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Facts
The assessee, a homemaker, purchased a property jointly with her husband. The Assessing Officer (AO) initiated proceedings under section 148A and invoked section 56(2)(vii)(b) for the difference between the stamp duty value and the agreement value, treating it as the assessee's income. The lower authorities held that the assessee failed to prove her husband solely paid the consideration.
Held
The Tribunal allowed the appeal, finding that the husband had made all payments for the property and that similar proceedings against him were dropped. The Tribunal also held that the approving authority for reopening was incorrect, rendering the proceedings void. The addition was deleted on both merits and legal grounds.
Key Issues
Validity of reopening proceedings due to incorrect approving authority and sustainability of addition under section 56(2)(vii)(b) when consideration was solely paid by the husband.
Sections Cited
148A, 148, 56(2)(vii)(b), 151, 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: SMT. BEENA PILLAI
ORDER Per Smt. Beena Pillai, JM: Presentappealfiled by assessee arises out of order dated 17/09/2025 passed by NFAC, Delhi [hereinafter “the Ld.CIT(A)”], for Assessment Year 2017-18 on following grounds of appeal:- “1) That on the facts and circumstances of the case and in law, the Assessing Officer has erred in assessing the income of the Appellant at RS.47,74,681/-. As such the addition of Rs.47,74,681/- under the head income from other sources u/s 56(2)(vii)(b) may please be deleted. 2) That having regard to the facts and circumstances of the case and despite providing all the explanations with evidences called for, the Assessing Officer has erred on facts and in law in making an addition of Rs.47,74,681/- under section 56(2)(vii)(b) of the Income Tax Act, 1961 in contravention of the provisions of the said section, wherein, the Agreement for the purchase of the residential flat was registered on 23/02/2017. 3) That having regard to the facts and circumstances of the case, the Assessing Officer has erred on facts and in law in making the addition of Rs.47,74,681/- under section 56(2)(vii)(b) of the Income Tax Act, 1961 under the premise that the Appellant has failed to prove that the entire consideration was paid by the Appellants spouse.
That the Assessing Officer has misdirected himself or has routinely initiated proceedings under section 270A of the Income Tax Act, 1961 as underreporting of income, where, in fact, the purported underreporting is a matter of incorrect application of law and thus devoid of merits and contrary to law and needs to be quashed and prayed for accordingly. 5) The Appellant craves leave to add, amend, alter and/or delete any/all of the above grounds of Appeal before or at the time of hearing of the Appeal.”
2. Brief facts of the case are as under:- The assessee had not filed any return of income for the year under consideration as she is a home-maker. However, based on information passed through the Insight Portal regarding assessee having entered into purchase of an immovable property at Rs.46,13,239/- where the stamp duly value adopted was Rs.1,41,62,600/-,notice u/s 148 of the Act was issued to the assessee. The Ld.AO was of the opinion that there was difference of Rs.95,49,361/- between agreement value as well as the stamp duty value. 2.1. After completing the due procedure under the new provisions of Section 148A notice u/s 148 was issued on 31/07/2022. The assessee was thereafter called upon to furnish of the details regarding the purchase of immovable property, details of the consideration etc. Ld.AO invoked provisions of Section 56(2)(vii)(b)of the Act regarding the difference in the value as per the agreement and as per the stamp duty authority. 2.2. In response to the statutory notice, assessee submitted before Ld.AO that, she is a home-maker and is not engaged in any kind of business activity. It was submitted that, during the year under consideration she had received income by way of bank interest and dividend income and that she had account in Abhyudaya BankLtd., copy of the bank statement was furnished before Ld.AO. It was submitted that, during financial year relevant to AY 2011-12, assessee along with her husband as a joint-owner, purchased a property from Evergreen Developers. Assessee in reply furnished before Ld.AO had submitted that, she was a co-applicant to the said agreement, for purchase of the immovable property. 