KETAN RATANSHI SHAH,MUMBAI vs. INCOME TAX OFFICER, MUMBAI

PER OM PRAKASH KANT, AM

This appeal has been preferred by the assessee against the order dated 22.01.2026 passed by the learned Commissioner of Income-Tax (Appeals), National Faceless Appeal Centre, Delhi [in short 'the learned CIT(A)'] for Assessment Year 2020-21, raising the following grounds:

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“This appeal is filed by the assesse before Honorable Tribunal against the appellate order of the learned Commissioner of Income Tax Appeal-NFAC- passed u/s 250 of Income Tax Act, 1961 dated 22-01-2026 for A.Y. 2020-2021 which in turn arise from the assessment order passed by Assessing Officer. On the facts and circumstances of case the learned assessing officer, ITO Ward- 41(4)(2) while completing assessment and passing assessment order u/s.143(3) r.w.s.144(B) of the Income Tax Act dated 05-09-2022 for A.Y.2020-2021 has erred in assessing total income of assesse at Rs.40,99,293/- as against returned income of Rs.4,47,170/- thereby making total addition of Rs.36,52,123/- as follows: (1) Addition of Rs.36,52,123/- as Income from Other Sources u/s 56(2)(x) of the IT Act, 1961. Aggrieved by the assessment order, the assesse filed appeal before CIT(A) on 09- 11-2022. Subsequently, the appeal was migrated to National Faceless Appeals Centre (NFAC) On appeal the learned Commissioner of Income Tax Appeals National Faceless Appeals Centre (NFAC) has upheld the action of AO and confirming the Addition of Rs.36,52,123/- as Income from Other Sources u/s 56(2)(x) of the IT Act, 1961.” 2. Briefly stated, facts of the case are that assessee, an individual, filed return of income on 18.12.2020 declaring total income of Rs.4,47,170/-. In the return of income, the assessee reported income from business, income from other sources. The return of income of the assessee was selected for scrutiny, and statutory notices under the Income-tax Act, 1961 (in short 'the Act') were issued and served upon. During the course of assessment proceeding, the Assessing Officer observed that assessee had purchased a property during the year under consideration, the purchase consideration of which was less than the stamp duty value adopted by the stamp duty authorities. The assessee submitted that said property was purchased jointly with her husband, Shri Ketan Ratanshi Shah, and all the payments for the

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property were made by her husband. Further, the assessee submitted that agreement for purchase of the property was done on 19.04.2012 as per allotment letter, and therefore, as per the proviso to section 56(2)(vii)(b), if the date of agreement is different from the registration date, then the date of agreement has to be considered for the purpose of stamp duty value. It was submitted that on the date of allotment, the value of the property was less than the stamp duty valuation and therefore no addition is warranted in the case of the assessee. But, said claim of the assessee was, however, rejected by the Assessing Officer. As according to the Assessing Officer, said allotment letter cannot be equated with an agreement for the purpose of proviso to section 56(2)(vii)(b) of the Act. On further appeal, the learned CIT(A) however dismissed the appeal of the assessee, observing as under:

“8. Ground No. 1 is related to addition of Rs.36,52,123/- u/s 56 (2)(x)(b), on account of income of other source. During assessment, the AO brought on record that as per registered sale deed dated 03/08/2020, stamp duty value was Rs. 1,00,56,123 whereas the assessee claimed purchase consideration of only Rs. 64,04,000/- the difference exceeding prescribed tolerance limit under the Act. Despite repeated statutory notices, the assessee failed to produce the original agreement to sell dated 19/04/2012, the purchase deed of 2012, and corroborative bank statements/payment schedules; instead, only an unregistered allotment letter bearing a later registration endorsement was furnished, which did not conclusively establish the consideration on the alleged agreement date. In absence of reliable primary evidence to justify application of stamp value as on 2012, and there being no objection to the stamp valuation itself or request for valuation by DVO, the AO had invoked provisions of section 50C by adopting stamp duty value as full value of consideration on the date of registration of transfer. As there is a clear failure on part of the assessee to discharge the onus of proving that the apparent consideration reflected in the sale deed did not represent the real consideration, the AO added the difference amount of Rs. 36,52, 123/-u/s 50C.

