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TMI Blog2024 (4) TMI 739X X X X Extracts X X X X X X X X Extracts X X X X ..... e present case, no such opportunity was granted by the learned CIT(A) to the assessee while making the aforesaid enhancement and directing the AO to tax Rs. 25 lakh in the hands of the assessee under section 56(2)(vii)(a) of the Act. Therefore, we are of the considered view that the learned CIT(A), while directing the impugned addition under section 56(2)(vii)(a) of the Act, did not comply with the provisions of section 251(2) of the Act. Addition u/s 56(2)(vii)(a) - Whether such a contravention is an illegality or irregularity ? - As u/s 56(2)(vii)(a) of the Act, one of the preconditions for the taxability of the money received by the assessee is that the same should have been received without consideration, which, in our considered view, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d circumstances of the case and law, the Learned Commissioner of Income Tax (Appeals) has erred in enhancing the retuned income by Rs. 25,00,000/- in utter contravention of the provisions of sub-section (2) of section 251 of the Income Tax Act, 1961; accordingly the impugned enhancement is ultra vires to the express provisions of the Act and bad in law. 2. In the facts and circumstances of the case and law, the Learned Commissioner of Income Tax (Appeals) has erred in enhancing the income of the Appellant by Rs. 25,00,000/- and directing the Ld. Assessing Officer to tax the same under the provision of clause (vii) of sub-section (2) of section 56 of the Act; disregarding the factual and legal matrix of the case. 3. The appellant craves leav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25 lakh to the assessee. Accordingly, during the assessment proceedings, the assessee was asked to show cause as to why the capital gain arising out of the transaction entered into with the developer for the intended development of the land should not be taxed. After considering the submissions of the assessee, the Assessing Officer ( AO ) vide order dated 27/03/2014 passed under section 143(3) of the Act did not agree with the submissions of the assessee and held that there is a written agreement for transfer/creation of interest in favour of the transferee, under which the transferee has taken over the possession and transferor has handed over the possession for an agreed consideration of 15 constructed bungalows apart from the assessee r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he learned CIT(A) further noted that the AO has not made any addition on this account as the AO computed the long-term capital gains on the entire transaction. Accordingly, vide impugned order, the learned CIT(A) came to the conclusion that the amount of Rs. 25 lakh received by the assessee as deposit is taxable in the hands of the assessee as per the provisions of section 56(2)(vii)(a) of the Act. Accordingly, the learned CIT(A) directed the AO to tax Rs. 25 lakh in the hands of the assessee as income from other sources under section 56(2)(vii)(a) of the Act. Being aggrieved by the aforesaid addition made by the learned CIT(A), which was not made in the assessment order, the assessee is in appeal before us. 7. During the hearing, the learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 56(2)(vii)(a) of the Act. Therefore, we are of the considered view that the learned CIT(A), while directing the impugned addition under section 56(2)(vii)(a) of the Act, did not comply with the provisions of section 251(2) of the Act. 10. Now the question arises as to whether such a contravention is an illegality or irregularity. As if it is considered as an illegality then the entire addition is void ab initio. However, we are of the considered view that the non-grant of a reasonable opportunity to the assessee to show cause against the proposed enhancement results in an irregularity, as the learned CIT(A) failed to comply with the procedure laid down under section 251(2) of the Act prior to making the impugned enhancement. In any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds as under:- (vii) where an individual or a Hindu undivided family receives, in any previous year, from any person or persons on or after the 1st day of October, 2009, (a) any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum; 12. Therefore, as per the provisions of section 56(2)(vii)(a) of the Act, any sum of money, the aggregate of which exceeds Rs. 50,000, received by an individual without consideration is taxable as income from other sources. Thus, under section 56(2)(vii)(a) of the Act, the incidence of taxation is at the stage of receipt of money. The fact that the money received as a security deposit was subsequently refunded by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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