2024 (5) TMI 1011 - AT - Income Tax

Addition u/s 43CA - difference between the sale consideration and the market value of the property - AO held that the unregistered agreement of sale cannot be recognized in the Court of law and also held in certain cases, the parties from whom the advances received are not the same parties to whom the registration has been done - HELD THAT - We hold that the assessee is entitled for benefit of provision of section 43CA (3) in respect of plots booked in Financial Years 2009-10, 2010-11 and 2013-14. Further, we also direct that the AO shall re-compute the profits, taking into consideration, the complete details, registry regarding sale of plot year wise and accord the benefit of Section 43CA.

Summary

Issues Involved:
1. Deletion of addition u/s 43CA by CIT(A).
2. Rejection of rectification application by CIT(A).
3. Validity of jurisdictional notice u/s 143(2).

Summary:

Issue 1: Deletion of addition u/s 43CA by CIT(A)

The Revenue challenged the deletion of an addition of Rs. 4,91,69,153/- by CIT(A), arguing that the assessee was wrongly given the benefit of section 43CA(3) for plots booked in various financial years without proper examination. The Assessing Officer (AO) had found discrepancies such as unregistered agreements and payments made in cash, leading to the addition u/s 43CA. The CIT(A) held that the term "agreement" is not defined in the Income Tax Act, 1961, and relied on Supreme Court judgments to conclude that even unregistered agreements can be valid. The CIT(A) also reconciled the plot-wise receipts and transfers between Rajul Builders and Rajul Construction. The ITAT upheld the CIT(A)'s decision, stating that the assessee is entitled to the benefits of section 43CA(3) for the plots booked in the specified financial years and directed the AO to re-compute the profits accordingly.

Issue 2: Rejection of rectification application by CIT(A)

The assessee contended that the CIT(A) mechanically rejected their rectification application, which led to an incorrect addition of Rs. 57,14,390 instead of the entire relief of Rs. 4,91,69,153. The ITAT directed the AO to re-compute the profits, taking into consideration the complete details and registry regarding the sale of plots year-wise, thereby addressing the rectification issue.

Issue 3: Validity of jurisdictional notice u/s 143(2)

The assessee argued that the jurisdictional notice u/s 143(2) was issued by an officer who did not have jurisdiction over the case, making the assessment order invalid. The CIT(A) held that the provision of section 292BB applied, validating the assessment order despite the jurisdictional issue. The ITAT did not adjudicate on this issue as it became academic in nature due to the decision on merits.

Conclusion:

The ITAT dismissed the Revenue's appeal and the assessee's cross-objection, while allowing the assessee's appeal for rectification. The AO was directed to re-compute the profits in accordance with section 43CA, considering the sale of plots year-wise.