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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
Before: JUSTICE (RETD.) C V BHADANG&
(Assessment Year: 2016-17) Sharad Sevantilal Shah, Income Tax Officer, Ward- Office No. 13 & 20, Bhangwadi 23(3)(6), Room No. 6, 10th Floor, Piramal Shopping Arcade, Bhangwadi, Vs. Kalbadevi Road, Mumbai-400002. Chambers, Lalbaug, Parel, PAN: AAHPS5895E Mumbai-400012. Appellant) : Respondent) Appellant /Assessee by : Shri B. V. Jhaveri, AR Revenue / Respondent by : Shri Swapnil Choudhary, Sr. DR : 14.08.2025 Date of Hearing : 02.09.2025 Date of Pronouncement O R D E R
Per Padmavathy S, AM:
This appeal by the assessee is against the order of the Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre, Delhi [In short 'CIT(A)'] passed under section 250 of the Income Tax Act, 1961 (the Act) dated 20.05.2025 for Assessment Year (AY) 2016-17. The assessee has raised the following grounds of appeal:
1. The Commissioner (Appeals) erred in suggesting the Assessing Officer to make an addition of Rs. 97,40,000/- being the difference between the stamp duty value and the agreement value u/s. 56(2)(vii)(b)(ii) of the I.T. Act, 1961.
2 ITA 4154/Mum/2025 Sharad Sevantilal Shah 2. The Commissioner (Appeals) erred in observing as under: "6.6 The appellant argues that an agreement fixing the sale consideration was made orally on 27.05.2015 and as part of this payments were made on 27.05.2015 and 14.08.2015 totalling to Rs. 2,11,85,000. However, the appellant has not produced any written agreement, let along registered agreement. Without a written agreement it is impossible to accept that the sale consideration was fixed at Rs.3.15,00,000 on 27th May, 2015. The sellers have filed notarised affidavits that they had agreed to sell the flat on 27.05.2015 to the appellant for a consideration for Rs. 3,15,00,000. However, these are post facto affirmations and cannot substitute for the absence of a written agreement. Therefore, the provisos to section 56(2)(vii) do not apply in this case. The AO may bring to tax the difference between stamp duty value and agreement value under section 56(2)(vii)(b)(ii)."
3. The Commissioner (Appeals) failed to appreciate that the assessee had paid first instalment of the sale consideration of Rs. 54,00,000/- on 27th May, 2015 after deducting TDS @ 1% (i.e., Rs. 54,000/-) on 27th May, 2015 and paid the TDS amount to the State Exchequer for which the acknowledgement in Form 26QB was generated which had recorded the "Total Value of Consideration (Property Value) 3,15,00,000/-". This acknowledgement proves the date of the agreement and the amount of consideration for sale.
4. The Commissioner (Appeals) failed to appreciate that the assessee had paid a second instalment of the sale consideration of Rs. 1,61,00,000/-on 14th August, 2015, after deducting TDS @ 1% (i.e. Rs. 1,61,000/-) on 14th August, 2015 and paid the TDS amount to the State Exchequer for which the acknowledgement in Form 26QB was generated which had recorded the "Total Value of Consideration (Property Value) 3,15,00,000/-". This acknowledgement proves the date of the agreement and the amount of consideration for sale.
The Commissioner (Appeals) failed to appreciate that the assessee had applied for the bank loan of Rs. 1,00,00,000/- to HDFC Bank on 26th June, 2015 and in the said application the assessee had disclosed "Total purchase price Rs. 3,15,00,000/-" and the said loan was sanctioned by HDFC Bank on 8th August, 2015.
The Commissioner (Appeals) failed to appreciate that 1" proviso to section 56(2)(vii) (b) requires the date of the agreement fixing the amount consideration and not a written and/or registered agreement.
3 ITA 4154/Mum/2025 Sharad Sevantilal Shah 7. The Commissioner (Appeals) erred in overlooking the application for loan filed by the assessee with HDFC Bank which recorded the 'Total purchase price Rs. 3,15,00,000/-.”
