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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY, VP &
(Assessment Year: 2014-15) DCIT-42(1)(1), Satyendra Kumar Triloknath Goyal, 7th Floor, Room No. 732, 1702, Pranay Nagar Society, Ram Kautilya Bhavan, BKC, Vs. Mandir Extn. Road, Vazira Naka, Mumbai-400051. Borivali West, Mumbai-400091. PAN: AAEPG3578R Appellant) : Respondent) Revenue / Appellant by : Shri Swapnil Chaudhary, Sr. DR Assessee / Respondent by : Shri Ajay R. Singh & Shri Akshay Pawar, AR Date of Hearing : 11.09.2025 Date of Pronouncement : 06.10.2025 O R D E R
Per Padmavathy S, AM:
This appeal by the Revenue is against the order of the Commissioner of Income Tax (Appeals) / National Faceless Appeal Centre (NFAC), Delhi [In short 'CIT(A)'] passed under section 250 of the Income Tax Act, 1961 (the Act) dated 30.06.2024 for Assessment Years (AY) 2014-15. The Revenue raised the following grounds of appeal:
“1. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition made of Rs. 3,20,00,000/- as unexplained cash credit u/5.66 of the I.T.Act, 1961 by the AO in respect of unsecured loans Satyendra Kumar Triloknath Goyal taken by the assessee from Bhanwarlal Jain who is an accommodation entry provider.
2. On the facts and circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition made of Rs. 9,60,000/- as unexplained expenditure u/s.69C of the 1.T.Act, 1961 by AO in respect of commission paid on the said loans.
On the facts and circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition made of Rs. 90,13,442/- as unexplained cash credit u/s.68 of the I.T. Act, 1961by the AO in respect of commission paid on the said loans.
4. On the facts and circumstances of the case and in law, the Ld.CIT(A) erred in deleting the addition made of Rs. 18,18,500/- u/s.43CA of the Act without appreciating the fact that the assessee has sold the flat below the stamp duty value.”
The assessee is an individual and proprietor of M/s Peerless Constructions engaged in the business of constructing building. The assessee filed the return of income for AY 2014-15 on 25.09.2014 declaring a total income of Rs. 1,80,55,170/- which was subsequently revised on 03.11.2014 declaring total income of Rs. 1,76,67,500/-. The assessee's case was selected for scrutiny and the statutory notices were duly served on the assessee. The Assessing officer (AO) completed the assessment by making the following additions:
(i) Unexplained cash credit under section 68 in respect of loans taken from four parties – Rs. 3,20,00,000/-. (ii) Disallowance of interest expenses for the said loans taken earlier year – Rs. 90,13,442/-. (iii) Addition under section 43CA – Rs. 18,18,500/- 3. On further appeal, the CIT(A) gave relief to the assessee with respect to all the additions / disallowance made by the AO. The CIT(A) while deleting the addition made towards unsecured loan and interest thereon held that the assessee Satyendra Kumar Triloknath Goyal had discharged the onus of substantiating the loans by providing all the relevant documents such as loan confirmation from parties, copies of returns of the lender, relevant bank statements of the lender and the assessee, copies of the financial statements of the lenders as well as the assessee. The CIT(A) also placed reliance on the decision of the Co-ordinate Bench in assessee's own case for AY 2012-13. With regard to the addition made under section 43CA, the CIT(A) gave relief to the assessee considering the fact that the difference between the sale value and the stamp duty value is only 7.7%. The revenue is in appeal before the Tribunal against the order of the CIT(A).
Addition towards unexplained loans and interest thereon.
The ld. DR submitted that mere submission of documents does not prove the credibility of the transactions and that the same has to be examined considering the overall circumstances surrounding the facts. The ld. DR further submitted that the loan transactions in the first place were questioned based on fact that the parties from whom the assessee has obtained the loan are accommodation entry providers controlled and managed by Bhanwarlal Jain Group who is a leading entry provider of Mumbai as per the Investigation Report. The ld. DR accordingly argued that the genuineness of these transactions cannot be accepted based on the documentary evidences alone. Accordingly, the ld. DR supported the order of the AO.
