Reegal Construction Vs ITO (ITAT Kolkata)
ITAT Kolkata held that as provisions of section 43CA of the Income Tax Act are introduced with effect from 1st April 2014, the said provisions are not applicable to ‘agreement to sell’ entered prior to 1st April 2014.
Facts- During the assessment proceedings, the Assessing Officer (AO) noted that as per the audited accounts, the assessee had shown sale of 12 flats, one office room and four shops (total 17) at a consideration of Rs.3,00,32,750/-. Further, as per the information obtained from the sub-Registrar office, the assessee had sold total 18 properties vide separate 18 registered sale deeds. The Assessing Officer noted that the assessee did not disclose the sale value of one property registered on 21.07.2014 of the sale value of Rs.12,05,200/-. AO further noted that the total stamp duty value of all the properties sold was at Rs.4,96,06,660/-. The total sale consideration mentioned in the sale deed of 18 properties was Rs.3,19,55,150/-. However, the assessee had shown in its books of account a total sale consideration received of Rs.3,00,32,750/- only.
AO, accordingly, applying the provisions of section 43CA of the Act, calculated the difference between the sale consideration shown and the stamp duty value in respect of 17 properties at Rs.1,83,68,710/- and added the same into the income of the assessee u/s 43CA of the Act. He also added the amount of Rs.12,05,200/- on account of concealment of sale consideration relating to the 18th property.
CIT(A) confirmed the additions. Being aggrieved, the present appeal is filed.
Conclusion-Held that 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 1st 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.
Held that since the sale consideration of Rs.12,05,200/- 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.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
The present appeal has been preferred by the assessee against the order dated 27.03.2023 of the National Faceless Appeal Centre(hereinafter referred to as the ‘CIT(A)’) passed u/s 250 of the Income Tax Act (hereinafter referred to as the ‘Act’).
2. The brief facts relevant to the issue raised vide Ground Nos.2 to 4 are that the assessee has been engaged in the business of promoting/developing/construction and sale of residential/commercial building. During the assessment proceedings, the Assessing Officer noted that as per the audited accounts, the assessee had shown sale of 12 flats, one office room and four shops (total 17) at a consideration of Rs.3,00,32,750/-. Further, as per the information obtained from the sub-Registrar office, the assessee had sold total 18 properties vide separate 18 registered sale deeds. The Assessing Officer noted that the assessee did not disclose the sale value of one property vide deed no.I-0605055487/2014 registered on 21.07.2014 of the sale value of Rs.12,05,200/-. The Assessing Officer further noted that the total stamp duty value of all the properties sold was at Rs.4,96,06,660/-. The total sale consideration mentioned in the sale deed of 18 properties was Rs.3,19,55,150/-. However, the assessee had shown in its books of account a total sale consideration received of Rs.3,00,32,750/- only. The Assessing Officer tabulated the figures of the sale consideration, stamp duty value and the difference between the sale consideration and stamp duty value in respect of 18 properties as under:
