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Facts
The assessee challenged an addition of INR 7,06,225 under Section 56(2)(x) of the Income Tax Act, 1961, made by the Assessing Officer (AO) concerning the purchase of an immovable property where the stamp duty valuation exceeded the consideration. The CIT(A) dismissed the assessee's appeal.
Held
The Tribunal noted that the CIT(A) failed to adjudicate the ground related to the applicability of Section 115BBE and observed that Section 115BBE is not applicable to additions made under Section 56(2)(x). The Tribunal set aside the CIT(A)'s order and remanded the issue back to the AO.
Key Issues
Whether the CIT(A) erred in dismissing the appeal and whether Section 115BBE is applicable to additions made under Section 56(2)(x).
Sections Cited
Section 250, Section 253(5), Section 56(2)(x), Section 143(3), Section 143(3A), Section 143(3B), Section 43CA, Section 50C, Section 68, Section 69, Section 69A, Section 69B, Section 69C, Section 69D, Section 115BBE
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Income Tax Appellate Tribunal, “H (SMC
IN THE INCOME TAX APPELLATE TRIBUNAL “H (SMC)” BENCH, MUMBAI SHRI AMARJIT SINGH, ACCOUNTANT MEMBER SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER Swati Sanjay Khadye, Agyari Compound, Tardeo Road, Tardeo, Mumbai - 400034, Maharashtra. [PAN:ATEPK9123H] …………. Appellant Income Tax Officer Ward 19(3)(1), Vs Piramal Chamber, Lalbaug, Mumbai – 400012 Maharashtra. …………. Respondent Appearance For the Appellant/Assessee : None For the Respondent/Department : Shri Rajesh Kumar Yadav Date : Conclusion of hearing 13.11.2024 : Pronouncement of order 21.11.2024
O R D E R [ Per Rahul Chaudhary, Judicial Member: 1. The present appeal preferred by the Assessee is directed against the order, dated 12/12/2023, passed by the National Faceless Appeal Centre (NFAC), Delhi, [hereinafter referred to as ‘the CIT(A)’] under Section 250 of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’] whereby the Ld. CIT(A) had dismissed the appeal against the Assessment Order, dated 13/04/2021, passed under Section 143(3) read with Sections 143(3A) & 143(3B) of the Act for the Assessment Year 2018-19. 2. There was a delay of 78 days in filing the present appeal. In the application seeking condonation of delay it has been stated that the Appellant got knowledge of the order, dated 13/12/2023, having been passed by the CIT(A) belatedly since the order impugned was communicated solely over the e-mail and that the Appellant was not Assessment Year 2018-2019 able to access her email on account of lack of education/awareness. Accepting the aforesaid reasons for filing appeal after delay of 78 days as bonafide and reasonable, we hold that Appellant was prevented by sufficient cause in filing the appeal within the prescribed time. Accordingly, we condoned the delay in filing the present appeal in terms of Section 253(5) of the Act and proceed to adjudicate the following grounds of appeal raised by the Assessee:
“1. The learned Assessing Officer erred in law and facts in making addition of Rs.7,06,225 under Section 56(2)(x) of the Act. 2. The learned Assessing Officer failed to appreciate the established legal position that the variation between Stamp Value of the property and Purchase Consideration can occur in respect of similar properties in the same area because of variety of factors including the shape of flat or location and thus the variation does not automatically lead to the inference that the entire difference should be added back as Income from other sources by inviting the regours of see section 56(2)(x). 3. The learned Assessing Officer erred in fact and in law in not appreciating that the difference between the Stamp Value of the Property and Purchase Consideration in the appellants case may have been tolerated considering the amendments in law enhancing the tolerance band and providing safe harbor of 5 percent followed by 10 percent and 20 percent (by Finance Act 2021 for giving tax relief for home buyers below the circle rate). Thereby the AO has failed to appreciate that etierh the purpose consideration should be accepted at Face Value without invoking the anti avoidance provisions u/s.56(2)(x) or the Partial Relief should be given to the Appellant. 4 The learned Assessing Officer erred in fact and in law in not appreciating the recent judicial pronouncement of Mumbai Tribunal in case of Maria Fernanandes Cheryl Vs. ITO (ITA No.48 50 Mum 2019) pronounced on 15.1.2021 stating the rationalization of provisions of section 43CA 50C 56 and effect of related amendments while enhancing the safe horbour margin (from 5 to 10 to 20 percent). Hon’ble Mumbai ITAT held that such curative amendments in law for avoiding unintended hardships are retrospective in nature. 5. The learned Assessing Officer erred in relying on valuation adopted by stamp valuation authority of Rs.5412500 neither making any reference to Departmental Valuation Officer (DVO) for ascertainment of the market value nor giving an opportunity to the appellant for challenging the stamp value of property adopted by producing Valuation Report from an Independent
2 Assessment Year 2018-2019 Valuer in support of the correct valuation of Rs.40,00,000/- for the appellants property. 6. The learned Assessing Officer erred in ascertaining tax liability at the rate of 60% of the addition to the total income of the appellant by treating the same as unexplained and thereby inviting the rigours of unexplained income and resulting tax liability us115BBE .” 3. The relevant facts are in brief that the Appellant before is an individual resident. Assessment was framed on the Appellant under Section 143(3) read with Section 143(3A) and 143(3B) of the Act vide Assessment Order, dated 13/04/2021, and an addition of INR.7,06,225/- was made in the hand of the Appellant under Section 56(2)(x) of the Act. The aforesaid addition was challenged in appeal before the CIT(A). However, vide order, dated 12/12/2023, the appeal was dismissed. Now the Appellant had preferred the present appeal before the Tribunal on the grounds reproduced at paragraph 2 above.
