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Facts
The assessee filed its income tax return declaring a total income. During the assessment, the AO observed a difference between the sale consideration of properties and their stamp duty value. The AO invoked Section 43CA of the Income Tax Act and added the difference to the assessee's income.
Held
The CIT(A) restricted the disallowance to Rs.9,74,200/- for a specific property (D-9), upholding the AO's addition. The Tribunal noted that the assessee failed to provide sufficient evidence regarding the sale of D-9 to substantiate the sale consideration against the market value.
Key Issues
Whether the addition made by the AO under Section 43CA on account of the difference between sale consideration and stamp duty value is sustainable, especially when the assessee claims to have lost supporting documents?
Sections Cited
43CA
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Income Tax Appellate Tribunal, MUMBAI BENCH “B” MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI RAHUL CHAUDHARY
This appeal has been preferred by the assessee against order dated 20.11.2023 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2014-15, raising following grounds:
On the facts and in the circumstances of the case and in law, Rs. 2,92,261 the Hon'ble National Faceless Appeal Centre (NFAC) erred in M/s New Tech Infrastructure Pvt. Ltd. M/s New Tech Infrastructure Pvt. Ltd. upholding the decision of Ld.AO of additionof Rs.9,74,200/ upholding the decision of Ld.AO of additionof Rs.9,74,200/ upholding the decision of Ld.AO of additionof Rs.9,74,200/-on account of difference between sales consideration and marke of difference between sales consideration and market value u/s t value u/s 43CA(1) of the Income Tax Act, 1961 on basis of insufficient documents 43CA(1) of the Income Tax Act, 1961 on basis of insufficient documents 43CA(1) of the Income Tax Act, 1961 on basis of insufficient documents and information. The appellant company prays that the said addition and information. The appellant company prays that the said addition and information. The appellant company prays that the said addition may please be deleted. may please be deleted.
Briefly stated, facts of the case are that the Briefly stated, facts of the case are that the Briefly stated, facts of the case are that the assessee filed return of income return of income on 24.09.2014, declaring total income declaring total income at Rs.8,90,630/-. The return of income filed by the assessee was . The return of income filed by the assessee was . The return of income filed by the assessee was selected for scrutiny and statutory notices under the Income-tax selected for scrutiny and statutory notices under the Income selected for scrutiny and statutory notices under the Income Act, 1961 (in short ‘the Act’) were issued and complied with. During Act, 1961 (in short ‘the Act’) were issued and complied with. During Act, 1961 (in short ‘the Act’) were issued and complied with. During the assessment proc the assessment proceedings, the Assessing Officer observed that eedings, the Assessing Officer observed that assessee was engaged in the sale of properties. He further observed assessee was engaged in the sale of properties. He further observed assessee was engaged in the sale of properties. He further observed difference in sale consideration of the properties recorded in its difference in sale consideration of the properties recorded in its difference in sale consideration of the properties recorded in its books of accounts and stamp duty value determined by the Joint books of accounts and stamp duty value determined by the Joint books of accounts and stamp duty value determined by the Joint Sub-registrar of valuation of valuation. The detail of the properties w of the properties where the differences was noticed by the AO, is was noticed by the AO, is as under:
Name of the Buyer er Sale Consideration Market Value Addition u/s 43CA and Godown No. D-18, Jalan Trading Co. 15,00,000/- 22,32,000/- 7,32,000/- D-19, Jalan Trading Co. 15,00,000/- 22,32,0007- 7,32,000/- D-7, Komal B Chandan 14,00,0007- 24,74,0007- 10,74,000/- D-8, Vimla Motilal Jain 15,00,000/- 24,74,000/- 9,74,000/- D-9, Sanghavi Bothra 15,00,000/- 24,74,200/- 9,74,200/- Engineer Total 74,00,000/- 1,18,86,000/- 44,86,200/- 2.1 The Assessing Officer invoked section 43CA of the Act and The Assessing Officer invoked section 43CA of the Act and The Assessing Officer invoked section 43CA of the Act and added added the the difference difference of of Rs.44,86,200/ Rs.44,86,200/- between between the the sale sale consideration recorded in the books of accounts and the stamp consideration recorded in the books of accounts and the stamp consideration recorded in the books of accounts and the stamp duty value determined by the Sub duty value determined by the Sub-registrar.
