Kapish Agarwal Vs ITO (ITAT Hyderabad)
The Hyderabad Bench of the Income Tax Appellate Tribunal considered the assessee’s appeal against the order of the Commissioner of Income Tax (Appeals), NFAC, for Assessment Year 2022-23. The dispute primarily concerned two additions made by the Assessing Officer: an addition of ₹66,63,600 under Section 69 of the Income-tax Act, 1961, towards unexplained investment in immovable property, and an addition of ₹36,12,625 under Section 56(2)(x) on account of the difference between the stamp duty value and the purchase consideration of the property.
The assessee had filed the return of income declaring total income of ₹27,93,213. During scrutiny assessment, the Assessing Officer noted that the assessee, along with other co-purchasers, had acquired immovable property for ₹22,37,50,000 and incurred registration and related expenses of ₹29,04,400, resulting in a total acquisition cost of ₹22,66,54,400. The assessee’s share was determined at ₹66,63,600. As the Assessing Officer was not satisfied with the explanation regarding the source of investment, the amount was treated as unexplained investment under Section 69. The Assessing Officer also found that the stamp duty value of the property exceeded the actual purchase consideration by ₹1,44,50,500 and brought the assessee’s one-fourth share of ₹36,12,625 to tax under Section 56(2)(x). The assessment was completed under Section 143(3) read with Section 144B, and both additions were confirmed by the Commissioner (Appeals).
Before the Tribunal, the assessee submitted that the investment in the property had been financed from the opening bank balance and amounts received from relatives through banking channels, except ₹9,50,000 received from the assessee’s grandmother. It was contended that the relatives were regular income-tax assessees and that copies of their income-tax returns had been produced before the Commissioner (Appeals). The assessee argued that the appellate authority failed to properly consider the documentary evidence filed under Rule 46A relating to the identity, genuineness and creditworthiness of the persons providing the funds.
The Department submitted that the documentary evidence had been produced for the first time before the Commissioner (Appeals) and that the evidence was incomplete. It pointed out that acknowledgements, computations of income and other relevant documents were not available for all the alleged donors or lenders, and therefore the source of investment had not been satisfactorily established.
The Tribunal examined the material placed on record and found merit in the Department’s contention that complete documentary evidence had not been furnished for all the persons from whom the assessee claimed to have received funds. At the same time, it observed that the evidence had been produced before the Commissioner (Appeals) and that the additions had been confirmed without proper verification. Considering the facts and in the interest of substantial justice, the Tribunal set aside the orders of the lower authorities on this issue and restored the matter to the Assessing Officer for fresh examination. The Assessing Officer was directed to verify all documentary evidence that the assessee may furnish, including acknowledgements of returns, computations of income and other supporting documents necessary to establish the identity, creditworthiness and genuineness of the transactions, after providing adequate opportunity of hearing. The addition under Section 69 was therefore restored for fresh adjudication and the corresponding grounds were allowed for statistical purposes.
Regarding the addition under Section 56(2)(x), the assessee contended that the agreement for purchase had been entered into before the revision of the guideline value from ₹45,000 per square yard to ₹58,500 per square yard with effect from 1 August 2021, although the sale deed was executed on 7 August 2021. It was further submitted that the property suffered from deficiencies because the vendors proposed to execute the sale deed on the basis of an unregistered will and that the lower purchase price reflected the risks associated with such title issues.
The Tribunal found that no documentary evidence had been produced to establish that an agreement to purchase the property existed before the revision of the guideline value. It also observed that there was no evidence showing that any part of the consideration had been paid through the prescribed banking modes before the alleged agreement date, as required by the first and second provisos to Section 56(2)(x). The Tribunal further held that the alleged title deficiencies were unsupported by documentary evidence establishing any defect, litigation or encumbrance affecting the property’s value. Accordingly, it held that the Assessing Officer had correctly adopted the stamp duty value prevailing on the date of execution of the sale deed and upheld the addition of ₹36,12,625 under Section 56(2)(x).
The appeal was accordingly partly allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
This appeal is filed by Shri Kapish Agarwal (“the assessee”), feeling aggrieved by the order passed by the Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi (“Ld. CIT(A)”) dated 07.08.2025 for the A.Y.2022-23.
2. The assessee has raised the following grounds of appeal:
1. The Ld. NFAC. Delhi dismissed the appellant’s appeal and confirmed the addition made by the Ld. Assessment Unit/AO is bad on facts and in law in as much as it suffers from the vice of violation of the principles of natural justice.
