RAMAR MURTHY,CHENNAI vs. DEPUTY COMMISSIONER OF INCOME-TAX, NON-CORPORATE CIRCLE 4(1) CHENNAI, GREAMS ROAD, CHENNAI

The Assessee has raised the following grounds of appeal: “1. That the Learned Additional/Joint Commissioner of Income Tax (Appeals). Aurangabad ["Ld.AddVJCIT(A)"] erred in not appreciating that the assessment order dated 05.12.2019 passed by the Assistant Commissioner of Income Tax, Non Corporate Circle 5(1), Chennai ["Assessing Officer"] u/s. 143(3) of the Income-tax Act, 1961 ["Act"], for the Assessment Year 2017-18 is invalid, void ab initio, and liable to be quashed as being bad in law.

Briefly stated facts of the case are that the Assessee is an individual. The return of income for the Assessment Year 2017-18 was filed on 07.11.2017 disclosing total income of Rs.1,19,85,060/-. Against the said return of income, the assessment was completed by the ACIT, Non Corporate Ward, Circle-1, Chennai(hereinafter called ‘AO’) vide order dated 05.12.2019 passed u/s.143(3) of the Income Tax Act, 1961 at a total income of Rs.1,41,82,260/-. While doing so, the Assessing Officer made addition of Rs.19,06,500/- u/s.43CA of the Income Tax Act, 1961. The factual background leading to the above addition is as under :

The appellant sold several lands during the previous year relevant to the assessment year under consideration. One of the lands was sold was shown as a business asset was sold to one T.Kameshwari 15.06.2016 for a consideration of Rs.57,19,500/-. However, the value for the purpose of stamp duty Rs.76,26,000/-, accordingly, the Assessing Officer made addition u/s.43CA of the Act, the difference amount of Rs.19,06,500/-. The Assessing Officer also made disallowance of PF & ESI for belated remittances of Rs.2,10,700/-.

Being aggrieved by the above assessment order, appellant filed an appeal before the ld.CIT(A) who vide impugned order confirmed the addition on account of belated remittance of PF & ESI following law laid down by the Hon’ble Supreme Court in the case of Checkmate Services Private Limited vs CIT in Civil Appeal No.2833 of 2016 order dated 12.10.2022 and also confirmed the addition made u/s.43CA of the Income Tax Act.

Being aggrieved by the order of the ld.CIT(A), appellant is in appeal before us in the present appeal. The ld.Counsel submits that the provisions of section 43CA have no application to the facts of the case, in as much as, the appellant had entered agreement with a buyer on 14.02.2014 to sell property @4500 per square feet. However, the property was registered during the previous year related to assessment year under consideration, when the guidelines value of the property was enhanced to Rs.6000 per square feet. It is further submitted that the Assessing Officer cannot make addition mechanically without making reference to the District Valuation Officer(DVO) for the purpose of computing the Fair Market Value of difference of property sold.

On the other hand, Learned Sr.DR submits that the appellant never made claim before the Assessing Officer or ld.CIT(A), that value of stamp duty was higher than the Fair Market Value of the property and the appellant never submitted before the Assessing Officer that the appellant had entered into agreement to sell the property in the year 2014.

We heard the both the parties and perused the material on record. The issue that arises for our consideration is whether the ld.CIT(A) was justified in sustaining addition of Rs.19,06,500/- lakhs made by the Assessing Officer u/s.43CA of the Income Tax Act, 1961. On bare perusal of the assessment order, there is no dispute that the value adopted for stamp duty purpose was Rs.76,06,500/- the land sold was held as a business asset. But there is nothing on record to show that the Assessing Officer had given a reasonable opportunity to the appellant before invoking the provisions of section 43CA of the Act. Therefore, we are of the considered opinion that the matter requires a remand to the file of Assessing Officer for a denovo assessment in accordance with law after affording an opportunity of being heard to the appellant.

In the result, appeal filed by the Assessee is partly allowed for statistical purpose. Order pronounced in the open Court on 26th May, 2026.