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Facts
The assessee, a co-owner with her husband, purchased immovable property. The AO made additions under Section 69A for unexplained investment and Section 56(2)(vii)(b) for the difference between the actual consideration and stamp duty value, attributing 50% to the assessee. A penalty under Section 271AAC was also imposed.
Held
The Tribunal found that the entire investment for the property was made by the husband, and the related additions had already been considered in his assessment. Therefore, the Tribunal held that there was no justification for making similar additions in the assessee's hands. Consequently, both the quantum additions and the associated penalty were deleted.
Key Issues
Whether additions for unexplained investment and difference in property value are justified in the co-owner wife's hands when the entire investment was made by the husband and already assessed in his hands, and consequently, whether associated penalties are imposable.
Sections Cited
69A, 56(2)(vii)(b), 271AAC, 270A, 148, 250
AI-generated summary — verify with the full judgment below
Before: SHRI AMIT SHUKLA & SMT. RENU JAUHRI
आदेश / O R D E R PER RENU JAUHRI [A.M.] :-
& 2004/mum/2025 AY 2017-18 Prerna Pramod Kadam These appeals are filed by the assessee against the orders of the National Faceless Appeal Centre (NFAC), Delhi 27.01.2025 passed u/s. 250 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for Assessment Year 2017-18 on different dates.
The assessee has raised the following common grounds in all three appeals: “1. The Hon J C IT has erred in making additions under section 69A of Income Tax Act of Rs 10,50,000/- being 50% of the unexplained investment in the property without considering the fact that the Bank Statements submitted duly highlighting the payments made for purchase of the Property. 2. The Hon J CIT has erred in representation made by the assessee that She is only a co-owner in the agreement and all the investments were made by her husband. I may inform you that the Case of her husband is already completed without any additions under section 69A.
The Hon J C IT has erred in making addition under section 56(2)(vii)(b) of Rs 5,30,000/- being the Difference in the value as per Agreement and Value as per the Order of D VO without considering the fact that the difference is within the limit of 5% as allowed under relevant Provisions of the Income Tax 4. The assessee also prays that the penalties under section 271AAC(1) and Section 270A be dropped as a consequence of these submissions. 5. The assessee craves leave to add, alter or change any of the grounds set out herein above.” pertains to penalty order u/s. 270A of the Act imposed vide order dated 08.03.2024. At the very outset, Ld. AR has submitted that this appeal has been erroneously filed since the penalty levied u/s. 270A has been deleted by the Ld. CIT(A). Accordingly, the assessee sought leave to withdraw the appeal.
3.1. In view of above, the appeal is dismissed as withdrawn.
& 2004/mum/2025 AY 2017-18 Prerna Pramod Kadam relates to the quantum appeal for AY 2017- 18 whereas pertains to penalty levied u/s. 271AAC of the Act. As same facts are involved, both these appeals are being disposed of vide a common order and is taken as the lead case.
Brief Facts are that the assessee filed return declaring income of Rs. 12,58,880/- for AY 2017-18. On the basis of information available with the department regarding purchase of immovable property by the assessee for a consideration lower than the stamp duty valuation, the case was reopened and a notice u/s. 148 was issued on 26.07.2022. The assessee had purchased an immovable property jointly with her husband for total consideration amounting to Rs. 1,21,00,000/- for which the stamp duty had been paid on Rs. 1,61,93,000/- i.e the value determined by the stamp valuation authority. Upon a request received from the assessee, Ld. AO made a reference to the valuation officer to determine the value of the property.
However, the valuation report was not received till the date of order and, therefore, Ld. AO made an addition of the difference of Rs. 40,93,000/- between the stamp duty value and the purchase consideration paid after invoking provisions of section 56(2)(vii)(b) of the Act. As the assessee was a co- owner of the property with her husband who had made the entire investment 50% of the amount of difference, being Rs. 20,46,500/-, was added to the assessee’s income. Further, the AO observed that out of the total investment of Rs. 1,21,00,000/-, a loan of Rs. 102,79,000/- was sanctioned in the name of & 2004/mum/2025 AY 2017-18 Prerna Pramod Kadam Shri. Pramod Kadam (Co-owner). Therefore, the balance amount was treated as unexplained and Rs. 21,00,000/- was also added as unexplained money u/s. 69A of the Act. 6.1 Aggrieved with the order of Ld. AO, the assessee preferred an appeal before Ld. CIT(A). During the appellate proceeding, a remand report was called for from the AO by Ld. CIT(A) in view of the fact that valuation report was received subsequent to the finalisation of the assessment and the market value determined by the DVO was Rs. 1,26,30,000/- against consideration paid of Rs. 1,21,00,000/-. Hence, the addition u/s. 56(2)(vii)(b)(ii) was restricted to the difference of Rs. 5,30,000/- by the Ld. CIT(A). Aggrieved with the order of Ld. CIT(A), assessee has preferred an appeal before us.
At the outset, Ld. AR has submitted that the assessee’s name was added as a co-owner even though the entire investments was made by her husband. He has further submitted that the entire investment and the difference in valuation has been considered in the hands of the husband and therefore, there was no justification to consider any addition in the hands of the assessee. A copy of the relevant assessment order of assessee’s husband Shri. Pramod Kadam has also been filed before us, along with bank statements of the husband to explain the source of investment.
We have heard the rival submissions and perused the material placed before us. Since the entire addition has been considered in the hands of & 2004/mum/2025 AY 2017-18 Prerna Pramod Kadam husband, there is no justification for making any addition in the hands of the assessee.
Another connected issue raised in the appeal is regarding addition of Rs. 10,50,000/- on account of unexplained investment in the property u/s. 69A of the Act. Since, the investment has been made by the husband which has been considered is entirely in his assessment, there is no justification for making addition of Rs. 10,50,000 u/s. 69A in the hands of the assessee. Accordingly, we hold that on both grounds, the assessee’s appeal deserves to be allowed as these additions have been considered in the hands of her husband who had made the entire investment.
10. This appeal is filed against the penalty u/s. 271AAC levied vide order dated 27.01.2024. Since, the addition made u/s. 69A has been deleted in the quantum appeal decided above, the penalty levied u/s. 271AAC with regard to this addition does not survive and is hereby deleted. 11. In the result, both the appeals are allowed.