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Facts
The assessee purchased a property in 2010. An addition was made by the AO under Section 56(2)(x)(b) based on the difference between the agreement value and the stamp duty value as of the agreement date. The CIT(A) upheld this addition. The assessee contended that the stamp duty value should be considered as of the allotment date, not the agreement date, as part payment was made at the time of allotment.
Held
The Tribunal held that for the purpose of Section 56(2)(x)(b), considering the part payments made through banking channels prior to the execution of the sale agreement, the stamp duty valuation should be based on the date of the allotment letter. The addition made by the AO and confirmed by the CIT(A) was not justified.
Key Issues
Whether the stamp duty valuation for the purpose of Section 56(2)(x)(b) should be taken as of the date of allotment or the date of agreement, when part payment was made at the time of allotment.
Sections Cited
147, 148, 143(2), 142(1), 56(2)(x), 56(2)(x)(b)
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Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: SHRI AMIT SHUKLA, JM & SHRI ARUN KHODPIA, AM
O R D E R
Per Arun Khodpia, AM:
This appeal is filed by the assessee against the order of Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi [for short “ld. CIT(A)”] dated 24.12.2024 for the AY 2018-19, which in turn arises from the assessment order passed under section 147 r.w.s. 144 of the Income Tax Act, 1961 (the Act) dated 15.03.2023 passed by Assessment Unit, Income Tax Department. The grounds of appeal raised by the assessee are as under:
On the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals) ["CIT(A)"] has erred in upholding the validity of reopening of assessment.
Erroneous Addition under Section 56(2)(x)
On the facts and in the circumstances of the case and in law, the Learned CIT(A) has erred in upholding the addition of Rs. 12,36,000 made by the Assessing Officer ("AO") under the head "Income from Other Sources" in terms of section 56(2)(x)(b) of the Income-tax Act, 1961 ("the Act"), in respect of the difference between the agreement value and the stamp duty value of the property, without appreciating the true nature of the transaction and the supporting evidences placed on record.
3. Failure to Consider the Allotment Letter as a Valid Agreement:
On the facts and in the circumstances of the case and in law, the Learned CIT(A) has erred in law and on facts in disregarding the Allotment Letter, which duly records the consideration and binding terms of the transaction, and which constitutes a valid and enforceable agreement in the absence of a registered sale deed.
4. Violation of Principles of Natural Justice
On the facts and in the circumstances of the case and in law, the Learned CIT(A) has erred in passing the appellate order without affording a reasonable and effective opportunity of being heard to the Appellant, despite the Appellant's repeated written submissions requesting intimation of any further documentary requirements.
5. Levy of Addition Merely on Procedural Grounds On the facts and in the circumstances of the case and in law, the Learned CIT(A) has erred in sustaining the addition solely on the procedural ground of alleged non-filing of the registered agreement, without appreciating the substantive evidences placed on record including the Allotment Letter, which clearly established the agreed consideration.
6. Without Prejudice - Incorrect Full Addition in Hands of Co-owner
Without prejudice to the foregoing grounds and without admitting the applicability of section 56(2)(x), on the facts and in the circumstances of the case and in law, the Learned CIT(A) has erred in sustaining the entire difference 2 Meena Arjun Narang between the agreement value and the stamp duty value in the hands of the Appellant, ignoring the fact that the Appellant is a co-owner of the property. Accordingly, if any addition were to be made, it ought to have been restricted to the Appellant's share in the property, i.e., 50% of the differential amount.”
2. At the beginning of the hearing of the case, it is brought to our notice that the present appeal is barred by limitation with 231 days of delay to explain the delay ld. Authorized Representative (AR) of the assessee submitted that the delay was occasioned for genuine reasons beyond the control of assessee, who is a senior citizen. Initially such notices were received on email of the son of the assessee, however owing to some technical storage glitch in the gmail account of the assessee’s son the assessee had not received the notices through email from the office of the ld. CIT(A), which was brought to the notice of ld. CIT(A) also on 21.12.2023. Subsequently a request was made to send communications through email, on the email ID of assessee’s daughter. Despite above intimation, notices as well as order was issued and forwarded to the email ID of assessee’s son as checked from the web portal later on. Thus, for such reasons the assessee had not received any notices as well was unaware about passing the impugned appellate order. It is also submitted that during the relevant period the assessee’s family was undergone severe prolonged personal hardships, particularly involving continuous medical exigencies, relevant supporting evidence submitted along with the condonation petition. Going through the aforesaid facts following the judicial precedents in such matters, we are of the considered view that the prayer of assessee to condone the delay of 231 days,
The sole issue in the present matter pertains to the date of stamp duty valuation of the property which the assessee had purchased in the year 2010 for a consideration of Rs. 44,00,000/-, which was further added with certain development charges, society advance maintenance and other taxes. The property was allotted to the assessee vide allotment letter dated 11.12.2010.
