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Facts
The assessee, a co-operative credit society, purchased an immovable property for INR 7,20,000, while the stamp duty valuation was INR 67,39,506. The Assessing Officer made an addition of INR 60,19,506 under Section 56(2)(x)(b)(B) of the Act, considering the difference between the purchase consideration and the stamp duty valuation.
Held
The CIT(A) sustained the addition, holding that while the first proviso to Section 56(2)(x)(b)(B) was met, the second proviso was not, as the consideration was not paid through banking channels. The Tribunal found that the CIT(A)'s finding regarding payment was factually incorrect as bank statements showed the entire consideration was paid through banking channels. The Tribunal noted that the CIT(A) had accepted the first proviso was complied with.
Key Issues
Whether the addition made under Section 56(2)(x)(b)(B) of the Income Tax Act is sustainable when the consideration for the property was paid through banking channels in accordance with the agreement entered into much earlier.
Sections Cited
56(2)(x)(b)(B), 143(3), 143(3A), 143(3B), 80P
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, G BENCH, MUMBAI
IN THE INCOME TAX APPELLATE TRIBUNAL "G" BENCH, MUMBAI SHRI AMARJIT SINGH, ACCOUNTANT MEMBER SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER (Assessment Year: 2018-19) Guhagar Taluka Kunbi Sahakari Patpedhi Ltd., 4, Shanti Niwas, Fitwala Road, Elphinstone Road, Mumbai - 400013 [PAN: AAAAG3363R] …………… Appellant Income Tax Officer Vs Ward 22(1)(1), Mumbai. Piramal Chamber, Mumbai - 400012 ……………. Respondent Appearance For the Appellant/Assessee : Shri Haridas Bhat For the Respondent/Department : Dr. Kishor Dhule Date Conclusion of hearing : 24.01.2024 Pronouncement of order : 26.02.2024
O R D E R Per Rahul Chaudhary, Judicial Member: By way of the present appeal the Appellant has challenged the order, 1. dated 14/07/2023, passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as ‘the CIT(A)’] for the Assessment Year 2018-19, whereby the Ld. CIT(A) had partly allowed the appeal of the Assessee against the Assessment Order, dated 20/02/2021, passed under Section 143(3) read with Sections 143(3A) & 143(3B) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’).
The Appellant has raised following grounds of appeal: 2.
“a. On the facts and in the circumstances of the case and in law, the Additional/Joint/Deputy/Assistant Commissioner of Income Tax /Income-tax Officer, National Faceless Assessment Centre, Delhi. The AO erred making additions made u/s 56(2)(x)(b)(B) of the Act amounting to Rs. 60,19,506/-. b. On the facts and circumstances of the case and in law the AO failed to appreciate that i. The assessee has entered into the agreement to purchase the property in 2005. ii. Registration of the said property is done in 2017. iii. There is no fresh purchase of property during the year. iv. The different in value adopted u/s 56 is on account change of value of the property from the date on which it was purchased in 2005 till date. c. Thus the appellant therefore prays that the addition made u/s 56 may please be deleted.” The relevant facts in brief are that the Appellant, a co-operative 3. credit society, filed return of income for the Assessment Year 2018- 19 on 26/12/2018 which was selected for scrutiny. During the assessment proceedings, the Assessing Officer noted that the Appellant had purchased one immovable property vide registered Sale Deed, dated 15/06/2017, for a consideration of INR 7,20,000/-. Whereas the Stamp Duty Valuation of the said immovable property was INR 67,39,506/-. Since the purchase consideration of the immovable property was below the stamp duty valuation, the Assessing Officer made the addition of differential amount of INR 60,19,506/- in the hands of the Appellant by invoking provisions of Section 56(2)(x)(b)(B) of the Act. While making the aforesaid addition vide Assessment Order, dated 20/02/2021, passed under Section 143(3) read with Sections 143(3A) & 143(3B) of the Act, the Assessing Officer noted that the Appellant had not disclosed the purchase of the aforesaid immovable property in the return of (Assessment Year: 2018-19) income for the Assessment Year 2018-19.