The ld. AR on the other hand submitted that the loans obtained by the assessee are genuine business loans and the AO has made the addition merely based on the third party statements without any evidence discrediting the documents filed by the assessee. The ld. AR further submitted the assessee has discharged the onus of proving the identity, creditworthiness and the genuineness of the loans by submitting all the relevant documents before the lower authorities Satyendra Kumar Triloknath Goyal and the CIT(A) has rightly considered the same before giving relief to the assessee. The ld. AR also submitted that the loans are taken and repaid through proper banking channel and therefore the genuineness cannot be questioned without bringing any contradictory finding on record. The ld. AR also submitted that the loans taken from the parties which is treated as non-genuine in the year are the same parties from earlier years and that the Co-ordinate Bench while considering the same issue of the loans being considered as non-genuine as upheld the findings of the CIT(A) in AY 2012-13 (ITA No. 5562/Mum/2017). The ld. AR also brought to our attention that the Co-ordinate Bench in subsequent AY i.e. AY 2013-14 (ITA No. 1113/Mum/2025 dated 31.07.2025) has placed reliance on the earlier year decision to give relief to the assessee. Accordingly, the ld. AR submitted that the genuineness of the loans have been repeatedly upheld by the Co-ordinate Bench and therefore there is no infirmity in the order of the CIT(A) in deleting the additions made by the AO. The ld. AR presented the below chart with respect to the loans and the interest which are added by the AO during the year under consideration:
We heard the parties and perused the material on record. The AO alleged that the assessee has taken loan from parties who are accommodation entry providers controlled by Shri Bhanwarlal Jain who is accommodation entry provider. The assessee submitted various details to substantiate the alleged bogus loans from these parties and submitted that the loans are genuine borrowed for business purposes. The AO did not accept the submissions of the assessee and treated the same as non-genuine to make an addition to the tune of Rs. 3,20,00,000/- and the AO also made addition towards the interest on the said loans. In this regard, we notice that the Co-ordinate Bench has considered the loans borrowed from the same parties in assessee's own case for AY 2013-14 where it has been held that “4. We have heard rival submissions of the parties and perused the relevant materials on record. In the case of the assessee allegation are that assessee had received accommodation entry of the unsecured loans from the entities controlled and operated by Shri Bhawarlal Jain, i.e. an accommodation entry provider. During the course of assessment proceedings, Satyendra Kumar Triloknath Goyal the Assessing Officer issued notice u/s 133(6) of the Act to all such parties from whom, the assessee received loans. In response, those parties confirmed loan given to the assessee and also filed copy of their bank statements. The assessee also filed his bank statement and further explained that loans were repaid through account payee cheques and tax was deducted on the interest payment regularly. The Ld. CIT(A) observed that in the additions were made in earlier year by the Assessing Officer on similar allegation of the receipt of unsecured loan by way of accommodation entry from the Bhawarlal Jain but the Co-ordinate Bench of the Tribunal after verification of documents of identity, confirmation, bank statements etc held that assessee discharged his onus of burden u/s 68 of the Act. The relevant finding of the Co-ordinate Bench of the Tribunal in for assessment year 2012- 13 is reproduced as under: “7. We have heard the rival submissions and perused the relevant material on record. The reasons for our decisions are given below. In the case of Bikram Singh (supra), relied on by the Ld. DR, it is held that "where the AO made addition to assessee's income u/s 68 in respect of loan taken from various parties, since the assessee failed to prove that any of those creditors had financial strength to lend such huge sums of money to assessee, that too without any collateral security, without interest and without a loan agreement, impugned addition deserves to be confirmed". In the case of NRA Iron & Steel Pvt. Ltd. (supra), relied on by the Ld. DR, the AO had issued summons to the representatives of the investor companies. Despite the summons having been served, nobody appeared on behalf of any of the investor companies. The Department only received submissions through dak, which created a doubt about the identity of the investor companies. Thereafter, the AO independently got field enquiries conducted with respect to the identity and creditworthiness of the investor companies and to examine the genuineness of the transaction. Enquiries were made at Mumbai, Kolkata and Guwahati, where these Companies were Satyendra Kumar Triloknath Goyal stated to be situated. On the basis of the detailed enquiries conducted, the AO held Assessment Year: 2012-13 that the assessee had failed to prove the existence of the identity of the investor companies and genuineness of the transaction. As mentioned earlier, in the instant case the entire focus of the AO was on the modus operandi adopted by Bhanwarlal Jain Group of cases to provide bogus accommodation entries of loan. The main reason of the AO for making addition u/s 68 was on the basis of information provided by the Investigation Wing of the Department. No independent enquiry has been conducted by the AO as was done in NRA Iron & Steel Pvt. Ltd. (supra). In the case of Bikram Singh (supra), the assessee was unable to establish the identity, creditworthiness and genuineness of the said persons and transactions. As recorded by the Ld. CIT (A), during the course of assessment proceedings, the assessee filed before the AO (i) loan confirmations from lenders, (ii) PAN of the lenders, (iii) copy of the return of income of lenders, who advanced the loan, (iv) copy of bank account of lenders (v) copy of bank account of the assessee and (vi) copy of balance sheet and P & L account of the lenders. Therefore, the instant case is distinguishable from the above case laws relied on by the Ld. DR. 7.1 It is well settled that in order to discharge the onus u/s 68, the assessee must prove the following: (i) the identity of the creditor, (ii) the capacity of the creditor to advance money; and Assessment Year: 2012-13 (iii) the genuineness of the transaction. After the assessee has adduced evidence to establish prima facie the aforesaid, the onus shifts to the department. In the instant case, though the onus shifted to the department, the AO Satyendra Kumar Triloknath Goyal has failed to make necessary enquiry to reject the contentions of the assessee. In view of the above factual matrix and position of law, we uphold the order of the Ld. CIT (A).
