SHRI AKSHAY MANOJ PAGDHARE ,MUMBAI vs. ITO WARD-42(1)(1), MUMBAI

The Registry informed that the appeal filed by the assessee was delayed by 241 days. The assessee has filed a condonation petition explaining the reasons for the delay in filing the appeal. Upon consideration of the submissions made in the condonation petition, we are satisfied that there existed sufficient cause preventing the assessee from filing the appeal within the prescribed period of limitation. Accordingly, the delay of 241 days is condoned and the appeal is admitted for adjudication on merits.

We have heard the submissions of the Ld. DR and perused the material available on record. The assessee filed its return of income declaring a total income of Rs.16,26,690/-. The case was selected for limited scrutiny under the CASS on the issue of investment in immovable property. During the course of assessment proceedings, the Ld.AO observed that the assessee had purchased an immovable property for a consideration lower than the value adopted by the stamp valuation authority. The stamp duty valuation of the property was determined at Rs.1,22,98,200/-, whereas the agreed purchase consideration was

Upon perusal of the record, it is observed that the assessee had purchased a residential flat and paid the entire consideration for the same. The initial booking amount was paid on 11.10.2016, and an allotment letter was issued by the builder on the very same date. Thereafter, the assessee made the entire payment towards the purchase of the flat during the period from 11.10.2016 to 23.06.2017. The property was under construction and possession thereof was not handed over to the assessee until 15.10.2021, relevant to A.Y. 2022-23. It is further noted that on 31.03.2020, the assessee availed a mortgage loan by creating a charge over the rights acquired in the said under-construction property. For the purpose of sanctioning the mortgage loan, the lending bank insisted upon registration of the agreement relating to the flat. Consequently, the agreement was registered during A.Y. 2020-21. At the time of such registration, the registering authority adopted the stamp duty valuation prevailing on the date of registration, which was higher than the originally agreed purchase consideration. The Ld. AO invoked the provisions of Section 56(2)(x) of the Act and made an addition on account of the difference between the agreement value and the stamp duty valuation adopted for the purpose of the mortgage transaction. The assessee contended that the subsequent registration undertaken

It is further evident from the appellate order that the assessee had contended that the right in the flat was acquired upon issuance of the allotment letter in October 2016 and that such right constituted a capital asset within the meaning of Section 2(14) of the Act from A.Y. 2017-18 itself. The subsequent registration of the agreement was merely a procedural requirement necessitated by the bank for sanctioning the mortgage loan and did not result in any fresh acquisition or transfer of rights in the property. The assessee further submitted that the rights acquired pursuant to the allotment letter continued uninterrupted and were never terminated by the builder. The registration was carried out only for the purpose of exploiting the existing rights in the property to secure financial assistance from the bank. The assessee had financed the purchase entirely from its own sources and no borrowings were utilized for acquisition of the property. Possession of the flat was eventually received in A.Y. 2022-23. In support of the aforesaid contentions, reliance was placed on the decision of the Coordinate Bench of the Tribunal in the case of Smt. Nargis Airani v. ITO reported in (2006) 287 ITR 142 (Pune), wherein it was held that the rights relating to possession, enjoyment, and control over a flat constitute a capital asset. Since the assessee had acquired such rights in October 2016 itself and those rights remained

The Ld. DR submitted that the transaction was rightly treated by the revenue authorities as a deemed transfer for the purpose of applying the relevant provisions of the Act. While the Ld. DR did not dispute the factual matrix of the case, he placed complete reliance on the findings recorded by the revenue authorities. In support of his contentions, the Ld. DR invited our attention to paragraph 4.6 of the assessment order, which is reproduced hereunder: “4.6. Conclusion drawn- The assessee has failed to show the income u/s 56(2)(x) of the I.T. Act arising on account of difference in Purchase Value of Property and value as per Stamp authority. In this case the property was registered in year 2019-20 (date of agreement 06/05/2019) for Rs.1,02,00,000/- and the year of first payment was 2016-17 (date of allotment/first payment13/10/2016). As the value of the property as per Stamp Authority for the year 2016-17 is not available, the Joint Sub- registrar-2 Mumbai was requested for the same, but there is no response from the Joint Sub- registrar-2, Mumbai. The assessee in its reply dated 03.11.2021 has submitted valuation report of the property purchase prepared by the Registered Valuer and as per the report the value of the property as on 01.04.2016 has been valued at Rs.1,22,98,200/-. In the absence of the report of the Joint Sub-registrar the value of the property is being taken as Rs.1,22,98,200/-. The difference in value of purchase value and valuation report i.e. Rs.20,98,200/- (12298200- 10200000) is treated as unexplained income u/s 56(2)(x) of the I.T. Act 1961 under the head income from other sources and added to the total income of the assessee. The penalty proceedings u/s 270A of the IT Act for misreporting of income is also initiated separately on this issue.”

In the result, the appeal of the assessee bearing ITA No.1013/Mum/2026 is allowed for statistical purpose. Order pronounced in the open court on 24th day of June 2026. Sd/- Sd/- (OM PRAKASH KANT) (ANIKESH BANERJEE) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai,िदनांक/Dated: 24/06/2026 SAUMYASr.PS Copy of the Order forwarded to: 1. अपीलाथ�/The Appellant , 2. �ितवादी/ The Respondent. 3. आयकरआयु� CIT 4. िवभागीय�ितिनिध, आय.अपी.अिध., मुंबई/DR, ITAT, Mumbai 5. गाड�फाइल/Guard file. BY ORDER, //True Copy// (Asstt. Registrar), ITAT, MUMBAI