Being aggrieved by the above addition of INR 60,19,506/- under 4. Section 56(2)(x)(b)(B) of the Act, the Appellant preferred appeal before CIT(A). Before the CIT(A), it was contended on behalf of the Appellant that the immovable property under consideration was initially agreed to be acquired in the year 2005 and only the formal procedure of registration of the Sale Deed had taken place on 15/06/2017. The Appellant supported the aforesaid submission with copies of the relevant documents which included copy of Agreement, dated 28/01/2005, and copy of bank statements showing the payment of aggregate consideration of INR 7,20,000/- made towards purchases of immovable property. It was further submitted that the consideration for purchase immovable property was fixed at INR 7,20,000/- vide Agreement, dated 28/01/2005 and the said purchase consideration was paid through banking channel on 16/07/2004 (INR 4,00,000/-) on 07/01/2005 (INR 3,20,000/-). Therefore, the case of the Appellant was covered by first and second proviso to Section 56(2)(x)(b)(B) of the Act. However, the CIT(A) was of the view that the requirement of the aforesaid proviso to Section 56(2)(x)(b)(B) of the Act were not satisfied and therefore, the CIT(A) sustained the addition of INR 60,19,506/- holding as under:
“6. With regard to second issue of deduction u/s 56(2)(x)(b)(B), the appellant has claimed that the property was initially agreed to be acquired in the year 2005 and only the formal procedure of registration was undertaken on 15.06.2007. The relevant copies of documents were also provided for verification. On careful examination of the said records, it is found that the condition laid down under first proviso to section 56(2)(x) stands complied as there exists agreement fixing the amount of consideration for the transfer of immovable property in the year 2005. However, while the consideration has not been paid through banking channels, the condition laid down in the second proviso have not been complied. Since both the conditions (Assessment Year: 2018-19) have to be fulfilled cumulatively. the relief claimed by the appellant is untenable. 6.1. Therefore, the addition made u/s 56(2)(x)(b)(B) of Rs.6019506/- is sustained. While this deemed income from Other Sources is not attributable to the business of extending credit facility undertaken by the assessee in terms of its bye laws, this income from Other Sources is not eligible for deduction u/s 80P and therefore the addition to such extent stands as such. Accordingly, this ground of appeal is dismissed.” Being aggrieved, the Appellant carried the issue in appeal before the 5. Tribunal.
We have considered the rival submissions and perused the material 6. on record. On perusal of paragraph 6 and 6.1 of the order impugned, we find that the sole reason cited by the CIT(A) for declining to grant relief to the Appellant was that the consideration of INR 7,20,000/- was not paid by the Appellant through banking channel. On perusal of the bank statement placed before us (placed at page 79 to 94 of the paper-book), we find that the finding returned by the CIT(A) is factually incorrect. The copy of bank statement placed on record reflects payment of INR 4,00,000/- and INR 3,20,000/- made by the Appellant on 16/07/2004 and 07/01/2005, respectively. Thus, entire consideration of INR 7,20,000/- was paid by the Appellant through banking channel. We note that the CIT(A) had accepted the contention of the Appellant that the condition laid down under first proviso to Section 56(2)(x)(b)(B) of the Act stood complied with as there existed Indenture of Sale Deed, dated 20/01/2005, whereby the consideration for transfer of the immovable property under consideration was fixed at INR 7,20,000/-. We note that the aforesaid finding returned by the CIT(A) has not been challenged by the Revenue. Accordingly, since both the conditions laid down in second proviso to Section 56(2)(x)(b)(B) of the Act are also satisfied, (Assessment Year: 2018-19) the addition of INR 60,19,506/- made by the Assessing Officer cannot be sustained and is therefore, deleted. Ground No. 1 raised by the Appellant is allowed.
In result, the present appeal preferred by the Assessee is allowed. 7.
Order pronounced on 26.02.2024.