SAI ESSEN DEVELOPERS,PUNE vs. PRINCIPAL COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 2(4), PUNE

Facts of the case, in brief, are that the assessee is engaged in business of real estate and construction. Return of income was furnished on 31.10.2018 declaring an income of Rs.15,26,47,500/-. The case was selected for scrutiny on the basis of survey proceedings u/s 133A of the IT Act. Statutory notices u/s 143(2) and 142(1) were issued from time to time calling for various details. During the course of survey proceedings on 27.10.2018 statement of Shri Narendra Agarwal, partner in M/s Sai Essen Developers was recorded u/s 131 of the IT Act wherein he stated that he would be offering estimated income of Rs.15.29 crores for assessment year 2018-19 in respect of Aishwaryam Hamara Phase-1. On going through the return filed, the Assessing Officer found that the assessee has declared gross income of Rs.22,61,05,434/- and after claiming deduction u/s 80IB of Rs.7,34,57,930/- had offered total 3 income of Rs.15,26,47,500/- to tax. The assessment was completed u/s 143(3) of the IT Act by determining the same income of Rs.15,26,47,500/- as returned by the assessee. 4. On perusal of the assessment record and submissions furnished by the assessee during the assessment proceedings, Ld. PCIT, Central, Pune found that the assessee has sold flats being stock in trade to various persons & there is substantial variation between the agreement value and the ready reckoner value of some of the units which amounts to Rs.15,15,659/- and therefore according to Ld. PCIT, Central, Pune the provisions of section 43CA of the IT Act were clearly attracted in this case. However, according to Ld. PCIT, Central, Pune, the Assessing Officer failed to consider this aspect and without examining this issue of applicability of section 43CA of the IT Act completed the assessment proceedings without treating the above difference amount as taxable income in the light of section 43CA of the IT Act. Accordingly, Ld. PCIT, Central, Pune issued statutory notice u/s 263 of the IT Act and after considering the submissions filed by the assessee came to the conclusion that the assessment order for assessment year 2018-19 dated 24.06.2021 passed by the Assessing 4 Officer u/s 143(3) of the IT Act is erroneous in so far as it is prejudicial to the interest of the Revenue. Accordingly, vide order dated 21.02.2024 passed u/s 263 of the IT Act the said assessment order dated 24.06.2021 was set-aside to the file of Assessing Officer for examining the above issue in detail while framing the fresh assessment order. 5. It is this above order against which the assessee is in appeal before this Tribunal. 6. Ld. AR appearing from side of the assessee submitted before us that the order passed u/s 263 of the IT Act is unjustified. Ld. AR submitted before us that the Assessing Officer issued notice u/s 142(1) on 10.03.2021 wherein total 20 questions were asked from the assessee. In question no.15 the Assessing Officer asked the assessee to provide a chart wherein detail of agreement value, ready reckoner value and the difference, if any, between them was sought. Ld. AR further submitted that in response to above notice the assessee furnished reply to all the queries including the answer to question no.15 also. In reply to question no.15, the assessee furnished a chart wherein complete detail of flat, name of purchaser, agreement value and ready reckoner value was produced. Copy of 5 the same reply is also produced before the Bench. Accordingly, Ld. AR contended that each and every detail was furnished before the Assessing Officer even the chart showing difference of Rs.15,15,659/- in agreement value and ready reckoner value was considered by the Assessing Officer and thereafter the assessment order was passed accepting the returned income. Ld. AR further submitted that Hon’ble Courts has already held that the issue on which Assessing Officer has applied his mind and arrived at certain conclusion and on the issue which is not prejudicial to the interest of the Revenue, initiation of proceedings u/s 263 of the IT Act are bad in law. In support of this contention, Ld. AR relied on judgement of Hon’ble Delhi High Court in the case of CIT vs. Sunbeam Auto [2021] 187 ITD 738 (Mumbai) wherein it was held that the tolerance margins of 10% carries retrospective effect being curative 6 in nature. Apart from above decision, Ld. AR also relied on the decision passed by Juri ictional Tribunal in the case of Sai Bhargavnath Infra vs. ACIT, ITA No.1332/PUN/2019 order dated 17.08.2022 wherein it was held that 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 01.04.2021 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. Accordingly, Ld. AR requested before the bench to set-aside the order passed by Ld. PCIT u/s 263 of the IT Act, since the difference in the agreement value & the Ready Reckoner value was less than 10% . 