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Income Tax Appellate Tribunal, JAIPUR BENCHES,”B” JAIPUR
Before: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, vk;dj vihy la-@ITA No. 536/JP/2024
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 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.
The ld. DR is heard who relied on the findings of the lower authorities.
1. 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 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 ld. AR of the assessee in the rejoinder relied upon the affidavit of 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:
That the assessment for the AY 2017-18 was completed on 26-12-2019. Against which we have filed an appeal before CIT(A) on 15-01-2020.
That our accountant Shri Mohammad Irshad s/o Mohammad Iqbal Aged 32 Years,R/o Ward No.- 4. Kararkhaniyan Ka Mohalla, Chaksu.Jaipur.Rajasthan- 303901 was the person who was taking care the all these proceedings. Therefore, we mention the e-mail ID ashiyanag@gmail.com for communication of notices to be issued by the CIT(A) during the proceedings, which was in control of the Accountants Manager and operated by him only.
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.
The CIT(A) order was also served on thealternate email id which is registered at Income Tax portal. As and when we received the order, we filed an appeal before Hon'ble ITAT which is within time.”
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.
We have heard the rival contentions and perused the material placed 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. 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 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 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 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 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 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) .
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 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.
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/- 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,
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