2020 (8) TMI 511 - AT - Income Tax

Tribunal directs reassessment based on stamp duty valuation, allowing appeal.

Radha Kishan Kungwani Versus I.T.O. Ward 1 (2), Ajmer.

Radha Kishan Kungwani Versus I.T.O. Ward 1 (2), Ajmer. - TMI Issues Involved:1. Addition of Rs. 15,39,496/- under Section 56(2)(b) of the Income Tax Act, 1961 due to inadequate consideration.Issue-Wise Detailed Analysis:1. Addition of Rs. 15,39,496/- under Section 56(2)(b) of the Income Tax Act, 1961 due to inadequate consideration:The appeal concerns the addition of Rs. 15,39,496/- made by the Assessing Officer (A.O.) under Section 56(2)(b) of the Income Tax Act, 1961. The assessee, a proprietor of M/s Mahendra Gulkand Works, filed a return declaring a total income of Rs. 7,08,230/-. During scrutiny, the A.O. noted that the assessee purchased a flat for Rs. 1,38,03,550/- on 17/09/2014, while the Sub-Registrar valued it at Rs. 1,53,43,036/-. The A.O. invoked Section 56(2)(b) to add the differential amount of Rs. 15,39,496/-.The assessee contended that the flat was booked on 10/10/2010, with an earnest payment of Rs. 12,38,090/-. The A.O. did not dispute the payments made on 10/10/2010 and 14/10/2010 but denied the claim due to the absence of an agreement prior to the registered sale agreement dated 17/09/2014. The A.O. added the differential amount based on the stamp duty valuation at the time of registration.The CIT(A) upheld the A.O.'s decision, noting the failure to produce an agreement from 2010. The assessee argued that the booking itself constituted an agreement, supported by a letter from the builder dated 16/10/2017 confirming the payments. The assessee claimed that the stamp duty value should be considered as of the booking date, not the registration date.The Tribunal found no dispute regarding the payments made in 2010. The key issue was whether the stamp duty valuation should be taken as of the booking date or the registration date. The Tribunal noted that the builder confirmed the booking and payments, and the final agreement included a payment schedule. The Tribunal concluded that the booking and part payment constituted an agreement, with terms and conditions agreed upon at the booking time.Section 56(2)(vii) states that if an immovable property is received for a consideration less than the stamp duty value, the excess amount is chargeable to income tax. However, the provisos allow for considering the stamp duty value as of an earlier agreement date if part of the consideration was paid before the registration date by non-cash means.The Tribunal acknowledged the earlier booking and payments, applying the provisos to Section 56(2)(vii). The Tribunal remanded the matter to the A.O. to apply the stamp duty valuation as of 10/10/2010, when the flat was booked and part payment made. If the stamp duty valuation exceeded the purchase consideration, the difference would be added to the assessee's income under Section 56(2)(vii)(b).Conclusion:The appeal was allowed for statistical purposes, with the Tribunal directing the A.O. to reassess the stamp duty valuation as of the booking date and make necessary adjustments to the assessee's income. The order was pronounced on 19th August 2020.