The assessee is an individual and filed the return of income for AY 2016-17 on 14.10.2016 declaring a total income of Rs. 13,840/-. The case was selected for scrutiny and the statutory notices were duly served on the assessee. During the year under consideration, the assessee has purchased the property for a consideration of Rs. 3,15,00,000/-. The AO noticed that the stamp duty value of the property on the date of registration is Rs. 4,12,00,000/- and called on the assessee to explain why the difference cannot be treated as income in the hands of the assessee. The assessee submitted that the impugned property was agreed to be purchased by the assessee in May 2015 for a consideration of Rs. 3.15 crores and that advance of Rs. 54,00,000/- was paid on 27.05.2015 after deducting TDS. The assessee further submitted that one more advance of Rs. 1.61 crores was paid on 14.08.2015 by the assessee and the balance amount of Rs. 1 crore was sourced by the assessee through Housing Loan from HDFC Bank. The assessee also submitted that since the seller had some technical issues in getting the original documents from the Bank there was delay in getting the property registered which ultimately happened on 31.12.2015 by when the stamp duty valuation has increased due to change in the method of ariving at the stamp duty valuation. Accordingly, assessee submitted that the difference between the actual consideration and the stamp duty value as on the date of registration cannot be treated as income in the hands of the assessee. The AO however did not accept the submissions of the assessee and proceeded to treat the difference amount as unexplained investment under section 69B of the Act. Aggrieved assessee filed further appeal before the CIT(A). The CIT(A) held that the difference between the sale consideration and the stamp duty value should be brought to tax under section 56(2)(vii)(b) of the Act and not under 4 ITA 4154/Mum/2025 Sharad Sevantilal Shah section 69B as done by the AO. The CIT(A) has confirmed the addition mainly for the reason that the sale price claimed to be agreed is not supported by any documentary evidence.
The ld. AR submitted that the assessee has purchased the impugned property from his neighbour and hence has not entered into any formal agreement of sale. The ld. AR further submitted that the sale consideration was agreed in May 2015 at Rs.3.15 crores and as per the oral agreement the assessee paid Rs. 54,00,000/- as advance after deducting tax at source at 1%. The ld. AR in this regard drew our attention to Form 26QB (page 234 & 235 of PB) where the assessee on 27.05.2015 at the time of making the advance had mentioned the sale consideration as Rs. 3.15 crores. Therefore, the ld. AR submitted that though there is no formal agreement; the said documents should evidence that the sale consideration agreed at Rs. 3.15 crores in May 2015. The ld. AR further submitted that the method of arriving at the valuation of the property for stamp duty purposes has undergone change vide Circular dated 04.11.2025 issued by the Inspector General of Registration and Controller of stamps. The ld. AR also submitted that due to this change though the rate per square meter has not undergone a change during the year entire year of 2015 the value for stamp duty purposes has increased substantially. In this regard the ld. AR drew our attention to the valuation report wherein the stamp duty value of the property as on 27.05.2015 and as on 31.12.2015 have been arrived at (page 254 & 255 of PB). The ld. AR submitted that the ready reckoner value of the property does not change during the year and for the year 2015 the value remained at the same throughout the year. The ld. AR further submitted that this fact should substantiate that the difference is arising only out of the method of calculation and not because of real appreciation in the market value of the property. Therefore, the ld. AR argued that the provisions of section 56(2)(vii)(b) cannot be applied. The 5 ITA 4154/Mum/2025 Sharad Sevantilal Shah ld. AR submitted that even otherwise the 1st proviso to section 56(2)vii)(b) should be applied in assessee's case since the sale consideration was agreed in May 2015 and the stamp duty value on that date would be considered for the purpose of section 56(2)(vii)(b).
The ld. DR on the other hand submitted that for applying the proviso to section 56(2)(vii)(b) there should be agreement entered into between the assessee and seller agreeing the consideration which is not available in the given case. The ld. DR further submitted that the assessee having a long term acquaintance with the seller cannot be a reason for accepting that the sale consideration was frozen orally without any corroborative documentary evidence. The ld. DR also submitted that the documents submitted by the assessee as evidence of the sale consideration agreed are all self serving documents and does not evidence that the sale consideration is mutually agreed. Accordingly the ld. DR supported the orders of the lower authorities.
