ADARSH DEVELOPERS,MUMBAI V. INCOME TAX OFFICER - 22(1)(1), MUMBAI

ITA 101/MUM/2025

AI Insights

The case involves M/s. Adarsh Developers appealing against the order of the National Faceless Appeal Center (NFAC)/Commissioner of Income Tax (Appeals), which affirmed the addition of Rs.58,72,378 to the Assessee's income. This addition was based on the difference between the sale consideration shown in three property agreements and their stamp duty values, under section 43CA of the Income Tax Act, 1961. The Assessee argued that the properties were part of a Slum Redevelopment Authority (SRA) project, which faced legal and logistical challenges, affecting the project's timeline and the fair market value of the properties. The AO had referred the matter to the District Valuation Officer (DVO) to determine the fair market value, but proceeded with the assessment before receiving the DVO's report due to the impending limitation period. The Tribunal decided to remand the case for a fresh assessment considering the DVO's report.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 33680 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: UMESH CHANDRA SINHA; LD.
• Assessee Lawyers: PRAKASH JHUNJHUNWALA; LD
• Keywords: Opportunity of being heard; Sale consideration of property below Jantri Value; Fair market value; Value adopted by valuation officer
• Section: 143(3); 250; 43CA; 55A

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “A”, MUMBAI BEFORE SHRI BR BASKARAN, ACCOUNTANT MEMBER AND SHRI NARENDER KUMAR CHOUDHRY, JUDICIAL MEMBER ITA No.101/M/2025 Assessment Year: 2014-15 M/s. Adarsh Developers, Adarsh Developers B-1, Sukhsagar CHS, Golibar Road, Santacruz (E) Maharashtra 400 055. PAN: AANFM3760A Vs. Income Tax Officer – 22(1)(1) Piramal Chambers, Lalbaug Maharashtra -400012. (Appellant) (Respondent) Present for: Assessee by : Shri Prakash Jhunjhunwala, Ld. A.R. Revenue by : Shri Umesh Chandra Sinha, Ld. Sr.D.R. Date of Hearing : 27 . 02 .2025 Date of Pronouncement : 25 . 03 .2025 O R D E R Per : Narender Kumar Choudhry, Judicial Member: This appeal has been preferred by the Assessee against the order dated 12.11.2024, impugned herein, passed by the National Faceless Appeal Center (NFAC)/ Ld. Commissioner of Income Tax (Appeals) (in short Ld. Commissioner) u/s 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2014-15. 2. In this case, during the course of assessment proceedings, on verifying the copy of sale agreements executed by the Assessee during the assessment year under consideration, it was found by the Assessing Officer (AO) that the Assessee had executed three agreements on a consideration less than the stamp duty value of the properties, detailed below: ITA no.101/MUM/2025 M/s. Adarsh Developers 2 Sl. Agreement no. Agreement date Stamp Duty Value Sale consideration Difference 01 6894/2013 21.09.2013 40,08,207/- 10,31,100/- 29,77,107/- 02 6949/2013 19.11.2013 50,27,334/- 34,60,000/- 15,67,334/- 03 4251/2013 05.06.2013 47,87,937/- 34,60,000/- 13,27,937/- Total: 58,72,378/- 3. As the value of the property sold by the Assessee was less than stamp duty value, therefore it was opined by the AO that the provision of section 43CA would be applicable and therefore he showcaused the Assessee about the applicability of the section 43CA of the Act and as to why the difference of Rs.58,72,378/- between the consideration shown by the Assessee and the stamp duty value, should not be added to the total income of the Assessee. 4. The Assessee in response to show cause has claimed that the project executed by the Assessee was SRA project and total surrendered area was full of slum dwellers and stables (Tabela). The project was undertaken before the year 2004 which was initiated by other party however there were some legal issues and hassles and all type of harassment from the slum dwellers and therefore the work was held up for quite some time, which continued till 2010 and slowly some progress was there but again stopped due to legal cases. The Assessee without prejudice to the above submissions, also requested the AO for referring the case to the DVO to adjudicate the fair market value. 5. The AO considering the reply of the Assessee, found the same as not acceptable and by taking refuge of the provision of section 43CA of the Act, ultimately treated the difference between stamp duty value and agreement value in respect of above mentioned three agreements, which worked out to Rs.58,72,378/- in total, added to the total income of the Assessee, however, in the order in para 9 has observed as under: ITA no.101/MUM/2025 M/s. Adarsh Developers 3 “The Assessee during the scrutiny proceedings requested to refer the matter to DVO to determine the fair market value of the property. Assessee's request is accepted and matter is referred to the DVO to determine the FMV of all the three flats. As the matter is getting barred by limitation on 31.12.2016, the assessment is completed after taking the value of the asset as determined by the stamp duty authority. The assessment order passed is subject to the modification if any brought by the DVO whose report is awaited.” 6. The Assessee, being aggrieved, challenged the said addition before the Ld. Commissioner, however, of no avail, as the Ld. Commissioner affirmed the aforesaid addition. The Assessee being aggrieved has filed the instant appeal. 7. We have heard the parties and perused the material available ion record and given thoughtful consideration to the orders passed by the authorities below and the contentions raised by the parties. Admittedly, in para no.9 of the assessment order, it is categorically recorded by the AO that matter was getting barred by limitation on 31.12.2016 and therefore without waiting further for the DVO report, the AO vide order dated 27.12.2016 u/s 143(3) of the Act completed the assessment but subject to the modification if any to be brought by the DVO, whose report was awaited. Admittedly, the DVO/Assistant Valuation Officer-2, vide 23.06.2017 has determined the FMV of the property u/s 55A of the Act, which remained to be considered. Thus, considering the peculiar facts and circumstances in totality and for the just decision of the case and substantial justice, we are inclined to remand the instant case to the file of the AO to determine afresh the assessment by taking into consideration the DVO report referred to above and also by affording reasonable opportunity of being heard to the Assessee. Thus, the case is remanded to the file of the AO accordingly. ITA no.101/MUM/2025 M/s. Adarsh Developers 4 8. In the result, the appeal filed by the Assessee stands allowed for statistical purposes. Order pronounced in the open court on 25.03.2025. Sd/- Sd/- (BR BASKARAN) (NARENDER KUMAR CHOUDHRY) ACCOUNTANT MEMBER JUDICIAL MEMBER * Kishore, Sr. P.S. Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The DR Concerned Bench //True Copy// By Order Dy/Asstt. Registrar, ITAT, Mumbai. "