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Facts
The assessee purchased an immovable property for ₹3,75,000, but the stamp duty valuation was ₹34,26,000. The Assessing Officer treated the difference of ₹30,51,000 as deemed income under Section 56(2)(vii)(b) of the Act. The assessee claimed the property was originally purchased by his father in 2004 with full payment, and the registration was done in 2018 after his father's demise.
Held
The Tribunal admitted additional evidence, including a bank statement showing a payment of ₹3,50,000 by the assessee's father, and remanded the matter to the Assessing Officer for fresh verification. The appeal related to penalty for misreporting was also restored.
Key Issues
Whether the difference between the stamp duty value and the purchase consideration of an immovable property is taxable as income, and whether the payment made by the assessee's father prior to the registration date qualifies for the proviso to Section 56(2)(x).
Sections Cited
56(2)(vii)(b), 56(2)(x), 143(3), 144, 56(2)
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Income Tax Appellate Tribunal, MUMBAI BENCH “E” MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI RAJ KUMAR CHAUHAN
first appeal being against the quantum of assessment proceeding being against the quantum of assessment proceeding being against the quantum of assessment proceedings and second being against the penalty levied for misreporting of and second being against the penalty levied for and second being against the penalty levied for income. Issues involved in both the appeals being interconnected, involved in both the appeals being interconnected, involved in both the appeals being interconnected, same were heard together and disposed off by way of this and disposed off by way of this consolidated order for lidated order for sake of convenience.
Firstly, we take up the appeal of the assessee in we take up the appeal of the assessee in we take up the appeal of the assessee in ITA No. 6407/Mum/2024 for A.Y. 2018 6407/Mum/2024 for A.Y. 2018-19 in relation to quantum 19 in relation to quantum proceedings. The ground he grounds raised by the assessee are reproduced as raised by the assessee are reproduced as under:-
“1. The Ld. Commissioner The Ld. Commissioner of Income (Appeals) erred in upholding the of Income (Appeals) erred in upholding the order of Assessing officer wherein the addition of Rs. 30,51,000/- order of Assessing officer wherein the addition of Rs. 30,51,000/ order of Assessing officer wherein the addition of Rs. 30,51,000/ (Rs. 34,26,000/- minus Rs. 3,75,000/ minus Rs. 3,75,000/-) is made, being difference in ) is made, being difference in stamp valuc rate and agreement rate of the property purchased, us stamp valuc rate and agreement rate of the property purchased, us stamp valuc rate and agreement rate of the property purchased, us 56(2)(vii)(b) 56(2)(x) as income from other sources, 56(2)(x) as income from other sources, 56(2)(x) as income from other sources, without without without appreciating the facts of the case. appreciating the facts of the case.
2. The Ld. Commissioner of Income Tax (Appeal) erred in holding that 2. The Ld. Commissioner of Income Tax (Appeal) erred in holding that 2. The Ld. Commissioner of Income Tax (Appeal) erred in holding that 1" proviso to section 56(2)(x) of the Act is not applicable as assessee 1" proviso to section 56(2)(x) of the Act is not applicable as assessee 1" proviso to section 56(2)(x) of the Act is not applicable as assessee has failed to furnish the detai has failed to furnish the details of payment made by Appellant's ls of payment made by Appellant's father pursuant to agreement dated 13th September, 2004 being father pursuant to agreement dated 13th September, 2004 being father pursuant to agreement dated 13th September, 2004 being sale consideration of Rs. 3,75,000/ sale consideration of Rs. 3,75,000/- as per the modes specified. The as per the modes specified. The assessee had filed the explanation and details showing payments assessee had filed the explanation and details showing payments assessee had filed the explanation and details showing payments vide letter dt: 27/6/2023. vide letter dt: 27/6/2023.
