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Facts
The assessee filed his return for AY 2017-18 declaring income of Rs. 31,60,210/-. The case was reopened under Section 147 due to information regarding the purchase of an immovable property at a price lower than its stamp duty value. The AO made an addition of Rs. 25,39,000/- under Section 56(2)(vii)(b) of the Act.
Held
The Tribunal restored the issue to the CIT(A) for fresh adjudication after considering the additional evidence filed by the assessee. The assessee was to be given an opportunity to be heard.
Key Issues
Whether Section 56(2)(vii)(b) of the Income Tax Act, 1961, is applicable to the assessee's case, and whether the addition made by the AO is sustainable given the additional evidence presented.
Sections Cited
147, 250, 56(2)(vii)(b), 2(47), 53A, 144B
AI-generated summary — verify with the full judgment below
Before: SMT BEENA PILLAI & SMT.RENU JAUHRI
This appeal is filed by the assessee against the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “CIT(A)”] dated 13.08.2025 passed u/s. 250 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for Assessment Year [A.Y.] 2017-18. 2. The grounds of appeal are as follows:
“1. On the facts and circumstances of the case in law, ld. CIT(A) upheld AO's decision in invoking section 56 which is not applicable to assesse case 2. On the facts and circumstances of the case in law, Id. CIT(A) erred in confirming addition of Rs. 25,39,000/-u/s 56 of the Act, 1961
3. The Assessee reserves his right to amend modify delete and make any additional grounds of appeal”
Brief facts of the case are that the assessee had filed his return for A.Y. 2017-18 declaring income of Rs. 31,60,210/-.
In view of the information available with the department regarding purchase of an immovable property for Rs. 1,41,74,000/- as against the stamp duty value (SDV) of Rs. 1,67,13,000/- the case was reopened u/s. 147 of the Act for the reason the income of Rs. 25,39,000/- had escaped assessment in view of section 56(2)(vii)(b) of the Act.
During the reassessment proceedings, the assessee submitted that it had booked under-construction an office premises in the project known as ‘MAN EXCELLEZA’ on 15.07.2009 for a total consideration of Rs.
1,28,32,000/- alongwith his son.
Ld. AO noted that the allotment letter dated 15.07.2009 issued by the builder did not contain the assessee’s name. The assessment was completed after making an addition of Rs. 25,39,000/- (Rs. 16713000 – Rs. 1,41,74,000) u/s. 56(2)(vii)(b) vide order u/s. 147 r.w.s 144B dated 28.05.2023. Aggrieved, the assessee preferred an appeal before ld.
CIT(A). The appeal of the assessee was dismissed by ld. CIT(A) with the following observations:
“5.5 With regard to applicability of section 56(2)(vii) (b), even though the property was agreed for sale in the FY 2009-10, the registration of the property was made in the F.Y. 2016-17. Therefore, the date of transfer of property to be considered from the date of registration i.e. in the F.Y. 2016- 17. Hence, the applicability of the section is to be considered for FY. 2016-17.
In addition, as per first proviso of section 56(2)(vii)(b), the Act is clear that the stamp duty value on the date of agreement may be considered. However, in the instant case, the appellant could not submit any supportive evidence of valuation report in order to substantiate that market value at the time of initial agreement is lesser than the market value at the time of registration. Further, two conditions are to be fulfilled in order to bring a transaction within expression "Transfer" u/s 2(47) of the Act and 53A of the Transfer of Property Act, (i) Execution of a written agreement and (ii) Handing over of possession of the property In the instant case, the transfer of property to be reckoned from the date of registration i.e., 06.10.2016 since, the possession of the property and the rights of the builder are extinguished from the date of registration of the property. 5.6 Further, the appellant had submitted that the assessment in the case of the joint owner i.e., the appellant's son was completed by the AO accepting the contention of appellant's son. However, in the instant case, the appellant could not substantiate his claim of lower market value with supporting evidence. Further, it is also observed from the assessment order in the appellant's son case that there is no mention of supporting evidence about the market value of the property in at the time of initial payment. Therefore, the mistake of appellant son's AO cannot be binding precedence on the present proceedings. 5.7 In view of the above, I am of considered opinion that the addition made by the AO of Rs.25,39,000/- u/s 56(2) (vii) (b) of the Act is sustainable due to the fact that the appellant unable to provide valuation report in support of his stand that the market value during the date of agreement and date of registration is same. Therefore, the grounds of appeal on this issue is dismissed” Aggrieved further, the assessee has filed an appeal before the Tribunal.
Before us ld. AR has submitted the following documents in the form of a paperbook in support of the claim the section 56(2)(vii)(b) is not applicable in the case:
“1. Purchase agreement made between Man infraprojects Ltd. and Assessee dated 06.10.2016. 2f. Notice from Man Infraprojects Ltd to assessee dated 15.07.2009 regarding allotment of property. 2g. Payment made via cheques by Dilip Shah & Jimmy Shah for the Property. 2d. Bank statement of Dilip Shah & Rekha Shah from period October 2011 to December 2013 2b. Notice from Man infraprojects Ltd to assessee dated 16.11.2011 regarding site hinderance and possession of property.
2c. Bank statement of Vicky dilip shah for AY 2010-11. 2d. Bank statement of Dilip Shah & Rekha Shah from period October 2011 to December 2013” It has been explained in the light of these documents that the property was initially booked in the names of his sons but vide letter dated 16.03.2011 issued by the builder, the assessee’s name was added a joint allottee. Subsequently, the assessee made payments from this own account during F.Y. 2012-13 & 2013-14 as under:
“Rs. 9,00,000/- on 22.12.2012 Rs. 5,00,000/- on 24.01.2013 Rs. 10,00,000/- on 30.04.2013 Rs. 8,00,000/- on 09.05.2013 Rs. 6.00.000/- on 22.05.2013 Rs. 5,00,000/- on 11.06.2013” Due to construction delays the project could not be completed as
per schedule and eventually it was registered in the joint name of the
assessee and his son on 06.10.2016.
Ld. AR has also furnished, by way of additional evidence. The fair market valuation (FMV) reports of the Registered Valuer on various dates and regarded for admission of the same under rule 29 of the ITAT
Rules.
Ld. DR, on the other hand, has strongly relied on the orders of the lower authorities.
We have considered the rival submissions and perused the material available before us. In view of the additional evidences being filed by the assessee, we deem it appropriate to restore the issue to ld. CIT(A) for fresh adjudication after considering these evidences. Needless to add, the assessee should be given due opportunity before deciding the matter.
In the result, appeal of the assessee is allowed for statistical purposes.
Order Pronounced in Open Court on 27.11.2025