MUSTANSHIR ABBAS HUSSAIN,MUMBAI vs. INCOME TAX OFFICER, WARD 24(2)(1), PIRAMAL CHAMBERS, MUMBAI, MUMBAI

IN THE INCOME TAX APPELLATE TRIBUNAL“J(SMC)” BENCH, MUMBAI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI JAGADISH, ACCOUNTANT MEMBER ITA No. 6853/MUM/2026 (AY: 2014-15) (Physical Hearing) Mustanshir Abbas Hussain ITO, Ward – 24(2)(1), Mumbai A2-1203, Lok Raunak Tower, vs Piramal Chambers, Area Code Cosmos Lane, Off Maroshi Road, MUM, AO type W, AO Number 91, J.B. Nagar S.O.,Mumbai – 400059. Range Code 201, [PAN: ABJPH4183R] Mumbai – 400012. Appellant / Assessee Respondent / Revenue Assessee by Shri Anil Sathe, CA Revenue by Ms. Kanupriya Damor Sr. DR Date of Institution 29.05.2026 Date of hearing 27.08.2026 Date of pronouncement 09.09.2026 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER; 1. This appeal by assessee is directed against the order of ld. CIT(A)/ADDL/JCIT(A) – 1, Gurugram dated 11.03.2026 for Assessment Year (AY) 2014-15. The assessee has raised following grounds of appeal: “1. The learned Commissioner of Income Tax (Appeals) had erred, in facts and in law, in confirming the action of Assessing officer by making additions of Rs 30,40,800/- under section 56(2)(vii)(b) of the Income tax Act, 1961(the Act). 2. The learned Commissioner of Income Tax (Appeals) had erred, in facts and in law, in not appreciating that the possession of the property was not received during the relevant previous year and therefore, the provisions of section 56(2)(vii)(b) of the Act were not attracted. 3. The learned Commissioner of Income Tax (Appeals) erred in facts and in law, in upholding the addition without appreciating that income under section 56(2)(vii)(b) of the Act ought to be based on the stamp duty value on the date of agreement fixing consideration i.e. date of booking(2007) and not merely on the date of entering an agreement to sell/date of registration(2013).

ITA No.6853/Mum/2026 (AY: 2014-15) Mustanshir Abbas Gussain 4. The learned Commissioner of Income Tax (Appeals) erred in disregarding various judicial decisions where it is held that if the assessee has submitted the letter of allotment and made the payment for the purchase of property before the date of agreement, stamp duty value on the date of allotment must be compared with the purchase price. 4. Without prejudice to other grounds and strictly in alternative, the learned Commissioner of Income Tax (Appeals) have erred, in confirming the 100% additions under section 56(2)(vii)(b) of the Act instead of restricting it to 50% as the flat is purchased jointly by the appellant and his father. 5. The appellant previously to add alter or amend any of the grounds of appeal prior to or at the time of hearing. 2. Rival submissions of both the parties have been heard and the record perused. The learned Authorised Representative (in short, “learned AR”) of the assessee submits that the assessee alongwith his father purchased a house property, being a flat in an under-construction project, in 2007 for a consideration of Rs. 84,96,000/-. The builder issued an allotment letter dated 11.12.2007, copy of which is placed on record. The project was delayed due to various reasons and, ultimately, the sale agreement was registered on 28.11.2013. The Stamp Valuation Authority valued the property / flat as per the ready reckoner rate on the date of registration at Rs. 1,15,36,800/-. The AO invoked the provisions of Section 56(2)(vii)(b) and added the difference of Rs. 35,65,080/- vis-à-vis the agreement value of the flat and the value determined by the Stamp Valuation Authority. The learned AR of the assessee submits that at the time of allotment, the assessee made a payment of Rs. 1,00,000/- by way of cheque drawn on Bank of Baroda. Further, within 30 days of the allotment date, the assessee paid Rs. 2548,800/-. All such amount was paid through cheque/ banking channel. In the allotment letter, all the terms and conditions of