2.3. It was submitted that on 13/03/2009, a flat with 760 sq.ft. Carpet area was booked in A-wing No. 901, of Anand Heights at Survey No.340,341,342, Sheikh Mistry Road, Antop Hill, Wadal (East), Mumbai-400037, for a total consideration of Rs.46,13,238/-. It was submitted that, assessee husband had paid Rs.30,50,000/- as advance on various dates thereafter as the building was under construction. 2.4. Assessee submitted that, subsequently as the rate of the property increased, the builder cheated on the assessee and her husband and sent notices cancelling the agreement and sold theflat to someone else.As a consequence, to the action of the builder, assessee’shusband filed case in the Consumer Court on 19/03/2013 vide Case no.CC/13/120.The Hon’ble Consumer Disputes Redressal Commission, Maharashtra, vide Consent Terms order dated 07/06/2016 issued decree in favour of assessee and her husband. As per the consent terms, the builder agreed to sell another residential flat in the same premises for the same amount of Rs.46,13,238/-,in different wing being C-wing having ad-measuring area of 649.27 sq.ft. As per the consent terms, assessee was only required to pay the balance Rs.15,63,238/- to the builder having regard to the fact that Rs.30,50,000/- was already paid which duly acknowledged by the builder before the Consumer Commission. 2.5. The Ld.AO, however, was of the opinion that just because the consideration is paid according to the direction of the Consumer Court the transaction would not become tax-free for adopting the stamp duty value for the entire year. The Ld.AO thus, called upon the assessee to explain as to why provisions of Section 56(2)(vii)(b)of the Act is not applicable to the differential amount of the stampduty valuation and the agreement value of the immovable property. The Ld.AO after considering various submissions of assessee observed and held as under:- “6. According to the sale agreement dated.08.09.2010, the assessee and her spouse Shri.Subhash Narayan Anbhavane (herein after called parties) were agreed to acquire the flat no.901, admeasuring 760.00 Sq.ft on the gin floor of A-wing of "Anand Heights", Antop Hill, Wadala (East), Mumbai for the price of Rs.54,00,000/-. On which Rs.14,00,000/- was paid as earnest money. And the balance of Rs.40,00,000/- has to pay as per the schedule of the agreement.
7. As therewas some disputes occurs between the parties and the builder, they have made complaint no.120/2013 beforeConsumer Disputes Redressal Commission of Mumbai. On which, an order was passed. on 08,09.2016, directed the parties to pay Rs.15,63,238/-(after adjusting the advance payment received by the builder),being the balance amount out of agreed price of Rs.46,13,238, as the builder has agreed to allot residential flat no.901 at gth floor in the C-wing of "Anand Heights, Antop Hill, Wadala (East), Mumbai.
Accordingly, the conveyance deed was registered on 23.02.2017 on which, thepurchase price was Rs.46,13,238.65/-and the stamp duty value was Rs.1,41,62,600/-.Therefore, the stamp duty of Rs.708200/- was paid by the assesseeagainst the stamp dutyvalue adopted bythe Sub-Registrar. However, the assessee in her reply stated that the Consumer Disputes Redressal Commission has directed the builder to bear the expenses of stamp duty and registration fee on the market value. But no such information has been noticed in the order passed by the commission also. assessee has alsofailed to provethe payment towards purchase was borne by the assessee's husband Shri. Subhash Narayan Anbavane till date. Also, in the absence of valid Return of Income filed for the year under consideration, | have considered that the 50% of assessee's share on the difference between stamp duty value and the purchase consideration paid of Rs.47,74,681/-95,49362)is to be treated asunexplained as the assessee has not fulfill the conditions laid down in the proviso of section 56(2)(vii)(b) of the Act. ********************* Further to the earlier submissions and more particularly in response to the Show cause Notice dated 10/05/2023 bearing DIN: ITBA/AST/F/147(SCN)/2023-24/1052710104(1) the assessee submits as under: 1. The show cause notice by way of a proposed Assessment Order is not in acceptance to thesubmissions of theassessee and the proposed addition of Rs. 47,74,681/-u/s 69A of the Income Tax Act,1961,is itself is an incorrect section for the addition. The law has provided that such differences are covered u/s 56(2)(vii)(b) of the IT Act.
The assessee has explained that she is a housewife and has no source of income and that her name was included by her spouse in the purchase of the said property without any contribution by the assessee. The entire purchase contribution as regards the said property was met by the assessee's husband.
