DHANA-SHREE DEVELOPERS ,MUMBAI V. PCIT 27 MUMBAI, NAVI MUMBAI

ITA 1771/MUM/2024

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The case involves Dhana-Shree Developers, a partnership firm engaged in real estate, which appealed against the order of the PCIT setting aside their assessment order for the Assessment Year 2015-2016. The PCIT had found that the assessee sold immovable properties and disclosed sale considerations that were less than the stamp duty values, which should have been examined under Section 43CA of the Income Tax Act. The Tribunal's decision was based on the examination of whether the differences in sale considerations and stamp duty values exceeded the statutory tolerance band of 10%.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 398320 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-06-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: K
• Assessment Year: 2015-2016
• Other Referred Cases: Maria Fernandes Cheryl v. ITO(IT), Macrotech Developers Ltd. Vs. DCIT-7 (3), Mumbai, Gaurav Investments vs. Deputy Commissioner of Income-tax
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: ASSESSEE
• Keywords: Set aside; Difference of opinion; Change of opinion; Capital asset; Opportunity of being heard; Reassessment proceedings; Sale consideration of property below Jantri Value; Assessment record
• Section: 147; 148; 143(3); 263; 43CA; 50C

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “K (SMC)” BENCH, MUMBAI SHRI OM PRAKASH KANT, ACCOUNTANT MEMBER SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER ITA No.1771/MUM/2024 (Assessment Year: 2015-2016) Dhana-Shree Developers C/o.40, A Wing, 3rd Floor, Dattani Center, Mahadevbhai Desai Road, Kandivali (East), Mumbai – 400 101. Maharashtra. [PAN:AACFD9296M].…………. Appellant Principle Commissioner of Income Tax 27, Mumbai Room No.401, 4th Floor, Tower No.6, Vashi Railway Station Commercial Complex, Vashi, Navi Mumbai - 400703. Maharashtra. Vs …………. Respondent Appearance For the Appellant/Assessee For the Respondent/Department : : Shri Bhupendra Shah Ms. Neena Jeph Date Conclusion of hearing Pronouncement of order : : 03.04.2025 04.06.2025 O R D E R [ Per Rahul Chaudhary, Judicial Member: 1. By way of the present appeal the Assessee has challenged the order, dated 18/12/2018, passed by the Learned Principal Commissioner of Income Tax, Mumbai - 27 [hereinafter referred to as ‘the PCIT’] under Section 263 read with 254 of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’] whereby the Assessment Order, dated 18/12/2018, passed under Section 143(3) read with Section 147 of the Act was set aside as being erroneous in so far as prejudicial to the interest of Revenue. 2. The Assessee has raised following grounds of appeal : ITA No.1771/Mum/2024 Assessment Year 2015-2016 2 “1. In the facts of the case and in Law, the learned PCIT erred in invoking Section 263 to the case of the Appellant only by way of change of opinion, without pointing out any error in the order of the A.O. and also by rejecting detailed submissions made to him from time to time. 2. In the facts of the case and in Law, the Show Cause Notice & or order u/s.263 alleging errors and prejudice, itself is erroneous on many counts as follows. a. In the facts of the case and in Law, the learned PCIT erred in invoking the provision of sec. 263 merely because he wants to take a view different from the one taken by the Assessing Officer and thereby changing the opinion. b. In the facts of the case and in Law, the learned PCIT erred in holding that Assessing Officer failed to verify the fact that there is difference between the Stamp Duty Value and agreement value of the flats sold.” 3. The relevant facts in brief are that the Assessee is a partnership firm engaged in the business of real estate. For the Assessment Year 2015-2016, the Assessee filed original return of income on 31/10/2015. A survey was conducted on the Assessee on 05/11/2014. Thereafter, reassessment proceedings were initiated under Section 147 of the Act for the Assessment Year 2015-2016 by issuance of notice under Section 148 of the Act on 21/03/2018. In response, the Assessee filed return on 22/05/2018 declaring total income of INR.5,32,80,810/-. The assessment proceedings were completed under Section 143(3) read with Section 147 of the Act on 18/12/2018 and the total income was assessed at INR.5,32,80,810/- without making any additions/disallowances. 