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Facts
The assessee, a builder and developer, sold properties for Rs. 1,10,25,000, which was less than the stamp duty value of Rs. 1,26,47,620. The Assessing Officer (AO) made an addition of Rs. 16,22,620 under Section 43CA of the Act. The Commissioner of Income Tax (Appeals) upheld the addition.
Held
The Tribunal held that the proviso to Section 43CA allows for a variation within the 10% limit between the sale consideration and the stamp duty value. Since the difference was within this limit and supported by DVO's report, the addition made by the AO and upheld by the CIT(A) was without merit.
Key Issues
Whether the addition under Section 43CA is valid when the difference between sale consideration and stamp duty value is within the 10% safe harbour limit, even if the DVO's report was not available during the assessment proceedings.
Sections Cited
43CA, 143(1), 143(2), 142(1), 144B, 50C, 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “F” BENCH, MUMBAI
(Assessment Year: 2018-19) Vastu Nirman Deputy Commissioner of Income 111, Lalji Shopping Centre, S. V. Road, Tax 42(1)(1), Mumbai Vs. Borivali (West), Mumbai – 400092 PAN/GIR No. AADFV1915E (Appellant) : (Respondent) Assessee by : Shri Jignesh Shah Respondent by : Ms. Kavitha Kaushik, SR DR (Virtually appeared) Date of Hearing : 01.10.2025 Date of Pronouncement : 29.10.2025 O R D E R Per Kavitha Rajagopal, J M: This appeal has been filed by the assessee, challenging the order of the learned Commissioner of Income Tax (Appeals)Delhi (‘ld.CIT(A)’ for short), National Faceless Appeal Centre (‘NFAC’ for short) passed u/s.250 of the Income Tax Act, 1961 (‘the Act'), pertaining to the Assessment Year (‘A.Y.’ for short) 2018-19.
The assessee has raised the following grounds of appeal:
1. On facts, circumstances and law, the learned CIT(A) erred in confirming the addition under Section 43CA of the Act amounting to Rs. 16,22,620 without considering and appreciating the fact that the case was referred to Ld. DVO and the value adopted by the Ld. DVO is within the specified limit as mentioned in the 1st proviso to section 43CA of the Act.
2. Without prejudice to the above grounds, on the fact and circumstances and law, the learned CIT(A) erred in making the addition u/s 43CA of the Act without (A.Y. 2018-19) Vastu Nirman appreciating the fact that the assessee had sold the property at the prevailing market value and did not receive any consideration other than given in the sale deed.
3. On facts, circumstances and law, the learned CIT(A) erred in not adjudicating and considering the fact that the Ld. AO had not given the personal video hearing to the assessee before passing the final assessment order, thereby violating the provision of section 144B of the Act and against the principal of natural justice.”
Brief facts of the case are that the assessee is a partnership firm engaged in the business of builder, development, constructionand contractors. The assessee is into the construction of SRA project (Slum Rehabilitation Authority) and had filed its return of income dated 19.08.2018, declaring total income at Rs. 1,67,12,040/- and the same was processed u/s. 143(1) of the Act. The assessee’s case was selected for scrutiny under CASS and notice u/s. 143(2) and 142(1) were duly issued and served upon the assessee. During the assessment proceeding, the learned Assessing Officer ('ld. A.O.' for short) observed that the assessee has sold immovable property and had received sale consideration which was less than the stamp value during the year under consideration.After duly considering the assessee’s submission, theld. AO passed the assessment order u/s. 143(3) r.w.s. 144B of the Act, dated 28.09.2021, determining total income at Rs. 1,83,34,660/- making an addition of Rs. 16,22,620/- u/s. 43CA of the Act towards the difference in the stamp duty value and sale consideration received by the assessee.
Aggrieved the assessee was in appeal before the first appellate authority, who vide order dated 06.06.2025 upheld the addition made by the ld. AO on the ground that the DVO’s report was not available during the assessment proceeding, thereby denying the 10% threshold limit as per Section 43CA of the Act.
(A.Y. 2018-19) Vastu Nirman 5. The assessee is in appeal before us, challenging the order of the ld. CIT(A).
