2024 (12) TMI 245 - AT - Income Tax

Addition u/s 56(2)(vii)(b) - difference in purchase price of flat shown in the documents as compared to market value - HELD THAT - Section 56(2)(vii)(b) of the Act is applicable in the circumstances of this case as difference in purchase price of flat shown in the documents is more than the market value exceeding Rs. 50,000/-.The appellant did not mention any reason for the difference between the price mentioned in the document and market value before the AO or the Ld. CIT(A) or ITAT. Appellant s simple argument that the section is not applicable without giving any reason in the grounds of appeal is not tenable. Additional ground of appeal stating that CBDT instructions forbid the Ld. AO from exceeding the purview of reasons mentioned in the CASS to make any addition - This additional ground of appeal is entertained and adjudicated against the appellant because the Ld. DR has shown in paragraph 2 of the assessment order that one of the scrutiny reason is whether investment and income in property is properly disclosed and hence the appellant cannot dispute the issue on this technical ground. In our considered view also, the issue is covered under CASS, and hence the Ld. AO is empowered to adjudicate this issue in limited scrutiny and the reliance placed by Ld. AR of the appellant on CBDT Instruction No. 20/2015 dated 29.12.2015 is not applicable in the present case. This section comes into play in case of an individual receives an immovable property for a consideration which is having difference of more than Rs. 50,000/- compared to the stamp value thereof. Hence, the addition made by the Ld. AO in this regard is correct and upheld.

Summary

Issues Involved:
1. Maintainability of Departmental appeal due to monetary limits.
2. Addition made under section 56(2)(vii)(b) of the Income Tax Act.

Issue 1: Maintainability of Departmental Appeal:
The appellant argued that the Departmental appeal is not maintainable due to monetary limits as per the recent CBDT Circular, which increased the limit to Rs. 60 lakhs from Rs. 50 lakhs. The Circular stated that the enhanced limit is applicable to all pending appeals. The ITAT agreed with the appellant's contention and dismissed the Department appeal due to monetary limits.

Issue 2: Addition under section 56(2)(vii)(b) of the Income Tax Act:
The appellant contested the addition of Rs. 23,17,000 made under section 56(2)(vii)(b) for the assessment year 2016-17. The Assessing Officer (AO) added the amount as the appellant purchased a flat below market value, invoking the provisions of the Act. The Commissioner of Income Tax (Appeals) upheld the addition, stating that the law was correctly applied. The appellant argued that the addition was incorrect and out of the AO's purview in a limited scrutiny case. However, the ITAT upheld the addition for various reasons, including the significant difference in purchase price and market value, lack of explanation by the appellant, and failure to substantiate the inapplicability of the section. The ITAT also rejected the appellant's argument based on CBDT instructions and held that the AO had jurisdiction to make the addition. The ITAT dismissed the Cross Objection filed by the appellant, upholding the addition under section 56(2)(vii)(b) of the Act.

In conclusion, the ITAT dismissed the Department's appeal and the Cross Objection of the appellant, maintaining the addition under section 56(2)(vii)(b) of the Income Tax Act.