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Facts
The assessee purchased an office property where the stamp duty value exceeded the agreement value. The Assessing Officer made an addition of 50% of this difference on a protective basis. The assessee's wife also purchased the property, and the full difference was brought to tax in her hands and subsequently settled under the Vivad-Se-Viswas Scheme.
Held
The Tribunal noted that the addition in the assessee's hands was on a protective basis, while the substantive addition was made in the hands of the wife, which was settled under the Vivad-Se-Viswas Scheme. Therefore, there was no legal or justifiable basis to sustain the protective addition in the assessee's hands.
Key Issues
Whether the protective addition made in the hands of the assessee is sustainable when the substantive addition was already settled in the hands of the wife under the Vivad-Se-Viswas Scheme.
Sections Cited
143(3), 144B, 56(2)(x), 194-IA
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Income Tax Appellate Tribunal, MUMBAI “D” BENCH : MUMBAI
Before: SHRI VIKRAM SINGH YADAV & MS. KAVITHA RAJAGOPAL
Assessment Year : 2018-19 Mahendra Manshi Nagda, Income Tax Officer, 202, Kanan Building, Ward-20(1)(1), Seth Motishaw Lane, vs. Piramal Chamber, Mumbai-400010. Mumbai-400012. PAN : AAHPN5436C (Appellant) (Respondent) For Assessee : Shri Sameer Dalal For Revenue : Shri Annavaran Kosuri Date of Hearing : 20-01-2026 Date of Pronouncement : 23-01-2026 O R D E R PER VIKRAM SINGH YADAV, A.M :
This is an appeal filed by the assessee against the order of the Learned Commissioner of Income Tax (Appeals)-National Faceless Appeal Centre (NFAC), Delhi [„Ld.CIT(A)‟], dated 11-09-2025, pertaining to Assessment Year (AY) 2018-19.
Briefly the facts of the case are that the assessment in this case was completed u/s. 143(3) r.w.s. 144B of the Income Tax Act, 1961 („the Act‟) vide order dt. 05-06-2021, wherein the AO brought to tax 50% of the excess amount of stamp duty value over purchase consideration amounting to Rs. 27,19,804/- on protective basis in the hands of the assessee. The assessee carried the matter in appeal before the Ld.CIT(A), who has since dismissed the appeal filed by the assessee and against the said order, the assessee is in appeal before us.
During the course of hearing, the Ld.AR submitted that during the year under consideration, the assessee along with his wife has entered into an agreement for purchase of office at Bhandup, Mumbai for an agreement value of Rs. 2,12,70,230/- against the stamp duty value of Rs. 2,67,09,738/-. During the assessment proceedings, the explanation of the assessee was called as to why the addition u/s. 56(2)(x) of the Act in respect of the difference between the stamp duty value amounting to Rs. 2,67,09,738/ and Rs. 2,12,70,230/- should not be made in the hands of the assessee. In response, it was submitted that the assessee‟s name was added only for convenience purpose, real beneficiary was assessee‟s wife, Smt. Manjula Nagda, who had made all the payments and also deducted TDS u/s. 194-IA of the Act and a copy of Form-26QB as well as confirmation letter from the wife of the assessee were also submitted. In spite of the same, 50% of the difference between the agreement value and market value amounting to Rs. 27,19,804/- was brought to tax by the AO, invoking the provisions of section 56(2)(x) of the Act.
It was further submitted that during the appellate proceedings, submission was made by the assessee, reiterating the above facts and also the fact that the assessment order u/s. 143(3) of the Act has since been passed in case of assessee‟s wife, wherein the whole of difference between the agreement value and the stamp duty value has been brought to tax in the hands of the wife of the assessee u/s. 56(2)(x) of the Act. It was submitted that the attention of the Ld.CIT(A) was also drawn to the fact that the assessee‟s wife has since opted for and availed the benefit of Vivad-Se-Viswas Scheme, 2024 by filing Form-I, dt. 28-12-2024, accepting the addition of Rs. 54,39,508/- and has paid taxes thereon and subsequently, final settlement order dt. 03-04-2025 in Form-4 was also issued by the competent authority. The copy thereof was also submitted before the Ld.CIT(A). However, the Ld.CIT(A) has failed to take cognizance of the same and has confirmed the order so passed by the AO.
It was accordingly submitted that where the whole of the addition has been made in the hands of the wife of the assessee and where she has already paid taxes thereon and the tax disputed attained finality with issue of final order under VSVS Scheme, there is no basis for continuing with the protective addition in the hands of the assessee.
The Ld. DR has been heard, who is not able to controvert the factual position that 100% difference between stamp duty value and the agreed consideration was brought to tax in the hands of the wife of the assessee in terms of order passed u/s. 143(3) of the Act and the wife of the assessee has since availed the benefit of Vivad-Se-Viswas Scheme and the matter has since been settled by issuance of order in Form-4, dt. 03-04-2025 by the Competent authority.
We have heard the rival contentions and perused the material available on record. In light of the undisputed fact that the addition in the hands of the assessee has been done merely on protective basis and as far as substantive additions were concerned, 100% addition was made in the hands of the wife of the assessee, who has since settled the tax dispute by opting for Vivad-Se-Viswas Scheme, and has paid due taxes which has also been duly taken on record and the requisite order in Form-4, dt. 03-04-2025 has since been issued by the competent authority. In light of the same, we do not find any legal and justifiable basis for sustenance of addition on protective basis in the hands of the assessee and the same is hereby directed to be deleted.
In the result, the appeal of the assessee is allowed.