AJD DEVELOPERS PRIVATE LIMITED,JAIPUR vs. ASSISTANCE COMMISSIONER OF INCOME TAX, CIRCLE 7, JAIPUR, JAIPUR

per provision of section 43CA of the Act where the value adopted or

assessed or assessable by the authority for the purpose of payment of

stamp duty does not exceed one hundred and ten per cent of the

consideration received or accruing as a result of the transfer, the

consideration so received or accruing as a result of the transfer shall, for

the purposes of computing profits and gains from transfer of such asset, be

deemed to be the full value of the consideration and therefore, this aspect

of the matter has not been appreciated by the lower authority and that 10 %

leverage is required to be available to the assessee for the each of the

property sold and that amount comes to Rs. 2,31,055/-. Rs. 86,134/- is

11 ITA No. 536/JP/2024 AJD Developers Pvt. Ltd. vs. ACIT required to be deducted from the addition on account of the fact the

assessee has received the money in advance and therefore, the stamp duty

value to adopted at the time of receipt of the money by cheque. The ld. AR

of the assessee submitted that for an amount of Rs. 17,000/- there has

been calculation error on the part of the registrar registering the property

and Rs. 26,79,950/- for the assessee disputed the valuation and the matter

was referred to the DVO by the AO but that DVO report has not been

submitted. Against that the assessee has submitted comparable valuation

report and based on that report of independent valuer there is no alleged

difference.

Ld. DR submitted that the order of the ld. CIT(A) is ex-parte. The assessee

has not submitted the details as contended. So, there is no fault on the part

of the revenue. The assessee has not challenged that they have not been

given opportunity of hearing before the ld. CIT(A) and now therefore, the

appeal of the assessee is required to be dismissed. The ld. DR also

submitted that the addition so made is within the four corner of the law.

While making the disputed addition the ld. AO has given specific show

cause notice to the assessee and the assessee what has been argued has

12 ITA No. 536/JP/2024 AJD Developers Pvt. Ltd. vs. ACIT not been contended before the ld. AO. The ld. AO has co-operated with the

assessee and has referred the matter to the DVO and the same was not

received therefore, the addition was made in accordance with the provision

of section 43CA of the Act. As regards the third party valuation and 10 %

range of each of property as contended is subjected to the verification of

the ld.AO.

the director of the assessee company declaring the fact as to why the

notices issued by the ld. CIT(A) were remained non compliant. The content

of the affidavit reads as under :

Affidavit of Mr. Aareef Khan S/o Chhotu Khan Aged 32 years, R/o Ward No.25. Meer Khan Ki Dhani Sheetla Mata Chaksu,Jaipur, Rajasthan-303901. Director, AJD DEVELOPERS PRIVATE LIMITED.

The Deponent Mr. Aareef Khan has well conversant with the facts deposed to below:

13 ITA No. 536/JP/2024 AJD Developers Pvt. Ltd. vs. ACIT 3. Shri Mohammad Irshad s/o Mohammad Iqbal (accounts manager) resigned on 31-03-2021 and the email id ashiyanag@gmail.c which was mentioned for communication purpose in the CIT(A) was become inoperative and the communication notices issued on email was not came in the knowledge of the company.

As is evident from the order of the ld. CIT(A) that three notices were issued

in the covid 19 period and the notices were issued on the inoperative email

id of the accountant who left the job was given for communication. Thus, as

such the assessee has no intention for non compliance. On receipt of the

order on the alternate email id the assessee has preferred the present

appeal which is well within time.

on record. The bench noted that in this appeal the assessee has challenged

the solitary addition of Rs. 36,19,708/- made by the ld. AO and sustained by

the ld. CIT(A) as per provision of section 43CA of the Act. The brief facts

related to the issue on hand are that the assessee after filling the return of

income by the assessee the case was selected for scrutiny under CASS.

Therefore, notices u/s 143(2) and 142(1) were issued and were complied by

the assessee. Based on the details placed on record by the assessee ld.

14 ITA No. 536/JP/2024 AJD Developers Pvt. Ltd. vs. ACIT AO noted that for the year under consideration the assessee company is

engaged in the business of property development wherein gross turnover of

Rs. 8,34,13,952/- and net profit of Rs. 16,56,658/- was reported by the

assessee. The books of the assessee have been duly audited as required

u/s 44AB of the Act. After considering the audited final accounts, return of

income and other information furnished by the assessee ld. AO observed

that the assessee has sold 76 properties in the year under consideration.

