Property purchase agreement from 1991 with non-cash payment exempts Section 56(2)(vii)(b) addition despite 2017 registration

ITAT Raipur held that Section 56(2)(vii)(b) addition was not applicable where property purchase agreement was executed in 1991 with consideration fixed at Rs. 92,000/- and paid via cheques/drafts, though registration occurred in 2017 for Rs. 1,05,332/-. The first and second provisos were satisfied as consideration was paid by non-cash mode before agreement date. Addition under Section 69 for unexplained investment was also deleted as no undisclosed investment was established beyond actual consideration paid. Revenue's appeal dismissed on all grounds.

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Issues Involved:

1. Deletion of addition u/s 69 of the Income Tax Act, 1961.
2. Admission of additional evidence by CIT(A) without providing a copy to the AO.
3. Admission of additional evidence under Rule 46A(1) without remanding back the matter to the AO.
4. Violation of Rule 46A(3) of the Income Tax Rules, 1962.
5. General grounds.

Summary:

Issue 1: Deletion of Addition u/s 69

The AO observed that the assessee purchased an immovable property for Rs. 1,05,332/-, while its stamp value was Rs. 1,11,52,200/-. The AO added the difference of Rs. 1,10,46,868/- as unexplained investment u/s 69 of the Act, asserting that the income had escaped assessment within the meaning of Section 56(2)(vii)(b) of the Act. The CIT(A) deleted this addition, noting that the property was originally purchased by the assessee's father in 1991 for Rs. 92,000/- and the consideration was paid by cheque. The CIT(A) held that the provisos to Section 56(2)(vii)(b) were applicable, and thus, the stamp duty value on the date of the agreement (1991) should be considered, not the registration date (2017). Therefore, the addition u/s 56(2)(vii)(b) was not justified, and consequently, the addition u/s 69 also failed.

Issue 2: Admission of Additional Evidence

The revenue contended that the CIT(A) erred in admitting additional evidence regarding the acquisition of property by the assessee's father without providing a copy to the AO during the assessment proceedings, thereby violating Rule 46A(3) of the Income Tax Rules, 1962. The Tribunal found that the documents were indeed filed before the AO, and hence, the CIT(A) did not violate Rule 46A(3).

Issue 3: Admission of Additional Evidence under Rule 46A(1)

The revenue argued that the CIT(A) admitted additional evidence under Rule 46A(1) without remanding the matter back to the AO for verification. The Tribunal observed that the documents were already part of the record, and thus, there was no need for remand.

Issue 4: Violation of Rule 46A(3)

The Tribunal found no merit in the revenue's claim of violation of Rule 46A(3) as the documents were already submitted to the AO during the assessment proceedings.

Issue 5: General Grounds

The general grounds raised by the revenue were dismissed as not pressed.

Conclusion:

The Tribunal upheld the CIT(A)'s decision, dismissing the revenue's appeal and confirming that the addition of Rs. 1,10,46,868/- u/s 56(2)(vii)(b) and u/s 69 was not justified. The Tribunal also found no procedural violations in the admission of additional evidence by the CIT(A). The appeal of the revenue was dismissed.

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