The Ld. Commissioner of Income Tax (Appeal) failed to consider The Ld. Commissioner of Income Tax (Appeal) failed to consider The Ld. Commissioner of Income Tax (Appeal) failed to consider that after the demise of his father, the property was transferred to that after the demise of his father, the property was transferred to that after the demise of his father, the property was transferred to his son without any additional consideration on 1 March, 2018 his son without any additional consideration on 1 March, 2018 his son without any additional consideration on 1 March, 2018 pursuant to the purchased agreement entered in the year pursuant to the purchased agreement entered in the year pursuant to the purchased agreement entered in the year September, 2004 and the sale consideration was on the basis of rate tember, 2004 and the sale consideration was on the basis of rate tember, 2004 and the sale consideration was on the basis of rate prevailing during the relevant period and also possession was prevailing during the relevant period and also possession was prevailing during the relevant period and also possession was handed over, merely to get the clear title of the property registration handed over, merely to get the clear title of the property registration handed over, merely to get the clear title of the property registration was done in the March, 2018. Therefore, section 56(2)(vii)(b)/56(2)(x) was done in the March, 2018. Therefore, section 56(2)(vii was done in the March, 2018. Therefore, section 56(2)(vii wrongly invoked to the facts of the case as neither payment is made wrongly invoked to the facts of the case as neither payment is made wrongly invoked to the facts of the case as neither payment is made nor possession is handed over during the year. nor possession is handed over during the year.
Khudbuddin Dadepir Pirjade Khudbuddin Dadepir Pirjade 3 & 6668/MUM/2024 Nos. 6407 & 6668/MUM/2024
The Assessee craves leave to add, alter modify or delete one or 4. The Assessee craves leave to add, alter modify or delete one or 4. The Assessee craves leave to add, alter modify or delete one or more ground before or at the time of hearing of appeal. more ground before or at the time of hearing of appeal.” 3. Briefly stated, the facts of the case are that the assessee filed Briefly stated, the facts of the case are that the assessee filed Briefly stated, the facts of the case are that the assessee filed his return of income of income for the assessment year under consideration for the assessment year under consideration on 31.08.2018, declaring a total income of ₹2,07,200/ on 31.08.2018, declaring a total income of 2,07,200/-. The return of income was selected for scrutiny based on information indicating was selected for scrutiny based on information indicating was selected for scrutiny based on information indicating that the transaction value of an immovable property was reported at that the transaction value of an immovable property was reported at that the transaction value of an immovable property was reported at an amount lower than the stamp duty valuation. During the an amount lower than the stamp duty valuation. During the an amount lower than the stamp duty valuation. During the scrutiny proceedings, the Assessing Officer issued a show cause scrutiny proceedings, the Assessing Officer issued a show cause scrutiny proceedings, the Assessing Officer issued a show cause notice to the assessee, seeking an explanation for the difference o the assessee, seeking an explanation for the difference o the assessee, seeking an explanation for the difference between the purchase consideration of ₹3,75,000/- between the purchase consideration of - and the stamp duty value of ₹34,26,000/ 34,26,000/-. However, due to non-compliance on the compliance on the part of the assessee, the Assessing Officer treated the difference of part of the assessee, the Assessing Officer treated the difference o part of the assessee, the Assessing Officer treated the difference o ₹30,51,000/- as deemed income under Section 56(2)(vii)(b) of the as deemed income under Section 56(2)(vii)(b) of the as deemed income under Section 56(2)(vii)(b) of the Act and completed the assessment under Section 143(3) read with Act and completed the assessment under Section 143(3) read with Act and completed the assessment under Section 143(3) read with Section 144 of the Act of the Act on 26.03.2021. On further appeal, the on 26.03.2021. On further appeal, the assessee explained before the learned CIT(A) that the property in assessee explained before the learned CIT(A) that the property i assessee explained before the learned CIT(A) that the property i question was originally purchased by his father, with an agreement question was originally purchased by his father, with an agreement question was originally purchased by his father, with an agreement executed on 30.09.2004 and the full payment of executed on 30.09.2004 and the full payment of ₹3,75,000/ 3,75,000/- made as per the prevailing market value in the financial year 2004. The as per the prevailing market value in the financial year 2004. The as per the prevailing market value in the financial year 2004. The assessee further stated that his father passed away on 22.07.2010, assessee further stated that his father passed away on 2 assessee further stated that his father passed away on 2 and subsequently, on 01.03.2018, and subsequently, on 01.03.2018, the assessee registered the assessee registered the agreement for stamp duty for stamp duty, substituting the assessee in place of his , substituting the assessee in place of his father. The assessee argued that, in accordance with Section 56(2), father. The assessee argued that, in accordance with Section 56(2), father. The assessee argued that, in accordance with Section 56(2), the stamp duty value applicable in the financial the stamp duty value applicable in the financial year 2004 should year 2004 should