When the appeal was taken up for hearing none was present on behalf of the Appellant. After examining memorandum of appeal and the issue raised therein we proceeded to adjudicate the appeal after hearing the learned Departmental Representative.
We have considered the submission advance by the learned Departmental Representative and perused the material on record. The relevant facts as emerging from the record are that during the relevant previous year the Appellant alongwith her husband had purchased an immovable property [i.e, property bearing Room No.403, Fourth Floor, Krishna Building, Navi Chikhalwadi Grant Road, Naushir Maharashtra] for a consideration of Bharucha Marg, Mumbai, INR.40,00,000/-. According to the Assessing Officer the Stamp duty Valuation of the said immovable property was INR.54,12,500/-. Thus, there was a difference of INR.14,12,500/- [INR.54,12,500/- minus INR.40,00,000/-], between stamp duty value and consideration. Therefore, the Assessing Officer proceeded to make an addition of 3 Assessment Year 2018-2019 INR.7,06,225/-, being his 50% share in the difference of INR.14,12,500/-, in the hand of the Appellant under Section 56(2)(x) of the Act.
Before the CIT(A), the Appellant had challenged the stamp duty valuation adopted by the Assessing Officer on the ground that no reference was made to the Departmental Valuation Officer. It was also contended that the Appellant was not granted opportunity to produced valuation report to support the valuation of INR.40,00,000/- for the immovable property. The Appellant had also challenged the application of tax rate of 60% by invoking provisions contained in Section 115BBE of the Act.
We note that in the appellate proceedings before the CIT(A), the Appellant was proceeded ex-parte. While deciding the appeal the CIT(A) has failed to adjudicate the ground raised by the Appellant regarding the application of tax rate of 60% under Section 115BBE of the Act. A bare perusal of Section 115BBE of the Act shows that the same is applicable in case of additions made under Section 68, 69, and 69A/B/C/D of the Act; and that the same are not applicable in case of an addition made under Section 56(2)(x) of the Act. Given the aforesaid facts and circumstances of the present case, we deemed it appropriate to set aside the order, dated 12/12/2023, passed by the CIT(A) and remand the issue relating to addition made under Section 56(2)(x) of the Act back to the file of Assessing Officer with the directions to decide the issue a fresh after obtaining report from Departmental Valuation Officer as per law and after granting the Appellant reasonable opportunity of being heard. It is clarified that in case the Appellant fails to enter appearance before the Assessing Officer or file documents/details/submission, the Assessing Officer shall be at liberty to adjudicate the issue on merits based upon the material on record. In terms of the aforesaid, Ground No.6 raised by the Appellant is allowed, Ground No. 1, 2 & 5 raised by the Appellant
4 Assessment Year 2018-2019 are allowed for statistical purposes and Ground No.3 & 4 are dismissed as being infructuous.
In result, the present appeal preferred by the assessee is partly allowed.
Order pronounced on 21.11.2024. (Amarjit Singh) Judicial Member मुंबई Mumbai; िदनांक Dated : 21.11.2024 Milan,LDC
5 Assessment Year 2018-2019
आदेश की "ितिलिप अ"ेिषत/Copy of the Order forwarded to : 1. अपीलाथ" / The Appellant 2. ""थ" / The Respondent. 3. आयकर आयु"/ The CIT 4. "धान आयकर आयु" / Pr.CIT 5. िवभागीय "ितिनिध ,आयकर अपीलीय अिधकरण ,मुंबई / DR, ITAT, Mumbai 6. गाड" फाईल / Guard file.
आदेशानुसार/ BY ORDER, स"ािपत "ित //// उप/सहायक पंजीकार /(Dy./Asstt.