Gurukrupa Developers Vs PCIT-32 (ITAT Mumbai)
Summary: The assessee, a builder and developer, challenged the order passed by the learned CIT under section 263 of the Income Tax Act, 1961 in respect of Assessment Year 2014-15. The assessee had filed its return declaring total income of Rs. 6,82,55,390/- on 30.09.2014, following which the assessment was completed under section 143(3) at an assessed income of Rs. 6,83,55,390/-.
The learned CIT initiated revision proceedings on the ground that the stamp duty valuation exceeded the total consideration and, therefore, the higher stamp duty valuation ought to have been considered for taxation under section 43CA. According to the learned CIT, the Assessing Officer had overlooked this aspect and had completed the assessment erroneously and prejudicially to the interests of the Revenue.
Before the CIT, the assessee submitted that although registration of the flats/shops took place during the relevant financial year, the allotment, booking and agreement had occurred in earlier years. It contended that the agreement value at the time of allotment was higher than the applicable Ready Reckoner value and that the subsequent registration resulted in a higher stamp duty value. The assessee also submitted that consideration or booking amounts had been received through banking channels on or before the relevant dates.
The learned CIT noted that although allotment letters had been furnished, details such as payment of the initial booking amount, cheque numbers and dates were not contained in the allotment letters. The CIT also noted that bank statements of the concerned buyers were not available on record. On that basis, the CIT considered the assessee’s claim that the flats had been booked much before registration to be unsupported and set aside the assessment to the extent of the issue concerning section 43CA, directing the Assessing Officer to verify the documents and decide the matter in accordance with law.
Before the Tribunal, the assessee submitted that the issue had already been examined during the assessment proceedings. It relied upon section 43CA(3) and (4), under which, where the date of agreement fixing consideration and the date of registration are different, the stamp duty value on the date of agreement may be considered where consideration or part thereof has been received through a specified non-cash mode on or before the date of agreement.
The Tribunal noted that the assessee had produced allotment letters and evidence of payments through its bank account before registration. The Tribunal also noted that the CIT had not disputed that the receipt of payment prior to registration was evidenced by the assessee’s bank account. It held that the CIT could not reject the assessee’s claim merely because the bank statements of the buyers were not available.
The Tribunal concluded that the allotment/booking and payment through bank had already been evidenced on record and that the relevant aspect had been examined by the Assessing Officer. It held that there was no occasion for the CIT to exercise revisionary jurisdiction under section 263 and that directing a further roving inquiry to dislodge evidence already available on record was not sustainable.
Accordingly, the Tribunal set aside the order passed by the learned CIT under section 263 and decided the issue in favour of the assessee. The appeal was allowed.
Facts and Assessment Proceedings
The assessee was engaged in the business of builder and developer. For A.Y. 2014-15, it filed its return of income on 30.09.2014 declaring total income of Rs. 6,82,55,390/-. The return was selected for scrutiny and an assessment order was passed under section 143(3), determining total income at Rs. 6,83,55,390/-.
The learned CIT subsequently issued a show-cause notice under section 263. The notice stated that the stamp duty valuation exceeded the total consideration and that the higher stamp duty valuation ought to have been considered for taxation under section 43CA.
The assessee explained that the flats and shops had been allotted/booked in earlier years and that their registration took place only after completion of construction during financial year 2013-14. According to the assessee, comparison of the stamp duty value applicable in the year of registration with the earlier allotment/agreement value resulted in the apparent difference.
The assessee further stated that consideration had been received through account payee cheques on or before the date of allotment/sale and that the relevant documents, including allotment letters, bank statements and ledger accounts, had been submitted during assessment proceedings.
Revision Proceedings under Section 263
The learned CIT considered the material submitted by the assessee but observed that the allotment letters did not contain details of the initial booking payments, including cheque numbers and dates. The CIT also noted that bank statements of the persons who had booked the flats were not available.
On this basis, the CIT concluded that the assessee’s claim that the flats were booked long before registration was not justified. The CIT accordingly set aside the assessment order concerning the issue of section 43CA and directed the Assessing Officer to verify the documents and take action in accordance with law.
Assessee’s Submissions before the Tribunal
The learned counsel for the assessee submitted that the issue had already been examined by the Assessing Officer during the assessment proceedings.
