FARIDA ASHHAD ANWAR SIDDIQUI,MUMBAI vs. INCOME TAX OFFICER WARD 41(1)(2), MUMBAI

Per: SHRI JAGADISH, A.M.:

ITA No.108/M/2026 Farida Ashhad Anwar Siddiqui 2. The assessee has raised various grounds challenging the validity of reassessment as well as the addition of ₹53,47,100/- made under section 56(2)(vii)(b) of the Income Tax Act, 1961 ("the Act"). 3. The brief facts are that the assessee filed her return of income declaring total income of ₹3,40,320/-. The case was reopened on the basis of information that the assessee had purchased an immovable property for a consideration of ₹23,64,400/- whereas the stamp duty value adopted by the registering authority was ₹77,11,500/-. During the reassessment proceedings, the assessee explained that the property had been negotiated and agreed to be purchased in the year 2007 for a consideration of approximately ₹17,74,500/-. Part payment was made through banking channels in the year 2007 itself, further payments were made subsequently and an allotment letter confirming the allotment was issued by the developer on 23.11.2009. It was further explained that the project was an SRA redevelopment project which commenced in 2002 and the formal agreement could be executed only on 02.05.2016 due to delay in completion of the redevelopment project. The Assessing Officer rejected the explanation and, by adopting the stamp duty value prevailing on the date of registration, made an addition of ₹53,47,100/- under section 56(2)(vii)(b) of the Act. The addition was confirmed by the Ld. CIT(A). Aggrieved, the assessee is in appeal before us. 4. The Ld. Authorised Representative submitted that the impugned transaction had substantially concluded in the year 2007 itself when the consideration was negotiated and fixed and substantial payments were made through banking channels. The execution of the agreement in 2016 merely formalized the transaction because of delay in completion of the redevelopment project. It was submitted that section 56(2)(vii), introduced with effect from 01.10.2009, cannot be applied to a transaction which had substantially concluded prior to its introduction.

ITA No.108/M/2026 Farida Ashhad Anwar Siddiqui Alternatively, it was contended that even if the provision is held applicable, the authorities below failed to apply the proviso to section 56(2)(vii)(b), which requires adoption of the stamp duty value as on the date of agreement where part consideration had already been paid through banking channels. It was further argued that there is no evidence of any understatement of consideration or payment of on-money and the addition is merely notional. The Registered Valuer's report determining the fair market value of the property in 2007 at ₹21,56,220/- also supports the assessee's case 5. Per contra, the Ld. Departmental Representative relied upon the assessment order as well as the order passed by the Ld. CIT(A). He submitted that the registered agreement for sale was admittedly executed on 02.05.2016 and the property was also registered on the same date. Therefore, according to him, the Assessing Officer rightly invoked the provisions of section 56(2)(vii)(b) by adopting the stamp duty value prevailing on the date of registration. It was further submitted that no legally enforceable agreement executed in the year 2007 was produced before the Assessing Officer and, therefore, the explanation furnished by the assessee was rightly rejected. He accordingly supported the orders of the lower authorities and prayed that the appeal of the assessee be dismissed. 6. We have heard the rival submissions and perused the material available on record. The controversy before us is whether the addition of ₹53,47,100/- under section 56(2)(vii)(b) can be sustained in the peculiar facts of the present case. From the documentary evidence placed before us, it emerges that the transaction was negotiated and substantially acted upon much prior to execution of the registered agreement. The assessee has demonstrated that the consideration was fixed in the year 2007 itself, part consideration was paid through banking channels during the year

ITA No.108/M/2026 Farida Ashhad Anwar Siddiqui 2007, further payments were made subsequently and the developer confirmed the allotment by issuing an allotment letter dated 23.11.2009. The Revenue has not disputed these factual aspects. The material placed on record further shows that the project was undertaken under the SRA redevelopment scheme and the formal agreement could be executed only in the year 2016 because of considerable delay in completion of the redevelopment project. Thus, the execution of the registered agreement in the year 2016 merely formalized an arrangement which had substantially crystallized much earlier. 7. We further find merit in the alternative contention of the assessee that even if section 56(2)(vii)(b) is assumed to be applicable, the authorities below completely ignored the statutory proviso to the said provision. The proviso specifically contemplates adoption of the stamp duty value as on the date of agreement where the date of agreement and the date of registration are different and the whole or part of the consideration has been paid by account payee cheque or other prescribed banking modes before the date of agreement. The material on record clearly demonstrates that substantial payments were made through banking channels much prior to execution of the registered document. Despite this, the Assessing Officer mechanically adopted the stamp duty value prevailing on the date of registration without examining the applicability of the proviso. Such an approach, in our considered opinion, is contrary to the scheme of the provision itself. 8. We also find that the impugned addition is entirely based upon the difference between the stamp duty valuation prevailing in the year 2016 and the agreed consideration, without there being any material to establish understatement of consideration or payment of any amount outside the books. The increase in stamp duty value over a period of nearly nine years is attributable to normal market appreciation and

ITA No.108/M/2026 Farida Ashhad Anwar Siddiqui cannot, by itself, constitute income chargeable to tax in the hands of the assessee. The Registered Valuer's report placed on record determining the fair market value of the property in the year 2007 at ₹21,56,220/- has also not been controverted by the Revenue by bringing any contrary material. Thus, the addition rests merely upon a notional difference arising because of delayed execution of the registered agreement. 9. Considering the totality of the facts and circumstances, we are of the considered opinion that the authorities below were not justified in invoking section 56(2)(vii)(b) by adopting the stamp duty valuation as on 02.05.2016. The transaction had substantially crystallized prior to the introduction of section 56(2)(vii), and even otherwise the benefit available under the proviso to the section could not have been denied in the facts of the present case. Since no material has been brought on record to establish payment of any excess consideration over and above the recorded consideration, the addition of ₹53,47,100/- made under section 56(2)(vii)(b) is unsustainable. We accordingly direct the Assessing Officer to delete the addition. The grounds raised by the assessee are allowed.

Order pronounced in the open court on 08/07/2026.

Sd/- Sd/- (NARENDER KUMAR CHOUDHRY) (JAGADISH) Accountant Member Judicial Member

Mumbai, Dated: 08/07/2026 Ashwani Rao Sr. Private Secretary 5

ITA No.108/M/2026 Farida Ashhad Anwar Siddiqui

Copy of the order forwarded to: 1. Appellant 2. Respondent 3. The CIT 4. The CIT (Appeals) 5. The DR, I.T.A.T. By order

(Assistant Registrar) ITAT, Mumbai