In the result, appeal filed by the revenue is dismissed.” 4.1 We find that the Co-ordinate Bench(supra) while deciding relied on the following decision of the Co-ordinate Bench : 1 ITANo. 6099/Mum/2016 DCIT (CC)-l(3)vs. M/s Jainam Investments 2. ITANo. 1414/Mum/2017 DCIT 25(1) vs. M/s YRV International 3. and ITANo. 1645/Mum/2017 Shri Ashok Nagraj Mehta vs. ACIT Circle 19(1) 4. ITANo. 7049/Mum/2016 Asst CIT-19(1) vs. Shri Dilip Chimanlal Gandhi 5. & 7050/Mum/2016 Jitendra M Kitawat vs. ITO 18(1X5) 6. ITANo. 7047/Mum/2016 Jitendra M Kitawat (HUF) vs. ITO 18(1)(5) 7. ITA No. 3017/Mum/2018 Smt. Ritu Kamal Singal vs. ITO 21(3114) 4.2 Before documents identical to which had been filed in earlier year had been filed. Out of the list of parties from whom loans have been taken , the unsecured loan giver parties namely ‘Naukar Diamonds’ and ‘Naukar India’ are also appearing in the list of the parties for assessment year 2012-13 which has been allowed in favour of the assessee by the Co-ordinate Bench (supra). Since identical documents have been filed in respect of parties to justify the discharging of onus u/s 68 of the Act, we uphold the finding of the Ld. CIT(A) on the issue in dispute in respect of addition of the unsecured loan. Thebground No. 1 of the appeal of Revenue is dismissed.
Satyendra Kumar Triloknath Goyal 4.2 As far as addition of the commission expenses is concerned same is in respect of unsecured loans considered as unexplained cash credits, which have already deleted by the ld CIT(A) and we have upheld said deletion while adjudicating ground no. 1 of appeal, therefore, consequent addition for the commission in respect of those entries is also deleted. The ground No. 2 of the appeal is dismssed. 4.3 In respect of ground No. 3, the Ld. Counsel for the assessee has given list of the interest in respect of parties for the current year as well as the brought forward and in remark column given where the loan has been allowed by the ITAT or the Ld. CIT(A) against which no appeal is pending. The relevant detail of the interest payment is reproduced as under: SR. NAME, ADDRESS AND INTEREST TDS-Rs Remarks NO. PAN OF THE LOAN (Incl. TDS)- Rs. CREDITORS 1 Navkar India 218,137 21,819 Loan allowed in appeal AY 12-13 by ITAT 2 Rajan Diamonds 1,344,000 134,400 Loan allowed by CIT(A) in AY 2009-10 and ITAT in AY 12-13 Mohit Enterprises 120,000 12,000 Loan allowed in Appeal AY 3 12-13 by ITAT 4 Mukti Exports 120,000 12,000 Loan allowed in Appeal AY 12-13 by ITAT Pushpak Gems 360,000 36,000 Loan allowed in Appeal AY 5. 12-13 by ITAT S Navkar Diamond 380,054 38,005 Loan allowed in Appeal AY 12-13 by ITAT 7 Mehul Gems Pvt Ltd 120,000 12,000 Loan allowed in Appeal AY 12-13 by ITAT 8 Daksh Diamonds 324,000 32,400 Loan allowed by CIT (A) in AY 2009-10 and ITAT in AY 12-13 9 Jewel Diam 120,000 12,000 Loan allowed by CIT (A) in AY 2009-10 and ITAT in AY 12-13 10 Kothari & Co. 120,000 12,000 Loan allowed by CIT (A) in AY 2009-10 and ITAT in AY 12-13 11 Minal Gems 360,000 36,000 Loan allowed by CIT (A) in AY 2009-10 and ITAT in AY 12-13 Satyendra Kumar Triloknath Goyal 12 Rose Impex 300,000 30,000 Loan allowed by CIT (A) in AY 2009-10 and ITAT in AY 12-13 Total interest disallowed 3,886,191 388,624 4.3 Since the loans corresponding to the interest paid has already been allowed either by the Co-ordinate Bench of the ITAT or the Ld. CIT(A) and no appeal has been preferred against said finding of CIT(A), therefore, the interest paid in respect of those loans also stands allowed. We uphold the finding of ld CIT(A) on the issue in dispute. The ground No. 3 of the appeal of the Revenue is accordingly dismissed.”
