Sai Essen Developers Vs PCIT (ITAT Pune)
Facts
Assessee, engaged in real estate & construction, filed return declaring income of ₹15.26 Cr after claiming deduction u/s 80IB. During survey, partner admitted estimated income of ₹15.29 Cr, which matched declared income. AO completed assessment u/s 143(3) accepting returned income. PCIT noticed variation of ₹15.15 Lakh between agreement value & ready reckoner value of certain flats sold. PCIT invoked s.263, holding that AO failed to apply s.43CA and treated assessment order as erroneous & prejudicial to Revenue.
Assessee’s Stand
AO had specifically asked details in notice u/s 142(1); assessee furnished complete chart showing both agreement & stamp duty values, including the difference. AO applied his mind & accepted explanation & this cannot be termed erroneous. Where AO takes a permissible view, revision u/s 263 not justified. Cited case laws including Sunbeam Auto Ltd. (Delhi HC) & Sai Bhargavnath Infra (Pune ITAT). Emphasized that the 10% safe harbor tolerance under s.43CA (introduced from 01.04.2019) is beneficial & retrospective; since difference <10%, no addition warranted.
Revenue’s Contention
Relied on Welfare Properties Pvt. Ltd. (Mumbai ITAT) & Pooshya Exports Pvt. Ltd. (Mad HC).
Tribunal’s Findings
- AO had examined issue by calling for details & considering assessee’s reply.
- Once AO adopts a possible view, order cannot be labelled as erroneous.
- Tolerance margin of 10% under s.43CA is beneficial in nature & hence applicable retrospectively.
- In present case, variation was within 10% → no revenue loss.
Decision
- PCIT’s revision order u/s 263 set aside.
- AO’s original assessment restored.
- Appeal allowed in favour of Assessee.
Tribunal reaffirmed two principles:
- No 263 revision when AO has applied mind & taken a plausible view.
- 10% tolerance limit under s.43CA is retrospective—minor differences between agreement & stamp duty values cannot trigger addition.
FULL TEXT OF THE ORDER OF ITAT PUNE
