Applicability of Section 56(2)(x): subsequent registration does not attract levy if provision was not in force when agreement made.

Whether Section 56(2)(x) could be applied where the sale agreement was executed in 2010 but the sale deed was registered in 2018: the tribunal found the agreement date, substantial payment and possession in 2010 determinative and that the statutory provision relied on was not in force when the parties contracted; consequently imposing liability solely because of later registration would apply a provision retroactively. Procedural points on reassessment and advance tax did not alter this substantive temporal non applicability. The addition under the cited provision was deleted and the appeal allowed for the assessee.

---

---

Issues: (i) Whether addition under Section 56(2)(x) of the Income-tax Act, 1961 could be levied in respect of a property transaction where the original agreement for sale was executed in 2010 but the sale deed was registered in 2018, and whether the reassessment and addition under Section 56(2)(x) should be deleted.

Analysis: The facts establish that the agreement for sale was entered into in 2010 and substantial payment and possession occurred pursuant to that agreement. The provision now embodied in Section 56(2)(x) was not in force at the time the original agreement was executed. Application of Section 56(2)(x) based solely on subsequent registration in 2018 would impose liability under a provision that did not govern the parties' transaction when the agreement was made. The requirement under Section 249 regarding advance tax and the procedural grounds relied upon by the lower authority do not negate the substantive point that the statutory provision relied upon for the addition did not apply to the transaction as originally contracted in 2010. The addition under Section 56(2)(x) was therefore not maintainable on merits given the temporal non-applicability of that provision to the original agreement.

Conclusion: The addition made under Section 56(2)(x) is deleted and the appeal is allowed in favour of the assessee.

---