SHASHANK SHANTARAM BHA vs. AR,MUMBAIVS.ITO WARD 42(1)(5), MUMBAI, MUMBAI

At the outset, the appeal is delayed by 43 days. In the affidavit filed in support of the application under section 253(5), the assessee states that the impugned order was not received or read by him in the ordinary course. He became aware of it only when a speed-post communication was delivered on 4 August 2026, which he opened and read on 5 August 2026. After obtaining advice and engaging counsel, he took steps to file the appeal, which was presented on 12 August 2026. The explanation is supported by an affidavit, and the stated dates are consistent with the short interval between the asserted date of knowledge and the filing of the appeal. Having regard to the explanation as a whole, we find sufficient cause for the delay. The delay is condoned and the appeal is admitted for adjudication on merits.

The assessee’s main submission has been that the flat had been allotted to him by Kaustubh Construction Pvt. Ltd.

The Assessing Officer treated the registered instrument as the relevant document for determining the consideration and adopted the stamp duty value of ₹1,64,47,238 prevailing on the date of registration. The registered consideration was ₹94,11,500. The Assessing Officer computed the difference at ₹70,35,738 and brought 50 per cent thereof, namely ₹35,17,869, to tax under section 56(2)(x). The learned first appellate authority sustained the addition, substantially proceeding on the footing that the allotment letter was unregistered and did not constitute an agreement capable of attracting the first proviso. The issue before us is whether the

Section 56(2)(x)(b)(B), as applicable to the year under appeal, brings to tax the prescribed difference where immovable property is received for consideration lower than its stamp duty value, if that difference exceeds the higher of ₹50,000 and five per cent of the consideration. The first proviso addresses a situation in which the date of the agreement fixing the amount of consideration and the date of registration are different. In that situation, the stamp duty value on the date of the agreement may be taken for purposes of the provision. The second proviso requires that the consideration, or part of it, be paid through a prescribed banking mode on or before the date of the agreement. These provisos recognise the distinction between the date on which the bargain and its consideration are fixed and the later date on which the instrument transferring the property is registered. For Assessment Year 2020–21, the applicable tolerance in the main provision is five per cent; the later enhanced percentage does not govern the year before us.

The expression “agreement fixing the amount of consideration” is not confined by its terms to a registered conveyance. The inquiry is whether the contemporaneous

In the present case, the allotment letter dated 17 July 2013 identifies Flat No. 601, A-Wing, states the area and consideration, records payments received by cheque and provides for payment of the balance and delivery of possession after payment. The record also indicates that the allotment was acted upon by the parties. These features identify the property and the material financial obligation. They show that the arrangement had moved beyond a preliminary expression of interest. The terms relied upon by the assessee concerning cancellation, transfer or transmission of the allotment further support the existence of rights attached to it, subject to the conditions in the builder’s

The fact that the allotment letter was not registered does not, by itself, answer the question posed by the first proviso. Section 54 of the Transfer of Property Act distinguishes a contract for sale from the conveyance that transfers ownership; a contract for sale does not, of itself, create an interest in or charge on the property. In CIT v. Balbir Singh Maini (2017) 398 ITR 531 (SC), the Supreme Court considered an unregistered joint development agreement in the context of section 53A of the Transfer of Property Act and section 2(47)(v) of the Income-tax Act. The Court held that an unregistered agreement could not be acted upon for that specific purpose following the statutory amendment. That decision does not lay down that an unregistered document is ineffective for every purpose under the Income-tax Act. The question here is whether the allotment letter records an agreement fixing consideration within the meaning of the first proviso to section 56(2)(x). We do not treat it as a conveyance or as an instrument giving effect to part performance under section 53A. The principle stated in Suraj Lamp & Industries (P) Ltd. v. State of Haryana (2012) 340 ITR 1 (SC), concerning the instrument required to transfer title to immovable property, is consistent with the distinction between

The allotment letter, read with the contemporaneous payment material and the conduct of the parties, evidences an agreement fixing consideration before registration. The material placed on record supports the assessee’s case that consideration, or part of it, was paid through banking channels on or before the date of allotment. The stamp duty value on the allotment date is stated in the assessee’s material to have been ₹61,98,357. That value was below the consideration. We are therefore satisfied on the facts of this case that the requirements of the first and second provisos are met. The stamp duty value prevailing on the later date of registration cannot displace the valuation date contemplated by the first proviso.

The addition was made by comparing the registered consideration with the stamp duty value prevailing on the date of registration, without giving effect to the agreement- date rule in the first proviso. Since the allotment letter and the contemporaneous material establish an agreement fixing consideration before registration, and the stamp duty value on that date was below the consideration, the difference brought to tax under section 56(2)(x) is not sustainable. We

The levy of interest is consequential and shall be recomputed in accordance with law. The ground relating to initiation of penalty proceedings is premature and does not call for separate adjudication at this stage.

In the result, the appeal is allowed.