M/s New Tech Infrastructure Pvt. Ltd. M/s New Tech Infrastructure Pvt. Ltd.
On further appeal, the Ld. CIT(A On further appeal, the Ld. CIT(A) restricted the disallowance to ) restricted the disallowance to Rs.9,74,200/- observing as under: observing as under:
Through Ground No. 2, the appellant has challenged the addition of Rs. Through Ground No. 2, the appellant has challenged the addition of Rs. Through Ground No. 2, the appellant has challenged the addition of Rs. 44,86,200/-u/s 43CA. During the appellate proceeding, the appellant u/s 43CA. During the appellate proceeding, the appellant u/s 43CA. During the appellate proceeding, the appellant submitted some additional evidences which were no submitted some additional evidences which were not submitted before t submitted before the AO regarding the sale of properties. the AO regarding the sale of properties. The additional evidences were The additional evidences were sent to the AO to verify the correctness of the facts. sent to the AO to verify the correctness of the facts. The AO submitted The AO submitted his remand report on 26.04.2019. In his remand report, the AO after his remand report on 26.04.2019. In his remand report, the AO after his remand report on 26.04.2019. In his remand report, the AO after verification of the allotm verification of the allotment letter issued to the buyer and copy of index ent letter issued to the buyer and copy of index 2 registered with Joint SubRegistrar, Ulhasnagar, Taluka 2 registered with Joint SubRegistrar, Ulhasnagar, Taluka-3 in respect of 3 in respect of 4 properties except go 4 properties except go-down no. D-9 sold to Sanghavi Bothra Engineer 9 sold to Sanghavi Bothra Engineer accepted the appellant's contention. The AO mentioned in his repo accepted the appellant's contention. The AO mentioned in his repo accepted the appellant's contention. The AO mentioned in his report that replies by Joint Sub replies by Joint Sub-Registrar, Ulhasnagar to the notices u/s 133(6) of Registrar, Ulhasnagar to the notices u/s 133(6) of the Act and Index 2 received from him matched with details provided by the Act and Index 2 received from him matched with details provided by the Act and Index 2 received from him matched with details provided by the appellant. The AO has convinced that the appellant had been able the appellant. The AO has convinced that the appellant had been able the appellant. The AO has convinced that the appellant had been able to substantiate the difference of Rs to substantiate the difference of Rs. 35,12,200/- out of Rs. 44,86,200/ out of Rs. 44,86,200/-, but failed to prove the difference of Rs. 9,74,000/ but failed to prove the difference of Rs. 9,74,000/- with respect to sale with respect to sale of godown no. D godown no. D-9. Copy of remand report was sent to the appellant for a rebuttal if any. In Copy of remand report was sent to the appellant for a rebuttal if any. In Copy of remand report was sent to the appellant for a rebuttal if any. In response the appellant submitted that copy of regis response the appellant submitted that copy of registered agreement is tered agreement is the only corroborative evidence available with the appellant and no the only corroborative evidence available with the appellant and no the only corroborative evidence available with the appellant and no other document is relevant to substantiate transaction entered with the other document is relevant to substantiate transaction entered with the other document is relevant to substantiate transaction entered with the buyer. The appellant also submitted that many a time due to buyer. The appellant also submitted that many a time due to buyer. The appellant also submitted that many a time due to unavoidable circumstances it is requi unavoidable circumstances it is required to take decision to sell the red to take decision to sell the property for a price much lower than the stamp duty value such as due property for a price much lower than the stamp duty value such as due property for a price much lower than the stamp duty value such as due to certain business urgencies/sluggish demand in the market. to certain business urgencies/sluggish demand in the market. to certain business urgencies/sluggish demand in the market. I have considered the submission of the appellant, assessment order I have considered the submission of the appellant, assessment order I have considered the submission of the appellant, assessment order and subsequent remand report of the AO. There is no deny the fact There is no deny the fact and subsequent remand re that the appellant has sold go that the appellant has sold go-down no. D-9 to Sanghavi Bothra 9 to Sanghavi Bothra Engineer for sale consideration of Rs. 15,00,000/ Engineer for sale consideration of Rs. 15,00,000/ Engineer for sale consideration of Rs. 15,00,000/- whereas market value determined by the Joint Sub market value determined by the Joint Sub-Registrar was Registrar was Rs.24,74,200/ Rs.24,74,200/-. It is also fact that no document was submitted to no document was submitted to prove that either any allotment letter was issued to the buyer or any prove that either any allotment letter was issued to the buyer or any prove that either any allotment letter was issued to the buyer or any agreement was signed for sale with the buyer prior to final registration. agreement was signed for sale with the buyer prior to final registration. agreement was signed for sale with the buyer prior to final registration. The appellant also failed to submit any document to prove that it had The appellant also failed to submit any document to prove that it had The appellant also failed to submit any document to prove that it had received any received any part payment from the buyer before the sale deed. part payment from the buyer before the sale deed. Therefore, the AO was correct in invoking the provisions of section 43CA Therefore, the AO was correct in invoking the provisions of section 43CA Therefore, the AO was correct in invoking the provisions of section 43CA (1) and treated the difference of Rs. 9,74,200/ (1) and treated the difference of Rs. 9,74,200/- between sale between sale consideration and market value as income of the appellant. I do not fin consideration and market value as income of the appellant. I do not fin consideration and market value as income of the appellant. I do not find any infirmity in the action of the AO. The addition of Rs. 9,74,200/ any infirmity in the action of the AO. The addition of Rs. 9,74,200/ any infirmity in the action of the AO. The addition of Rs. 9,74,200/- is upheld.