Khudbuddin Dadepir Pirjade Khudbuddin Dadepir Pirjade 4 & 6668/MUM/2024 Nos. 6407 & 6668/MUM/2024 be considered for the purpose of determining the income under this be considered for the purpose of determining the income under this be considered for the purpose of determining the income under this section. However, as the assessee failed to provide a copy of the section. However, as the assessee failed to provide a copy of the section. However, as the assessee failed to provide a copy of the original sale agreement dated 30.09.2004 or any supporting original sale agreement dated 30.09.2004 or any supporting original sale agreement dated 30.09.2004 or any supporting evidence of payment via cheque, the learned CI evidence of payment via cheque, the learned CIT(A) rejected the T(A) rejected the appeal observing as under as under :
“8.5. A plain reading of Section 56(2)(x)(b) shows that any assessee 8.5. A plain reading of Section 56(2)(x)(b) shows that any assessee 8.5. A plain reading of Section 56(2)(x)(b) shows that any assessee receives any immovable property for a consideration, the stamp duty receives any immovable property for a consideration, the stamp duty receives any immovable property for a consideration, the stamp duty value of such property as exceeds actual consideration, the same value of such property as exceeds actual consideration, the same value of such property as exceeds actual consideration, the same shall be chargeable to income chargeable to income-tax under the head "Income from other tax under the head "Income from other sources". The appellant's argument is correct as to the proviso 1 to the sources". The appellant's argument is correct as to the proviso 1 to the sources". The appellant's argument is correct as to the proviso 1 to the sub section, the original agreement value is to be considered for sub section, the original agreement value is to be considered for sub section, the original agreement value is to be considered for stamp duty valuation. However, as per the proviso 2 of the section the stamp duty valuation. However, as per the proviso 2 of th stamp duty valuation. However, as per the proviso 2 of th provisions of the first proviso shall apply only in a case where the provisions of the first proviso shall apply only in a case where 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 amount of consideration referred to therein, or a part thereof, has amount of consideration referred to therein, or a part thereof, has been paid by way of an account payee cheque or an account payee been paid by way of an account payee cheque or an account payee been paid by way of an account payee cheque or an account payee bank draft or by use of electronic cleari bank draft or by use of electronic clearing system through a bank ng system through a bank account [or through such other electronic mode as may be prescribed), account [or through such other electronic mode as may be prescribed), account [or through such other electronic mode as may be prescribed), on or before the date of agreement for transfer of such immovable on or before the date of agreement for transfer of such immovable on or before the date of agreement for transfer of such immovable property. In the present case, it is seen that the appellant has not property. In the present case, it is seen that the appellant has not property. In the present case, it is seen that the appellant has not shown the payment was made shown the payment was made in modes presided as in proviso (2) of in modes presided as in proviso (2) of the section. It is apparent from the sale agreement that no payment the section. It is apparent from the sale agreement that no payment the section. It is apparent from the sale agreement that no payment was made in electronic modes as mentioned in the provisions. The was made in electronic modes as mentioned in the provisions. The was made in electronic modes as mentioned in the provisions. The appellant has failed to prove that the payment was made as per the appellant has failed to prove that the payment was made as per the appellant has failed to prove that the payment was made as per the prescribed mode before the date of agreement either before the AO or before the date of agreement either before the AO or before the date of agreement either before the AO or before the appellate authority. No Such evidence was produced by the before the appellate authority. No Such evidence was produced by the before the appellate authority. No Such evidence was produced by the appellant to prove that the payment was made before the sale appellant to prove that the payment was made before the sale appellant to