For the sake of good order, the assessee is annexing the Order of her husband u/s 148A(d) of the Income-Tax Act, 1961 in respect of the same property and the same difference of Rs. 95,49,361/marked as Annexure 1. The said Order passed by an Officer of the Income Tax department has taken note of the husband's contribution towards the said property and based on the facts has judiciously dropped the proceeding u/s 148 of the Income-Tax Act, 1961.
There is nothing to doubt from the Order u/s 148A(d) of the Income-Tax Act, 1961 passed in case of the assessee's husband that he himself has contributed to the purchase of the property and is covered by the proviso to section 56(2)(vii)(b) of the Income-Tax Act, 1961 which reads as Provided that where the date of the agreement fixing the amount of consideration for the transfer of immovableproperty and the dateof registrationare not same, the stamp duty value on the date of the agreement may be taken for the purposes of this sub-clause.
The Order passed 4/s, 148A(d) of the Income Tax Act, 1961, in case of the assesse's husband is enough of proof and evidence that the assesse's husband himself was the sole contributor as regards the purchase of the property. What is established now is that the assessee's name is included as a joint holder.
Here the question arises whether the assessee would be attracted to the provisions of section 56(2)(Vii)(b) of the Income-Tax Act, 1961 and the answer to this is Yes, but the assesse is covered and protected under the definition of Relative and exempts the applicability of the said section. Hence, the assessee cannot be brought to tax u/s 56(2)(vii)(b) of the Income-Tax Act, 1961 and the question of addition u/s 69A of the Income- Tax Act, 1961 does not arise. Addition made shall be in direct defiance of the enacted Act and grossly unjust and illegal.
7. The assessee being well covered under the provisions of the enacted Act, requests you to judiciously examine and assess and if legally correct not to subject the assessee to unnecessary litigative process causing unwanted hardship by making a high pitched assessment. According to the assessee's reply, the difference of Rs.95,49,361/- has already been taken into account on her husband's case vide order was passed u/s 148A(d) of the Act dated 25.07.2022. Hence, the same amount has to be assessed in the case of the assessee is illegal.
The contention of the assessee is duly perused and not considered for the following reason. a. There is no evidence furnished by the assessee that any order passed by the Assessing Officer assessing the difference of Rs.95,49,361/- against the spouse of the assessee for the A.Y.2017-18 or not b. Failed to prove that the entire consideration was paid by the spouse of the assessee or not. In view of the above, for the interest-of revenue, I have considered that 50% of share on the difference between the purchase consideration and the stamp duty value of Rs.47,74,681/- is treated as deemed income of the assessee and assessed under " Income from Other Sources". Aggrieved by the order of Ld.AO, assessee preferred appeal before Ld.CIT(A).
3. The Ld.CIT(A) dismissed the appeal of assessee by holding that assessee failed toprove that the entireconsideration was paid by her spouse. Aggrieved by the order of Ld.CIT(A), assessee is in appeal before this Tribunal.
At the outset, the Ld.AR submitted that, assessee has filed application seeking admission of following additional ground:- “1. The hearing of the captioned appeal is fixed before Your Honours on January 13, 2026. In this connection, I humbly submit the following: 2. During the conference, the Counsel suggested to me to raise an additional ground, attached herewith as "Annexure -A", challenging the jurisdiction of the Assessing Officer in invoking provisions of section 147 of the Act.
3. It is submitted that the Additional Ground of Appeal
is a legal plea and does not require any investigation of new facts. The additional ground strikes at the root of the matter.
4. Irespectfully submit that, as per the settled legal position, the Hon'ble Tribunal has powers to admit additional grounds of appeal.” 4.1. The Ld.AR submitted that, the above issue raised challenging the validity of reopening of assessment goes to the root of the cause and does not require any new facts to be considered to adjudicate. He placed reliance on the decisions of Hon’ble Supreme Court in the case of Jute Corporation of India Ltd. v.CIT reported in(1991) 187 ITR 688 (SC) and National Thermal Power Co.Ltd.v.CIT reported in (1998) 229 ITR 383 (SC). 4.2. On the contrary, the Ld.DR though objected to the application seeking admission of additional grounds, could not controvert the submission of assessee in respect of the same. We have carefully considered the application filed by the assessee seeking admission of the additional grounds.
