PUSHPA S. AMIN,MUMBAI vs. ITO-41(4)(3), MUMBAI

This appeal has been preferred by the ASSESSEE against the order dated 11.09.2025, impugned herein, passed by the Ld. Commissioner of Income Tax (Appeals) (in short Ld. Commissioner) u/s 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2018- 19, confirming the addition of Rs. 25,51,474/- made by the Assessing Officer under section 56(2)(x) of the Income-tax Act, 1961 (“the Act”).

At the outset, it is observed that the appeal is delayed by about 120 days. The Assessee, being a senior citizen, thus has filed an application, supported by an affidavit, explaining that he did not receive the physical copy of the appellate order, was not regularly accessing his e- mail, and was also travelling outside India from 25.10.2025 to 15.11.2025. It is further stated that she became aware of the impugned order only upon receipt of notice under section 270A dated 06.03.2026, where after, he consulted his Chartered Accountant and took steps for filing the present appeal.

On the contrary, the Ld. DR refuted the claim of the Assessee qua condonation of delay.

We have considered the rival submissions of the parties qua delay. The Hon'ble Supreme Court in Collector, Land Acquisition, Anantnag v. Mst. Katiji & Ors., (1987) 2 SCC 107, has held that, while considering condonation of delay, a justice-oriented approach should be adopted, particularly where the delay is not deliberate or mala fide. Considering the explanation furnished, the age of the Assessee, and the circumstances stated in the affidavit, we find sufficient cause for the delay. Thus, in the interest of substantial justice, the delay is condoned and the appeal is admitted for adjudication on merits.

Coming to the merits of case, we observe that the Assessee had acquired the residential property under the principal agreement executed in March 2006. Subsequently, a supplementary agreement dated 06.12.2017 was executed, according to the Assessee, consequent to amendments in the Development Control Regulations and corresponding changes in the building plan. The Assessee has specifically contended that there was no overall increase in the area already allotted, no additional right was conferred, and no additional consideration was either demanded or paid. The Assessing Officer, however, treated the supplementary agreement, as involving acquisition of a car parking space for nil consideration, having stamp duty value of Rs. 25,51,474/-, and invoked section 56(2)(x), which action was sustained by the Ld. Commissioner.

We have heard the parties, perused the material available on record and given thoughtful consideration to the rival claims of the parties. The applicability of section 56(2)(x), insofar as relevant, presupposes receipt of an immovable property by the Assessee during the relevant previous year. Thus, though an instrument may have been executed or registered during the year and may have been subjected to stamp duty valuation, however, the essential requirement remains that the Assessee should have received an immovable property contemplated under the said provision.

In Bipinchandra Shantilal Shah v. ITO, ITA No.2933/Mum/2023, order dated 22.10.2024, the coordinate bench considered the applicability of section 56(2)(x) where pre-existing tenancy rights were converted into ownership rights. After examining the statutory definition of “property”, the Tribunal held that section 56(2)(x) contemplates receipt of land or building or both, and cannot be extended to an improvement of a right already held by the Assessee. It was, accordingly, held that acquisition of ownership rights in the very property already occupied by the Assessee, as a protected tenant did not amount to receipt of immovable property for the purposes of section 56(2)(x).

Similarly, in Anil Dattaram Pitale v. ITO, ITA No.465/Mum/2025, order dated 17.03.2025, the Assessee, pursuant to redevelopment, received a new flat in lieu of his old flat and the Assessing Officer sought to tax the difference with reference to the stamp duty value under section 56(2)(x). The coordinate bench held that, since the new flat was received in lieu of the old flat, it was not a case of receipt of immovable property for inadequate consideration falling within section 56(2)(x), and deleted the addition.

In the present case also, though the supplementary agreement was executed on 06.12.2017 and a stamp duty value was attributed thereto, however, the Revenue has not established that, under the said agreement, the Assessee received any fresh immovable property, or any independent additional proprietary right, for the first time during the relevant previous year. The property already stood acquired under the principal agreement of March 2006 and, as per the case of the Assessee, the supplementary agreement merely incorporated the changes arising from the amended building plan. Further, there is no finding that any additional consideration was demanded from, or paid by, the Assessee under the supplementary agreement. Thus, the ratio laid down in Bipinchandra Shantilal Shah and Anil Dattaram Pitale, in our considered view, squarely supports the case of the Assessee.

Though the lower authorities have relied upon the absence of a specific reference to car parking in the earlier agreement and upon the stamp duty valuation of the supplementary instrument, however, these circumstances, by themselves, cannot establish receipt of a separate immovable property during the year. The stamp duty valuation would become relevant only upon first establishing a transaction falling within the ambit of section 56(2)(x). Thus, in the absence of material establishing that the Assessee acquired a fresh property, or an additional independent property right, under the supplementary agreement dated 06.12.2017, the foundational requirement for invoking section 56(2)(x) is not satisfied.

Accordingly, respectfully following the aforesaid decisions of the coordinate benches, we are of the considered view that the addition of Rs. 25,51,474/- made by the Assessing Officer under section 56(2)(x), and sustained by the Ld. Commissioner, is unsustainable. Thus, the same is, accordingly, deleted.

In view of our decision on merits, the alternative ground relating to co-ownership and the ground challenging the validity of reassessment are rendered academic and, therefore, are left open.

In the result, the Assessee’s appeal is allowed.