prove that the payment was made before the sale agreement dated 13/09/2004 in a mode prescribed by furnishing agreement dated 13/09/2004 in a mode prescribed by furnishing agreement dated 13/09/2004 in a mode prescribed by furnishing clinking documentary evidence. As such, it is held that the appellant's cumentary evidence. As such, it is held that the appellant's cumentary evidence. As such, it is held that the appellant's contention cannot be accepted and the AO is right in applying the contention cannot be accepted and the AO is right in applying the contention cannot be accepted and the AO is right in applying the provisions of the section 56(2)(x) for taxing the difference amount of provisions of the section 56(2)(x) for taxing the difference amount of provisions of the section 56(2)(x) for taxing the difference amount of actual consideration and stamp duty valuation. actual consideration and stamp duty valuation. 8.6. In view of the above facts and detailed discussion, it can be w of the above facts and detailed discussion, it can be w of the above facts and detailed discussion, it can be reasonably concluded that the nature of income received being income reasonably concluded that the nature of income received being income reasonably concluded that the nature of income received being income from other sources and the Assessing Officer has taxed them rightly from other sources and the Assessing Officer has taxed them rightly from other sources and the Assessing Officer has taxed them rightly 56(2)(x)(b) of the Act after considering both factual and circumstantial 56(2)(x)(b) of the Act after considering both factual and circu 56(2)(x)(b) of the Act after considering both factual and circu evidence. No infirmity is found in the order of the Assessing Officer evidence. No infirmity is found in the order of the Assessing Officer evidence. No infirmity is found in the order of the Assessing Officer and the action of the Assessing Officer treating the difference amount and the action of the Assessing Officer treating the difference amount and the action of the Assessing Officer treating the difference amount
Khudbuddin Dadepir Pirjade Khudbuddin Dadepir Pirjade 5 & 6668/MUM/2024 Nos. 6407 & 6668/MUM/2024 between stamp duty value and actual sale consideration, under between stamp duty value and actual sale consideration, under between stamp duty value and actual sale consideration, under income from other sources warrants confirma income from other sources warrants confirmation. Thus, the Ground of tion. Thus, the Ground of appeal in No. 2, 3 and 5 raised by the appellant are not acceptable appeal in No. 2, 3 and 5 raised by the appellant are not acceptable appeal in No. 2, 3 and 5 raised by the appellant are not acceptable and hereby dismissed. and hereby dismissed.”
4. Before us, the learned counsel for the assessee submitted a Before us, the learned counsel for the assessee submitted a Before us, the learned counsel for the assessee submitted a paper book comprising pages 1 paper book comprising pages 1-53 and filed an application for 53 and filed an application for admitting additional evidence, annexed as pages 54 ditional evidence, annexed as pages 54 ditional evidence, annexed as pages 54-63. This included a bank statement reflecting a payment of ₹3,75,000/- included a bank statement reflecting a payment of included a bank statement reflecting a payment of made by the assessee’s father. The learned counsel specifically made by the assessee’s father. The learned counsel specifically made by the assessee’s father. The learned counsel specifically pointed out that page 55 of the paper book clearly indicates a pointed out that page 55 of the paper book clearly indicates a pointed out that page 55 of the paper book clearly indicates a cheque payment of cheque payment of ₹3,50,000/-. Additionally, the assessee . Additionally, the assessee submitted a certificate from the relevant cooperative society where submitted a certificate from the relevant cooperative society where submitted a certificate from the relevant cooperative society where the immovable property is located. In light of these additional the immovable property is located. In light of these additional the immovable property is located. In light of these additional affidavits, the learned counsel requested that the matter be affidavits, the learned counsel requested that the matter be affidavits, the learned counsel requested that the matter be remanded to the Assessin remanded to the Assessing Officer for verification of compliance g Officer for verification of compliance with the provisions of Section 56(2) of the Act with the provisions of Section 56(2) of the Act.
We have considered the rival submissions and examined the We have considered the rival submissions and examined the We have considered the rival submissions and examined the relevant material on record. The primary issue in dispute is whether relevant material on record. The primary issue in dispute is whether relevant material on record. The primary issue in dispute is whether the property was registered at a pur the property was registered at a purchase consideration lower than chase consideration lower than the stamp duty value on the date of registration. the stamp duty value on the date of registration.