5. On perusal of the record, we find that the additional grounds sought to be raised are purely legal in nature and go to the very root of the matter. The facts necessary for adjudication of these grounds are already borne out from the material available on record and no further investigation of facts are required. It is a settled position of law that a legal issue, which has a bearing on the determination of the correct tax liability,can be raisedat any stage of the proceedings. In the interest of substantial justice and to render a complete and effective adjudication of the controversy before us, we deem it appropriate to admit the additional grounds. Accordingly, the additional grounds raised by the assessee are admitted for adjudication.
6. On merits, the Ld.AR submitted that, on similar situation, Ld.AO reopened the assessment of assessee’s husband vide notice dated 30/05/2022 show-causing assessee’s husband to provide details as to why notice u/s148 of the Act should not be issued with reference to the information provided. Ld. AR submitted that, assessee’s husband thereafter vide reply dated 24/06/2022 filed submissions and all details regarding purchase of the property and the court proceedingsinitiated by him against the builder,the decree dated 07/06/2016 passed by the Hon’ble Consumer Disputes Redressal Commission, Maharashtraalong with Consent Terms drawn between assessee’s husband and the developer. The Ld.AR submitted that based on these details, Ld.AO vide order dated 25/07/2022, dropped the 148 proceedings while passing order u/s 148A(d) of the Act. 6.1. He submitted that, admittedly assessee in the present facts of the case did not contribute to the purchase of the property and the entire sale consideration was paid by her spouse to the builder. The breakup of the part sale consideration paid by assessee’s spouse to the builder in respect of the original flat in A-wing is furnished at page104of the paperbook.Ld.AR submitted that assessee’s husband had made thesepayments through three banksbeing Abhyudaya Co- operative Bank Ltd., Cosmos Bank Ltd.and Axis Bank and a sum of Rs. 4,00,000/- was paid by cash on various dates starting from 13/03/2009 till 26/02/2010.He submitted that,assessee cannot be held liable in respect of the agreement entered into by her husband with the builder merely because assessee is a joint name holder. 6.2. Without prejudice, Ld.AR on the issue raised in additional grounds, submitted that, the entire differential value between the stamp duty valuation and the agreement value cannot be added in hands of assessee as assessee is 50% owner of the immovable property so purchased which is less than Rs.50,00,000/-. He thus, submitted that, the Competent Authority who was required to approve the re-opening of assessment would beas per Section151 of the Act. It is the submissions of Ld.AR that as the Pr. Chief Commissioner -17,granted approval for issuing of notice u/s148 for the monetary limit being less than Rs.50,00,000/-is void ab initio as the present notice has been issued after the expiry of three years. 6.3. He submitted that, as per the provisions of Section 151(ii), the appropriate authority who is to sanction the passing of order u/s 148A(d) as well as notice u/s 148 would be Pr. Chief Commissioner or Chief Commissioner. In support, he placed reliance on the decisions of Hon’ble Supreme Court in the cases of UOI vs. Rajeev Bansal reported in (2024) 167 taxmann.com 70 and UOI vs.Ashish Agarwal reported in (2022) 138 taxmann.com 64. The Ld.AR also placed reliance on the decision ofCo-ordinate Bench of this Tribunal in the case of M/s R S Construction in order dated 31.10.2025,wherein identical issue has been considered and the proceedings u/s 148 were quashed. 6.4. On the contrary, Ld.DR on merits submitted that, authorities below are doubting the source of the advance paid by assessee amounting to Rs.30,50,000/-before the Consent Termswere entered into between the assessee and the builder. He submitted that, these details were never furnished before the authorities below and, therefore, claim of assessee was rejected. 6.5. At this juncture, this Tribunal called upon Ld.AR to furnish details of the payment made to the builder towards advances for purchase of property as per the original agreement entered into between her spouse and the builder.In support,the Ld.AR furnished the bankstatements ofassessee’s husband held with Abhyudaya Co- operative Bank Ltd.,Cosmos Bank Ltd. and Axis Bank from where the payments weremade through bankingchannels on various dates as marked therein tothe developer that amounted to Rs.30,50,000/- which was prior to the Consent Terms arrived between the parties therein.The Ld.AR in response submitted reconciliation of payments made by assessee’s husband to the developer on various dates as under:-