7. From the combined perusal of the table as extracted in the earlier part of the order and the findings of the Co-ordinate Bench, we notice that the Tribunal has held these parties as genuine and hence we see no reason to take a different view since no new material fact have been brought on record. Further we notice that the CIT(A) has examined the various documentary evidences submitted by the assessee before holing that the addition under section 68 cannot be sustained. In view of this discussion, we see no reason to interfere with the decision of the CIT(A) in allowing the issue in favour of the assessee.
Addition under section 43CA
8. The assessee with regard to the addition made by the AO submitted the below table: Sr.No. Flat No. Sale Value (Rs.) Value as per Difference stamp duty (Rs.) Amount (Rs.) 1 601 1,05,00,000 1,06,06,500 1,06,500 2 1203 65,00,000 73,58,500 8,58,500
3 1403 66,00,000 74,53,500 8,53,500 Total 2,36,00,000 2,54,18,500 18,18,500 Satyendra Kumar Triloknath Goyal 9. The ld. AR submitted that the CIT(A) has considered the explanation of the assessee regarding the low demand in real estate and that the difference being less than the threshold limit of 10% under proviso to section 43CA of the Act.
The ld. DR on the other hand submitted that no precedent allows ignoring the statutory deeming fiction on account of sympathetic consideration and the provisions must take its force unless the assessee qualifies for a specified exception. The ld DR further submitted that the tolerance limit introduced in the statute cannot be considered as retrospective.
We heard the parties and perused the material on record. The AO has received the information from Stamp duty authorities that during the year under consideration, the assessee has sold properties for a consideration less than the stamp duty valuation. The AO called on the assessee to show cause as to why the provisions of section 43CA cannot be applied to make the addition towards the difference between the stamp duty value and sale consideration. Therefore before proceeding further we will look at the provisions of section 43CA which read as under – 43CA. - Special provision for full value of consideration for transfer of assets other than capital assets in certain cases. (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 Satyendra Kumar Triloknath Goyal purposes of computing profits and gains from transfer of such asset, be deemed to be the full value of the consideration: 61[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) & (4) ****
The plain reading of the above provisions makes it clear that if the stamp duty value is higher than the sale consideration received on sale of a property (other than capital asset) then the income from the sale of the said property shall be considered at stamp duty valuation. The proviso which was introduced by the Finance Act 2018, provided that if the difference is not more than 5% then the actual sale consideration will be treated as the income. In other words no addition will be made, if the difference is within the tolerance band of 5%. The said 5% was increased to 10% by Finance Act, 2020 w.e.f. 01.04.2020. The contention of the assessee before the AO is that the tolerance band of 5% / 10% should be applied in assessee's case and therefore no addition can be made under section 43CA of the Act. The AO did not accept the said claim of the assessee and held that the introduction of tolerance band in section 43CA of the Act is prospective. The Satyendra Kumar Triloknath Goyal CIT(A) deleted the addition on the ground that the difference is below the tolerance limit.
In the light of these facts the limited issue for our consideration is whether the tolerance band introduced under section 43CA of the Act i.e. 5% w.e.f. 01.04.2019 and 10% w.e.f. 01.04.2021 are applicable to assessee's case for AY 2014-15. In this regard we notice that the Co-ordinate Bench of the Tribunal in the case of Macrotech Developers Ltd. (MDL) v. DCIT [2023(5)] TMI 153 has considered a similar issue where it has been held that – “037. Ground number 4 of the appeal is with respect to the addition of Rs 2,03,051/- by invoking the provisions of section 43CA of the act. During the year, the assessee has sold a commercial property to a customer for the sale consideration of Rs.47,500,000. The stamp duty value of the flat as determined by the stamp duty authority is 47,703,051/- which exceeded the value of the sale consideration by Rs.203,051. Thus, the difference between the sale consideration and stamp duty value is merely 0.43% The learned assessing officer has made the addition of the above sum by invoking the provisions of section 43CA of the act. This was also upheld by the learned dispute resolution panel.
The learned authorized representative submitted that first proviso to section 43CA (1) of the act states that where the difference between the sale consideration and value adopted for the purpose of stamp duty does not exceed 110% of the sale consideration, the deeming provisions of this section will not apply and the actual sale consideration will be considered for the purpose of calculation of the profit. Prior to 1 April 2021, the proviso provided tolerance band of 105% of the sale consideration it was submitted that the enhancement of the tolerance band should apply retrospectively as it is amended to remove the genuine hardship faced by the stakeholders and therefore it should be applied retrospectively. The assessee relied upon several judicial precedents. Accordingly, it was argued that the addition requires to be deleted.
