PRERNA PRAMOD KADAM,MUMBAI vs. ITO 22(2)(1) MUMBAI, MUMBAI

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.