2. The Ld. NFAC. Delhi has erred in upholding the addition made by the Ld. Assessment Unit/A0 as unexplained investment under sec. 69 of the IT Act without considering the written submissions and additional documentary evidence filed under Rule 46A of the I T Rules during the course of appellate proceedings to substantiate the sources for the investment in purchase of immovable property, which were met out of gifts/loans received from the family members.
3. The Ld. NFAC, Delhi has not taken into consideration of the ITR copies of the family members, bank account statement and bank/cash flow statement of the appellant filed during the course of appellate proceedings to establish the identity, genuineness and creditworthiness of the appellant and his family members, as a sources for making the investment /payment.
4. The Ld. NFAC, Delhi failed to appreciate the fact and the appellant had opening balance of Rs. 20,25,9178/- as on 1.4.2021 in his bank account with RBL Bank account No. 301018092003 which was also utilized for purchase of immovable property.
5. The Ld. NFAC, Delhi failed to appreciate the fact that the appellant received an amount of Rs. 33,26,000 from the appellant’s family members through verifiable banking channels and the source for cash deposit in the bank account is the cash received from appellant’s grandmother late Mrs. Uma Devi (who passed away on 1204-2021) on family settlement. late Mrs. Uma Devi is also an income tax assesses for several years and is having a gross income of Rs. 37,73,000 (for the AYs 2021-22 & 2020-21 alone).
6. The Ld. NFAC, Delhi failed to appreciate the fact that the immovable property may have various attributes, charges, encumbrances, limitations and conditions, which the stamp valuation authority does not take into consideration of the attributes of the property for determining the fair market value of the property offered for sale and accordingly sustained the addition of Rs. 36,12,625/- under sec. 56(2)(x) of the t T Act, which the appellant had not paid to the seller. The immovable property purchased by the appellant is having some document deficiency as the vendors proposed to execute the sale deed based on the unregistered will and the appellant bought the property by taking the risk as the appellant is got the property lesser than the stamp duty value/market value.
7. The Ld. NFAC. Delhi failed to apply mind in understanding/considering /analysing the written submissions and additional documentary evidence filed under Rule 46A of the I T Rules and concluded the non-reasoned order frivolously and casually by completely relying blindly on the assessment order of the Ld. Assessment Unit and reiterated the same in appeal order without any effort.
8. The appellant craves leave to add, amend or delete any of the above ground on or before the final date of hearing.
3. The brief facts of the case are that the assessee, an individual, filed his return of income for Assessment Year 2022-23 on 27.07.2022 declaring total income of 27,93,213/-. The case of the assessee was selected for scrutiny under CASS and accordingly notice under section 143(2) of the Income-tax Act, 1961 (“the Act”) was issued by the Learned Assessing Officer (“Ld. AO”) on 01.06.2023. During the course of assessment proceedings, the Ld. A.O observed that the assessee, along with certain other persons, had purchased an immovable property for a purchase consideration of 22,37,50,000/-. The purchasers had also incurred registration and other incidental expenses amounting to 229,04,400/-. Accordingly, the total cost of acquisition of the property was worked out at 22,66,54,400/-. The Ld. A.O determined the assessee’s share in the said property at 266,63,600/-. Since the Ld. AO was not satisfied with the explanation furnished by the assessee regarding the source of investment in the property, he treated the said amount of Z66,63,600/- as unexplained investment under section 69 of the Act and made addition to that extent. The Ld. AO further observed that the value adopted by the Stamp Valuation Authority in respect of the said property was 23,82,00,500/- as against the actual purchase consideration of 22,37,50,000/-. Thus, according to the Ld. AO, there was a difference of Z1,44,50,500/- between the stamp duty value and the actual consideration paid for purchase of the property. Since the assessee’s share in the property was one-fourth, the Ld. AO computed the assessee’s proportionate share of such difference at 236,12,625/- and treated the same as income of the assessee under section 56(2)(x) of the Act. Accordingly, the Ld. AO completed the assessment under section 143(3) read with section 144B of the Act vide order dated 26.02.2024 by making additions of Z66,63,600/- under section 69 of the Act and Z36,12,625/-under section 56(2)(x) of the Act and assessed the total income of the assessee at Z1,10,69,438/-.
4. Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A) upheld both the additions made by the Ld. AO.
5. Aggrieved by the order of the Ld. CIT (A), the assessee is in further appeal before us. At the outset, the Learned Authorized Representative (“Ld. AR”) submitted that only two issues are involved out of the grounds of the appeal of the assessee. First is the addition of 266,63,600/- under section 69 of the Act and the second is the addition of 236,12,625/- under section 56(2)(x) of the Act. With regard to the addition of Z66,63,600/- under section 69 of the Act, the Ld. AR invited our attention to para no. 2 of the written submission placed at page no. 2 of the paper book and submitted that the investment made by the assessee in the property was sourced from the opening balance available in the bank account and amounts received from relatives through banking channels. It was submitted that except for an amount of 29,50,000/- received from the assessee’s grandmother, all other receipts were through proper banking channels from identifiable persons. Referring to the para no. 3 of the written submissions placed at page no. 3 of the paper book, the Ld. AR submitted that the persons (“the donees”) from whom the assessee had received the amounts were regular income-tax assessees and had filed their returns of income for Assessment Years 2019-20 to 2021-22 declaring income exceeding Z10 lakh in each case. Inviting our attention to copy of return filed by the donees, it was further submitted that copies of the returns of income of the donees were filed before the Ld. CIT(A). According to the Ld. AR, the Ld. CIT(A), while confirming the addition, failed to properly consider the evidences filed before him. He, therefore, prayed for deletion of the addition.
6. Per contra, the Learned Departmental Representative (“Ld. DR”) strongly relied upon the orders of the lower authorities. However, he fairly submitted that the copies of income-tax returns of certain donees were filed by the assessee before the Ld. CIT(A) for the first time and were not available before the Ld. AO. He further submitted that even before the appellate authorities, the assessee had not furnished complete documentary evidences in respect of all the donees. According to the Ld. DR, the assessee had not filed complete acknowledgements and computations of income for all the relevant assessment years. It was specifically pointed out that the assessee had not filed any documents in respect of Shri K. Subhash Chandra, had filed only the acknowledgement for Assessment Year 2019-20 in the case of Late Smt. Uma Devi, had not filed the computation of income in the case of Shri K Pankaj Kumar and had not filed the acknowledgement of return for Assessment Year 2021-22 in the case of Smt. Shweta Agrawal. He therefore submitted that the assessee had failed to satisfactorily establish the source of investment in the property. Accordingly, the Ld. DR submitted that there is no infirmity in the orders passed by the lower authorities.
7. We have carefully considered the rival submissions and perused the material available on record. We have also gone through the copies of the income-tax returns and related documents placed by the assessee at page nos. 17 to 35 of the paper book. On perusal of the said documents, we find merit in the contention of the Ld. DR that complete documentary evidences have not been furnished in respect of all the donees from whom the assessee claims to have received funds. We find that copies of acknowledgements and computations of income for all the relevant assessment years, namely Assessment Years 2019-20 to 2021-22, have not been placed on record in respect of each of the said persons. The evidences available on record are incomplete and, therefore, do not enable us to conclusively verify the creditworthiness of the persons concerned and the genuineness of the transactions relied upon by the assessee. At the same time, we find that the assessee has produced these documentary evidences first time before the Ld. CIT(A) in support of his claim regarding the source of investment, which admittedly were not available before the Ld. AO. We further find that the Ld. CIT(A) has confirmed the addition without proper verification of the said evidences. Considering the totality of facts and circumstances of the case and in the interest of substantial justice, we are of the considered opinion that one more opportunity deserves to be granted to the assessee to substantiate the source of investment made in the property. Accordingly, we set aside the orders of the lower authorities on this issue and restore the matter to the file of the Ld. AO with a direction to examine afresh the source of investment claimed by the assessee after considering all relevant documentary evidences that may be furnished by the assessee. The assessee is directed to furnish complete details and supporting documents in respect of all the donees, including copies of acknowledgements of returns, computations of income and such other supporting evidences as may be necessary to establish the identity, creditworthiness and genuineness of the transactions. The Ld. AO shall examine the evidences so furnished and decide the issue afresh in accordance with law after providing adequate opportunity of being heard to the assessee. Accordingly, the issue relating to the addition of Z66,63,600/- under section 69 of the Act is allowed for statistical purposes.