The learned departmental representative supported the orders of the lower authorities and submitted that such tolerance bench should not be applied retrospectively. The learned departmental representative referred to the historical background of provisions of section 43CA of the act and Satyendra Kumar Triloknath Goyal submitted that earlier it did not apply to transfer of immovable property held as stock in trade and for curbing the use of unaccounted money by parties involving in transfer of immovable property where the stock in trade is sold the above provisions were included. He relied upon the decision of the honourable Bombay High Court in case of principal Commissioner of income tax versus Swanand properties private limited (2019) 111 taxmann.com 94, the decision of the honourable allowable High Court where retrospective operation of rule 6AA was held to be prospective in case of CIT versus Rajasthan Charm Kal Kendra (2005) 144 taxman 320 and decision of the coordinate bench in welfare properties private limited versus deputy Commissioner of income tax 180 ITD 591 wherein it has been held that prior to incorporation of proviso to section 43CA (1) with effect from 1/4/2019, there was not on rent Limited envisaged in section 43CA regarding difference between stamp duty value and actual sale consideration received by assessee on transfer of asset and therefore, the benefit of tolerance limit is not available to the assessee in view of these decisions.
The learned authorized representative vehemently opposed the submission of learned departmental representative and referred to page number 21 of the assessment order wherein assessee specifically objected to the above addition before the learned assessing officer submitting that that there can be several reasons for the difference such as shape of the plot, location et cetera and therefore, the learned AO should have referred the matter to the valuation officer. Even otherwise, he submitted that the several judicial precedents have held that it is retrospective in nature. He further referred to the central board of direct taxes Circular number 8 of 2018 dated 26/12/2018 wherein the tolerance band of 5% was provided which is enhanced to 10% with effect from 1/4/2021. He therefore submitted that there is no reason why assessee should not be given a benefit of the above tolerance band.
We have carefully considered the rival contention and perused the orders of the lower authorities.
We find that identical issue arose before the coordinate bench in case of Sai Bhargavanath Infra v Assistant Commissioner of Income-tax [2022] 144 taxmann.com 168 (Pune Trib.) For assessment year 2015-16 wherein it has been held that- “4. We observe from plain reading of sec. 43CA that it provides in a case where consideration received or accruing as a result of the transfer by an assessee of an asset other than the capital asset being land or building is lesser than the value adopted or assessed by any Government Satyendra Kumar Triloknath Goyal authority for the purpose of payment of stamp duty then the difference will taxed as deemed income. At the same time, the proviso to this section states that if there is a difference of such value within 10% margin then there cannot be any addition on the pretext of deemed income and this 10% margin has been inserted by Finance Act, 2020 w.e.f. 1-4-2021. The assessment year under consideration before us is A.Y. 2015-16 that is prior to the date when the amendment look place and such 10% margin was inserted. The question therefore, arises whether this amendment effective from 1-4-2021 can even apply to prior assessment years as well. The assessee had relied on Pune Tribunal decision in (supra) where the Tribunal has given retrospective effect in regard to section 43CA first proviso where the tolerance margin of 10% has been held to be applicable even for the prior assessment years. However, in this decision, reliance was placed on another decision of Bombay Tribunal in the case of Maria Fernandes Cheryl v. ITO (International Taxation) [2021] 123 taxmann.com 252/187 ITD 738 (Mum) which relates to section 50C of the Act. It was contended that section 43CA and section 50C of the Act are pari materia provisions and therefore, holding of retrospective application of section 50C is even applicable making retrospective application to section 43CA of the Act as well. The Id. A.R was unable to place on record before us any direct decision where the first proviso of section 43CA which has been brought into effect from 1-4-2021 was held to be applicable retrospectively. In such scenario, we place reliance on the doctrine enshrined in the judgment of the full bench decision of Hon'ble Supreme Court in the case of CIT v. Vatika Township (P) Ltd. [2014] 49 taxmann.com 249/227 Taxman 121/367 ITR 466. The fact in this case was that search and seizure u/s 132 was conducted on 10-2-2001 pursuant to which the assessment order for the block period from 1-4- 1989 to 10-2-2000 was passed on 28-02-2002 at a total undisclosed income of Rs. 85,00,000/-. The tax was charged as prescribed in section 113 of the Act. Subsequently, a proviso was inserted u/s 113 by the Finance Act, 2002 w.e.f. 01-06-2002 to provide for levy of surcharge at 10%. The A.O took the view that the said amendment was clarificatory in nature and he levied surcharge by passing rectification order u/s 154 of the Act. However, the Tribunal and the Hon'ble High Court upheld the assessee's claim that the said amendment was prospective in nature and did not apply to block period falling before 01-06-2002. However, the plea of the assessee was rejected by the Hon'ble Supreme Court in CIT v. Suresh N. Gupta [2008] 166 Taxman 313/297 ITR 322 also held that the proviso to section 113 is clarificatory and hence, should be read into block assessment scheme under Chapter XIV-B with retrospective effect. Similar view was reiterated by the Hon'ble Supreme Court in CIT v.