Further there were certain disagreement between the tenants of the property and the builder, therefore a substantial delay in construction and completion was taken place and therefore the property was completed in 2017, almost after seven years. Assessee also made certain payments towards the letter of allotment to the tune of Rs. 8,80,000/- at the time of issuance of allotment letter.
Copy of payment receipts furnished before us. The assessee further made certain payments on 24.09.2011. The property was held in co-ownership of assessee and her husband Mr. Sandeep Narang.
During the year under consideration as per information uploaded on insight portal the assessee’s name was reflected for purchase of immovable property at an agreement value of Rs. 46,50,000/- as on 03.11.2017, but the stamp duty value of the said property was Rs. 58,86,000/-. Accordingly, the Meena Arjun Narang difference of Rs. 12,36,000/- is hit by the provisions of section 56(2)(x)(b) of the Act. The date of agreement in present matter was 03.11.2017.
On the basis of aforesaid information, the case of assessee was selected for re-opening under section 147 of the Act, accordingly notice under section 148 was issued, in response to which the assessee filed her return of income declaring total income at Rs. 3,48,570/-. Further notices under section 143(2) and 142(1) were issued which was responded by the assessee. It was the submission of assessee before the AO that the assessee purchased the impugned property as per allotment letter dated 11.12.2010 and had made partial payments also. Therefore, following the decision of ITAT, Mumbai in dated 05.09.2022 the stamp duty value of the property should be considered as on the date of allotment and not on the date of registration / agreement. Assessee’s submissions were taken in to consideration by the AO but have not found tenable. The ld. AO took the value of stamp duty as on the date of registration and accordingly an addition of Rs. 12,36,000/- was made as Income from other sources as per the provisions of section 56(2)(x)(b) of the Act.
6. Aggrieved with the aforesaid addition assessee preferred an appeal before the ld. CIT(A), however the contentions of assessee are not found convincing by the ld. CIT(A). Consequently, the appeal of assessee has been dismissed by confirming the addition made by the ld. AO. 5
7. Being dissatisfied with the order of ld. CIT(A), the assessee preferred an appeal before us, which is under consideration.
At the outset, the ld. AR of the assessee submitted that the aforesaid issue is squarely covered by the decisions of ITAT, Mumbai in the number of cases out of certain cases are quoted before us, the same are listed as under:
“1. Dharmesh Ramesh Jhaveri v. DCIT. [ITA No. 5472/Mum/2024] dated 04.12.2024 2. Pinstripe Properties (P.) Ltd. v. DCIT [172 taxmann.com 777] 3. Smt. Mohini Bharat Kumar Ludhani v. NAFC, Delhi [ITA No. 1868/Mum/2022] dated 1/31/2024 4. Manjulaben Himmatlal Jain v. ITO [168 taxmann.com 673]” 5. Mr. Sajjanraj Mehta v. ITO [ITA No. 56/Mum/2021] dated 05.09.2022”
Per contra, the ld. SR. DR representing the revenue submitted that the date of stamp duty valuation as per section 56(2)(x)(b) should be the date of agreement and not the date of allotment. Further the allotment letter referred to by the assessee was not a registered document therefore the same should not be relied upon. Accordingly, the ld. AO and the ld. CIT(A) had rightly made / confirmed the addition under section 56(2)(x)(b) of the Act, the same, therefore deserves to be sustained.
We have considered the rival submissions and perused the material available on record and the decisions of ITAT, Mumbai relied upon by the assessee. The only issue before us is, whether for the purpose of section Meena Arjun Narang 56(2)(x)(b) of the Act, the date of purchase of property for the purpose of stamp duty valuation should be date of allotment or date of agreement. On this issue, we refer to the decision of ITAT, Mumbai in the case of Pinstripe Properties (P.) Ltd. v. DCIT (supra), wherein it is held by the Tribunal that where the assessee had paid part of consideration of flat, as per the terms of allotment through banking channels prior to execution of sale agreement, proviso to section 56(2)(x) should apply and no addition could be made to assessee’s income on the ground that stamp duty valuation of the said property was higher than properties price. The relevant findings of the Tribunal are extracted as under:
“5. Heard both the sides and perused the material on record. During the course of assessment, the assessing officer noticed that assessee had purchased flat no. 204, B-Wing, "Insignia" building situated at Kalina, Santacruz (E), Mumbai for a consideration of Rs. 1,79,94,452/-. However, the value of the said property as per the stamp duty was determined at Rs. 2,73,41,000/-. Therefore, the assessing officer has added difference of Rs. 93,46,548/- in the total income of the assessee after applying the provisions of section 56(2)(x) of the Act. The assessee has submitted the copies of allotment letter of flat no. 1601 & 1701 dated 18.03.2011 wherein it is categorically stated that said flat has been allotted to the assessee and the assessee had paid Rs. 25,00,000/-. The assessee has also referred the allotment letter issued on 26.04.2016 placed in the paper book filed before us. We have perused the said allotment letter wherein it is specifically incorporated that due to change in Development Control Regulation for Greater Mumbai the builder was constrained to alter/amend the building plans. In view of the same assessee has been allotted another flat no. 204 on the 2nd floor in "Insignia" building in place of the flat no. 1601 & 1701 which was earlier allotted in A-Wing in "Insignia" building on 16th floor for a total consideration of Rs. 1,78,91,327/-. It is also mentioned in the allotment letter that acknowledgement of advance payment already