5.1 As per Section 56(2)(x) of the Act, if an assessee receives or As per Section 56(2)(x) of the Act, if an assessee receives or As per Section 56(2)(x) of the Act, if an assessee receives or purchases an immovable property for a consideration below its purchases an immovable property for a consideration below its purchases an immovable property for a consideration below its stamp duty value, the difference between the stamp duty value, the difference between the stamp duty value and stamp duty value and the purchase consideration is deemed to be the assessee’s income. the purchase consideration is deemed to be the assessee’s income. the purchase consideration is deemed to be the assessee’s income. However, the second proviso to this section states that if the However, the second proviso to this section states that if the However, the second proviso to this section states that if the Khudbuddin Dadepir Pirjade Khudbuddin Dadepir Pirjade 6 & 6668/MUM/2024 Nos. 6407 & 6668/MUM/2024 consideration (or a part thereof) is paid via an account payee consideration (or a part thereof) is paid via an account payee consideration (or a part thereof) is paid via an account payee cheque on or before the date of the agreeme cheque on or before the date of the agreement for transfer, the nt for transfer, the stamp duty value as of the agreement date may be considered stamp duty value as of the agreement date may be considered stamp duty value as of the agreement date may be considered instead. In the present case, the assessee contends that the instead. In the present case, the assessee contends that the instead. In the present case, the assessee contends that the agreement for the property purchase was originally executed by his agreement for the property purchase was originally executed by his agreement for the property purchase was originally executed by his father in the financial year 2004, with the pay father in the financial year 2004, with the payment made through ment made through cheque. Therefore, the assessee claims compliance with the second cheque. Therefore, the assessee claims compliance with the second cheque. Therefore, the assessee claims compliance with the second proviso to Section 56(2)(x). In support of this, the assessee has proviso to Section 56(2)(x). In support of this, the assessee has proviso to Section 56(2)(x). In support of this, the assessee has submitted additional evidence and requested that the matter be submitted additional evidence and requested that the matter be submitted additional evidence and requested that the matter be remanded to the Assessing Officer for recon remanded to the Assessing Officer for reconsideration. Furthermore, sideration. Furthermore, we have examined the registered sale agreement, which was we have examined the registered sale agreement, which was we have examined the registered sale agreement, which was executed on 01.03.2018 and is available in the paper book on pages executed on 01.03.2018 and is available in the paper book on pages executed on 01.03.2018 and is available in the paper book on pages 31-34. However, upon perusal, we do not find any mention of the 34. However, upon perusal, we do not find any mention of the 34. However, upon perusal, we do not find any mention of the ₹3,75,000/- payment made by the assessee’s payment made by the assessee’s father or any reference to an earlier purchase agreement. The learned counsel for reference to an earlier purchase agreement. The learned counsel for reference to an earlier purchase agreement. The learned counsel for the assessee contends that this omission was inadvertent and the assessee contends that this omission was inadvertent and the assessee contends that this omission was inadvertent and maintains that no additional payment was made by the assessee at maintains that no additional payment was made by the assessee at maintains that no additional payment was made by the assessee at the time of registration. In view of the above facts and the time of registration. In view of the above the time of registration. In view of the above circumstances, and in the interest of substantive justice, we admit circumstances, and in the interest of substantive justice, we admit circumstances, and in the interest of substantive justice, we admit the additional evidence submitted by the assessee and remand the the additional evidence submitted by the assessee and remand the the additional evidence submitted by the assessee and remand the matter to the Assessing Officer for a fresh decision in accordance matter to the Assessing Officer for a fresh decision in accordance matter to the Assessing Officer for a fresh decision in accordance with the law, after verifying the documentary with the law, after verifying the documentary evidence. If deemed evidence. If deemed necessary, the Assessing Officer may conduct inquiries with the necessary, the Assessing Officer may conduct inquiries with the necessary, the Assessing Officer may conduct inquiries with the cooperative society from which the property was purchased. cooperative society from which the property was purchased. cooperative society from which the property was purchased.
Khudbuddin Dadepir Pirjade Khudbuddin Dadepir Pirjade 7 & 6668/MUM/2024 Nos. 6407 & 6668/MUM/2024
In conclusion, the grounds raised by the assessee are allowed In conclusion, the grounds raised by the assessee are allowed In conclusion, the grounds raised by the assessee are allowed for statistical purposes. for statistical purposes.
The next appeal in The next appeal in is in relation to penalty levied for mis penalty levied for misreporting of the income in quantum reporting of the income in quantum assessment proceeding. Since the appeal of the assessee in relation assessment proceeding. Since the appeal of the assessee in relation assessment proceeding. Since the appeal of the assessee in relation to quantum proceeding has already been restored back to the file of to quantum proceeding has already been restored back to quantum proceeding has already been restored back the assessing officer, , therefore, we fill it appropriate to restore this we fill it appropriate to restore this appeal also to file to the assessing officer for necessary action in appeal also to file to the assessing officer for necessary action in appeal also to file to the assessing officer for necessary action in accordance with law. accordance with law.
In the result, both the appeals of the assessee are allowed for In the result, both the appeals of the assessee are allowed for In the result, both the appeals of the assessee are allowed for statistical purposes.
Order pronounced in the Order pronounced in the open Court on 18/03/2025. /03/2025.