2025 (10) TMI 857 - AT - Income Tax

De novo reassessment ordered for s.56(2)(vii) addition over stamp duty versus agreement price after admitting new evidence

ITAT restored for de novo adjudication an addition under s.56(2)(vii) concerning the difference between stamp duty value and agreement price, after ... Addition u/s 56(2)(vii) - difference between the stamp duty value and the agreement price as income - DR submitted that all these details, which are now furnished by the assessee, were not filed during the assessment proceedings and were also not examined by the learned CIT(A) - HELD THAT:- As undisputed that the assessee could not file the details before the AO, and the same could also not be filed before the learned CIT(A), which now form part of the application seeking admission of additional evidence. Therefore, in the interest of natural justice and fair play, we deem it appropriate to restore the issue raised before us to the file of the AO for de novo adjudication after considering the details as filed by the assessee. ISSUES PRESENTED AND CONSIDERED 1. Whether the difference between stamp duty value and agreement value of immovable property can be added to the assessee's income under section 56(2)(vii)(b) of the Income Tax Act in the absence of contemporaneous documentary evidence of allotment, payments and market value at the time of allotment. 2. Whether unabsorbed business losses can be directed to be adjusted against income under the head 'Income from Other Sources' and short-term capital gains when such claim was not accepted by the Assessing Officer. 3. Whether newly produced documents (allotment letter and payment details) not filed before the Assessing Officer or Commissioner (Appeals) should be admitted on appeal and, if admitted, what is the appropriate remedial course (remand/restoration) for de novo adjudication. 4. Whether the principles of natural justice require restoration of the issue to the Assessing Officer for fresh adjudication where relevant documentary evidence is produced for the first time before the Appellate Tribunal and the lower authorities have not considered it. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Addition under section 56(2)(vii)(b) for difference between stamp duty value and agreement value Legal framework: Section 56(2)(vii)(b) treats as income the receipt of immovable property for inadequate consideration where the stamp duty value exceeds the consideration by prescribed thresholds; the AO must examine the facts and documentary evidence to determine whether the excess constitutes income. Precedent Treatment: The judgment does not invoke or distinguish any specific precedents on the interpretation of section 56(2)(vii)(b); treatment is fact-driven and rests on documentary proof of timing and quantum of payments and allotment. Interpretation and reasoning: The Tribunal records that the AO made the addition after observing a difference of Rs. 92,85,800 between stamp duty value and agreement value and in the absence of details of payment and allotment documentation. The assessee's plea was that the flat was allotted in 2005 and payments made during 2005-2009, contending that market value at allotment-not registration-should determine the position. Because the relevant documents substantiating that claim were not placed before the AO, the AO proceeded to add the difference under section 56(2)(vii)(b). Ratio vs. Obiter: The operative ratio is not a substantive adjudication on the correctness of the addition under section 56(2)(vii)(b) but a procedural holding that, given subsequent production of material evidence, the matter requires fresh examination by the AO. Any discussion of substantive application of section 56(2)(vii)(b) to the facts is obiter since no final finding on merits is rendered. Conclusions: The Tribunal set aside the impugned orders and remitted the issue to the AO for de novo adjudication after considering the allotment letter and payment details now produced; the AO is directed to afford a reasonable opportunity of hearing before passing any order. Issue 2 - Claim for adjustment of unabsorbed business losses against income from other sources and short-term capital gains Legal framework: Set-off and carry-forward of business losses follow statutory provisions that require proper substantiation and assessment by the AO; claims for set-off are adjudicative and fact-specific, requiring documentary proof and conformity with the Act's provisions. Precedent Treatment: No specific precedent is cited or applied; the Tribunal treats the claim as intertwined with the primary factual issue of income assessment and evidence availability. Interpretation and reasoning: The AO rejected the claim for set-off in the assessment order; the CIT(A) upheld the AO's action in absence of documentary proof. The Tribunal observed that the claim of set-off cannot be finally adjudicated without examining the newly produced documents and therefore should be reconsidered by the AO in the remand proceedings. Ratio vs. Obiter: The direction to the AO to re-examine the set-off claim is part of the dispositive order (ratio) insofar as it flows from the remand; there is no substantive determination on entitlement to set-off (obiter on merits). Conclusions: The issue of adjustment of unabsorbed business losses is restored to the file of the AO for de novo adjudication together with consideration of the additional evidence and after affording opportunity of hearing. Issue 3 - Admissibility of additional evidence and remedial course Legal framework: Appellate authorities have power to admit additional evidence in the interest of justice subject to legal standards (relevance, explanation for former non-production, and potential to affect the decision); where evidence is produced for first time on appeal, the usual remedial course is either to admit and decide afresh or to remit to the AO for fresh consideration. Precedent Treatment: The Tribunal applies established procedural principles favoring examination of relevant documents that were not before the AO or CIT(A) and does not rely on any decision overruling those principles. Interpretation and reasoning: The Tribunal finds it undisputed that the allotment letter and payment details were not filed earlier. In the interest of natural justice and fair play, and because the documents are directly material to the issues of valuation under section 56(2)(vii)(b) and set-off, the Tribunal deems it appropriate to restore the matter to the AO for de novo adjudication rather than finally deciding the matter on the record before it. Ratio vs. Obiter: The decision to remit for de novo adjudication is ratio as it is the operative remedial direction of the Tribunal. Observations on natural justice and cooperation of the assessee are guiding dicta (obiter) to be followed in the remand proceedings. Conclusions: The Tribunal admitted the additional evidence by restoring the issue to the AO for fresh adjudication, directing that no order be passed without affording reasonable opportunity of hearing and instructing the assessee to cooperate and furnish all requested details. Issue 4 - Application of natural justice and requirement of opportunity of hearing Legal framework: Principles of natural justice require that an assessee be given a reasonable opportunity to produce relevant evidence and to be heard before adverse orders are passed. Precedent Treatment: The Tribunal applies these principles without citing specific authorities, treating them as foundational to fair administrative adjudication. Interpretation and reasoning: The Tribunal notes that the CIT(A) refused the adjournment sought shortly before passing the impugned order and that material documents are now available. In these circumstances, fairness demands that the AO reconsider the matter after providing the assessee a reasonable opportunity of hearing. Ratio vs. Obiter: The direction to afford reasonable opportunity of hearing is part of the dispositive remand order (ratio) and necessary to ensure compliance with natural justice in the re-adjudication. Conclusions: The Tribunal required that no order be passed on remand without affording a reasonable opportunity of hearing to the assessee and instructed full cooperation and production of requested documents in the AO's proceedings. Cross-references Issues 1-3 are interlinked: admissibility of additional evidence (Issue 3) is the basis for remanding the valuation/addition question under section 56(2)(vii)(b) (Issue 1) and the claim for set-off of unabsorbed business losses (Issue 2); Issue 4 (natural justice) underpins the Tribunal's remedial directions and requirement for fresh hearing on remand.