made shall be considered and be treated to have been issued in respect of flat no. 204 in place of the earlier allotment. The assessee has also referred the copy of agreement for sale dated 11.09.2017 placed in the paper book. He also referred copy of bank statemet showing that part of the sale consideration has been paid through Meena Arjun Narang banking channel on 08.02.2011. After perusal of the copies of material placed on record, it is evident that assessee has brought before the lower authority that due to change in Development Control Regulation for Greater Mumbai, 1991, the builder was constrained to alter/amend the building plans and in view of the same the builder allotted another flat on a lower floor. We find that this fact was not disproved by the assessing officer neither by making any enquiry from the builder nor brought any material on record to controvert the claim of the assessee. The allotment letter issued to the assessee dated 26.04.2016 substantiate that booking of old flat no. 1601 and 1701 was replaced by flat no. 204 because of the circumstances of change in Development Control Regulation as discussed (supra) in this order. We have also perused the provision of section 56(2)(x) of the Act applicable from A.Y. 2017-18, the relevant extract of the provision of section 56(2)(x) is reproduced as under:
"Section 56(2)(x)
Where any person receives, in any previous year from any person or persons on or after the 1st day of April, 2017
(a) any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum,
(b) any immovable property
(A) without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property, (4) for a consideration, the stamp duty value of such property as exceeds such consideration, if the amount of such excess is more than the higher of the Following amounts, namely
(i) the amount of fifty thousand rupees, and (ii) the amount equal to ten per cent of the consideration:
Provided that where the date of agreement fixing the amount of consideration for the transfer of immovable property and the date of registration are not the same, the stamp duty value on the date of agreement may be taken for the purposes of this sub-clause:
Provided further that the provisions of the first proviso shall apply only in a case where the amount of consideration referred to therein, or a part thereof, has been paid by way of an account payee cheque or an account Meena Arjun Narang payee bank draft or by use of electronic clearing system through a bank account or through such other electronic mode as may be prescribed28, on or before the date of agreement for transfer of such immovable property:"
The First Proviso to section 56(2)(x) of the Act as above provides that where the date of agreement fixing the amount of consideration for the transfer of immovable property and the date of registration are not the same, the stamp duty value on the date of agreement may be taken. However, the Second Proviso provides that the provisions of first proviso shall apply only in a case where the amount of consideration referred to therein, or a part thereof, has been paid by way of an account payee cheque or an account payee bank draft or by use of electronic clearing system through a bank account on or before the date of agreement for transfer of such immovable property. In the case of the assessee it has already made part payment of Rs. 25,00,000/- vide RTGS dated 08.02.2011 through banking channel as discussed (supra) in this order. Apart of this even it is settled issue as per the various decisions of ITAT, Mumbai that Stamp Duty Valuation as on date of allotment letter should be considered for purposes of section 56(2)(vii)(b) of the Act. We consider that the respective allotment letters issued to the assessee should be considered as "Agreement to sell" for the purpose of section 56(2)(x) of the Act. Since the assessee has paid the parts of consideration as per the terms and conditions of allotment through banking channels prior to the execution of sale agreement therefore, we consider that proviso to section 56(2)(x) should apply to the facts of the present case. Therefore, as per the proviso to section 56(2)(x) as discussed the date of agreement in the case of the assessee will be taken to 18.03.2011 and not 26.04.2016 since it is clearly demonstrated from the relevant supporting material that allotment of the new flat has been made to the assessee in continuation of the replacing of the earlier allotment which was changed because of the unavoidable circumstances of change in the Development Control Regulation. Therefore, we consider that decision of Id. CIT(A) in sustaining the addition made by the assessing officer is not justified. Accordingly, the ground of appeal of the assessee is allowed.
In the result, the appeal of the assessee is allowed.”
In terms of aforesaid observations of the Tribunal in the aforesaid case which is further supported by the other decisions of the Tribunal referred to (supra), we find substance in the contentions raised by the ld. AR on behalf of the assessee, we therefore respectfully following the aforesaid deisons, in Meena Arjun Narang absence of any contrary fact or decision brough on records to dis-regard the same, are of the considered view that the date for the purpose of stamp duty valuation in the present matter, as the part payments were already made by the assessee through proper banking channel, prior to execution of sale agreement as per the terms of allotment letter, therefore under the provisions of section 56(2)(x)(b) as observed herein above would be the date of allotment i.e. 11.12.2010 and the date of registration of agreement (03.11.2017). Accordingly, we direct the AO to delete the addition in present matter and re-compute the capital gain in the assessee’s case based on aforesaid directions.
In result, the appeal of assessee stands allowed in terms of our observations.
Order pronounced in the open court on 24-12-2025.