M/S FIRST STONE,MUMBAI vs. ASSISTANT COMMISSIONER OF INCOME TAX, MUMBAI
In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.
What did the Tribunal hold?
The Tribunal dismissed the appeals for want of prosecution. The judgment notes that the case was listed for hearing on multiple dates, including 15.5.2025, 1.5.2025, 19.8.2025, and finally 1.10.2025. On all these dates, no one appeared on behalf of the appellant (assessee), nor was any letter of adjournment filed. The Learned Departmental Representative (DR) relied on the orders of the lower authorities. Consequently, after perusing the orders of the lower authorities and the grounds of appeal, the Tribunal decided to dismiss the appeals for want of prosecution. No specific finding was given on the merits of the grounds of appeal raised by the assessee. The operative direction was to dismiss the appeals.
What were the facts?
The assessee, M/s. First Stone, sold four flats for an amount less than the market value indicated in the Index II of Stamp Value fixed by the State Government. The Assessing Officer (AO) added the difference of Rs. 38,99,700/- to the total income under Section 43CA of the Income Tax Act, 1961, considering the Sub-Registrar's fair market value as the full consideration. The AO issued a show-cause notice and recorded the statement of a partner, Mr. Harish Nisar. The partner stated that advances were received in 2010, but the flats were sold in 2015, leading to a value difference. The AO disbelieved this, noting no documentary evidence for advances for these specific flats. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld the AO's addition.
What were the issues?
1. Whether, on the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) erred in affirming the additions of Rs. 38,99,700/- under Section 43CA of the Income Tax Act, 1961, made by the AO? (Question of law and fact, concerning Section 43CA). 2. Whether, on the facts and in the circumstances of the case and in law, the Hon'ble CIT(A) erred in appreciating that the provisions of Section 43CA were not applicable when part consideration was received in advance through banking channels during December 2010? (Question of law and fact, concerning Section 43CA and applicability based on advance receipt). 3. With prejudice to issue 2, whether, on the facts and circumstances of the case and in law, the Hon'ble CIT(A) erred in not considering the stamp duty value of the year in which part of the advance consideration was received through banking channels? (Question of law and fact, concerning the relevant valuation date for Section 43CA). 4. Whether, on the facts and circumstances of the case and in law, the Hon'ble CIT(A) erred in not understanding that advance can be received based on oral confirmation or exchange of letters? (Question of fact, concerning the nature of advance receipts). 5. Whether, on the facts and circumstances of the case and in law, the Hon'ble CIT(A) erred in not understanding that confirmation letters mentioned the amount was towards booking of flats and the persons from whom advances were received and sale agreements entered were the same? (Question of fact, concerning the identity of parties and purpose of advance). 6. Whether, on the facts and circumstances of the case and in law, the Hon'ble CIT(A) erred in not understanding that the amounts were returned back only to enable flat purchasers to apply for a housing loan? (Question of fact, concerning the reason for returning advances). Assessee's contentions: The assessee argued that part consideration was received in advance in December 2010, when Section 43CA was not applicable. They also contended that the stamp duty value of 2010 should be considered for advance payments and that advances could be received based on oral confirmation or letters, and the amounts were returned to facilitate housing loans. The persons from whom advances were received and to whom flats were sold were the same. Revenue's contentions: The Revenue relied on the orders of the lower authorities.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Mumbai “F” Bench, Mumbai.
Before: Smt. Kavitha Rajagopal (JM) & Shri Omkareshwar Chidara (AM)
Heard together (2 matters)
Read from the judgment's own cause title. This page is filed under one of them.
Aggrieved by the addition made by the order of Ld. AO, an appeal was filed before Ld. CIT(A) by the appellant. After considering the arguments/written submission of the appellant, the Ld. CIT(A) confirmed the addition concurring with the order of Ld. AO with the following observation in his order :- 7.7 The AO has also analysed the issues involved and summarised the same as under : From analysis of above submissions, following points surface:
1. 1. The sale agreements were signed in the FY 2015-16 and consideration received was less than the market value set by the Sub-Registrar Office as per Index II of the sale agreements.
2. The commencement certificate(C/C) was received in the FY 2015-16 and thereafter the actual construction started.
3. Although payment from some buyers viz. Dhaval Mehta, Meena Mehta and Bharat Mehta was received in the FY 2010-11, no agreement was signed and no flat was allotted to them in lieu of payment received in FY 2010-11.
