The Kolkata Bench of Income Tax Appellate Tribunal (ITAT) has deleted the addition holding that Section 43CA of the Income Tax Act 1961 would not apply to the sale agreement entered before 1.4.2014.
The assessee Regal Construction had been engaged in the business of promoting/developing/constructing and sale of residential/commercial buildings. During the assessment proceedings, the Assessing Officer (AO) noted that as per the audited accounts, the assessee had shown the sale of 12 flats, one office room, and four shops (total of 17).
Further, as per the information obtained from the sub-Registrar office, the assessee had sold a total of 18 properties vide separate 18 registered sale deeds. The Assessing Officer noted that the assessee had not disclosed the sale value of one property registered on 21.07.2014.
The Assessing Officer, accordingly, applied the provisions of the Section 43CA of the Income Tax Act and calculated the difference between the sale consideration and added the same into the income of the assessee under 43CA of the Income Tax Act.
Sunil Surana, who appeared on behalf of the appellant contended that the provisions to Section 43CA of the Income Tax Act had been inserted with effect from 01.04.2014, whereas, the assessee had agreed sale of flats with the buyers in the year 2012-13 itself and therefore the assessee could not have foreseen the provisions of section 43CA of the Income Tax Act and that the condition of accepting the part of sale consideration through the cheque/banking mode/electronic mode could not have been fastened upon the assessee in a retrospective manner applying the provisions of section 43CA of the Income Tax Act.
P. P. Barman, who appeared on behalf of the respondent relied upon the findings of the
lower authorities.
The two-member Bench of Sanjay Garg (Judicial Member) and Manish Borad (Accountant Member) relied upon the decision of the Bombay High Court in PCIT vs. Swananda Properties (P) Ltd.
The Bench held that the provisions to Section 43CA of Income Tax Act have been introduced w.e.f. 01.04.2014 and the ‘agreement to sell was entered before the 1st April 2014 and therefore, the condition of payment or part payment of consideration on or before the date of agreement could not be imposed back-dated as the assessee could not have foreseen the introduction of Section 43CA of the Income Tax Act 1961.
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