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Facts
The assessee purchased a property, paying a part of the consideration before the agreement date. The AO reopened the assessment due to a difference between the registered value and market value, invoking Section 56(2)(vii)(b) of the Act and making an addition.
Held
The Tribunal held that since a part of the consideration was paid by banking channels before the agreement date, and the agreement fixing consideration was prior to registration, the stamp duty value as on the agreement date should be considered.
Key Issues
Whether the stamp duty value on the date of registration or on the date of agreement should be considered for addition under Section 56(2)(vii)(b) when part payment was made before the agreement date.
Sections Cited
56(2)(vii)(b), 147, 144B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI
Before: SHRI ABY T. VARKEY & SHRI JAGADISH
आदेश / O R D E R
PER JAGADISH, A.M : Aforesaid appeal filed by the assessee for Assessment Year (AY) 2016-17 arises out of the order of Learned Commissioner of Income Tax (NFAC), Delhi [hereinafter “CIT(A)”] dated 27.01.2025 in the matter of assessment framed by the Assessing Officer [AO] u/s. 147 r.w.s 144B of the Income-tax Act,1961 (hereinafter “the Act”) on 31.03.2022.
ITA No.887/Chny/2025 :- 2 -:
The assessee has filed return of income on 12.03.2017 declaring total income of Rs. 5,30,500/-. The A.O has reopened the assessment for the reason that there was difference between the registered value and market value of the property purchased of Rs. 33,11,285/- which needs to be brought to tax u/s. 56(2)(vii)(b) of the Act. The assessee had booked a Row House and paid by way of account payee cheque on 08.10.2009. The assessee has entered into agreement for sale.
The deed of sale was registered for sale consideration was fixed and also property which is to be convened through the agreement for sale.
The deed of sale was registered for consideration of Rs. 9,73,215/- and the market value of property as on the date of registration was Rs. 42,84,500/-. Therefore, the A.O invoked Section 56(20(vii)(b) of the Act and made addition of Rs. 16,55,642/-. On appeal, the Ld. CIT(A) confirmed the addition.
Before us, the Ld. Authorized Representative (A.R) of the assessee has submitted that the assessee has paid of Rs. 1 Lakh by way account payee cheque on 08.10.2009 and has entered into agreement on 20.10.2011, whereby sale consideration was fixed, therefore the A.O was required to check value as on 20.10.2011 while invoking the provisions of Section 56(2)(vii)(b) of the Act. The Ld. AR has relied on the decisions of Hon’ble Supreme Court in the case of R.
ITA No.887/Chny/2025 :- 3 -:
Hemalatha vs. Kasthuri in Civil Appeal No.2535/2023 (SC), Shyamkumar Madhavdas Chugh vs. ACIT 158 taxmann.com 513 (ITAT-Del.), Sanjay Dattatraya Dapodikar vs. ITO 107 taxmann.com 219 (ITAT-Pune.).
5. The Ld. Departmental Representative has argued that the sale agreement as on 20.10.2011 is not a registered document and therefore, the market value as on the date of registration of property on 17.07.2015 is to be considered for the purpose of Section 56(2)(vii)(b) of the Act.
We have heard the rival submissions, and perused the materials available on record. The assessee entered into an agreement for sale on 20.10.2011, after having made payment by account payee cheque on 08.10.2009. The consideration was fixed in the agreement dated 20.10.2011. As per the proviso to section 56(2)(vii)(b) of the Act, where the date of the agreement fixing the amount of consideration and the date of registration are not the same, the stamp duty value on the date of the agreement may be considered, provided part of the consideration has been paid by banking channels before the agreement date.
ITA No.887/Chny/2025 :- 4 -:
In the present case, the assessee has made part payment before the date of the agreement through account payee cheque. This issue has been considered by the ITAT Delhi Bench in the case of Shyamkumar Madhavdas Chugh vs. ACIT (supra), wherein it was held that if the agreement fixing the consideration is prior to the date of registration and part payment has been made through banking channels before the agreement date, then the stamp duty value as on the agreement date must be taken for the purpose of section 56(2)(vii)(b). The relevant observation of the Tribunal in that case is as under:
“10. First proviso to section 56(2)(vii) (b) categorically provides 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 the agreement maybe taken for the purpose of this provision. Admittedly, the agreement fixing the consideration was entered into on 21-6-2022 fixing the value of Rs. 1.82 crores and the sale deed was registered on 13-8-2013. Prescription of the second proviso is admittedly fulfilled in the instant case inasmuch as the assessee paid a sum of Rs. 26 lakhs in FY 2010-11 (ie. on 17-6-2010 Le. even before the date of the agreement to sell being 21-6-2022) as part payment through banking channel. In view of the foregoing discussion, the provisions of s. 56(2)(vii)(b) do not apply to the facts of the instant case as it is covered by the first and second provisos inasmuch as the assessee entered into an agreement fixing the amount of consideration for the purchase of the immovable property in the year 2010 but the actual registration took place in 2013 and, further, the assessee paid a part of the consideration by cheque in the year 2010 before the date of the agreement. In such circumstances, we hold that, it is the stamp value on the date of agreement in the year 2010, has to be considered.” In light of the above discussion, we are of the considered opinion that the A.O was not justified in adopting the stamp duty value as on :- 5 -: the date of registration. We accordingly restore the matter to the file of the Assessing Officer with a direction to verify the stamp duty value as on 20.10.2011 and compute the addition, if any, under section 56(2)(vii)(b) of the Act, in accordance with law. In view of the above, the appeal filed by the assessee is allowed for statistical purposes only.
In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced on 24th day of June, 2025 at Chennai.