4. In the ledger entry of fats sold it is seen that the payments received from FY 2010-11 from the above buyers was returned back to them before the agreement for sale was signed. The assessee's contention that the market value of FY 2010-11 should be applicable holds no ground. Firstly, the assessee has failed to co-relate the payments received by him in the FY 2010-11 are for the sale of same flats. Secondly, the payment received was shown as liability in the books of the assessee Firm and the same was returned back to the persons form whom it was received without any interest, thus the liability stood dissolved. Thirdly, no agreement was done in the FY 2010-11 when the payment was received. 7.8 In view of the discussion in the preceding paragraphs, the action of the A.O in taken the market value as on the dates of the Agreement to Sell
3 and not on the dates of receipt of advance monies is upheld and the addition of Rs 38,99,700 u/s 43CA is sustained. The Ground of Appeals is Not Allowed.
Aggrieved by the orders of Ld. AO/Ld. CIT(A), an appeal was filed before the ITAT with the following grounds of appeal :-
1. On the facts and the circumstances of the case and in Law, the Hon'ble CIT (A) has erred in affirming the additions of Rs. 38,99,700/- u/s. 43CA of the Income Tax Act 1961 (the 'Act') made by the AO.
2. On the facts and the circumstances of the case and in Law, the Hon'ble CIT (A) has erred in appreciating the facts that the part consideration was received in advance through banking channel during December 2010 and provisions of section 43CA was not applicable during that year.
3. With prejudice to 2 above, on the facts and circumstances of the case and in Law, the Hon'ble CIT (A) has erred in not considering the stamp duty value of the year in the part of the advance consideration was received through banking channel.
4. On the facts and circumstances of the case and in Law, the Hon'ble CIT (A) has erred in not understanding the fact that advance can be received by the assessee based on the oral confirmation or on exchange of letter between parties.
5. On the facts and circumstances of the case and in Law, the Hon'ble CIT (A) has erred in not understanding the fact that the confirmation letters mentioned that the amount was towards booking of flats and the persons from whom advances were received and sale agreements entered were the same.
6. On the facts and circumstances of the case and in Law, the Hon'ble CIT (A) has erred in not understanding the fact that the amounts were returned back only to enable the flat purchasers to apply for a housing loan.
4. The case was posted for hearing by ITAT on 15.5.2025, 1.5.2025, 19.8.2025 and finally on 1.10.2025, the present day of hearing. On all these dates, none was present on behalf of the appellant nor there is any letter of adjournment. The Ld. DR relied on the orders of the lower authorities.
Perused the orders of the lower authorities, grounds of appeal of appellant firm. After giving a careful thought, it is decided to dismiss the appeals of appellant for want of prosecution.
6. Both the appeals of appellant are dismissed.
Order pronounced in the open Court on 14/10/2025.
More judgments on Section 43CA
- Ladam Homes Private Limited, Thane vs ACIT, Circle 1, ThaneITA 5788/MUM/2026[2016-17]Status: Disposed29 Sept 2026AY 2016-17
- M/S Suraj & Associates, Mumbai vs ACIT 31(3) / Now ACIT 41(4)(1), MumbaiITA 408/MUM/2026[2015-16]Status: Disposed28 Sept 2026AY 2015-16
- Dy Commissioner of Income Tax, Central… vs Susneh Infrapark Private Limited, MumbaiITA 9262/MUM/2025[2024-25]Status: Disposed24 Sept 2026AY 2024-25
- Dy Commissioner of Income Tax Central… vs Sushneh Infrapark Private Limited, MumbaiITA 9261/MUM/2025[2023-24]Status: Disposed24 Sept 2026AY 2023-24
- Dy Commissioner of Income Tax, Central… vs Susneh Infrapark Private Limited, MumbaiITA 9260/MUM/2025[2022-23]Status: Disposed24 Sept 2026AY 2022-23
Recent GST High Court judgments
Search GST case law →- M/S Barnala Steel Industries Private Limited vs. State Of Uttar Pradesh And 2 OthersAllahabad · 22 Oct 2026
- Skd Suppliers Private Limited vs. The Superintendent, Central CGST, Rishra Division, Range-Ii, And AnrCalcutta · 22 Oct 2026
- M/S Aasha Industries vs. State Of U.P. And AnotherAllahabad · 22 Oct 2026
- M/S Bharat Iron Scrap vs. State Of U.P. And AnotherAllahabad · 22 Oct 2026
- Mascot Constructions Co. And Another vs. The Commissioner Of Goods And Services Tax (GST) And AnotherBombay · 22 Oct 2026