5. We heard the parties and perused the material on record. The assessee has purchased a property which was registered on 31.12.2015 for a consideration of Rs.3.15 crores. The stamp duty on the date of registration was Rs.4.12 crores and therefore the AO added the difference amount as unexplained investment under section 69B of the Act. The CIT(A) sustained the addition but held that the addition is to be made under section 56(2)(vii(b) of the Act. The contention of the assessee is that the purchase price was agreed in May 2015 and due to some issues in getting original document by the seller the registration was delayed. The assessee is further contending that the proviso to section 56(2)(vii)(b) is to be applied in assessee's case and accordingly the stamp duty valuation in May 2015 should be considered and not as on the date of registration. In this regard the ld AR during the course of hearing drew our attention to few more instances of sale in the 6 ITA 4154/Mum/2025 Sharad Sevantilal Shah same building to submit that in May 2015 when the consideration was agreed the stamp duty value was lower than the sale consideration agreed. The assessee is also contending that the surge in the stamp duty valuation is due only to the change in method of calculation under the Stamp Act and that there has been no change to the per square meter value. The revenue is contention is that there is no evidence to support the claim that the sale price was agreed at Rs.3.15 crores in May 2015. From the perusal of the documents submitted we notice that the assessee while paying the advance has deducted tax at source and has filed the return in From 26QB where the sale consideration is stated as Rs.3.15 crores (page 260 to 267 of PB). Further the assessee has submitted affidavits from the sellers with regard to the agreed sale consideration where it is also stated that the delay in registration is due to the issues they had in obtaining original documents. It is relevant to notice that the AO while making the addition under section 69B has not brought anything on record to substantiate that there has been any unaccounted cash transaction between the buyer and the seller. The CIT(A) while holding that the addition should be made under section 56(1)(vii)(b) for want of agreement between the buyer and the seller on the sale consideration and the respite sought under the proviso cannot be granted. However if we go by the plain reading of the proviso to section 56(2)(viib) it is noticed that it mentions "agreement fixing the amount of consideration for the transfer of immovable property" and therefore the claim of the assessee that the consideration is based on oral agreement cannot be rejected in toto more so when the same is substantiated by the documentary evidences.
6. Be that as it may, we would consider the applicability of the provisions of section 56(2)(vii)(b) to assessee's case. The legislative intention behind section 56(2)(vii)(b) is to curb the unaccounted cash transactions in the purchase/sale of immovable property where the property is registered for value below the stamp 7 ITA 4154/Mum/2025 Sharad Sevantilal Shah duty valuation. In the given case at the time of registration the property value was at Rs.4.12 crores whereas the sale consideration as per registered agreement is Rs.3.15. In this regard we notice that the Stamp Duty Authorities of Maharashtra have vide Circular dated 04.11.2015 amended the method of calculation of stamp duty valuation of old buildings. As per the old method, in order to arrive at the stamp duty valuation the overall cost per square meter of the building and the land was depreciated at the prescribed rate based on the age of the building and the same was multiplied by the area. Under the new method of arriving at the stamp duty valuation, the rate per square meter of the land was not allowed to be depreciated and only the rate per square meter of the building was allowed to be depreciated depending on the age of the building. Due to this the stamp duty valuation has increased by circa 30%. For better understanding of the impact of the change in the method is explained by the below example – Old method of calculation Rate per square metre of the building & Land – Rs.5,01,300 Area of Building – 150 sq.meter Depreciation Factor – 60% Stamp duty valuation - Rs 5,01,300 x 0.6 x 150 = Rs 4,51,17,000 New method of calculation Rate per square metre of Land – Rs.2,19,400 Rate per square metre of Building– (5,01,300-Rs.2,19,400) = Rs.2,81,900 Area of Building – 150 sq.meter Depreciation Factor – 60% Stamp duty valuation – (Rs.2,19,400 x 150) + (Rs.2,81,900 x 60% x 150) = Rs.3,29,10,000 + 2,53,71,000 = 5,82,81,000 8 ITA 4154/Mum/2025 Sharad Sevantilal Shah 7. From the above it is clear that though there is no change to overall value per square meter of the building and land, the stamp duty value has substantially increased due to the per square meter value of the land was not allowed to be depreciated from 04.11.2015. In assessee's case from the perusal of the valuation report (page 246 to 256 of PB) we notice that the overall value per square meter of Land and Building is at Rs.6,51,900 in which land value is Rs.3,52,900 and the balance is the building cost. We further notice that this overall cost per square meter has not undergone any change between May 2015 to Dec. 2015. This fact is substantiated by the Ld AR by referring to the Ready Reconer Value of the impugned property and it is submitted that the value per square meter remained unaltered during the financial year 2015-16. In view of these factual findings in our considered view, there is merit in the submission of the ld. AR that the increase in valuation is only due to change in the method of calculating the stamp duty value. Considering the overall facts and circumstances of the case we are of the considered view that the addition under section 56(vii)(b) towards difference between stamp duty valuation and the actual consideration cannot be sustained. Accordingly we direct the AO to delete the addition made in this regard.
Before parting we would like to mention that our decision herein above is based the facts and circumstances unique to assessee's case and therefore the same cannot be applied as precedent in any other case.
In result the appeal of the assessee is allowed.
Order pronounced in the open court on 02-09-2025. Sd/- Sd/- (JUSTICE (RETD.) C.V. BHADANG) (PADMAVATHY S) President Accountant Member *SK, Sr. PS 9 ITA 4154/Mum/2025 Sharad Sevantilal Shah Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. DR, ITAT, Mumbai 4. Guard File 5. CIT BY ORDER,