RUDARAM DUNGARARAMJI CHOUDHARY ,MUMBAI vs. ITO. 19(3)(1), MUMBAI

The Appellant reserves the right to add, alter, amend, or modify any of the grounds of appeal at the time of hearing or thereafter.” Brief facts of the case are as under: 2. The assessee is an individual and filed his return of income on 26/09/2014 declaring total income at Rs.9,37,690/-. The case was selected for scrutiny and notices under section 143(2) of the act along with 142(1) of the act was issued to assessee. In response to a statutory notices assessee file requisite details as called for. 2.1 The Ld.AR observed that assessee during the year under consideration had purchased the property having a transaction value of Rs.1,33,64,550/-. To verify the purchase, requisite documentary evidences were called for wide notice dated 23/08/2016. The assessee in response submitted the registered agreement towards purchase of the flat dated 31/12/2013, that was registered on 05/03/2014. The Ld.AO observed that, sale consideration recorded in the agreement was Rs.1,16,59,950/- but the stamp duty was paid at the value of Rs.1,33,64,550/-. 2.2 The Ld.AO thus made addition of the differential amount in the stamp duty value by invoking provisions of section 56(2)(vii)(b) of the act. 2.3 Aggrieved by the order of the Ld.AO, simplified appeal before the Ld.CIT(A). 2.4 The Ld.CIT(A) after considering the submissions of the assessee observed and held as under: “6.1.1 The appellant raised a ground that the Ld. AO erred in making an addition of Rs 17,04,600/- for the stated difference

1.2 I have gone through the assessment order, submissions made by the appellant From the facts of the case it is noticed that during the year under consideration, the appellant has purchased a flat The date of agreement is recorded as 31-12- 2013 and the date of registration is found to be on 05-03-2014. The sale consideration is recorded at Rs. 1,16,59,950/- and the stamp duty value is recorded at Rs.1,33,64,550/-, The consideration paid by the assessee for purchase of the property is lesser than the stamp duty value of the property and the difference is of Rs. 17,04,600/- (Rs.1,33,64,550 Rs.1,16,59,950). Accordingly, AO treated this difference as the income of the assessee under the head "income from other sources' u/s 56(2) (vii) (b) of the Act and added to the total income. Aggrieved with the above addition made in the assessment order, the assessee filed the present appeal and contended that as the first payment for booking was made in the year, 2010, the ready reckoner rate of the year 2010 should be applicable to the said flat and the stamp duty value for the 2010 should be considered.

1.2.1 During scrutiny proceedings, AO recorded statement u/s 131 of the Act from the assessee. During his statement, the assessee furnished copy of letter dated 26.12. 2016 issued by the builder acknowledging the receipt of booking amount from the assessee towards the flat on 18.10.2010 and it is also mentioned in the letter that the cost of the flat is Rs.1,16,59,950/-. However, when the assessee was asked that whether any agreement was entered into with the builder at the time of payment of booking amount or after, the assessee replied that no such agreement was made. The only agreement which was made was that entered on 31.12.2013 and the same had been registered on 05.03.2014. 6.1.2.2 As per the provisions of sec. 56(2) (vii) (b) of the Act, in a case where an assessee, being an individual, purchases any immovable property for a consideration which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as exceeds such consideration shall be chargeable to income-tax under the head income from other sources. There are certain safeguards available to the assessee in respect of applicability of sec.56(2) (vii) (b) of the Act. First one is mandated in first proviso to the said section wherein it is mentioned that in case of delayed registration, the date of agreement fixing the amount of consideration' may be taken for the purpose of referring to stamp duty value. Further, second proviso to the said section is also there, but it is basically dependent on the first proviso. In the second proviso, it is mandated that in case any payment has been made on or before the date of agreement fixing the amount of consideration, then only first proviso shall apply. When the facts of the case of the assessee are examined vis-à- vis the statutory provisions, it is seen that though the assessee has made payment of Rs. 2,25,210/-on 18.10.2010, but there is no agreement made on or before this date. Therefore, the contention of the appellant that the rate for the year 2010 should be applied to the property is not acceptable, Further, the argument of the appellant that the stamp duty value should be adjusted for non-receipt of Occupancy certificate is also not acceptable since the date of registration of property and the stamp duty value on the date of registration has to be considered as per law for the purpose of computation of income. In view of the above discussion, the action of AO is justified in making addition of Rs. 17,04,600/- u/s 56(2) (vii) (b) of the Act. Accordingly, the grounds raised by the appellant are 'dismissed'”

Aggrieved by the order of the Ld.CIT(A), assessee is in appeal before this Tribunal. 4. The Ld.AR’s during assessment proceedings assessee had furnished letter dated 26/12/2016 issued by the builder acknowledging receipt of booking amount from the assessee towards the flat on 18/10/2010. The said letter also has a reference to the total cost of the flat to be Rs.1,16,59,950/-. The Ld.AR the submitted that based on this later issued by the builder assessee had subsequently various occasions during 2010, 2011 and 2012 as in when assessee was called upon to make payments by the builder. 4.1 He submitted that merely because the agreement was registered on 31/12/2013 at the time when the stamp duty authority determine the value of the flat at Rs.1,33,64,550/-, cannot be the reason to invoke provisions of section 56 (2)(vii) (b) of the act. He submitted that the 1st payment made by the assessee’s on 18/10/2010 towards the purchase of the flat as earnest money has to be treated as the date on which the assessee agreed to purchase the flat from the builder. He submitted that subsequently assessee had made various payments in instalments on 20/03/2010 to 11/01/2011, 20/01/2011, 21/01/2012. 6. The Ld.AR submitted that admittedly there is no allotment letter that was issued by the builder however the receipts against which the payments were made categorically shows that they were the part payment towards the consideration agreed between the assessee in the builder. Thus, the Ld.AR submitted that once