6.6. The Ld.AR submitted that,assessee was a joint-owner and had not contributed anything towards the purchase of the property, cannot lead to the conclusionthat disallowance couldbe made in the hands of assessee alone,moreso,when assessee’s husband has been exonerated from the identical proceedings by Ld.AO. 6.7. The Ld.AR has also placed reliance on the decision of Hon’ble Bombay High Court in the case of Kalpita Arun Lanjekar in W.P. No. 5966 of 2023, judgment dated 11/03/2024, wherein similar facts were analysed by Hon’ble High Court. For the sake of convenience, the facts as observed byHon’ble High Court based on which the view has been taken regarding the validity of notice as well as reopening of assessment, is reproduced as under:- “2. Petitioner by a letter dated 28th February 2023 issued through Raju More & Associates,Chartered Accountants submitted that the property was purchased byher husbandMr.Pravin Patil and all the payments were made by him. Petitioner also explained that Petitioner's name was included as a joint holder in the agreement for sale, but no-payment has been made by Petitioner. Copy of the registered agreement for the property, husband's bank details etc. were made available.
Notwithstanding the details and documents being provided, the impugned order dated 31 March 2023 under Section148A(d) of the Act has been passed. It is stated in the order that the Assessing Officer ("AO") has examined whether assessment is needed and the explanation and documents submitted by assessee do not conclusively preclude the suggestion based on the information available that the income chargeable to tax has escaped assessment. The only basis on which the order has been passed is, the assessee has not submitted the details of source of Rs.88,75,000/- paid for purchase of property by her husband, source and the details of receipt of amount from the relatives, whereas the husband's income is only Rs. 18,49,980/-.
4. Though Mr. Gupta has strongly opposed the petition, but at the end he agreed that those detailshave to besought from the husband for husband's assessment and not from Petitioner herein because the AO has accepted that Petitioner has not made any payment for purchase of property.
5. We also have to notice thatsurprisingly the Principal Chief Commissioner of Income Tax has also accordedsanction for issuance of this order instead of directing the AO to drop the proceedings against Petitioner.
6. In the circumstances,we hereby quash and set aside the order dated 31 March 2023 passed under Section 148A(d) of the Act, because in our opinion, it is not a fit case for reopening the assessment in the case of Petitioner.”
We have perused the submissions advanced by both sides in light of records placed before us.
This Tribunal has analysed in the present facts of the case, the issue that was questioned by the authorities below regarding the source of funds made by assessee’s husband towards advances for purchase of immovable propertyamounting to Rs.30,50,000/- based onthe bank statement furnished by the Ld.AR.The Ld.AR was asked to furnish reconciliation ofthe payments made through the banks to the builder which has been furnished and reproduced hereinabove.
Based on the above facts and the view taken by Hon’ble Bombay High Court under identical circumstances in the case of another assessee reproduced hereinabove, we do not find any reason to uphold theorder passed by Ld.CIT(A).The sourceof the advance paid by assessee’s husband categorically stands explained hereinabove from the reconciliationstatement filed by Ld.AR before this Tribunal. In any event, the Ld.AO of assessee’s husband verified necessary facts before dropping the 148 proceedings. The categorical observations of Ld.AO in assessee’s husband’s case are reproduced as under:-
***This space has been left blank intentionally, P.T.O.*** Based on the above, this Tribunal does not find any force in the addition made by Ld.CIT(A).This Tribunal directs the AO to delete the addition in hands of assessee. Accordingly, grounds raised by assessee stands allowed on merits.
8. On the legal issue, the additional grounds raised have to be considered in favour of assessee as the approving authority who granted permission to pass order u/s 148A(d) as well as the to issue notice u/s 148A(d) under the new provisions of Section 148 should have been issued by Principal Commissioner. On this count also, additional grounds raised by assessee stands allowed. Accordingly, the additional grounds raised by assessee stands allowed. In the result, appeal filed by assessee stands allowed.