It was submitted that section 43CA contains an exception where the date of agreement fixing consideration and the date of registration are different and consideration or part thereof has been received through a mode other than cash on or before the date of agreement. The assessee contended that allotment letters and bank statements evidenced the booking and receipt of payment before registration.
The assessee relied upon the decisions of CIT Vs. Sunbeam Auto Ltd., 332 ITR 167 (Delhi), and Gabriel India Ltd., 203 ITR 108 (Bom), in support of its submissions concerning revisionary jurisdiction under section 263.
Tribunal’s Findings on Section 43CA
The Tribunal reproduced the relevant provisions of section 43CA. Section 43CA(1) provides for adoption of the stamp duty value as the deemed full value of consideration where consideration for transfer of land or building held otherwise than as a capital asset is less than the value adopted or assessed or assessable by the State Government authority for stamp duty purposes.
Section 43CA(3) provides that where the date of agreement fixing the value of consideration and the date of registration are different, the value may be taken as the value assessable for stamp duty purposes on the date of the agreement.
Section 43CA(4) provides that sub-section (3) applies where the amount of consideration or part thereof has been received by any mode other than cash on or before the date of agreement for transfer of the asset.
The Tribunal found that the assessee had received sums through bank and that allotment letters were available on record. It therefore held that, when the allotment/booking of the units and receipt of booking amounts through bank at an earlier point of time were already on record, the value at the time of registration was not to be applied.
Section 263 and Further Enquiry
The Tribunal noted that the learned CIT had not disputed that receipt of payment prior to registration was evidenced by the assessee’s bank account. The adverse inference drawn by the CIT was based on the absence of the bank statements of the concerned buyers.
The Tribunal held that this reasoning was not sustainable. The assessee had produced evidence of allotment and booking through allotment letters and evidence of payment through bank before registration. According to the Tribunal, the assessee had thereby discharged the onus cast upon it.
The Tribunal further observed that there was nothing on record to suggest that the bank entries were bogus. There was also no material indicating that the buyers had not issued the cheques or that the bank entries in the assessee’s account related to some other transactions.
The Tribunal therefore concluded that the relevant aspect had already been examined by the Assessing Officer and there was no occasion for the learned CIT to exercise jurisdiction under section 263.
Tribunal’s Decision
The Tribunal held that the learned CIT had directed a roving inquiry despite the relevant evidence being available on record. It observed that the allotment letter/booking of the units and receipt of booking amounts through bank at an earlier period were already on record and that the requirements relevant to section 43CA(4) had been complied with.
Accordingly, the Tribunal set aside the order of the learned CIT passed under section 263 and decided the issue in favour of the assessee.
The appeal filed by the assessee was allowed.
For a broader explanation of the provisions concerning stamp duty valuation, agreement dates and section 43CA, see section 43CA.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This is an appeal by the assessee directed against the order of learned CIT passed u/s. 263 of the Income Tax Act dated 27.3.2019.
2. Brief facts of the case are that the assessee is engaged in the business of builder and developer. The assessee filed return of income declaring total income of Rs. 6,82,55,390/- for A.Y. 2014-15 on 30.9.2014, the same was selected for scrutiny and the order was passed u/s. 143(3) of the Act and assessed income of Rs. 6,83,55,390/-. Learned CIT issued show cause notice u/s. 263 of the Act. In the show-cause notice it was mentioned that stamp duty valuation exceeds total consideration, hence higher stamp duty valuation should have been considered for taxation as per provisions of section 43CA of the Act. That this fact was overlooked and assessment was erroneously completed u/s. 143(3) of the Act. That the Assessing Officer did not examine this crucial fact and as such assessment order was passed by the Assessing Officer is erroneously in so far as it prejudicial to the interest of the Revenue. In response, the assessee submitted that though registration happened in the impugned assessment year, agreement/allotment/booking was done much earlier and this aspect was duly examined by the Assessing Officer. The assessee submitting as noted by learned CIT reads as under:- “The show-cause notice dated 15.11.2018 was issued to the assessee fixing hearing on 03,12.2018 which was served on the assessee by hand delivery. Before the appointed day, Shri B.H, Kishnadwala & Associates, Chartered Accountants duly authorized by the assessee made submission vide letter 30.11,2018 which is placed on record, The relevant portion of the assessee’s submission is reproduced as under:-
“The assessee has declared sales during the AY. 2014-15 relevant to the financial year ended 31.03.2014 accordingly and paid the taxes on the profits for the year. The agreement value of the fiats/ shops allotted were at a rafe higher than the value worked out as per the Stamp Duty Authority rates (Ready Recknor Rates) applicable for the respective year. For example if a flat is booked on 1.4.11 then the Ready Recknor (Stamp Duty) rate of the year 2011 (from 1.1.2011 to 31.3.2011) is compared with the agreement rate of the fiat. In all such cases the agreement value is always higher than the Ready Recknor values.
