2024 (1) TMI 1003 - AT - Income Tax

Addition u/s 56(2)(x) - stamp duty valuation of the property - addition made as assessee has purchased one immovable property for a consideration less than value as assessed by the Stamp Valuation Authority - as per assessee flat was booked by the assessee in FY 2014-15 and all payments were made through banking channel - HELD THAT - Section 56(2)(x) provides that if the date of agreement fixing the amount of consideration for the transfer of immovable property and the date of registration are not the same, the stamp duty value on the date of agreement may be taken for the purposes of this sub-clause. The value determined by the valuation authority for the purpose of charging stamp duty as the value of the property and after deducting the purchase consideration shown by the assessee the remaining part is being considered as a deemed gift within the meaning of this Section. But in this case it is hit by the proviso. Assessee has booked the flat in 2015 and the AO has not taken the stamp duty valuation on 11.05.2015 which is less than the value considered by the AO. Thus the orders of both the lower authorities are not sustainable because the assessee has demonstrated that it has made payment for purchase of this property through account payee cheque in instalments on different dates. Therefore, as far as Rs. 32,93,730/- is concerned, it cannot be added and this addition is deleted. What the AO can add with the help of Section 56(2)(x) of the Act is the amount which is the difference between Rs. 32,93,730/- vis- -vis stamp duty value for the purpose of charging stamp duty on 11.05.2015. We deem it appropriate to set aside this issue to the file of the AO with the following directions a) The ld. AO first find out the stamp duty valuation of the property as on 11.05.2015 and if it is more than Rs. 32,93,730/- then that amount is to be worked out for the purpose of considering it as deemed fit. b) In case a positive difference is found which is required to be considered as deemed gift in the hands of the assessee then ld. AO shall call for the report of DVO for determining the fair market value of the flat as on 11.05.2015. c) The AO shall consider the fair market value determined by the DVO as well as the value of Stamp Valuation Authority and whichever is the lower is to be adopted for considering the value of the property as on 11.05.2015. From that amount sum of Rs. 32,93,730/- is to be debited and the balance could be considered as deemed gift in the hands of the assessee.

Summary

Issues Involved:
The judgment involves the issue of addition of Rs. 32,93,730/- by the Assessing Officer under section 56(2)(x) of the Act, pertaining to the purchase of an immovable property and the subsequent appeal against this addition.

Issue 1: Addition of Rs. 32,93,730/- under section 56(2)(x) of the Act

The Assessing Officer added Rs. 32,93,730/- to the total income of the assessee as unexplained investments, based on information received regarding the purchase of an immovable property. The assessee denied the transaction, claiming it was inaccurately uploaded by the concerned department. The reply of the assessee was deemed unacceptable as no new supporting documentary evidence was provided. Consequently, the AO made the addition under section 69 of the I.T Act, 1961. The CIT(A) upheld the AO's decision, leading to an appeal before the Tribunal.

Issue 2: Interpretation of Section 56(2)(x) of the Act

Section 56(2)(x) of the Act was invoked by the AO to justify the addition. However, the Tribunal found that the proviso to this section allows for considering the stamp duty value on the date of agreement for transfer of property. As the stamp duty valuation on the date of agreement was lower than the value considered by the AO, the addition was deemed inappropriate. The Tribunal directed the AO to determine the stamp duty valuation on the date of agreement and instructed a specific approach to calculate any deemed gift based on this valuation.

Conclusion:
The Tribunal allowed the appeal of the assessee, setting aside the orders of the lower authorities. It directed the AO to reevaluate the addition in light of the stamp duty valuation on the date of agreement for the property transaction. The Tribunal emphasized the importance of correctly applying the provisions of Section 56(2)(x) and ensuring a fair assessment based on the actual facts of the case.