What the courts have decided on section 43CA, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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Bansal Land Developers v ITO
ITATHelps taxpayerValidity unconfirmed
The stamp value rose between booking and registration and the AO added the difference under 43CA. Is that right?
Not where sub-sections (3) and (4) of s.43CA are satisfied. The Pune Tribunal deleted the entire addition because the booking dates preceded registration, the agreement values at booking exceeded the stamp duty values then prevailing, and part of the consideration had come through banking channels, so the agreement-date value governed.
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Prithvi Developers v DCIT
ITATHelps departmentValidity unconfirmed
Section 43CA got a 5 per cent tolerance band in 2018 and 10 per cent in 2020. Does the band help an earlier year, as Maria Fernandes Cheryl says it does for s.50C?
The Raipur bench said no. It held that the first proviso to s.43CA, inserted by the Finance Act 2018 with effect from 1 April 2019, applies prospectively from assessment year 2019-20, and it refused to read it as curative and retrospective. Its reasons were that before the 2018 amendment no tolerance limit was contemplated at all in s.43CA, that the explanatory notes state the amendment takes effect from 1 April 2019 and applies to assessment year 2019-20 and subsequent years, and, applying the distinction drawn by the Supreme Court in Shree Choudhary Transport Co., that this was a substantive change rather than a curative one. It followed a Mumbai coordinate bench decision in Welfare Properties P. Ltd. The addition was upheld. This entry is included precisely because it cuts against the assessee, and a practitioner should know the argument he is walking into.
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Alrameez Construction P Ltd v CIT/NFAC
ITATHelps taxpayer
The only addition is the gap between the stamp duty value and my price. Can that carry a s.270A penalty?
No, on this Tribunal's reasoning, and note the facts it rests on. The Tribunal read s.270A as dealing with deemed income only where the addition is made under s.115JB or s.115JC, so an addition under s.43CA read with s.56(2)(x) falls outside the under-reporting scheme; where a deeming provision applies the assessee has no option but to accept the difference, so neither concealment nor under-reporting can be established. Two further grounds carried the result: the notice never said which limb of s.270A was charged, and the assessment order itself recorded that the assessee had accepted the addition to buy peace. The penalty of Rs. 20,843 was deleted; the addition of Rs. 1,34,100 stands.
Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.