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Facts
The assessee purchased immovable property under an agreement dated 10.10.2006 with part payment made in FY 2006-07, but stamp duty was paid and registration completed in FY 2016-17. The AO added Rs. 2.82 Cr to the assessee's income under Section 56(2)(vii)(b) or 56(2)(x)(b) due to a difference between the agreed consideration and the stamp duty valuation at the time of registration. The assessee contended that the relevant section should not apply due to the agreement date and mode of payment, but the Ld. CIT(A) upheld the addition, citing lack of proof for non-cash payments.
Held
The Tribunal noted that the assessee consistently claimed part payments were made via banking channels in 2006, a fact not verified by lower authorities. Following precedents, it reiterated that the stamp duty value on the agreement date should be considered if part consideration was paid via account payee cheque, bank draft, or electronic mode. The matter was remanded to the Jurisdictional AO to verify these facts and grant relief.
Key Issues
Whether Section 56(2)(vii)(b) or 56(2)(x)(b) applies when property agreement and part payment are from an earlier year but registration and higher stamp duty valuation occur in a later year; and if the proviso for considering agreement date valuation due to non-cash payments is applicable.
Sections Cited
254(1), 56(2)(vii)(b), 56(2)(x)(b), 147, 144B
AI-generated summary — verify with the full judgment below
PER PAWAN SINGH, JUDICIAL MEMBER:
This appeal by the assessee is directed against the order of Learned Commissioner of Income Tax (Ld. CIT(A)) dated 31.03.2025 for A.Y. 2017-18.
The assessee has raised the following grounds of appeal:
“1. The Assessee had purchased the Immovable Property in the FY 2006-17 and entered in to an agreement dated 10.10.2006 (FY 2006-07). As the First payment towards purchases of the said Premises, amounting to Rs. 4,00,000/- was made on 07.10.2006, it can simply be enumerated that, the Assessee has started making the payment for such purchases from FY 2006-07.
Then after, the difference of Stamp Duty was paid under Maharashtra Stamp Duty Amnesty Scheme on 25.06.2009. However, on adjudication and Assessment the Application under Maharashtra Stamp Duty Amnesty Scheme was rejected.
Thereafter, to resolve the issue, the Stamp Duty as computed in 2016, was paid by the Assessee.
Though all documents such as Agreement, Stamp Duty Receipts, Statement showing Payment Made along with Bank Statement, were submitted, which were ignored by the AO.
2. The Consideration as per the Agreement dated 10.10.2006 was Rs. 1,36,35,000/- 6 However, the Stamp Duty valuation on the date of Registration i.e. 16.06.2016, was Rs. 4,18,37,500/-. The Difference of Rs. 2,82,02,500/-.
As, The AO erred in adding such difference as the Income from Other Sources under section 56(2)(vii)(b), considering the date of Registration as the Date of Purchases.
The AO has claimed that the buyer and seller accepted the Sales Consideration, while paying the Stamp Duty, where the AO has completely ignored the Process of Stamp Duty payment, according to Stamp Duty Adjudication Process, the Stamp Duty Valuation shall be computed on the date of payment and accordingly, the stamp duty shall be demanded. The AO ignored the basic fact of the Date of Fixing the Transaction, date of Agreement and date of Payment. The claim of the AO is completely unjustified.
4. Further, as rightly mentioned in the earlier notice issued by AO about Section 56(2)(vii)(b)
Section 56(2)(vii)(b) says that:-
56[2] In particular, and without prejudice to the generality of the provisions of sub-section [1], the following incomes, shall be chargeable to income-tax under the head "Income from other sources", namely:-
[vii] where an individual or a HUF receives, in any previous year, from any person or persons on or after the 1st day of October, 2009 but before the 1st day of April, 2017-
The AO erred in considering the date of Registration as the date of Purchases.
(b) any immovable property-
[i] without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property;
[ii] 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.
However, in the given case, the Assessee has entered in to an agreement in the year 2006, hence, this provisions are not applicable. The AO erred in applying the provisions, which are not applicable on the date of Agreement.
5. Due to above additions, the AO has raised the Income tax Demand and levied interest on the same, which is totally unjustifiable.
In the above circumstances considering peculiar situation, true facts and applicable provisions of Law, your appellant prays for consideration of the detailed grounds of appeal and contentions attached herewith, while reserving his right to add, amend, delete or replace any point or ground at or before the time of final hearing and prays for such other relief as may be available to him according to law.”