Satyendra Kumar Triloknath Goyal Rajiv Bhatara (2009) 178 Taxman 285/310 ITR 105 by holding the proviso u/s 113 to be retrospective in nature. Then the Supreme Court was of the view that the issue ought to be referred to a larger Bench of Five Judges. In this decision, the Hon'ble Supreme Court has given fundamental doctrine of retrospective applicability of provision. It has been held that no statute shall be construed to have a retrospective operation unless such a construction appears very clearly in terms of the Act or arises by necessary and distinct implication. The assessment creates a vested right on the assessee. The assessee cannot be subjected to re-assessment unless the provision to that effect is inserted by amendment either retrospectively or by necessary implications retrospectively. The Hon'ble Apex Court also opined that there cannot be any imposition of tax without the authority of law and such law has to be unambiguous and should prescribe liability to pay taxes in clear terms. This very principle is based on the doctrine, which means that if a particular provision of statute is not clear regarding imposition of tax or because of persons from whom the tax has to be collected, in such case the persons should not be fastened with any liability to pay tax. It was further observed that though the Chief Commissioner in their Conference suggested that there should be retrospective amendment to section 113 of the Act, the Legislature chose not to do so even though for other provisions in which the legislature in its wisdom felt the need to do so has brought in amendments made with retrospective effect. The CBDT circular No. 2002 dated 27-08-2002 also makes it clear that the amendment to section 113 is prospective. Consequently, the conclusion reached in N. Suresh Gupta (supra) treating the proviso to section 113 of the Act as clarificatory and having retrospective effect was held to be incorrect and was over-ruled. 5-6. The essence of the decision is that if any liability has to be fastened with the assessee tax-payer retrospectively then the statute and the provision must spell out specifically regarding such retrospective applicability. However, if the provision is beneficial for the assessee, in view of the welfare legislation spirit imbibed in the Income-tax Act, such beneficial provision can be applied in a retrospective manner. In the case of the assessee before us for the preceding assessment year i.e. A.Y. 2014-15, the difference of the consideration received from transfer of asset and the value adopted for stamp duty valuation was apparently not less than 10% tolerance margin which has been brought into effect from 1-4-2021 in the first proviso to section 43CA and therefore, the Tribunal in its wisdom had restored the matter to the file of the A.O for fresh adjudication (supra). Before us, admittedly such difference of tolerance margin is less than 10%. Now the question of applicability of Satyendra Kumar Triloknath Goyal this proviso of section 43CA retrospectively covering the assessment year in question i.e. A.Y. 2015-16, from the spirit of Supreme Court decision in Vatika Township (P.) Ltd. (supra) case is analysed. Now, the intent of the legislature is to provide relief to the assessee in case such difference is less than 10% which has been brought into effect from 1- 04-2021 thereby providing benefit to the assessee. This being the beneficial provision therefore will even have retrospective effect and would apply to the present assessment year 2015-16. At this juncture we would also refer to the decision of Pune Tribunal in Dinar Umeshkumar More v. ITO [IT Appeal No. 1503 (Pune) of 2015, dated 25-1-2019], where the said proposition of applicability of a beneficial provision was considered in light of Hon'ble Apex Court decision in the case of Vatika Township (P) Ltd. (supra). In the said Tribunal order, the Bench observed that if the legislature is going to confer a benefit then such an averment will have a retrospective effect. The Tribunal observed that while discussing this issue in para 33 of the said judgment, the Hon'ble Apex Court held that "We would also like to point out, for the sake of completeness, that where a benefit is conferred by legislation, the rule against a retrospective construction is different. If legislation confers a benefit on some persons but without inflicting a corresponding detriment on some other person or on the public generally and where to confer such benefit appears to have been the legislators object, then the presumption would be that such legislation, giving it a purposive construction, would warrant it to be given a retrospective effect". The net effect of this judgment is that if a fresh benefit is provided by the Parliament in an existing provision, then such an amendment should be given retrospective effect. Therefore, even without going into the merits of the case by the application of first proviso to section 43CA having retrospective effect, the grounds of appeal of the assessee stands allowed."