ITA No.6853/Mum/2026 (AY: 2014-15) Mustanshir Abbas Gussain the agreement, such as flat number, area of the flat, purchase consideration and other conditions, were duly recorded, thus it was like an agreement. The lower authorities failed to appreciate that the assessee is eligible for the benefit of the first and second proviso to Section 56(2)(vii)(b). To support his submission, the learned AR of the assessee relied upon the following decisions.  PCIT vs Vembu Vaidyanathan (2019) 101 taxmann.com 436 (Bombay)  DCIT vs Nitin Kshirsagar (HUF) (2026) 188 taxmann.com 359 (Mumbai – Trib.)  Raghavendra Ramakrishna Naik vs ITO (2025) 181 taxmann.com 663 (Mumbai – Trib.)  Dharmesh Ramesh Jhaveri vs ACIT/DCIT (2024) 169 taxmann.com 662 (Mumbai – Trib.)  Manjulaben Himmatlal Jain vs ITO (2024) 168 taxmann.com 673 (Mumbai - Trib.) 3. On the other hand, the learned Senior Departmental Representative (in short, “learned Senior DR”) for the Revenue submits that only Rs. 1,00,000/- was paid at the time of booking of the flat and there is no enforceable agreement in favour of the assessee. the agreement to sal was executed only in November 2013. Thus, the assessee is not eligible for the benefit of the first and second proviso to Section 56(2)(vii)(b). 4. In the short rejoinder submission, the learned AR of the assessee submits that he has also placed on record a copy of the bank passbook, allotment letter and registered agreement. The copy of the bank statement clearly shows the payments made to the builder in December 2007 and January 2008, and the remaining payment was also made by way of cheques. 5. We have considered the rival submissions of both the parties and perused the orders of the lower authorities. We have also gone through the various documentary evidences furnished by the assessee and the case laws relied

ITA No.6853/Mum/2026 (AY: 2014-15) Mustanshir Abbas Gussain upon by the learned AR of the assessee. We find that the assessee filed the return of income for AY 2014-15 on 29.07.2014, declaring income of Rs. 5,23,280/-. The case was selected for scrutiny. During the assessment, the Assessing Officer recorded that the assessee and his father entered into an agreement for purchase of Flat No. 1203, 12th Floor, Building No. A-2, Lok Raunak, Andheri (East), Mumbai-400059. The sale consideration in the agreement is mentioned at Rs. 84,96,000/- against the market value determined by the Stamp Valuation Authority at Rs. 1,15,36,800/-. During the assessment, the assessee was asked to explain such facts. On show cause, the assessee, in his reply dated 16.12.2016, contended that the flat was allotted vide allotment letter dated 11.12.2007. The allotment letter contained all the terms and conditions, including the specific flat number, area of the flat, consideration, date of allotment and other conditions. The assessee also relied upon the decision of the Hon'ble Bombay High Court in CIT v. Mrs. Hilla J. B. Wadia, (1993)69 Taxman 114 and Circular of CBDT No. 47 of 1986.The assessee specifically contended that till November 2008, the assessee had made payment of 40% of the sale consideration by way of banking channel. The project was delayed. Since the assessee has made payment at the time of allotment of the flat, so the value of flat as on the date of allotment is to be considered. The reply of the assessee was not accepted by the Assessing Officer. The Assessing Officer held that the agreement was executed on 26.11.2013 and was registered on 28.11.2013. There was no time gap between the date of agreement and the date of registration; therefore, the first proviso to Section 56(2)(vii)(b) was not applicable. The Assessing Officer further

ITA No.6853/Mum/2026 (AY: 2014-15) Mustanshir Abbas Gussain held that the circular relied upon by the assessee is in respect of deduction under Section 54, which is a beneficial provision, whereas Section 56(2) is a charging, i.e., taxing, provision. Accordingly, the Assessing Officer brought the difference vis-à-vis the value determined by the Stamp Valuation Authority and the value shown in the agreement to tax. 6. We find that before the learned CIT(A), the assessee filed a detailed written submission, including details of various payments made through cheques in the years 2007 and 2008, and submitted that the balance payment was made in 2008-09 or 2009-10. The assessee reiterated that he is eligible for the benefit of the proviso to Section 56(2)(vii)(b). The learned CIT(A) confirmed the action of the AO by holding that the Assessing Officer was justified in adopting the stamp duty value on the date of registration. The assessee failed to demonstrate fulfilment of the stipulated conditions of the proviso to Section 56(2)(vii)(b). 7. We find that the lower authorities have not disputed the allotment letter, nor were any verification of the fact of allotment letter issued by the builder carried out. The part payment made in pursuance of the allotment letter is clearly evident from the copy of the bank statement placed by the assessee on record. Thus, the assessee is clearly eligible for the benefit of the proviso to Section 56(2)(vii)(b), as part payment of the consideration was paid through banking channels at the time of fixing the sale consideration on the date of allotment. Thus, similar view has been taken in various case laws relied upon by the learned AR of the assessee. In

ITA No.6853/Mum/2026 (AY: 2014-15) Mustanshir Abbas Gussain view of the aforesaid factual and legal discussion, the grounds of appeal raised by the assessee are allowed. 8. In the result, appeal filed by assessee is allowed. 9. Order was pronounced in open court on 09/09/2026.

Sd/- Sd/- JAGADISH PAWAN SINGH ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, Dated: 09/09/2026 Biswajit Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Mumbai; and (5) Guard file. By Order

Assistant Registrar ITAT, Mumbai