Most of the flats/shops which were allotted in earlier years were registered with the Stamp Duty Authorities on complet ion of construction only i.e. in the financial year 2013-14 (i.e. on 31.3.2014). Therefore, the comparison on of Agreement value and that as shown in the registered document by Stamp Duty Authority is different and that the value of Stamp duty will always be higher as the same is done at a subsequent period/date.
Since the registration of agreement was done in F.Y, 2013-14, the value of Stamp duty authorities is higher than the value of agreement entered Into by the assesses in respect of those flats/shops which were allotted in earlier years. But if the value of the Stamp duty Authorities of the year of allotment is compared with the allotment letter value / agreement value, then none of the flats/shops have been sold at a rate lower than the value arrived at as per the Stamp Duty authority rates.
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As can be seen from the above referred submissions all the details were submitted to the Assessing officer and had been scrutinized in toto. As mentioned earlier since the registration of agreement was done in F.Y. 2013 -14, the value of Stamp duty authorizes is higher than the value of agreement entered into by the assessee in respect of those flats / shops which were allotted/sold in earlier years. But if the value of the Stamp duty Authorities of the year of allotment is compared with the allotment letter value / agreement value, then none of the flats/shops have been sold at a rate lower than the value arrived at as per the Stamp duty Authority rates. Also as per section 43CA, the assesses had received advance payments by account payee cheque from all such buyers on or before the date of allotment/sate.
From the above referred submissions it is clear that all the necessary documents and records as required for the verification and satisfaction of the assessing officer has been submitted during the time of assessment proceedings. Further the assessing officer had verified all the documents in all respects including applicability and satisfaction of satisfying all provisions of section 43CA that the officer has passed the order u/s 143(3).”
3. Considering the above and the details learned CIT noted that the assessee has submitted details with respect to the issue of 43CA of the Act only in regard to stamp value and agreement value of the units/gala. He noted that the assessee has submitted allotment letters to whom flats/shops allotted but he noted that neither the payment of initial booking amount nor cheque numbers alongwith date printed on it. Although he observed that the payment of initial booking amount has been credited in the assessee’s account as per bank statement submitted. However, he noted that bank statement s of persons who have booked flat are missing in record. Therefore he held that the claim of the assessee that flats were booked long time before registration is not justified. He also noted that if a person books flats by advancing its hard earned money, he will ensure that the same amount should be brought in writing which is not present in the allotment letters submitted by the assessee. Hence, he held that in the absence of vague details it is justified to come to the conclusion the order of the Assessing Officer was erroneous and prejudicial to the interest of the Revenue as mentioned above. Thereafter learned CIT referred to the provisions of section 43CA and held that the provisions of are self explanatory. Learned CIT concluded as under:-
“7. Based on the observations made above, on the perusal of the records and the documents submitted, I in exercise of the powers conferred upon me u/s 263 of the Act hereby set-aside the order of the Assessing Officer to the extent as under:-
“Issue of section 43CA of the Act, in respect of units sold at the rates below the stamp value.”
8. The Assessing Officer is required to go through the details as submitted by the assessee during the revision proceedings u/s. 263 of the Act as well as the details available on the record. In the light of the provisions of the section 43CA and 68 of the IT. Act, along-with relevant judicial case laws, the Assessing Officer is directed to verify and peruse the documents submitted by the assessee to reach a conclusion and action as per law. The Assessing Officer is directed to give opportunity to the assessee and the assessee is also free to submit the relevant documents in support of the claim made by it to ensure that the principle of justice is religiously followed.”