Therefore, the above decision of the coordinate bench clearly clinches the issue in favour of the assessee wherein it has been held that tolerance band of 10% would be applicable retrospectively. We also find that similar view has also been taken in i. SHRI HARISH H GANDHI VERSUS ACIT
33. (1), MUMBAI And ii. V.K. DEVELOPERS VERSUS THE ACIT, CIRCLE-3, PUNE. ITA No.923/PUN/2019 Satyendra Kumar Triloknath Goyal iii. M/S. SHETH DEVELOPERS PRIVATE LIMITED VERSUS DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-4 (2), MUMBAI AND (VICE-VERSA) TA No. 1953/Mum/2020 And And ITA No.11/Mum/2021 And ITA No. 12/Mum/2021 iv. M/S. CITY CORPORATION LIMITED, (EARLIER KNOWN AS M/S. AMANORA FUTURE TOWERS PVT. LTD.,) VERSUS DCIT, CIRCLE-1 (1) PUNE AND VICE VERSA (2022) 96 ITR 044. We find that the decision of the coordinate bench in case of welfare properties private limited versus DCIT (supra) did not consider the retrospective applicability of the tolerance band provided under section 43CA of the act same was not the issue argued before it.
The decision of the honourable Bombay High Court in case of 111 taxmann.com 94 in case of Swanand properties private limited was only with respect to applicability of provisions of section 43CA of the act for assessment year 2005-06 wherein it has been held that this provisions are applicable only with effect from 1/4/2014. Therefore, it does not help the case of the revenue.
Accordingly we hold that if the difference between the stamp duty value of a stock in trade and the transaction value covered by the provisions of section 43CA is less than 10% even prior to 1/4/2021, does not warrant any addition in the hands of the assessee. Accordingly, we direct the learned assessing officer to delete the addition of Rs. 203,051/- made under section 43CA of the act. Ground umber 4 of the appeal of the assessee is allowed.”
From the perusal of the above decision, it is noticed that the coordinate bench has held that the proviso to section 43CA providing relief to the assessee to the extent of the difference being less than 10% is applicable retrospectively for the reason that it is a beneficial provision as has been held by the Hon'ble Supreme Court in the case Vatika Township Pvt. Ltd. (supra). We also notice that the coordinate bench in the case of Maria Fernandes Cheryl vs ITO(IT) [2021] 123 taxmann.com 252 (Mumbai - Trib.) in the context of section 50C has elaborated the legislative intent of introducing the tolerance band and held that the amendment providing the tolerance band is retrospective in nature and relates back Satyendra Kumar Triloknath Goyal to the date of insertion of statutory section to the Act. The relevant extract of the observations made by the coordinate bench are extracted here under –
…………………….. The insertion of the third proviso to Section 50C(1) provides for this tolerance band with respect to a certain degree of variations between the stamp duty valuation and the stated consideration of an immovable property. In other words, as long as the variations are within the permissible limits, the anti-avoidance provisions of Section 50C do not come into play. As we have noted earlier, the CBDT itself accepts that there could be various bonafide reasons explaining the small variations between the sale consideration of immovable property as disclosed by the assessee vis-à-vis the stamp duty valuation for the said immovable property. Obviously, therefore, disturbing the actual sale consideration, for the purpose of computing capital gains, and adopting a notional figure, for that purpose, will not be justified in such cases. On a conceptual note, an estimation of market price is an estimation nevertheless, even if by a statutory authority like the stamp duty valuation authority, and such a valuation can never be elevated to the status of such a precise computation which admits no variations. The rigour of Section 50C(1) was thus relaxed, and very thoughtfully so, to take these bonafide cases of small variations between the stated sale consideration vis-à-vis stamp duty valuation, out of the scope of adjustments contemplated in the computation of capital gains under this anti-avoidance provision. In our humble understanding, it is a case of a curative amendment to take care of unintended consequences of the scheme of Section 50C. It makes perfect sense, and truly reflects a very pragmatic approach full of compassion and fairness, that just because there is a small variation between the stated sale consideration of a property and stamp duty valuation of the same property, one cannot proceed to draw an inference against the assessee, and subject the assessee to practically prove his being truthful in stating the sale consideration. Clearly, therefore, this insertion of the third proviso to Section 50C(1) is in the nature of a remedial measure to address a bonafide situation where there is little justification for invoking an anti-avoidance provision. Similarly, so far as enhancement of tolerance band to 10% by the Finance Act 2020, is concerned, as noted in the CBDT circular itself, it was done in response to the representations of the stakeholders for enhancement in the tolerance band. Once the Government acknowledged this genuine hardship to the taxpayer and addressed the issue by a suitable amendment in law, the next question was what should be a fair tolerance band for variations in these values. As a responsive Government, which is truly the hallmark of the present Government, even though the initial tolerance band level was taken at 5%, in response to the representations by the stakeholders, this tolerance Satyendra Kumar