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Facts
The assessee, a developer, faced an addition of Rs. 1,03,71,727/- under Section 43CA for AY 2020-21 because the purchase consideration for immovable properties under development agreements was less than the value assessed by the stamp valuation authority. The CIT(A) dismissed the assessee's appeal.
Held
The Tribunal noted that the assessee had submitted crucial documents, namely cancellation of development agreements and revocation of power of attorney, which were not produced before the lower authorities. Considering the relevance of these documents to the penalty imposition, the Tribunal restored the appeal to the CIT(A) to pass a fresh order after hearing the assessee and considering the new evidence.
Key Issues
Whether an addition under Section 43CA and subsequent penalty are sustainable if the underlying development agreements and power of attorney have been revoked, and if such new evidence should be considered by the appellate authority.
Sections Cited
250, 43CA, 270A, 142(1), 143(2), 154
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Income Tax Appellate Tribunal, “A” BENCH KOLKATA
Before: Shri Rajesh Kumar & Shri Pradip Kumar Choubey
order
: December 05, 2025 ORDER
Per Pradip Kumar Choubey, Judicial Member:
This appeal filed by the assessee is directed against the order dated 14.05.2025 of the National Faceless Appeal Centre passed under Section 250 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) for the assessment year 2020–21.
Brief facts of the case are that the assessee filed his Income Tax Return declaring total income at Rs.4,12,600/- and the case of the assessee was selected for scrutiny for examining issue related to investment in immovable property. During assessment proceedings, the Assessing Officer noticed that the assessee was a developer and had executed development agreements with respect to three immovable properties whose owners were persons other than the assessee and the agreements were got registered in the office of registering authority. The Assessing Officer noticed that the purchase-consideration was less than Biswarup Samadder the value of properties assessed by stamp valuation authority. He, therefore, made addition of Rs. 1,03,71,727/- u/s 43CA of the Act treating the difference between transfer-consideration and value assessed by stamp valuation authority
Being aggrieved by the said order, the assessee filed an appeal before the Ld. CIT(A) wherein also the appeal of the assessee has been dismissed.
Being aggrieved and dissatisfied by the order of the Ld. CIT(A), the assessee is in appeal before us challenging the impugned order thereby submitting that the Assessing Officer as well as the ld. CIT(A) did not consider the case of the assessee as there was joint development agreement and it was just in the nature of the contract between landowners and the assessee developer wherein the landowner provided their land and the assessee developed such lands using his funds and experts and no transfer and possession was taken place while entering into a development agreement. The ld. AR further submits that both deeds were made in between the assessee and landowners Sri Avhishek Das and Smt. Dipalika Das and subsequently revoked by landowners. According to him, since the joint development agreement and the power of attorney has been revoked, hence no addition for under-reporting as appreciated by the Assessing Officer is justified and the penalty imposed for the same is unsustainable in law.
Contrary to that, the ld. DR supports the impugned order.
Upon hearing the submissions of the counsels of the respective parties and we have perused the impugned order. It appears that in the present case, the assessee challenged the addition of Rs.1,03,71,727/- made u/s 43CA of the Act and he has filed the appeal against the Biswarup Samadder penalty order u/s 270A of the Act. The ld. AR filed the following documents:
We find that copy of cancellation, development agreement and copy of revocation of power of attorney as submitted by the assessee had not been produced before the assessment proceedings nor the same has been produced during the penalty proceedings. The submission of the assessee is that since the development agreement has been cancelled and power of attorney has also been revoked by the assessee, therefore, no penalty should be imposed. Since the copy of cancellation and copy of revocation have not been produced before the lower authorities, we are inclined to restore the appeal of the assessee to the file of CIT(A) by setting aside the order of the ld. CIT(A) with this direction to pass a fresh Biswarup Samadder order after being heard to the assessee and after considering the documents.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Kolkata, the 5th December, 2025.