AYUBALI KHAIRBALI QURESHI,MUMBAI vs. ITO, WARD, 16(2)(1), MUMBAI

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ITA 6851/MUM/2024Status: DisposedITAT Mumbai16 July 2025AY 2020-21Bench: SHRI ANIKESH BANERJEE (Judicial Member), SMT. RENU JAUHRI (Accountant Member)1 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that since a part of the consideration was paid via account payee cheque prior to the agreement date, the stamp duty value as on the date of the agreement in Financial Year 2013-14 should be taken into account. Consequently, the addition made by the Assessing Officer is liable to be deleted.

What were the facts?

The assessee purchased a property through an agreement in 2013-14. The payment was made partly to MHADA and partly to an intermediary. The Assessing Officer added the difference between the stamp duty value and the sale consideration under Section 56(2)(x) of the Income Tax Act.

What were the issues?

Applicability of Section 56(2)(x) for property purchase where part payment was made before the agreement, and determination of the relevant stamp duty value for calculating the addition.

Which sections of the Income-tax Act were involved?

Section 250,Section 143(3),Section 144B,Section 139(1),Section 56(2)(x)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCH “K”, MUMBAI

Before: SHRI ANIKESH BANERJEE & SMT. RENU JAUHRI

For Appellant: Shri Vimal Punmiya
For Respondent: Shri Bhagirat Ramawat (SR.DR.)
Hearing: 09/07/2025Pronounced: 16/07/2025

O R D E R Per Anikesh Banerjee (JM):

The instant appeal of the assesse was filed against the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter called, ‘Ld. CIT(A)] passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’) for Assessment Year 2020-21, date of order 23/02/2024. The impugned order emanated from the order of the Assessment Unit, Income-tax Department [hereinafter called, ‘Ld. AO] passed under section 143(3) read with section 144B of the Act, date of order 23/09/2022.

2 ITA 6851/Mum /2024 Ayubali Kharbali Qureshi 2. The brief facts of the case are that the assessee filed the return of income under section 139(1) and declared taxable income amounting to Rs.61,65,790/- from professional fees and Income from other sources. The case was selected for scrutiny through CASS and accordingly, the assessment was completed after making addition under section 56(2)(x) of the Act towards difference in set-forth value and the value adopted by the Registrar on purchase of property amount to Rs.81,13,509/- with the total income of the assesse. The assessee had gone through an agreement with Mr. Bhuvaneshwar S Sharma on 07/01/2014 through an unregistered sale agreement executed between the party and the assessee. The party, Mr. Bhuvaneshwar S Sharma was allotted a property in MHADA for 5 years with resale restrictions, on 18/12/2013, but due to financial stringency, Mr. Bhuvaneshwar S Sharma took help from the assessee for financial support and accordingly, the assesse gone through an agreement and paid the amount to Mr. Bhuvaneshwar S Sharma amount to Rs.43,26,000/- and paid Rs.4,24,000/- as profit element. The assessee paid directly to MHADA for obtaining the allotment letter. The payment was duly initiated during the time of agreement and finally, the MHADA’s possession letter received on 06/01/2014 in the name of party, Mr. Bhuvaneshwar S Sharma. The assesse took the physical possession and paid the society charges and maintenance in the year 2014. Due to restriction, the assessee was not able to register the property in his own name and finally, in 2019, the assessee executed the registration of the stamp duty value of the Registrar was the amount to Rs.1,24,39,509/-. So considering the actual purchase consideration of Rs.43,26,000/-, the differential amount of Rs.81,13,509/- was added under section 56(2)(x) of the Act in the impugned assessment order. Aggrieved assesse filed an 3 ITA 6851/Mum /2024 Ayubali Kharbali Qureshi appeal before the Ld. CIT(A) and the Ld.CIT(A) upheld the assessment order. Being aggrieved, assesse filed an appeal before us.

3.

