ADARSH DEVELOPERS,MUMBAI vs. INCOME TAX OFFICER - 22(1)(1), MUMBAI

In this case, during the course of assessment proceedings, on verifying the copy of sale agreements executed by the Assessee during the assessment year under consideration, it was found by the Assessing Officer (AO) that the Assessee had executed three agreements on a consideration less than the stamp duty value of the properties, detailed below:

As the value of the property sold by the Assessee was less than stamp duty value, therefore it was opined by the AO that the provision of section 43CA would be applicable and therefore he showcaused the Assessee about the applicability of the section 43CA of the Act and as to why the difference of Rs.58,72,378/- between the consideration shown by the Assessee and the stamp duty value, should not be added to the total income of the Assessee.

The Assessee in response to show cause has claimed that the project executed by the Assessee was SRA project and total surrendered area was full of slum dwellers and stables (Tabela). The project was undertaken before the year 2004 which was initiated by other party however there were some legal issues and hassles and all type of harassment from the slum dwellers and therefore the work was held up for quite some time, which continued till 2010 and slowly some progress was there but again stopped due to legal cases. The Assessee without prejudice to the above submissions, also requested the AO for referring the case to the DVO to adjudicate the fair market value.

The AO considering the reply of the Assessee, found the same as not acceptable and by taking refuge of the provision of section 43CA of the Act, ultimately treated the difference between stamp duty value and agreement value in respect of above mentioned three agreements, which worked out to Rs.58,72,378/- in total, added to the total income of the Assessee, however, in the order in para 9 has observed as under:

The Assessee, being aggrieved, challenged the said addition before the Ld. Commissioner, however, of no avail, as the Ld. Commissioner affirmed the aforesaid addition. The Assessee being aggrieved has filed the instant appeal.

We have heard the parties and perused the material available ion record and given thoughtful consideration to the orders passed by the authorities below and the contentions raised by the parties. Admittedly, in para no.9 of the assessment order, it is categorically recorded by the AO that matter was getting barred by limitation on 31.12.2016 and therefore without waiting further for the DVO report, the AO vide order dated 27.12.2016 u/s 143(3) of the Act completed the assessment but subject to the modification if any to be brought by the DVO, whose report was awaited. Admittedly, the DVO/Assistant Valuation Officer-2, vide 23.06.2017 has determined the FMV of the property u/s 55A of the Act, which remained to be considered. Thus, considering the peculiar facts and circumstances in totality and for the just decision of the case and substantial justice, we are inclined to remand the instant case to the file of the AO to determine afresh the assessment by taking into consideration the DVO report referred to above and also by affording reasonable opportunity of being heard to the Assessee. Thus, the case is remanded to the file of the AO accordingly.

In the result, the appeal filed by the Assessee stands allowed for statistical purposes.