4. We have heard both the counsel and perused the records. Learned Counsel of the assessee submitted that the issue has been duly examined by the Assessing Officer in course of assessment. He submitted that as per provisions of section 43CA the exception is carved out where amount of consideration or part thereof has been received by any mode other than cash on or before the date of agreement for transfer of asset. Hence, he submitted that the provision of subsection (1) & (2) are not applicable in this case. Learned Counsel submitted that the assessee has duly submitted allotment letter and payment of booking amount was also evidenced by bank statement submitted. Hence, he submitted that existence of agreement and payment thereof prior to the registration has been duly proved by the assessee. In this regard he also submitted that the bank statement and ledger account wherein details of bank account, credit from the customer are duly mentioned. We note that learned CIT has also not disputed that the receipt of payment prior to the registration in support of booking is evidenced by the assessee’s bank account. However, learned CIT has drawn adverse inference on account of bank account of the concerned buyers is not on record. In our considered opinion this limb of argument for disallowing assessee’s claim by learned CIT is not at all sustainable. The assessee has given evidence of allotment and booking by allotment letter and payment through bank prior to registration. Thus the assessee has discharged the onus cast upon it. Learned CIT cannot disbelieve the same on the ground that the bank statement of the buyers are not on record. In our considered opinion there is nothing on record to suggest that
bank statement contained bogus entries. It is also not a case that the Revenue has received any information that the buyers have not issued cheque and bank statement of the assessee show entries which are related to some other transaction. Moreover, when these documents are on record and hence, this aspect has been duly examined by the Assessing Officer in our considered opinion there is no occasion for learned CIT to exercise u/s. 263 of the Act. In this regard learned counsel has placed reliance upon the decision of Hon’ble Delhi High Court in the case of CIT Vs. Sunbeam Auto Ltd. (332 ITR 167) and Hon’ble Bombay High Court decision in the case of Gabriel India Ltd. (203 ITR 108). In our considered opinion these case laws also further fructify the case of the assessee. Accordingly, in our considered opinion when allotment letter/booking of the unit alongwith payment of receipt through bank is already on record, we fail to understand as to what enquiry is further remaining to find out whether provisions of section 43CA(4) are applicable. We may in this regard gainfully refer to provisions of section 43CA as under:-
Section 43CA.
(1) Where the consideration received or accruing as a result of the transfer by an assessee of an asset (other than a capital asset), being land or building or both, is less than the value adopted or assessed or assessable by any authority of a State Government for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessable shall, for the purposes of computing profits and gains from transfer of such asset, be deemed to be the full value of the consideration received or accruing as a result of such transfer.
(2) The provisions of sub-section (2) and sub-section (3) of section 50C shall, so far as may be, apply in relation to determination of the value adopted or assessed or assessable under sub-section (1).
(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 sub-section (1) may be taken as the value assessable by any authority of a State Government for the purp ose of payment of stamp duty in respect of such transfer on the date of the agreement.
(4) The provisions of sub-section (3) shall apply only in a case where the amount of consideration or a part thereof has been received by any mode other than cash on or before the date of agreement for transfer of the asset.]
5. From the above, we note that in compliance with sub-section 4 of section 43CA, the assessee has duly received sums through bank and allotment letter are also on record. Hence, when allotment letter/booking of the unit alongwith receipt of booking receipt through bank at an earlier period is already on record, the value at the time of registration is not to be applied. Learned CIT was fully conscious of the fact as he has all the details of the stamp value, date of agreement/allotment and date of receipt of payment in assessee’s bank statement. Hence when despite being aware that addition in this regard is not permissible, he has asked the Assessing Officer to further reexamine the issue by reference to the details available on record. In our considered opinion by way of above order dehorse any cogent material or reasoning learned CIT is directed the Assessing Officer to make roving inquiry to somehow or other dislodge evidences duly on record that provisions of section 43CA are not applicable in the facts of the case. Accordingly, in the background of the aforesaid precedent and discussion we set aside the order of learned CIT and decide the issue in favour of the assessee.
6. In the result, appeal of the assessee stands allowed.
Order has been pronounced in the Court on 14.1.2020.