The Ld.AR filed a paper book containing pages 1 to 106 which is kept on record. The Ld.AR submitted that in the said Sale Deed sale consideration was decided Rs.47,50,000/- which Mr. & Mrs. Qureshi directly paid to the MHADA Rs.43,26,000/- through banking channel and Rs.4,24,000 paid to the Bhuvenshwar Sharma towards Allotment Letter. Details of which is as under. Cheque Cheque Date Bank State Entry Account Amount No. Narration / our Remarks Holder 169401 19/12/2013 PO FVG MHADB A/c Ayub 10,81,500 NO.20045300843 Qureshi 154819 19/12/2013 PO FVG MHADB A/c Ayub 15,44,500 No.20045300843 Qureshi 169402 19/12/2013 PO FVG MHADB A/c Ayub 2,00,000 No.20045300843 Qureshi 001784 19/12/2013 PO FVG MHADB A/c Sameena 2,00,000 No.20045300843 Qureshi 24/12/2013 Cash Paid to Sameena 2,24,000 Bhuvaneshwar Sharma Qureshi 07/01/2014 Cash paid to Sameena 1,00,000 Bhuvaneshwar Sharma Qureshi 16/01/2014 Post dated cheque issued Sameena 1,00,000 to Sharma Qureshi Apart from above following payments also made to the Society in the year 2013-14 only. Bank Account Statement reflecting the below mentioned amount is enclosed in the paper book herewith for your ready reference. Cheque No. Cheque Purpose Account Holder Amount Date 00007 25/01/2014 Society Ayub Qureshi 100 Administration Fees 00005 25/01/2014 Society Membership Ayub Qureshi 500 Fees 4 ITA 6851/Mum /2024 Ayubali Kharbali Qureshi 00006 25/02/2014 Advance Ayub Qureshi 1,44,000 Maintenance Charges It is argued that the assessee Mr. and Mrs. Qureshi has purchased the property in the year 2013-14 by entering into an agreement to sale dated 07/01/2014 at the same price which MHADA has declared and therefore there is no question of involvement of cash component to be used towards purchase of property and therefore section 56(2)(X) is not applicable to the assessee Mr. & Mrs. Qureshi. The property has been purchased in the financial year 2012-13 pertaining to assessment year 2013-14 and no property purchase transaction has been carried on in the assessment year 2020-21 and therefore addition in the year 2020-21 for the property purchased in the assessment year 2013-14 is violation of provisions of income tax laws. As per sale agreement dated 07/01/2014 full value consideration of property was paid in December 2013 and custody of the same has been taken in January 2014 and thus in reality the property was purchased in the financial year 2013-14 but the property was MHADA property and therefore it was not possible to get it transfer in own name before completion of 5 year and therefore registration of the same has been done in the year 2019-20 that is after completion of 5 year. The assessee has taken the possession of property during the financial year 2013-14. Assessee has paid society admission fees, society share capital fees and advance society maintenance charges in the financial year 2013-14 and till now paying from self- account only.

5 ITA 6851/Mum /2024 Ayubali Kharbali Qureshi 4. The Ld. DR argued and stated that the assesse gone through an unregistered agreement which is devoid of the genuineness of the said registration of the property. The Ld. DR stands in favour the orders of revenue authorities.

5.

In this respect, the assessee further stated that in the case of Usha Arvind Dongare vs Suresh Raghunath Kotwal 1990 (3) BOMCR 389, date of order 11/12/1989. The relevant para 9 stated that as compared to Maharashtra Co- operative Societies’ Act, 1960, the exemption is allowed from compulsory registration of instruments relating to shares and debentures of societies. So, this registration of agreement is not mandatory for the co-operative societies.

6.

We heard the rival submissions and carefully perused the documents available on record. It is observed that the concerned party was duly allotted a flat by MHADA in the year 2014. Due to financial constraints, the party approached the assessee, and an agreement was executed between the parties in the year 2013. The payment in respect thereof was made by the assessee through banking channels. Subsequently, the allotment letter was issued by MHADA to the said party on 06.01.2014. From the bank account statements furnished, it is evident that the assessee had paid the co-operative society charges, including maintenance, administrative charges, and membership fees, on 05.02.2014 via cheque dated 25.01.2014. The initial payment by the assessee was made on 19.12.2013, and it is also noted that the said property was jointly purchased by the assessee and his wife. In light of the above, the provisions of section 56(2)(x) of the Act are squarely applicable. The relevant portion of the provision reads as under: “Provided that where the date of agreement fixing the amount of consideration for the transfer of immovable property and the date of registration are not the same, the stamp duty value on the date of agreement may be taken for the purposes of this sub-clause :

6 ITA 6851/Mum /2024 Ayubali Kharbali Qureshi Provided further that the provisions of the first proviso shall apply only in a case where the amount of consideration referred to therein, or a part thereof, has been paid by way of an account payee cheque or an account payee bank draft or by use of electronic clearing system through a bank account 51[or through such other electronic mode as may be prescribed 52], on or before the date of agreement for transfer of such immovable property:”

In view of the above statutory provisions and considering that part of the consideration was paid through an account payee cheque prior to the agreement date, the stamp duty value as on the date of the agreement in Financial Year 2013- 14 shall be taken into account. Accordingly, the addition of Rs. 81,13,509/- made in the impugned assessment order on account of the difference between the stamp duty value and the agreed sale consideration is liable to be deleted.

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