4. On perusal of record, the Learned PCIT noted that, the Assessee had sold following immovable properties during the relevant previous year and the sale consideration disclosed by the Assessee was less than the Stamp duty value: Sr.No. Name Consideration (INR.) Stamp Duty Value (INR.) Difference INR. 1 Rizwan Khan Flat No.405 57,73,000 60,65,000 2,92,000 ITA No.1771/Mum/2024 Assessment Year 2015-2016 3 2 Habibur Khan Flat No.406 79,31,000 83,32,000 4,01,000 3 Krishnarao Gaikwad Flat No.404 43,35,000 45,53,000 2,18,000 4 KrishnaraoGaikwad Flat No.403 92,10,000 96,64,000 4,54,000 5 Roshan Prasad Flat No.1201 71,28,750 76,93,000 5,64,250 6 Greetika Vashwani Shop No.5 37,52,500 53,97,000 16,44,500 7 Site Nexus Flat No.305 69,25,000 83,32,000 14,07,000 4,50,55,250 5,00,36,000 49,80,750 5. Section 43CA of the Act provides that where actual sale consideration received/accruing as a result of transfer of an asset (other than capital asset), being land or building or both, is lesser than the stamp duty value, for the purpose of computing income under the head ‘Profits & Gains of Business or Profession’, the stamp duty value shall be taken as full value of sale consideration. The Learned PCIT was of the view that the Assessee had disclosed sale consideration less than the stamp duty value and therefore, the applicability of provisions contained in Section 43CA of the Act should have been examined by the Assessing Officer. The Learned PCIT concluded that there was violation of provisions contained in Section 43CA of the Act and the same has resulted in loss of revenue. The Learned PCIT concluded that the Assessment Order was erroneous in so far as prejudicial to the interest of Revenue. Therefore, the Assessment Order, dated 18/12/2018, passed under Section 143(3) read with Section 147 of the Act was set aside by the Learned PCIT vide order dated, 26/03/2021, with the directions to the Assessing Officer to pass fresh Assessment Order. The aforesaid, Order passed under Section 263 of the Act was set–aside by the Tribunal in appeal preferred by the Assessee [ITA No. 1036/Mum/20222, Order dated 13/10/2022] with the directions to the Learned PCIT to pass the order under Section 263 of the Act afresh after affording adequate opportunity of being heard to the Assessee. In compliance with the directions of the Tribunal, the Learned PCIT passed Order, dated 09/02/2024, under Section 254 read with 263 of the Act which has been challenged by way of present appeal before the Tribunal on the grounds reproduced in ITA No.1771/Mum/2024 Assessment Year 2015-2016 4 Paragraph 2 above. 6. We have considered the rival submissions and have perused the material on record and have taken into consideration. During the course of hearing the original assessment record were perused and returned in terms of order, dated 03/04/2025. 7. The Assessee has challenged the order passed by the Learned PCIT, inter alia, on the grounds that the Assessing Officer had carried out necessary inquiry and verification and thereafter, passed the Assessment Order, dated 18/12/2018, taking a plausible view.Therefore, the Learned PCIT erred in exercise jurisdiction under Section 263 of the Act. Opposing the aforesaid submissions, the Learned Departmental Representative had submitted that the relevant sale agreements pertaining to the transfer of immovable property were never requisition or produced before the Assessing Officer. The Assessing Officer had failed to carry out the necessary inquiry and call for relevant documents/details to examine the applicability of provisions contained in Section 43CA of the Act. Therefore, the