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During the appellate proceedings, the appellant filed written submission in support of ground of appeal and medical reports with a request for condone the delay as the appeal was filed late. The submission made by the appellant and the assessment order were perused. On perusal of the details filed by the appellant it is noticed that there is only a letter of allotment dated 19/04/2012; which was filed by the appellant during both the proceedings, there is no registered agreement for sale between appellant and original promoter for 2012, while subsequent development-cum-sale documents (2019/2020) are between builders and joint developer which, merely recognizing the appellant as allottee/joint holder for name sake. Allotment letter neither fixes final sale consideration vis-à-vis super built-up area in a legally enforceable manner nor is registered, so it cannot replace the missing 2012 agreement for applying section 50C's "date of agreement" clause. The details filed by the appellant such as bank pass book and statement were filed during these proceedings were also perused. On perusal of the Abhyudaya Co-op Bank passbook in the joint names of the appellant and his spouse shows multiple sizeable payments to "Navkar Infra" and related parties during FY 2011- 12 to 2013-14 (e.g. Rs. 4,00,000, Rs. 5,00,000 etc.), which the appellant is relying upon as instalments towards the flat. However, these entries by themselves do not identify flat number, project, or link to any specific written agreement. In absence of the underlying 2012 agreement, mere banking entries cannot substitute the statutory requirement of an agreement "fixing the amount of consideration" for invoking the agreement-date benefit under section 50C third proviso / section 56(2)(x). The AO in the assessment order had already mentioned that the assessee did not file a proper purchase agreement of 19-04-2012 and that only the allotment letter plus bank passbook copies were produced: these new scans only confirm that the AO did consider the passbook but found details "covered with yellow mark" or otherwise insufficient to verify the exact amount or nature of transfer. AO can thus maintain that while passbook shows outflow to the builder, it does not (i) prove the contractual consideration was Rs. 64,04,000 on 19-04-2012, or (ii) explain why no registered agreement existed till 2019; accordingly, his reliance on stamp-duty value as on the 2020 sale deed remains justified. The stamp duty receipt dated 03-08-2019 shows duty of Rs. 6,04,000/- on market value (ready-reckoner) of Rs. 1,00,56,123/- squarely aligning with what the AO has taken as "value adopted by stamp valuation authority" for applying section 50C/56(2)(x). This supports the AO's stand that the property was effectively valued and registered only in 2019/2020 at rates then prevailing, and that earlier financial transactions or allotment, without a proper agreement, cannot override the deeming fiction of section 50C. Case-law relied upon by the appellant and furnished with during these proceedings (Radha Kishan Kunjwani, Joseph Mudaliar etc.) recognise that where there is a prior agreement and part consideration paid by account-payee modes, stamp value on the agreement-date can be adopted; but they all presuppose existence and production of such enforceable agreement. Whereas in the present case only an allotment letter and

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later development/sale agreements between builders were filed, not a bilateral agreement to sell between the appellant and promoter dated 19-04-2012 fixing Rs. 64,04,000/- as consideration, hence the factual foundation for those decisions is missing. The appellant claimed that once flat was "booked" in FY 2012-13 and instalments were paid, the builder's later registration at higher value should not trigger addition; the documents now on record (bank passbook, allotment, stamp receipt) do show early booking and staged payments but fail to cure the core legal defect identified by AO which are still not removed by the appellant. Therefore, failure on the part of the appellant on account of non- production of the crucial 2012 agreement, non-linkage between passbook entries and a specific contract, and clear statutory mandate of section 50C to adopt stamp-duty value at the time of registered transfer in such circumstances, makes the AO's addition legally sustainable. In view of the above facts the ground raised by the appellant is hereby Dismissed.” 3. We have heard rival submissions of the parties and perused the relevant material on record. Before us, the assessee has filed a paper book wherein the letter of allotment is placed on pages 18 to 20. The assessee has also filed a copy of the bank statement reflecting the payment made in the year 2012. The lower authorities has rejected the claim of the assessee only on the ground that the ‘allotment letter’ cannot be equated with the agreement under the proviso to section 56(2)(vii)(b) of the Act. However, we find that the coordinate benches of the Tribunal in various decisions has held that ‘allotment letter’ has to be considered as an agreement for the purpose of the proviso.

