observed that the addition of Rs.11,027/- has been made on account of sale of flat to one Mr. Abhay Bahirat with stamp value of Rs.39,39,447/- as against the actual sale price realized at Rs.39,28,420/-, giving difference of less than 0.3%.

The first proviso to section 43CA was inserted by the Finance Act, 2018 w.e.f. 01-04-2019 providing that: `where the value adopted or assessed or assessable by the authority for the purpose of payment of stamp duty does not exceed one hundred and five per cent of the consideration received or accruing as a result of the transfer, the consideration so received or accruing as a result of the transfer shall, for the purposes of computing profits and gains from transfer of such asset, be deemed to be the full value of the consideration’. The Finance Act, 2020 w.e.f. 1.4.2021 has substituted ten per cent with the hitherto five per cent. It is palpable that the rigor of section 43CA has been slackened by the first proviso providing that where the stamp value does not exceed by 10% of the agreed sale consideration, only the transacted value should be considered as full value of consideration.

The Pune Bench in the case of M/s. City Corporation Ltd. Vs. DCIT (ITA No.619/PUN/2020) has held, vide its order dated 17-08-2021, that the first proviso to section 43CA is retrospective.

The only other ground which survives in the instant appeal is against the confirmation of disallowance amounting to Rs.3,81,354/- made by the AO u/s.40(a)(ia) of the Act.

The factual matrix of this ground is that the AO, on perusal of details of legal expenses, observed that the assessee deposited lower TDS with reference to payments made to four parties, which have been tabulated at page 17 of his order. The differential amount of short deduction of tax at source was found out at Rs.1,27,118/-. By extrapolating the amount of short deduction of tax at source to the corresponding amount of expenditure at Rs.12,71,180/-, the AO computed the disallowance at 30% of this sum amounting to Rs.3,81,854/-. The ld. CIT(A) sustained the addition.

Having heard both the sides and gone through the relevant material on record, it is seen that the entire disallowance has been made on the basis of tabulation done by the AO, on the strength of information furnished by the assessee in Form No.16A and the other relevant details. The ld. AR submitted that the information submitted to the AO was not correct and there was some mistake on the part of the assessee. He invited our attention towards Form Nos.16A in respect of these four parties for demonstrating that there was no difference in the amount of TDS. At the same time, it was fairly admitted that the fresh Form Nos.16A were not considered either by the AO or by the ld. CIT(A). Considering the entire spectrum of the case, we are of the considered opinion that it would be just and fair if the impugned order on this score is set aside and the matter is remitted to the file of the AO. We order accordingly and direct him to decide the issue afresh as per law after allowing reasonable opportunity to the assessee. Needless to say, the assessee will be at liberty to file any evidence in support of its contention in such fresh proceedings.

In the result, the appeal is partly allowed.