The learned Authorised Representative ('ld. AR' for short) for the assessee contended that the difference in the stamp duty value and the sale consideration was within the 10% tolerance limit as per the valuation determined by the DVO’s report. The ld. AR further contended that though the ld. AO had referred the valuation to DVO the report was received till the completion of the assessment proceeding but the same was available before the ld. CIT(A). The ld. AR further stated that the ld. CIT(A) has failed to consider the same on the ground that the same should have been available before the ld. AO and has rejected the assessee’s contention merely on the ground that the DVO’s report was not made available during the assessment proceeding and had erroneously placed reliance on the decision of the Delhi High Court in the case of Commissioner of Income Tax, Bangalore vs. Medi Assist (India) TPA (P.) Ltd. [2021] 125 taxmann.com 77 (Karnataka)/[2020] 429 ITR 586 (Karnataka)[21-10- 2020], wherein it was held that evidence must be available before the ld. AO during the assessment for taking the benefit of the same. The ld. AR relied on a catena of decisions wherein it was held that the safe harbour of 10% tolerance bond was to benefit the assessee in case their difference between the stamp duty value and the sale consideration was within that limit.
The learned Departmental Representative ('ld. DR' for short) for the revenueon the other hand had nothing to controvert the same and relied on the order of the lower authorities. is observed that the assessee has entered into a sale transaction during the impugned order for a total sale consideration of Rs. 1,10,25,000/-. The ld. AO determined the value of the property as per the stamp value authority at Rs. 1,26,47,620/-, the details of which are tabulated herein under:
Sr. Name of the person to Description of the property Value of the Value of Difference (4- No. whom property sold property as per property as 5) in Rs. stamp value per sales deed authority 1 2 3 4 5 6 Flat No. C-402, 4th Floor, C- 1 Ambavi Mulji Rs. 61,21,620/- Rs. 7,66,620/- Manodara Wing, (42.60 Square meter), 53,55,000/- Anand Mangal, Block No. Jawahar Nagar, Khar Saibaba Road, Mumbai (East) – 400051. 2 Mularam Bhavaramji Flat No. C-504, 5th Floor, C- Rs. 65,26,000/- Rs. 8,56,000/- Rayaka Wing, (43.25 Square meter), 56,70,000/- Anand Mangal, Block No. Jawahar Nagar, Khar Saibaba Road, Mumbai (East) – 400051. Total 1,26,47,620/- 1,10,25,000 16,22,620/-
The assessee contended that the difference in the sale consideration was due to the reason that the said properties were part of slum rehabilitation authority project and the location of the properties was in a nature which was less than the market value.
Further, it is evident that the valuation report of the Government Approved Valuer as well as District Valuation Officer (DVO) were also of lower value then the stamp duty value, thereby substantiating the difference in the value arrived at by the DVO and the sale consideration was within the 10% variation as per the proviso to Section 43CA. This fact is also not controverted by the ld. DR for the reason that even the ld.
CIT(A) in his order has given a finding to that extent. It is also evident that DVO’s report was not on record, the lower authorities proceeded to determine the value in (A.Y. 2018-19) Vastu Nirman accordance with Section 43CA of the Act without considering the proviso to the said section which states that no addition can be made when the variation is within 10%. The relevant extract of the said provision is cited herein under for ease of reference: 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 consideration received or accruing as a result of such transfer: Provided 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 ten 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: Provided further that in case of transfer of an asset, being a residential unit, the provisions of this proviso shall have the effect as if for the words "one hundred and ten per cent", the words "one hundred and twenty per cent" had been substituted, if the following conditions are satisfied, namely:— (i) the transfer of such residential unit takes place during the period beginning from the 12th day of November, 2020 and ending on the 30th day of June, 2021; (ii) such transfer is by way of first time allotment of the residential unit to any person; and (iii) the consideration received or accruing as a result of such transfer does not exceed two crore rupees. (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 sub-section (3) shall apply only in a case where the amount of consideration or a part thereof has been received by way of an account payee cheque or an account payee bank draft or by use of electronic clearing system through a bank account or through such other electronic mode as may be prescribed on or before the date of agreement for transfer of the asset.
(A.Y. 2018-19) Vastu Nirman Explanation.—For the purposes of this section, "residential unit" means an independent housing unit with separate facilities for living, cooking and sanitary requirement, distinctly separated from other residential units within the building, which is directly accessible from an outer door or through an interior door in a shared hallway and not by walking through the living space of another household.”
On perusal of the same, we can safely conclude that the proviso to the said Section permits variation within 10% limit being the difference between the sale consideration and the stamp duty value as per the safe harbour limit. This proposition has been reiterated by the various decisions in support of the assessee’s contention and even more the amendment to the said provision increasing the quantum of variation from 5% to 10% as per Finance Act, 2019 was also held to be applicable retrospectively.
On the above observation, we deem it fit to delete the impugned addition made by the ld. AO and upheld by the ld. CIT(A) in the hands of the assessee holding the same to be without any merit.
In the result, the appeal filed by the assessee is hereby allowed. Order pronounced in the open court on 29.10.2025