The sale consideration shown by the assessee is less than the stamp duty

value of properties and thus, the sale consideration declared was less by

Rs. 36,19,708/- which is chargeable to tax as per provision of section 43CA

of the Act. Since that income was not offered by the assessee, a show

cause notice was issued on 02.12.2019 and reply was filed on 04.12.2019.

The ld. AO considered the reply carefully but did not found acceptable. The

ld. AO noted that the assessee has not ground for declaring the value less.

The ld. AO thus referred the matter to DVO. The valuation report was not

received by the ld. AO, and therefore, he has added a sum of Rs.

36,19,708/- in hands of the assessee considering the provision of section

43CA of the Act. When the matter carried before the ld. CIT(A) the same

was not attended on account of the fact that out of the four notices so

issued 3 were issued in covid-19 period and fourth also remained non

15 ITA No. 536/JP/2024 AJD Developers Pvt. Ltd. vs. ACIT compliant as the email id mentioned was of the accountant who left the job

and therefore, the assessee could not advanced the arguments on the

merits of the case. Before us ld. AR of the assessee submitted that while

filling the tax audit report already on record the tax auditor has placed on

record all the details duly verified and certified at point no 17 of the report,

reported that there are 76 registries in which the transaction value is lower

as compared to the value calculated /assessed by the sub registrar and

based on that disclosure already made in the tax audit report the ld. AO

made the addition of Rs. Rs.36,19,708.00/- considering the sales value of

properties being sold by assessee was less than the Stamp Duty Value as

per provision of section 43CA of the Act. Ld. CIT(A) has dismissed the

appeal without considering the complete facts of the case and confirmed

the said addition. As regards the merits of the addition we note from the

submission so made available in the order of the assessment wherein the

assessee contended that the matter be referred to valuation cell as the

assessee is engaged in the business of converting the agricultural land into

small plots and thereby develop the area out of the town. Obviously for this

reasons the DLC rate of the developed area cannot be compared with the

underdeveloped area. The assessee therefore, prayed the ld. AO to refer to

the valuation cell of the Department. The valuation cell asked the assessee

16 ITA No. 536/JP/2024 AJD Developers Pvt. Ltd. vs. ACIT to submit the details vide letter dated 31.12.2019 and the same was

supplied by the assessee vide letter dated 04.02.2020. In the meantime

without waiting for the DVO’s report ld. AO made the assessment order on

26.12.2019 without waiting for the report of the DVO. The ld. AO referred

the matter to DVO vide letter dated 27.11.2019 which was served to the

office of the DVO on 23.12.2019 (APB-39). The ld. AO passed the

assessment order on 26.12.2019 i.e. within 3 days of the matter referred to

DVO. Thus, the order of the assessment has been passed without

considering the principles of natural justice. The contention raised before us

by the assessee are based on the information already on record and

therefore, we are considering the contention raised by the assessee one by

one. As is evident that total 850 no of sales deed executed by the company.

Out of which in 76 registries the sales consideration mentioned in the

registry was below the Stamp Duty Value calculated by the sub-registrar u/s

54 of Stamp duty Act. The auditor of the company fairly reported these all

transactions in the tax audit report at Clause No. 17 of the tax audit report

(PB-I Pg. 24-26 ) which is not disputed by the revenue. Ld. AO calculated

the total difference between Sale value and stamp duty value amounting to

Rs. 36,19,708/- whereas there was a calculation error and the total of these

transactions is amounting to Rs.31,93,708/- only. A complete list of the all

17 ITA No. 536/JP/2024 AJD Developers Pvt. Ltd. vs. ACIT transactions being reported by the Auditor in the clause 17 of the audit

report was filed as Annexure A. Thus, the calculation error has resulted an

extra addition for an amount of Rs. 4,26,000/- which is based on these facts

required to be deleted from the overall addition made by the ld. AO. We

also take note of the fact that provision of section 43CA of the Act provide

that where the value adopted or assessed or assessable by the authority for

the purpose of payment of stamp duty does not exceed one hundred and

ten per cent of the consideration received or accruing as a result of the

transfer, the consideration so received or accruing as a result of the transfer

shall, for the purposes of computing profits and gains from transfer of such

asset, be deemed to be the full value of the consideration. So based on that

provision in the law the properties sold lesser then the Stamp Duty Value,

but the Stamp Duty Value was not in excess of one hundred and ten

percent of the Sale Value for the Properties quoted at Sr No. 1, 24 to 30, 35

to 37, 39, 40, 42 to 52, 54, 56 to 67, 69, and 71 to 73 at Clause 17 of Tax

Audit, hence addition in respect of these properties for an amount of Rs.