submissions made by the Learned Authorized Representative for the Assessee cannot be accepted. Keeping in view the submissions advanced by both the sides, the relevant assessment records wereexamined during the hearing held on 03/04/2025.On perusal of the same, it was clear that the Assessing Officer had neither requisitioned the sale agreements pertaining to the sale transactions under consideration, nor had the Assessee placed the same on record. The Assessee had merely furnished the details of sale transactions and the difference between sale consideration and the stamp duty value. Therefore, we reject the submissions of the Assessee that the sale agreements were filed during the assessment proceedings. Details furnished by the Assessee clearly showed that there was difference between the sale consideration disclosed by the Assessee and the stamp duty value, ITA No.1771/Mum/2024 Assessment Year 2015-2016 5 the Assessing Officer failed to inquire into the same and examine the applicability of provisions contained in Section 43CA of the Act. Therefore, we reject the contention advanced on behalf of the Assessee that the Learned PCIT erred in exercising jurisdiction under Section 263 of the Act. Accordingly, in our view, the order dated, 09/02/2024, passed by the Learned PCIT cannot be quashed as being without jurisdiction. 8. Having concluded as above, we find that before the Learned PCIT it was submitted on behalf of the Assessee that the Assessment Order cannot be regarded as erroneous in relation to 5 out of the 7 sale transactions under consideration were concerned since the provisions contained in Section 43CA of the Act were not applicable to the aforesaid 5 transactions for the reason that the difference between the sale consideration and the stamp duty value did not exceed the threshold of 10% specified in Proviso to Section 43CA of the Act. Reliance in this regard was placed upon reply to notice dated, 27/12/2023 issued under Section 263(1) of the Act filed before the Learned PCIT on 11/01/2024 and 18/01/2024. On perusal of the aforesaid replies we find that the Assessee had furnished following details regarding the difference in sale consideration and stamp duty value: SI. No. Name Difference INR. Difference % 1 Rizwan Khan Flat No.405 2,92,000 5.06 2 Habibur KhanFlat No.406 4,01,000 5.06 3 Krishnarao GaikwadFlat No.404 2,18,000 5.03 4 Krishnarao Gaikwad Flat No.403 4,54,000 4.93 5 Roshan Prasad Flat No.1201 5,64,250 7.92 6 Greetika VashwaniShop No.5 16,44,500 43.82 7 Site Nexus Flat No.305 14,07,000 20.32 On perusal of above details, which has not been disputed by the Revenue,it is evident that in the sale transactions at Sr. No.1 to 5 in the table above, the difference in sale consideration and stamp duty valueis less than 10%. In the case of Maria Fernandes Cheryl v. ITO(IT) [2021] 187 ITD 738 (Mumbai - Trib.), cited on behalf of the ITA No.1771/Mum/2024 Assessment Year 2015-2016 6 Assessee, Co-ordinate Bench of the Tribunal has, in the context of Section 50C of the Act, held that the amendment providing the tolerance band of 10% is retrospective in nature and relates back to the date of insertion of statutory provision into the Act. Identical view was taken by the Co-ordinate Bench of the Tribunalin the case of Macrotech Developers Ltd. Vs. DCIT-7 (3), Mumbai [ITA Nos. 2266 And 2239/Mum/2022, dated 17/04/2022] in the context of Section 43CA of the Act. We note that the Proviso to Section 43CA of the Act inserted by way of Finance Act, 2018 along with Third Proviso to Section 50(1)(c) of the Act. Both the provisos provided for a tolerance band of 5% which was enhanced to 10% by way of Finance Act, 2021. In the case of Macrotech Developers Ltd. (supra) it was held by the Mumbai Bench of the Tribunal that the tolerance band of 10% contained in Proviso to Section 43CA of the Act in respect of the difference between the sale consideration and the stamp duty value, as amended by the Finance Act 2021, would apply retrospectively 1 . The aforesaid decisions clearly