8. Ld. DR appearing from side of the Revenue relied on the order passed by Ld. PCIT, Central, Pune and requested to confirm the same. Ld. DR in support of his contention relied on the order passed by coordinate bench of this Tribunal in the case of Welfare Properties (P.) Ltd. vs. DCIT [2020] 113 taxmann.com 156 (Mumbai – Trib.) order dated 29.11.2019 and the judgement of Hon’ble Madras High Court in the case of CIT vs. Pooshya Exports (P.) Ltd. [2003] 127 Taxman 369 (Madras) order dated 19.11.2002. 7 9. We have heard Ld. Counsels from both the sides and perused the material available on record including paper book as well as copies of case laws furnished by the assessee as well as by Ld. DR. In this regard, we find that the assessee is engaged in the business of real estate, development and construction and sold residential flats forming stock in trade to various persons. Ld. PCIT, Central, Pune found that there is difference of Rs.15,15,659/- in the agreement value of flats and ready reckoner value but the same was not taxed by the assessing officer in the light of section 43CA of the IT Act. Accordingly, Ld. PCIT, Central, Pune by invoking provisions of section 263 of the IT Act set-aside the assessment order and directed the Assessing Officer to pass assessment order afresh after considering the provisions of section 43CA of the IT Act. In this regard, Ld. AR submitted before us that after insertion of section 43CA of the IT Act tolerance margin of 10% was provided w.e.f. 01.04.2021 and in the light of various judgements and decisions of coordinate benches of this Tribunal the benefit of tolerance margin of 10% is to be allowed retrospectively. In this regard, Ld. AR relied on the decision passed by Juri ictional Tribunal in the case of Sai Bhargavnath Infra vs. ACIT, ITA No.1332/PUN/2019 order 8 dated 17.08.2022 wherein the Tribunal has retrospectively allowed the benefit of 10% tolerance margin by observing as under :- “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 wi om 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 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 Pvt. Ltd. (supra)‟s 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 01-04-2021 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 ITA No. 1503/PUN/2015 for A.Y. 2011-12 dated 25-1-2019 in the case of Shri Dinar Umeshkumar More Vs. ITO Ward 3(3) Malegaon, where the said proposition of applicability of a beneficial provision was considered in light of Hon‟ble Apex Court decision in the case of Vitika Township Pvt. 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 9 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. 7. In the result, the appeal of the assessee is allowed.”

On the other hand, Ld. DR relied on the judgement of Hon’ble Tribunal passed in the case Sai Bhargavnath Infra (supra) wherein the Tribunal held that 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 01.04.2021 thereby providing benefit to the assessee. This being the beneficial provision therefore will even have retrospective effect and would apply to the present 10 assessment year. Accordingly, we hold that the assessee in the instant case is also entitled to get the benefit of tolerance margin of 10% for the period under consideration retrospectively and therefore, the order passed by the Assessing Officer cannot be said to be erroneous or prejudicial to the interest of the Revenue. Since the difference in the agreement value and the ready reckoner value is less than 10% of tolerance margin, therefore the Revenue is at no loss on this count. Therefore, we set-aside the order passed u/s 263 of the IT Act by Ld. PCIT, Central, Pune. Thus, the grounds of appeal raised by the assessee are allowed. 12. In the result, the appeal filed by the assessee is allowed. Order pronounced on this 08th day of September, 2025. (MANISH BORAD) JUDICIAL MEMBER

गाडᭅ फ़ाइल / Guard File. आदेशानुसार / BY ORDER,