Section 56(2)(vii)(b) of the Income Tax Act
Income-tax Act, 2025: s.92
Section 56(2)(vii)(b) falls under section 56 of the Income-tax Act, 1961, which corresponds to section 92 (Income from other sources) of the Income-tax Act, 2025.
Read section 92 of the 2025 Act
Correspondence checked against the ICAI tabular mapping of the two Acts and the BharatTax.co section commentary.
The decision most relied on for Section 56(2)(vii)(b) is CIT v. Puneet Sabharwal (338 ITR 485), cited in 69 of the 626 judgments on BharatTax that turn on this section.
Leading authorities on Section 56(2)(vii)(b)
The revenue must prove that an assessee received extra consideration beyond the declared value; a Departmental Valuation Officer's (DVO) report alone is insufficient to establish such receipt.
The Assessing Officer (AO) is not required to refer the valuation to the District Valuation Officer (DVO) if the AO has conducted a detailed inquiry and is satisfied with the cost of construction. Strict adherence to procedural requirements is essential; failure to comply with mandatory conditions renders the assessment based on such non-compliance invalid.
The Department cannot take advantage of an assessee's ignorance, especially when a surrender is made solely to achieve peace and the assessee is not an expert in income tax matters.
A notice under section 148 of the Income Tax Act, 1961, issued after the expiry of four years from the end of the relevant assessment year, is barred by limitation if the original assessment was completed under section 143(3).
The amendment to section 50C(1) of the Income Tax Act, 1961, by inserting the third proviso through the Finance Act, 2018, is curative and applies retrospectively. This means the tolerance band for the difference between sale consideration and stamp duty value, introduced by this amendment, is applicable to earlier assessment years.
Assessments initiated without proper jurisdiction, such as under section 153C without the necessary foundation, are null and void and must be annulled.
For the purpose of determining income under Section 56(2)(vii)(b) or 56(2)(x)(b), the stamp duty value or fair market value of immovable property is to be considered as on the date of payment made by the assessee towards booking of the property, where an agreement for purchase and payment of consideration has been made prior to the date of registration.
A family arrangement or settlement does not give rise to any income. This is because it represents the working out of existing rights among family members rather than a transfer of property.
The nature of a receipt as capital or revenue is determined by its character in the hands of the recipient, not the payer.
