SMT. KAJARI BANERJEE,KOLKATA vs. ITO WARD-29(1), KOLKTAT

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ITA 130/KOL/2025Status: DisposedITAT Kolkata19 May 2025AY 2018-1911 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the Assessing Officer (AO) and the CIT(A) had wrongly invoked the provisions of Section 56(2)(X) of the Act. The Tribunal noted that the agreement for the purchase of the property was made on 28.12.2012, and payments were made subsequently, with the entire consideration paid by 25.11.2015. Since Section 56(2)(X) was introduced with effect from 01.04.2017 (applicable from AY 2017-18), it could not be applied to transactions entered into prior to its enactment. The Tribunal relied on its co-ordinate bench's decision in the assessee's own case for AY 2020-21, which dealt with a similar issue. The ratio decidendi is that provisions of Section 56(2)(X) cannot be applied retrospectively to transactions where the agreement to sell was executed and substantial payments were made before the introduction of the said section. Accordingly, the addition made by the AO and upheld by the CIT(A) was directed to be deleted.

What were the facts?

The assessee, Smt. Kajari Banerjee, filed an appeal against the order of the National Faceless Appeal Centre, Delhi, for Assessment Year 2018-19. The appeal was filed with a delay of 108 days, which the Tribunal condoned due to bonafide reasons attributed to the assessee's previous counsel. The Assessing Officer (AO) initiated limited scrutiny concerning investment in property. The assessee purchased a property for ₹50 lacs, while its stamp value was ₹1,54,23,248/-. The AO invoked Section 56(2)(X) and added ₹1,04,23,248/-. The CIT(A) upheld the applicability of Section 56(2)(X) but restricted the addition to the assessee's 25% ownership, deleting 75% of the addition.

What were the issues?

1. Whether the provisions of Section 56(2)(X) of the Income Tax Act, 1961, were correctly invoked by the Assessing Officer and upheld by the CIT(A) in the case of the assessee for AY 2018-19, considering the property purchase agreement was made prior to the introduction of the said provision? Assessee's Contention: The assessee argued that the purchase agreement for the property was made on 28.12.2012, which predates the introduction of Section 56(2)(X) by the Finance Act, 2017, effective from 01.04.2017. Therefore, the provision should not be applicable. Revenue's Contention: The revenue, through the Assessing Officer and CIT(A), contended that the difference between the stamp duty value and the purchase price was taxable under Section 56(2)(X).

Which sections of the Income-tax Act were involved?

Section 56(2)(X),Section 143(3),Section 143(3A),Section 143(3B),Section 56(2)(vii)(b)

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Income Tax Appellate Tribunal, “B” BENCH, KOLKATA

Before: SHRI RAJESH KUMAR, AM & SHRI PRADIP KUMAR CHOUBEY, JM

This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 09.07.2024 for the AY 2018-19.

2.

At the outset, we note that there is a delay of 108 days in filing the appeal for which condonation petition along with affidavit was filed by the assessee. After going through the condonation petition, we find that the delay in filing the appeal is attributable to the counsel of the assessee Sri Pranabesh Choudhury, who appeared in the appellate proceedings through online mode and thereafter did not bother to find out the status of the order. Thereafter he was busy in filing the ITR, etc. Then, only when the matter was assigned to the present counsel on

3.

The only issue raised in the various grounds of appeal is against the applicability of the provisions of Section 56(2)(X) of the Act by the ld. AO which was upheld by the ld. CIT (A).

4.

The case of the assessee was selected for limited scrutiny on the ground of investment in property. Accordingly, statutory notices were issued along with questionnaire and duly served on the assessee. The AO found that assessee has purchased a property in District-24 Paraganas, P.S. Kalighat Corporation, Kolkata Municipal Corporation, Road Turf Road, Premise No.17, Ward-71, during the year, the stamp value of which was ₹1,54,23,248/- but the purchase price was only ₹50 lacs. Accordingly, the ld. AO invoked the provisions of Section 56(2)(X) of the Act and made an addition of ₹1,04,23,248/- to the income of the assessee in the assessment framed u/s 143(3)/ 143(3A) and 143(3B) of the Act.

5.

In the appellate proceedings, the ld. CIT (A) upheld the applicability of Section 50(2)(X) of the Act. However, directed the ld. AO to assess the income in the hands of the assessee to the extent of his ownership in the said property which was 25% thereby deleting the ¾ of the addition made in the hands of the assessee. The ld. CIT (A) recorded a finding of facts that the 50% ownership in the property belonged to Amarjit Sing and 25% to Manjit Singh and 25% of the assessee i.e. Kajari Banerjee.

6.

After hearing the rival contentions and perusing the materials available on record, we find that the agreement for the purchase of the said “6. After hearing the rival contentions and perusing the materials available on record, we find that the ld. AO has made the addition on account of investment in the flat by the assessee of ₹19 lacs which according to the ld. AO was not explained. However, we note that the investment in the flat has been made in the earlier year and was duly reflected in the balance sheet of the assessee a copy of which is available at page no.3 of the Paper Book. We note that the investment in Bengal Peerless was shown at ₹18,96,939/- under the head investment and deposits in the balance sheet as on 31.03.2020. We further note that the payments for the purchase of flats were made in the earlier financial year as per the details contained in the memo of consideration attached with the sale deed dated 30.04.2019. The details whereof are extracted below for ready reference:-

Blank

7.

We have also perused the copy of the agreement which is attached at page no.15 to 33 and thus, it is clear from the above that all payments were made through banking channel right from the F.Y. 2012-13 to A.Y. 2018-19. Therefore, conclusion drawn by the ld. AO is against the facts on record available in the assessment folder as all the materials were before the ld. AO. Similarly, the ld. CIT (A) has not appreciated these facts correctly and simply confirmed the addition made by the ld. AO. We note that the ld. AO has wrongly made the addition and similar ld. CIT (A) affirmed the same. Considering these facts, we are inclined to set aside the order of ld. CIT (A) on this issue and direct the ld. AO to delete the audition. The ground no. 2 is allowed.

8.

In the result, the appeal of the assessee is allowed.

Order pronounced in the open court on 19.05.2025.

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