2023 (12) TMI 268 - AT - Income Tax

Addition u/s 43CA - difference in the value taken by the Registration Authority for the purpose of stamp duty and the actual sale consideration - HELD THAT - The payment through cheque is required to ensure that the agreement to sell, if any, relied upon by the assessee has been actually executed and acted upon as back dated cheque payment cannot be claimed by an assessee. In the case in hand, though some of the parties had not made initial payment i.e. on or before the date of agreement through cheque/banking mode, however, the facts show that the some of the payments were made in each case much before the execution of the sale deed. Under the circumstances, it cannot be said that the agreement to sell relied upon by the assessee are bogus, rather, the payment of consideration in this case has been settled and paid as per the terms of the agreement. Under the circumstances, in the peculiar facts and circumstances, it will not be justified to adopt the stamp duty value as on the date of execution of the sale deed, rather, the object and purpose of the provisions will be achieved by taking the stamp duty value as on the date of execution of the agreement in the light of the peculiar facts and circumstances of this case. Moreover, the issue is otherwise decided by the Coordinate bench of the Tribunal in the case of Disha Construction 2021 (6) TMI 614 - ITAT MUMBAI wherein Tribunal further relied upon the decision of Swananda Properties (P) Ltd 2019 (9) TMI 1270 - BOMBAY HIGH COURT held that the provisions of Sec.43CA would not have retrospective application and accordingly, do not apply to agreement executed prior to its introduction. Thus since the provisions to section 43CA have been introduced w.e.f. 01.04.2014 and the agreement to sell was entered prior to the 1 st April 2014 and therefore, the condition of payment or part payment of consideration on or before the date of agreement cannot be imposed back-dated as the assessee could not have foreseen the introduction of section 43CA. Thus additions made by the Assessing Officer/CIT(A) on the above issue are not sustainable and the same are accordingly ordered to be deleted. Additions on account of concealment of sale consideration - Assessee submit that in fact the flat no. 2 was sold by the land-owner and not by the assessee and similarly flat no. 8 was also transferred by way of gift by the land-owner and not by the assessee - HELD THAT - We find that since the sale consideration was not received by the assessee as the said flat was sold by the land-owner as per the development agreement and not by the assessee, hence, the addition made by the Assessing Officer on this issue is not sustainable. In view of our findings given above, the additions made by the Assessing Officer/CIT(A) in this issue was not sustainable and the same are accordingly ordered to be deleted.

Summary

Issues Involved:
1. Whether the Assessing Officer correctly applied the provisions of section 43CA of the Income Tax Act.
2. Whether the addition of Rs. 12,05,200/- on account of concealment of sale consideration was justified.

Summary of Judgment:

Issue 1: Application of Section 43CA of the Income Tax Act
The assessee contested the application of section 43CA, arguing that the agreements to sell were entered into before the introduction of this section on 01.04.2014. The Tribunal noted that section 43CA was inserted to check suppressed sales of immovable properties, deeming the stamp duty value as the sale value if the actual sale value was less. However, subsection (3) allows for the stamp duty value on the date of the agreement to be considered if the agreement and registration dates differ, provided the consideration or part thereof was received through banking modes as per subsection (4).

The Tribunal found that the agreements to sell were made in 2012-13, with payments received through cheques before the execution of the sale deeds, indicating that the agreements were genuine. The Tribunal cited the decision in Disha Construction vs. JCIT and the Bombay High Court's ruling in PCIT vs. Swananda Properties (P) Ltd., which held that section 43CA cannot be applied retrospectively. Consequently, the Tribunal concluded that the additions made by the Assessing Officer under section 43CA were not sustainable and ordered their deletion.

Issue 2: Addition of Rs. 12,05,200/- for Concealment of Sale Consideration
The assessee argued that the flat in question was sold by the landowner, not by the assessee, as per the development agreement. The Tribunal reviewed the evidence, including sale and gift deeds, and found that the sale consideration of Rs. 12,05,200/- was indeed not received by the assessee. Therefore, the addition made by the Assessing Officer on this issue was not sustainable and was ordered to be deleted.

Conclusion:
The Tribunal allowed the appeal of the assessee, deleting the additions made by the Assessing Officer under section 43CA and for the alleged concealment of sale consideration.