support the contention of the Assessee. Therefore, we accept the contention of the Assessee that the Assessment Order, dated 18/12/2018, passed by the Assessing Officer cannot be regarded as erroneous as regards the aforesaid five sale transactions are concerned as there was no violation of the provisions contained in Section 43CA of the Act. 9. During the course of hearing the Learned Departmental Representative had relied upon the provisions contained in Explanation 2 to Section 263 of the Act to support the order passed by the Learned PCIT. On perusal of the order impugned, we find that the Learned PCIT has not invoked the provisions contained in Explanation 2 to Section 263 of the Act. The Order, dated 26/03/2021, passed under Section 263 of the Act, wherein reliance was placed on Explanation 2 to Section 263 of the Act, was set aside 1 Gaurav Investments vs. Deputy Commissioner of Income-tax [2025] 174 taxmann.com 839 (Mumbai - Trib.) ITA No.1771/Mum/2024 Assessment Year 2015-2016 7 by the Tribunal vide Order, dated 13/10/2022 passed in ITA No. 1036/Mum/2022.Therefore, the reliance on the provisions contained in Explanation 2 to Section 263 of the Act is misplaced. 10. At the same time, we note that the Assessing Officer had failed to carry out any inquiry in respect of the balance two transactions (at Sl No.6&7 in Table at Paragraph 8 above) even though it was apparent that the difference in sale consideration and the stampduty value was beyond the tolerance band. To this extent we do not find any infirmity in the order passed by the Learned PCIT in invoking provisions contained in Section 263 of the Act as clearly the applicability of Section 43CA of the Act was required to be examined and the failure on the part of the Assessing Officer has resulted in passing of assessment order which was erroneous as aforesaid. We have already returned a finding that the actual sale agreements were neither requisitioned nor produced during the assessment proceedings. We also reject the contention of the Learned Authorised Representative of the Assessee that the applicability of Section 43CA of the Act is to be examined by aggregating all the transaction.The language of Section 43CA of the Act does not provide for such an approach or interpretation. 11. In view of the above, we hold that no addition under Section 43CA of the Act was warranted in respect of 5 out of 7 transactions(Listed at Sl.No. 1 to 5in Table at paragraph 8above). Accordingly, the order passed by the Assessing Officer without making addition in respect of the aforesaid 5 transactions cannot be regardedas erroneous. Thus, the Order passed by the Learned PCIT directing for fresh examination of the aforesaid five transactions cannot be sustained. As regards balance 2 transactions(Listed at Sl.No. 6and 7 in Table at paragraph 8above), we uphold the order passed by the Learned PCIT holding that the Assessment Order, dated 18/12/2018, was erroneous in so far asprejudicial to the interest of revenue. The ITA No.1771/Mum/2024 Assessment Year 2015-2016 8 Assessee would be at liberty to raise all contentions in relation to the aforesaid 2 sale transaction on merits before the Assessing Officer. 12. In terms of paragraph 11 above, Ground No. 1 and 2(a) raised by the Assessee are dismissed while Ground No. 2(b) raised by the Assessee is partly allowed. 13. In result, the present appeal preferred by the Assessee is partly allowed. Order pronounced on04.06.2025. Sd/- Sd/- (Om Prakash Kant) Accountant Member (Rahul Chaudhary) Judicial Member म ुंबई Mumbai; दिन ुंकDated :04.06.2025 Milan,LDC ITA No.1771/Mum/2024 Assessment Year 2015-2016 9 आदेशकीप्रतितितिअग्रेतिि/Copy of the Order forwarded to : 1. अपील र्थी/ The Appellant 2. प्रत्यर्थी/ The Respondent. 3. आयकरआय क्त/ The CIT 4. प्रध न आयकर आय क्त / Pr.CIT 5. दिभ गीयप्रदिदनदध ,आयकरअपीलीयअदधकरण ,म ुंबई/ DR, ITAT, Mumbai 6. ग र्डफ ईल / Guard file. आिेश न स र/ BY ORDER, सत्य दपिप्रदि //True Copy// उप/सह यकपुंजीक र /(Dy./Asstt.Registrar) आयकरअपीलीयअदधकरण, म ुंबई / ITAT, Mumbai "