2,31,055 is not justified. The detailed working has been placed on record as

Annexure-B. The total of these additions come to Rs. 2,31,055/-, and the

same is against the provision of section 43CA and thus required to be

deleted. The properties reported at Sr. No. 38, 75 and 76 (Annexure- C) in

18 ITA No. 536/JP/2024 AJD Developers Pvt. Ltd. vs. ACIT tax audit report it is to submit that, the company has received the payment

by cheque in advance and was received before the date of actual sale,

hence as per Section 43CA(3) the stamp duty value to be considered as on

date when first installment / payment was received. As per provision of

Section 43CA(3) Where the date of agreement fixing the value of

consideration for transfer of the asset and the date of registration of such

transfer of asset are not the same, the value referred to in section 43CA(1)

may be taken as the value assessable by any authority of a State

Government for the purpose of payment of stamp duty in respect of such

transfer on the date of the agreement. For Property at Sr. No. 75, situated

at Ward 21 Chaksu, we note from the records that the sale deed was

executed on 29th August 2016, however the first payment of was received

on 15.11.2012 (through Cheque no. 069062) PB-I-Pg.48, hence the Stamp

Duty Value to be considered as on 15.11.2012 i.e. Rs.1000/- per sq.yd. and

the same can be verified through Sub Registrar Rates List on PB-II Pg.15,

whereas the company has executed a sale at Rs. 2,327 per sq.yd. Hence

this property is sold at a value which is allowable to be considered as Sales

Consideration as per the provisions of Section 43CA (3). For Property at Sr.

No. 76, situated at Ward 21 Chaksu, the sale deed was executed on 29th

August 2016, however the first payment of was received on 23.11.2012

19 ITA No. 536/JP/2024 AJD Developers Pvt. Ltd. vs. ACIT (through Cheque no. 757756) PB-I Pg. 59, hence the Stamp Duty Value to

be considered as on 23.11.2012 i.e. Rs.1000/- per sq.yd. and the same can

be verified through Sub Registrar Rates List on PB-II Pg.15, whereas the

company has executed a sale at Rs. 2,539 per sq.yd. Hence this property is

sold at a value which is allowable to be considered as Sales Consideration

as per the provisions of Section 43CA (3). For Property at Sr. No. 38,

situated at Sawaliya (Greenpark-CHAKSU) the sale deed was executed on

04th April 2016, however the first payment was received on 20.02.2014

(through Cheque no.085046), hence the Stamp Duty Value to be

considered as on 20.02.2014 i.e. Rs.430 per sq.yd. (PB-I- Pg 70) and the

same can be verified through Sub Registrar Rates on PB-II Pg.14., whereas

the company has executed the sale at Rs. 470 per sq.yd. Hence this

property is sold at a value which is allowable to be considered as Sales

Consideration as per the provisions of Section 43CA (3). Thus, the total

addition made by the AO is Rs.86,134/- and thus, when these facts already

on record not disputed the assessee should be given the benefit of that

amount wrongly added based on these facts.

Furthermore, as submitted by the ld. AR of the assessee that while

filling Form 3CD (Tax Audit Report) the Auditor has made a minor mistake

while quoting stamp duty value for Sr. no. 23 and Sr. No. 53 (Annexure-D) .

20 ITA No. 536/JP/2024 AJD Developers Pvt. Ltd. vs. ACIT For property at Sr. No. 23 at PB I 78-83 the actual Stamp Duty Value was

Rs.2,90,400/- and the quoted value in Form 3CD was Rs. 3,00,000/- which

resulted in unrequired addition of Rs.9,600/-. For property at Sr. No. 53 the

stamp duty value was Rs. 43,200/- but this value was wrongly declared as

Rs.54,000/-, which resulted in an unrequired addition of Rs. 10,800/-. This

being the apparent mistake the assessee should be given the benfit of that

error crept. As a result of this error made by Auditor an amount of Rs.