Aggrieved, the assessee is in appeal before the Tribunal the assessee is in appeal before the Tribunal the assessee is in appeal before the Tribunal regarding the addition of Rs.9,74,200/ regarding the addition of Rs.9,74,200/- sustained by the Ld. CIT(A). sustained by the Ld. CIT(A).
M/s New Tech Infrastructure Pvt. Ltd. M/s New Tech Infrastructure Pvt. Ltd.
We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the relevant material on record. The Ld. CIT(A) in respect of property D- relevant material on record. The Ld. CIT(A) in respect of property D relevant material on record. The Ld. CIT(A) in respect of property D 9 sold to ‘Sanghavi Bothra Engineer Sanghavi Bothra Engineer’, has sustained the difference has sustained the difference between sale consideration recorded in the books of Rs.9,74,200/- between sale consideration record between sale consideration record of accounts and market value of accounts and market value on the date of registration determined on the date of registration determined by the Sub-registrar of Stamp duty, invoking section 4 invoking section 43CA of the Act, due to failure in substantiating that Act, due to failure in substantiating that on date of allotment of the on date of allotment of the Flats to buyers, sale value of the property Flats to buyers, sale value of the property recorded in the books of recorded in the books of account is equal to or more than the stamp duty value of the account is equal to or more than the stamp duty value of the account is equal to or more than the stamp duty value of the property on that date, which is one of the conditions for exemption property on that date, which is one of the conditions for exemption property on that date, which is one of the conditions for exemption from invoking provision of section 43CA of the Act from invoking provision of section 43CA of the Act. Before us, the . Before us, the Ld. counsel for the assessee submit Ld. counsel for the assessee submitted that said documents ted that said documents including allotment letter etc., including allotment letter etc., were readily not traceable at the time readily not traceable at the time assessee is willing of the appeal before the Ld. CIT(A) of the appeal before the Ld. CIT(A) , but now, the assessee to file all documents all documents, if one more opportunity is is provided to the assessee before the Ld. assessee before the Ld. CIT(A). In view of the undertaking given by CIT(A). In view of the undertaking given by the Ld. counsel for the assessee the Ld. counsel for the assessee and in the interest of substantial in the interest of substantial justice, we feel it appropriate to restore this issue back to the file of we feel it appropriate to restore this issue back to the file of we feel it appropriate to restore this issue back to the file of the Ld. CIT(A) for deciding afresh for deciding afresh. The assessee is directed to . The assessee is directed to produce necessary evidence in support ce necessary evidence in support of its claim of its claim before the Ld. CIT(A) who will decide the issue in accordance with law. The ground CIT(A) who will decide the issue in accordance with law. The ground CIT(A) who will decide the issue in accordance with law. The ground No. 1 of the appeal of the assessee is allowed for statistical No. 1 of the appeal of the assessee is allowed for statistical No. 1 of the appeal of the assessee is allowed for statistical purposes.
M/s New Tech Infrastructure Pvt. Ltd. M/s New Tech Infrastructure Pvt. Ltd.
In the result, In the result, the appeal of the assessee the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open Court on nced in the open Court on 28/05 /05/2024.