Section 56(2)(x) of the Income Tax Act
Income-tax Act, 2025: s.92
Section 56(2)(x) 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)(x) is ACB India Ltd. v. ACIT (374 ITR 108), cited in 364 of the 565 judgments on BharatTax that turn on this section.
Leading authorities on Section 56(2)(x)
When computing disallowance under Section 14A of the Income-tax Act using Rule 8D of the Income-tax Rules, only investments that have actually yielded exempt income during the relevant previous year are to be considered for the calculation.
If the Assessing Officer has not conducted any investigation and thus has not discharged their burden of proof, any addition made by the AO is unsustainable and must be deleted.
Proceedings become fatal if principles of natural justice are violated, such as when seized material is not provided to the assessee or cross-examination of a person whose statement the Assessing Officer relies upon is denied.
Section 41(1) of the Income-tax Act cannot be invoked if the assessee has not been granted a deduction for the relevant liability in earlier years.
An adverse inference cannot be drawn against an assessee solely based on uncorroborated loose papers found during a search or on a statement made during the search that is later retracted, unless the Assessing Officer conducts independent enquiry to establish the facts.
To make an addition under Section 69B for undisclosed investment, the Revenue must first prove that an understatement of investment has occurred and that the assessee made the undisclosed investment. The burden of proof lies with the Revenue, and additions cannot be based merely on presumptions or assumptions without corroborative material.
The amendment introducing a tolerance band (safe harbour) under section 50C, allowing a difference of up to 10% between actual sale consideration and stamp duty valuation, applies retrospectively. If the difference falls within this limit, the actual sale consideration is adopted as the full value of consideration for computing capital gains.
An amendment to a section is declaratory and clarifies the existing legal position, rather than introducing a new rule.
Additions made by the Assessing Officer are unsustainable and deserve to be deleted when no appropriate investigation has been carried out and the burden of proof has not been discharged.
Statements recorded after an impugned search cannot be considered as incriminating material seized during the search for the purpose of proceedings under section 153A.
