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Facts
The appellant firm sold four flats for a consideration less than the market value fixed by the State Government's Index II. The AO added the difference to the total income under Section 43CA, treating the Sub-Registrar's value as the full consideration. Advances were received in 2010, but sales occurred in 2015, with no documentary evidence linking advances to specific flats.
Held
The Tribunal held that the market value on the date of the agreement to sell, not the date of advance receipt, is to be considered. The AO correctly sustained the addition of Rs. 38,99,700/- under Section 43CA.
Key Issues
Whether the market value on the date of advance receipt or on the date of agreement to sell should be considered for additions under Section 43CA of the Income Tax Act, when advances were received years before the sale agreement.
Sections Cited
43CA, 143(3)
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Income Tax Appellate Tribunal, Mumbai “F” Bench, Mumbai.
Before: Smt. Kavitha Rajagopal (JM) & Shri Omkareshwar Chidara (AM)
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.