20,400/- became an part of additions does not warranted and thus we order

to delete that part also. So, far as the properties listed at Sr. No. 31 and 34

(Annexure-E) referred in clause 17 of Tax Audit Report, it is to provide that

the Sub-Registrar has considered the wrong value as Stamp Duty Value,

the actual sale consideration is equal to the correct Stamp Duty Value. This

resulted in an addition of Rs. 17,000 which should be deleted. This error

being factual in nature the same is also required to be deleted.

For the remaining party of the property sold by the assessee it was

submitted before us that during the year under consideration the assessee

developed one town ship at Bhirawati (Nooh, Haryana). The major reasons

that caused the sales value, lesser than the stamp duty value because the

DLC Rates fixed by the State Government is same for existing developed

area and newly developed residential colonies, but in real circumstances

21 ITA No. 536/JP/2024 AJD Developers Pvt. Ltd. vs. ACIT the values of properties at newly developed areas are significantly lesser in

comparison to the properties situated at already developed areas. Due to

which DLC rate of areas where company has operations (rural areas) is

already overvalued than the actual prevailing rates in the market. For that

reasons the assessee could not fetch the rates as provided in the DLC. To

support this contention in absence of the DVO’s report the assessee

company has got the valuation report from government executives as well

as private surveyor who have reported that there is large gap in the DLC

rates and actual market price of the plots. Actual market rate is much lesser

than what the government has prescribed as DLC rates. The report of

approved valuer is at PB-II Pg1 to 4. Considering the fact that the DLC

Rates are substantially higher than the actual marketable rates of property

the assessee has requested to Tehsildar- Nooh (PB-II-16), Haryana about

the relevant value of property at Bhirawati and in response the officer

conducted a “Tasdiq” i.e. inquiry and evaluated the reasonable market

value to be Rs. 3800 to Rs. 4000 per sq.yd. The transactions incurred by

the assessee company was at average rate of 3900/- or above it which is

reasonable market rate and therefore the transactions incurred by the

company at village Bhirawati -Nooh, Haryana, is at fair market value, and

same should be allowed.

22 ITA No. 536/JP/2024 AJD Developers Pvt. Ltd. vs. ACIT The value being added by the AO pertaining to Village Bhirawati-Nooh,

Haryana is amounting to Rs.26,89,550/-. However, these properties were

sold at prevailing market values. Thus, in the absence of the DVO’s report

the other two evidence submitted by the assessee cannot be ignored. The

assessee also submitted valuation reports from the registered Valuer and

the same is enclosed at PB-II-1-4. The registered valuer has also given a

fair value which is also 3900/- and the transaction done by the company is

also at this value only. It is further submitted that the DVO Haryana has not

raised any query on the details so submitted by the assessee. Considering

that factum the addition so made is directed to be deleted. Considering all

these aspect of the matter the summarized addition in the case of the

assessee remained to be sustained is calculated herein below:

Addition made by AO [ A ] Rs. 36,19,708/- Less : i. Calculation error Rs. 4,26,000/- ii. Difference upto 10% Rs. 2,31,055/- iii. Payment recovered in each order by cheque Rs. 86,134/- iv. Difference in Actual value that wrong taken in 3CD Rs. 20,400/- v. Error of calculation is done by Registrar Rs. 17,000/- vi. Difference of higher DLC based on independent value report Rs. 26,79,950/- Total [ B ] Rs. 34,94,539/-

23 ITA No. 536/JP/2024 AJD Developers Pvt. Ltd. vs. ACIT Difference addition to be sustained [ A-B ] Rs. 1,59,169/-

While dealing with the above contentions as we note that the evidences

which were placed on record by the assessee is in furtherance to the facts

already on record and therefore the same is considered. Based on the

above finding, we sustain addition of Rs. 1,59,169/- in hands of the

assessee. Based on that set of facts ground No. 1 raised by the assessee

is partly allowed.

In the result, the appeal of the assessee is Partly Allowed.

Order pronounced in the open court on 25/10/2024. Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member

Tk;iqj@Jaipur fnukad@Dated:- 25/10/2024 *Ganesh Kumar, Sr. PS आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. The Appellant- AJD Developers Pvt. Ltd., Jaipur izR;FkhZ@ The Respondent- ACIT, Circle-07, Jaipur 2. vk;dj vk;qDr@ The ld CIT 3. 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत xkMZ QkbZy@ Guard File (ITA No. 536/JP/2024) 6. vkns'kkuqlkj@ By order,

सहायक पंजीकार@Aेेज. त्महपेजतंत