Rival submissions of both the parties have been heard and record perused. The learned Authorized Representative (ld. AR) of the assessee submits that case of assessee was reopened on the basis of information that assessee purchased immovable property on a consideration of Rs. 1.36 Crore (Cr), whereas the stamp duty valuation authority determined value of property at Rs. 4.18 Cr. The Assessing Officer (AO) on the basis of such difference was of the view that provision of section 56(2)(vii)(b) of Income Tax Act ( Act) are applicable on the transaction carried by assessee. On the basis of aforesaid observation the AO issued show cause notice as to why difference of Rs. 2.82 Cr be not added to the income of assessee under section 56(2)(vii)(b). In response to show cause notice the assessee filed reply on 20.01.2023 and 12.04.2023. In reply the assessee submitted that they have purchased commercial property in 2006, copy of the agreement dated 10.10.2006 was furnished. The assessee also furnished details of part of sale consideration in 2006. The assessee submitted that stamp duty was paid under amnesty scheme on 25.06.2009, copy of challan was furnished. Though, his application under amnesty scheme was rejected.
Thereafter, the stamp duty was paid in 2016 and registration was completed in 2016. The assessee also furnished the copy of bank statement in F.Y. 2006-07 showing payment of consideration. The assessee objected against addition under section 56(2) (vii)(b). On perusal of agreement the AO find that initial agreement to sale was made for a purchase of 1360 square feet. However, the assessee in final agreement purchased area of 1165 square feet in 2016 in respect of unit no. 105, 1st floor, B wing, 36, Turner Road, Bandra. The AO further issued show cause notice to explain such facts. The AO recorded that no reply filed by assessee and he brought the difference of Rs. 2.82 Cr for taxation u/s. 56(2)(vii)(b) while passing the assessment order under section 147 rws 144B on 25.05.2003.
3. Aggrieved by the additions in the assessment order, the assessee filed appeal before CIT(A). Before CIT(A) the assessee filed detailed return submission as recorded in para 3.2 of impugned order. However, such submission is not mentioned in the impugned order, nor the assessee filed copy of such submission on record. The ld. CIT(A) on considering the assessment order and the submission of the assessee noted that case of assessee is that the purchase property on 10.10.2006, however the registration process was completed in F.Y.
2016 17. As per proviso to section 56(2)(vii)(b) where the date of agreement fixing the sale consideration and transfer of immovable property are not the same, the stamp duty value on the date of agreement may be considered for the purpose this sub section. The ld. CIT(A) held that the said proviso shall apply in cases where the amount of consideration referred thereof have been paid other than cash mode on or before the date of agreement for transfer of immovable property. The assessee has not furnished mode of payment. The AO has 4 discussed the issue in length and considered the objection of assessee. The ld. CIT(A) concluded that exceptions provided in proviso to section 56(2)(vii) are not applicable in the present case and upheld the addition made by AO. Further aggrieved the assessee has filed present appeal before Tribunal.
We have heard the submission of learned authorised representative (ld. AR) of the assessee and the Learned Senior Departmental Representative (ld. DR) for the revenue. The ld. AR of the assessee submits that assessee purchased property in October 2006, copy of agreement is filed at page no. 43 to 185. At the time of execution of agreement the assessee has made part payment of purchase consideration by way of cheques. Details of all such payments are mentioned at page no. 186 of paper book. The ld. AR submits that majority of consideration was paid much prior to registration of final agreement. Copy of relevant entry of bank statement and the source of payment from accounts of Mahesh Rochiram Duhlani, Divya Mahesh Duhlani are placed on record. The assessee has not paid any additional consideration except the agreed amount in 2006. The assessee is clearly eligible for the benefit of first and second proviso to section 56(2)(vii)(b).
On the other hand the ld. DR for the revenue relied upon the order of lower authority.
We have considered the rival submission of both the parties and have gone through the order of lower authorities carefully. We find that the assessee right from the beginning has claimed that impugned property was purchased by them in 2006 and part payment thereof was made in 2006 itself. Such facts are mentioned by AO in para 3.2 at page No. 3 of assessment order. We find that similar submissions were made before ld CIT(A) that part payment of sale consideration was paid by way of banking transaction in 2006. However, such facts are not verified by lower authorities nor such facts are disputed.
We further find that in a series of decisions including in Manjulaben Himmatlal dated 12.11.2024 and in Pinki Chetan dated 27.02.2024, the Co-ordinate Bench of Tribunal held that when date of agreement, fixing the amount of consideration for transfer of immovable property is not the same as the date of registration, as per provision to section 56(2)(x)(b), the stamp duty value on the date of agreement be taken for the purpose of this sub-clause, if the assessee has paid part consideration thereof by way of account payee cheque or bank draft or by way of electronic mode. Similar view was taken by this combination in Ramesh Chandra Chhabildas in ITA No. 3520/M/2024. As we have recorded above that part payments of consideration made through banking channel in 2006 has not been verified by AO or CIT(A), thus, the matter is restored back to the file of Jurisdictional AO to verify the facts and if part payment of sale consideration paid and by way of a/c payee cheque and evidence of allotment in 2006 and allow relief to the assessee.
In the result, the appeal of the assessee is allowed.
Order pronounced in open court on 26.09.2025.