Triloknath Goyal band, or safe harbour provision, was increased to 10%. There is no particular reason to justify any particular time frame for implementing this enhancement of tolerance band or safe harbour provision. The reasons assigned by the CBDT, i.e., "the variation between stamp duty value and actual consideration received can occur in respect of similar properties in the same area because of a variety of factors, including the shape of the plot or location," was as much valid in 2003 as it is in 2021. There is no variation in the material facts in this respect in 2021 vis-à-vis the material facts in 2003. What holds good in 2021 was also good in 2003. If variations up to 10% need to be tolerated and need not be probed further, under section 50C, in 2021, there were no good reasons to probe such variations, under section 50C, in the earlier periods as well. We are, therefore, satisfied that the amendment in the scheme of Section 50 C(1), by inserting the third proviso thereto and by enhancing the tolerance band for variations between the stated sale consideration vis-à-vis stamp duty valuation to 10%, are curative in nature, and, therefore, these provisions, even though stated to be prospective, must be held to relate back to the date when the related statutory provision of Section 50C, i.e. 1st April 2003. In plain words, what is means is that even if the valuation of a property, for the purpose of stamp duty valuation, is 10% more than the stated sale consideration, the stated sale consideration will be accepted at the face value and the anti-avoidance provisions under section 50C will not be invoked.
8. Once legislature very graciously accepts, by introducing the legal amendments in question, that there were lacunas in the provisions of section 50C in the sense that even in the cases of genuine variations between the stated consideration and the stamp duty valuation, anti- avoidance provisions under section 50C could be pressed into service, and thus remedied the law, there is no escape from holding that these amendments are effective with effect from the date on which the related provision, i.e., Section 50C, itself was introduced. These amendments are thus held to be retrospective in effect. In our considered view, therefore, the provisions of the third proviso to Section 50C (1), as they stand now, must be held to be effective with effect from 1st April 2003. We order accordingly. Learned Departmental Representative, however, does not give up. Learned Departmental Representative has suggested that we may mention in our order that "relief is being provided as a special case and this decision may not be considered as a precedent". Nothing can be farther from a judicious approach to the process of dispensation of justice, and such an approach, as is prayed for, is an antithesis of the principle of "equality before the law," which is one of our most cherished constitutional values. Our judicial functioning has to be even-handed, transparent, and Satyendra Kumar Triloknath Goyal predictable, and what we decide for one litigant must hold good for all other similarly placed litigants as well. We, therefore, decline to entertain this plea of the assessee.
We have noted that as against the stated consideration of Rs. 75,00,000, the stamp duty valuation of the property is Rs. 79,91,500. The difference is just Rs. 4,91,500, which is about 6.55% of the stated sale consideration. As the difference between the stated consideration vis-à-vis the stamp duty valuation is admittedly less than 10% of the stated consideration in this case, and in the light of the above discussions, we are of the considered view that section 50C will have no application in the matter. The enhancement in capital gain computation, as made by the Assessing Officer, thus stands disapproved. The assessee gets the relief accordingly. (emphasis supplied)
The ratio laid down in the above decision is that the rational for holding newly inserted proviso to sub-section (1) to section 50C of the Act as curative in nature, hence, having retrospective application. In our considered view the same analogy would apply to the provisions of Section 43CA of the Act also since both the sections are similarly worded with the difference being that section 50C is applicable in case of transfer of capital asset being land or building or both and section 43CA is for the transfer of asset (other than capital asset) being land or building or both. We further notice that in Circular 8 of 2018 dated 26.12.2018 containing Explanatory Notes to the provisions of Finance Act 2018 in Para 16 for ‘Rationalization of Sections 43CA and 50C’ it is stated that the proviso containing the tolerance band is inserted in order to minimize hardship in case of genuine transactions in the real estate sector. When the reason behind the introduction of the proviso is read with the ratio laid down by the judicial precedence as discussed here in above on the retrospective applicability of beneficial provision, we have no hesitation in holding that the tolerance band of 10% is applicable in assessee's case for AY 2014-15. In assessee's case the difference between the stamp duty valuation that is considered for making addition under section 43CA and the sale Satyendra Kumar Triloknath Goyal consideration is 7.7% which is less than the tolerance band as per the proviso to the said section (refer table extracted in the earlier part of this order). Accordingly we see no reason to interfere with the decision of the CIT(A) who has deleted the addition made by the AO under section 43CA of the Act.
In result, appeal filed by the revenue is dismissed.