SHYAM SUNDER BHAETI,JODHPUR vs. ITO, WARD-1(4), JODHPUR

At the outset, we must observe, since, the assessee has died during the pendency of present appeal, he has been substituted through his legal heir. Be that as it may, the only dispute in the present appeal is with regard to addition of an amount of Rs.4,65,187/- under section 56(2)(vii)(b) of the Income-tax Act, 1961.

Briefly, the facts are, the deceased assessee was a resident individual. For the assessment year under dispute, the assessee has filed its return of income on 15.03.2017 declaring income of Rs.2,36,390/-. In course of assessment proceedings, while examining the materials on record, the Assessing Officer noticed that in the assessment year under consideration, the assessee had purchased an immovable property for a declared sale consideration of Rs.60,00,000/-. However, on the date of registration of the sale deed on 24.09.2015, the stamp duty authority has determined the value of the property at Rs.83,25,800/- for stamp duty purpose. Noticing this fact, the Assessing Officer was of the view that the difference in value as per the declared sale consideration and as determined by stamp duty authority has to be treated as income under section 56(2)(vii)(b) of the Act. Though, the assessee objected to the proposed addition, however, rejecting the objection of the assessee, the Assessing Officer added an amount of Rs.13,56,717/- to the income of the assessee by taking the share of the assessee in the sale consideration at 58.33%. The assessee contested the aforesaid addition before learned first appellate authority. Partly accepting assessee’s contention, learned first appellate authority held that since, the property purchased was co-owned by five individuals, assessee’s share in the deemed sale consideration can be computed at 20%. Accordingly, he restricted the addition to Rs.4,65,187/-.

We have considered rival submissions and perused materials on record. Basically, the contention of the assessee is two-fold.

We find substantial merit in the aforesaid contention of the assessee. On a conjoint reading of section 56(2)(vii)(b) of the Act, which is applicable to a purchaser of immovable property and section 50C, which is applicable to a seller of immovable property, it is observed that both have pari materia provisions. The third proviso to section 56(2)(vii)(b) enjoins upon the Assessing Officer a duty to refer the valuation to the DVO in case the assessee disputes the stamp duty valuation. Further, the first proviso to section 56(2)(vii)(b) makes it clear that if the date of agreement fixing the amount of sale consideration and the date of registration are not the same, the stamp duty valuation on the date of agreement to sale can be taken as the deemed sale consideration. Thus, if we examine the facts of the present appeal keeping in view the aforesaid statutory provisions, it is very much clear that the Assessing Officer has not complied with the condition of third proviso to section 56(2)(vii)(b) of the Act. Whereas, he failed to apply the benefit given under the first proviso to section 56(2)(vii)(b) of the Act. Thus, in our view, the addition made on this score is unsustainable. Accordingly, we delete the addition sustained by learned first appellate authority.

In the result, appeal is allowed.