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or the revised allotment dated 07.05.2009 was cancelled, rescinded or abandoned. There is also no finding that the payments made by the assessee in the earlier years were refunded by the Developer. 35. The Revenue's argument that the consideration was not fixed proceeds on the assumption that the word "fixed" means fixed once and for all, incapable of any later variation. Such an interpretation would be too narrow and would defeat the object of the proviso in genuine cases where the agreement or allotment precedes the registration by several years. The purpose of the proviso is to mitigate the hardship caused by an increase in stamp duty valuation between the date on which parties commit themselves to the transaction and the date on which the formal conveyance is registered. The statutory safeguard is that the consideration, or part thereof, must have been paid through the prescribed banking mode on or before the relevant date. 36. The learned CIT(A) has recorded that part payments were made by the assessee through banking channels. The payment schedule noticed in the appellate order shows that the assessee had paid Rs. 51,000/- on 25.10.2001, Rs. 2,50,000/- on 13.05.2009, Rs. 5,00,000/- on 30.06.2009 and Rs. 2,50,000/- on 01.04.2015, aggregating to Rs. 10,51,000/-. These payments were made much before the execution and registration of the final agreement in 2019. 37. In our view, once the assessee had a subsisting allotment, followed by an MOU, further followed by a revised allotment, and once payments had been made through banking channels pursuant to such allotment, the transaction cannot be treated as having commenced only in 2019 merely because the building plan was revised and the formal registered document was ultimately executed in that year. 38. The Assessing Officer has laid emphasis on the fact that the building plan was revised and finalised only in 2019. However, this circumstance, in our considered view, supports the assessee's explanation rather than the Revenue's case. It explains why the allotment terms underwent revision. It does not establish that the earlier allotment had ceased to exist. The revision in building plan was a project-related event. It cannot be used to erase the earlier rights and obligations created under the allotment and MOU, particularly when the transaction ultimately culminated in registration in favour of the assessee. 39. The earlier allotment letter also cannot be brushed aside as a mere informal document. The assessment order itself records that the Receipt-cum-Allotment Letter dated 01.11.2001 was annexed as Annexure H to the agreement dated 13.12.2019. This shows that the final registered document did not treat the earlier allotment as irrelevant or non-existent. On the contrary, the earlier allotment formed part of the chain of documents leading to the final registration. 40. The learned CIT(A) has proceeded on the correct premise that the real issue is not whether the registered agreement was executed in 2019, but whether the assessee's earlier allotment and revised allotment, acted upon by payment

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through banking channels, could be regarded as agreements fixing the consideration for the purpose of applying the proviso to section 56(2)(x)(b). Having examined the chronology and the payments, the learned CIT(A) answered the issue in favour of the assessee. 41. The reliance placed by the learned CIT(A) on the decisions of the coordinate benches is also apposite. The ratio of those decisions, as applied by the learned CIT(A), is that an allotment letter issued by a builder, containing the essential terms of allotment and acted upon by the allottee by making payments through banking channels, can be treated as an agreement to sell for the purpose of the proviso to section 56(2)(x)(b). No contrary binding decision has been brought to our notice by the Revenue. The mere fact that the allotment was revised in the present case does not render the principle inapplicable, because the revisions were part of the same continuing transaction and were not shown to be the result of cancellation of the earlier transaction. 42. We also find merit in the submission of the learned AR that the case of Mrs. Nisha Kshirsagar, concerning an adjacent property stated to have been acquired under materially similar circumstances, was accepted in assessment without making an addition under section 56(2)(x). The learned CIT(A) has noticed this aspect while granting relief. While the principle of res judicata does not strictly apply to income-tax proceedings, consistency in approach is a relevant consideration where the facts are substantially identical and the Revenue has not demonstrated any distinguishing feature. 43. The addition made by the Assessing Officer rests on the adoption of the stamp duty value of Rs. 4,13,08,000/- as prevailing on the date of registration and comparison thereof with the registered consideration of Rs. 1,74,75,285/-. However, once the proviso to section 56(2)(x)(b) is held applicable, the stamp duty value on the date of the relevant allotment or agreement is required to be considered. The Assessing Officer, therefore, was not justified in mechanically adopting the stamp duty value as on the date of registration by disregarding the earlier allotment, MOU, revised allotment and payments through banking channels. 44. We are conscious of the Revenue's submission that the final consideration underwent revision. However, as noted above, revision of consideration in the same continuing transaction cannot be equated with absence of fixation of consideration. The expression "fixing the amount of consideration" must receive a purposive interpretation. If the Revenue's construction is accepted, every genuine allotment in an under-construction project would stand excluded from the proviso merely because subsequent revisions occurred due to changes in plans, area, floor or parking. Such an interpretation would be contrary to the object of the proviso and would lead to an unjust result in cases where the assessee had already committed to the transaction and made payments through banking channels.

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said proviso. Thus, if the stamp duty value as on the date of allotment letter is less than the consideration reported by the assessee, then no addition is warranted. The matter is therefore, restored to the learned AO for verification of the conditions of proviso to section 56(2)(x)(b) of the Act including allotment letter and payment made at the time of allotment from the bank account of assessee and if the stamp duty value on the date of such allotment is found less than the sale consideration, no addition shall be made. The ground of the appeal of the assessee is accordingly allowed for statistical purposes.

Order pronounced in the open Court on 31/08/2026.

Sd/- Sd/- (ANIKESH BANERJEE) (OM PRAKASH KANT) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 31/08/2026 Kunal Kr. P.S. Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file.

BY ORDER, //True Copy// (Assistant Registrar) ITAT, Mumbai