8. As regards the addition of 236,12,625/- made under section 56(2)(x) of the Act, the Ld. AR submitted that the Ld. AO has brought to tax the difference between the stamp duty value of the property and the actual purchase consideration paid by the assessee. Inviting our attention to the copy of the registered sale deed placed at page nos. 36 to 62 of the paper book, the Ld. AR submitted that the sale deed was executed on 07.08.2021. He further invited our attention to the documents placed at page nos. 66 and 67 of the paper book containing the market value guidelines applicable as on 01.08.2021 and 01.07.2021 respectively. Based on the said documents, it was submitted that the stamp duty value of the property was 245,000 per square yard as on 01.07.2021, which was subsequently revised to 258,500 per square yard with effect from 01.08.2021. According to the Ld. AR, the assessee had entered into an agreement with the vendor prior to the revision of the guideline value and, therefore, the stamp duty value prevailing prior to such revision ought to have been adopted for the purpose of section 56(2)(x) of the Act. The Ld. AR further submitted that the property suffered from certain deficiencies inasmuch as the vendor proposed to convey title based on an unregistered Will. It was contended that the assessee purchased the property by assuming the attendant risks arising out of such title issues and, therefore, the actual purchase consideration was lower than the stamp duty value. It was submitted that the stamp valuation authority, while determining the guideline value, does not take into account such deficiencies affecting the marketability of a property. Accordingly, the Ld. AR prayed for deletion of the addition.
9. Per contra, the Ld. DR relied upon the orders of the lower authorities and submitted that the stamp duty value adopted by the Ld. AO was based upon the value prevailing on the date of registration of the sale deed and was fully in accordance with the provisions of section 56(2)(x) of the Act. He therefore submitted that no interference is called for in the orders of the lower authorities.
10. We have heard the rival submissions and perused the material available on record including the case laws relied upon. The undisputed facts emerging from the record are that the sale deed in respect of the property was executed on 07.08.2021 and the stamp duty value adopted by the Ld. AO was the value prevailing on the date of execution of the sale deed. We further find from the documents placed at page nos. 66 and 67 of the paper book that the guideline value of the property was revised from 245,000 per square yard to 258,500 per square yard with effect from 01.08.2021. The primary contention of the assessee is that an agreement for purchase of the property had been entered into before the revision of the guideline value and, therefore, the stamp duty value prevailing prior to such revision should be adopted. However, except making such oral submissions, the assessee has failed to place on record any documentary evidence establishing that any agreement for purchase of the impugned property was entered into prior to 01.08.2021 or prior to the revision of the guideline value. No agreement to sell, memorandum of understanding or any other contemporaneous document evidencing such arrangement has been brought on record. Further, we find that the provisions of the first and second provisos to section 56(2)(x) of the Act specifically provide that where the date of agreement fixing the amount of consideration and the date of registration are different, the stamp duty value as on the date of agreement may be adopted only if the whole or a part of the consideration has been paid by way of account payee cheque, account payee bank draft, electronic clearing system or such other prescribed electronic mode on or before the date of the agreement. In the present case, apart from the fact that the assessee has failed to establish by documentary evidence that any agreement was entered into prior to the revision of the guideline value, there is also nothing on record to demonstrate that any part of the consideration was paid through banking channels on or before the alleged date of such agreement. Therefore, the assessee fails to satisfy the statutory conditions prescribed in the first and second provisos to section 56(2)(x) of the Act.
11. We also find no merit in the contention of the assessee that the property suffered from certain deficiencies on account of the vendor deriving title through an unregistered Will. Except making a bald assertion, the assessee has not produced any documentary evidence to establish the existence of any title defect, litigation, encumbrance or any other factor adversely affecting the marketability or value of the property. In the absence of any supporting evidence, such contention cannot be accepted.
12. In view of the aforesaid facts, we are of the considered opinion that the Ld. AO was justified in adopting the stamp duty value prevailing on the date of execution of the sale deed and bringing to tax under section 56(2)(x) of the Act the difference between the stamp duty value and the actual consideration paid by the assessee. We, therefore, find no infirmity in the orders of the lower authorities on this issue. Accordingly, the addition of 236,12,625/- made under section 56(2)(x) of the Act is upheld and the grounds raised by the assessee on this issue are dismissed.
13. In the result, the appeal of the assessee is partly allowed for statistical purposes.
Order pronounced in the Open Court on 1st July, 2026.
