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Facts
The assessee, an NRI, did not file his return of income for AY 2015-16. The AO noticed an immovable property transaction and issued a notice u/s 148. The assessee filed a return declaring nil income, but the AO proposed to add the difference between the agreement value and market value under Section 56(2)(vii)(b). The DRP upheld this addition.
Held
The Tribunal held that the assessee is entitled to the benefit of the proviso to Section 56(2)(vii)(b) and that the stamp duty value as on the date of the agreement (03.09.2010) should be adopted for valuation, not the stamp duty rate on the date of registration.
Key Issues
Whether the stamp duty value as on the date of allotment letter/agreement should be considered for determining the value of property under Section 56(2)(vii)(b) instead of the stamp duty value on the date of registration.
Sections Cited
147, 144C(13), 56(2)(vii)(b), 69, 148
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Before: SHRI RAHUL CHAUDHARY & SMT. RENU JAUHRI
स िवाई की िारीख / Date of Hearing 11.06.2025 घोर्णा की िारीख/Date of Pronouncement 27.06.2025 आदेश / O R D E R PER RENU JAUHRI [A.M.] :- This appeal is filed by the assessee against the order of the Learned Income Tax Officer International Tax Ward 3(3)(1), Mumbai [hereinafter referred to as “AO”] dated 21.12.2024 passed u/s. 147 r.w.s. 144C(13) of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for Assessment Year [A.Y.] 2015-16.
A.Y. 2015-16 Kishor Ramchand Peswani 2. The assessee has raised the following grounds of appeal:
1. Whether on the facts and circumstances of the case and in law, the DRP was correct in issuing directions by completely ignoring the proviso of section 56(2)(vii)(b) of the Income Tax Act, 1961, relating to payments made by assessee for acquiring the property during F.Y. 2010-11
2. Whether on the facts and circumstances of the case and in law, the DRP was correct in issuing directions by completely ignoring the proviso of section 56(2)(vii) (b) of the Income Tax Act, 1961, relating to the allotment letter issued by builder and duly acknowledged by petitioner and also supported by cheque payments wherein, value of property was fixed in F.Y. 2010-11 itself
3. Whether on the facts and circumstances of the case and in law, the assessing officer was correct in passing assessment order by completely ignoring the proviso of section 56(2) (vii)(b) of the Income Tax Act, 1961, relating to payments made by assessee for acquiring the property during F.Y. 2010-11
4. Whether on the facts and circumstances of the case and in law, the assessing officer was correct in passing assessment order by completely ignoring the proviso of section 56(2) (vii)(b) of the Income Tax Act, 1961, relating to the allotment letter issued by builder and duly acknowledged by petitioner and also supported by cheque payments wherein, value of property was fixed in F.Y. 2010-11 itself.”
3. Brief facts of the case are that the assessee, an NRI, did not file his return of income for the year under consideration. Subsequently, as per the information available on the ITBA portal, it was noticed that the assessee had made an immovable property transaction during the FY 2014-15, relevant to AY 2015-16, and a total of Rs. 59,91,300/- was paid for purchase of a property by the assessee. Accordingly, a notice u/s 148 was issued and in response thereof, the assessee filed return declaring nil income on 11.11.2023. The assessee submitted a copy of the purchase agreement, wherein the agreement value of the property was Rs. 55,47,500/- as against the market value of Rs. 62,17,000/- . The assessee was required to show cause as to why the provisions of Section A.Y. 2015-16 Kishor Ramchand Peswani 56(2)(vii)(b) should not be applied in his case. After considering the assessee’s reply, Ld. AO vide the draft order u/s 144C(1) dated 08.03.2024 proposed to treat the difference of Rs. 6,69,500/- in the two values as unexplained investment u/s 69 of the Act. Against the proposed addition, the assessee filed objections before the Ld. Dispute Resolution Panel [DRP]. Vide order dated 22.11.2024, Ld. DRP held that the difference of Rs. 6,69,500/- is to be added as per the provisions of Section 56(2)(vii)(b) of the Act. Accordingly, the assessment was finalised vide order dated 21.12.2024 at an income of Rs. 7,06,264/- after making the addition of Rs. 6,69,500/- u/s 56(2)(vii)(b) of the Act.
4. Aggrieved with the order of Ld. AO, the assessee has preferred an appeal before the Tribunal. Ld. AR has placed before us a copy of the allotment letter dated 03.09.2010 issued by the builder, M/s Sai Enterprise, vide which Flat No. 405 in the building Rosa Bella was allotted to Mrs. Pooja Kishor Peswani, the wife of the assessee, for a consideration of Rs. 55,47,500/-. The allotment letter contains the plan of payment to be made by the assessee at different stages of construction, which includes 10% of the total amount to be paid at the time of issuing of the allotment letter. The assessee has furnished details of payments made to the builders, along with copies of bank statements evidencing the payments made during FY 2010-11 on different dates as per payment plan mentioned in the allotment letter. A copy of the agreement registered on A.Y. 2015-16 Kishor Ramchand Peswani 31.12.2014 between the builder and Mrs. Pooja K. Peswani and Mr. Kishor R. Peswani has also been submitted. In view of the various judicial pronouncements in favour of the assessee, Ld. AR argued that the assessee is entitled to the benefit of the proviso to Section 56(2)(vii)(b) of the Act and that the stamp duty as on the date of allotment letter should have been considered for valuation purposes. In support of his contention, the Ld. AR has also placed the following documents: Slab-wise payment breakup matching with the registered agreement. i. Bank statements evidencing payments made through banking channels. ii.
Placing reliance on the decisions of the coordinate benches, including in the case of Poonam Ramesh Sehjwani v/s ITO in Ld. AR has argued that the stamp duty value as on the date of 03.09.2010 should be adopted for the purposes of Section 56(2)(vii)(b) and not the valuation on the date of registration, i.e. 31.12.2014.
Ld. DR, on the other hand, has strongly relied on the order of Ld. AO, and has argued that since the assessee did not lead any evidence to prove the applicability of the provisos of Section 56(2)(vii)(b), despite being given due opportunity, the addition has correctly been made by the Ld. AO on the directions of the Ld. DRP.
We have considered the rival submissions and perused the material placed before us. In view of the facts and circumstances discussed above, it is clear that the assessee is entitled to the benefit of the provisos, and therefore, A.Y. 2015-16 Kishor Ramchand Peswani the stamp duty value as on the date of the agreement, i.e. 03.09.2010 has to be adopted while making the addition u/s 56(2)(vii)(b) and not the stamp duty rate as on the registration.
In view of the above, we direct that the Ld. AO should ascertain the stamp duty value as on the date of agreement and make correct addition u/s 56(2)(vii)(b) of the Act, if applicable, after giving due opportunity to the assessee.
In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on 27.06 .2025.