Purvi Nihal Shah Vs ITO (ITAT Mumbai)
Summary: The Mumbai Bench of the Income Tax Appellate Tribunal considered an appeal filed by Purvi Nihal Shah against an addition of Rs.12,40,464/- made under Section 56(2)(x)(b)(B) of the Income Tax Act, 1961, for assessment year 2018-19. The assessee had purchased an immovable property for Rs.99,00,536/-, whereas the stamp duty authority adopted a value of Rs.1,11,41,000/- at registration. The Assessing Officer treated the difference as taxable income from other sources, and the National Faceless Appeal Centre upheld the addition.
The assessee contended that the property had originally been allotted by Mishal Construction Pvt. Ltd. on 8 March 2011, when an initial payment of Rs.7,00,000/- was made through banking channels. The original allotment letter recorded consideration of Rs.82,88,000/-. The registered sale agreement was subsequently executed in October 2017 for Rs.99,00,536/-. According to the assessee, the applicable stamp duty value was therefore the value prevailing during financial year 2010-11, rather than the higher valuation on the registration date.
Before the Tribunal, the assessee sought admission of additional evidence under Rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963. The evidence included a certified valuation report and Ready Reckoner valuation showing the property’s stamp duty value for financial year 2010-11 at Rs.52,99,247/-. This was substantially below both the original allotment consideration and the ultimate purchase consideration. The Revenue argued that the subsequent change in consideration and execution of the registered agreement meant that the later valuation should govern the transaction.
The Tribunal examined the provisos to Section 56(2)(x)(b)(B), under which the stamp duty value on the agreement date may be adopted where the agreement and registration dates differ, provided the consideration or part thereof was paid through the prescribed banking channels on or before the agreement date. The Tribunal held that the documentary record established allotment during financial year 2010-11 and payment through banking channels. Consequently, the valuation prevailing on the allotment date was relevant. The Tribunal also found the additional valuation evidence material to a proper determination of the dispute.
However, the Tribunal did not finally delete the addition. It admitted the additional evidence, set aside the appellate order and restored the matter to the Assessing Officer for verification of the valuation report and applicable Ready Reckoner value as on the date of allotment. The Assessing Officer was directed to pass a reasoned order after providing the assessee an adequate opportunity of hearing. Accordingly, the appeal was allowed for statistical purposes. The decision highlights the significance of the allotment date and documented banking-channel payments in determining the applicable stamp duty valuation under Section 56(2)(x).
FULL TEXT OF THE ITAT MUMBAI ORDER
The instant appeal of the assessee filed against the order of the NFAC, Delhi [for brevity the “Ld. CIT(A)”], order passed under section 250 of the Income Tax Act 1961 (for brevity ‘the Act’) for Assessment Year 2018-19, date of order 21.11.2025. The impugned order emanated from the order of the Assessment Unit Income Tax Department (for brevity the ‘Ld. AO’) order passed under section 147 r.w.s. 144B of the Act date of order 28.02.2024.
2. The brief facts of the case are that the assessee filed the return declaring total income Rs.2,80,800/-. The information was received that the assessee had purchased an immovable property amount to Rs.99,00,536/- on 23.10.2017 however, the stamp duty valuation of the said property was determined by the stamp duty authority amount of Rs.1,11,41,000/-. Considering this, the Ld. AO added back the difference of the stamp duty value and the set forth value amount to Rs.12,40,464 u/sec. 56(2)(x)(b)(B) of the Act. Being aggrieved assessee filed the appeal before the Ld. CIT(A). The Ld. CIT(A) after considering the assessee’s submission, rejected the appeal of the assessee and uphold the impugned assessment order. Being aggrieved assessee filed an appeal before us.
3. The Ld. AR advanced his arguments and filed a paper book comprising pages 1 to 151, which has been taken on record. The Ld. AR submitted that the assessee had filed an application for admission of Additional Evidence under Rule 29 of the Income-tax (Appellate Tribunal) Rules, 1963, comprising the valuation report of the subject property duly certified by Shri C. V. Salvi, enclosed at pages 10 to 23 of the Additional Paper Book (APB). A copy of the certified Ready Reckoner valuation of the said property is also enclosed at page 24 of the APB. The Ld. AR contended that the assessee had purchased the property for a consideration lower than the stamp duty valuation. It was submitted that the property was acquired from M/s. Mishal Construction Pvt. Ltd. pursuant to an allotment dated 08.03.2011, against an advance payment of Rs.7,00,000/-. A copy of the allotment letter is placed at pages 44 to 46 of the APB. The Ld. AR further drew our attention to the assessee’s bank statement evidencing the initial payment, enclosed at pages 83 to 84 of the APB. It was further submitted that the balance consideration of Rs.22,00,000/- was duly paid at the time of registration of the property. A copy of the registered sale agreement has also been placed on record at pages 47 to 82 of the APB.
4. The Ld. AR further submitted that all relevant facts and supporting documents had been duly placed before both the Ld. AO and the Ld. CIT(A). In this regard, he invited our attention to the observations recorded by the Ld. AO at pages 7 and 8 of the impugned assessment order, the relevant extract of which is reproduced below:
“During the proceedings the assesse had submitted Receipt cum Allotment Letter issued by Mishal Construction Pvt Ltd dated 08/03/2011 against payment of Rs.7,00,000/-, Receipt voucher of Rs.22,00,000/- issued by Mishal Construction Pvt Ltd dated 28/02/2018 and a Copy of Sale Agreement dated 23/10/2017 executed between Mrs. PurviNihal Shah & Mr. NihalMaikant Shah and Mishal Construction Pvt Ltd.
From the perusal of the Receipt cum Allotment Letter issued by Mishal Construction Pvt Ltd submitted by the assesse, it is observed that the assesse has made payment of Rs.7,00,000/- through two cheques of Rs. 3,50,000/- each by cheque no.621732 and 038568 drawn no CITI Bank dated 08/03/2011 against purchase of flat no.905, 9th floor, Gahadhiraj CHS Ltd, Bldg.no5, Pant Nagar, Ghatkopar (E) Mumbai along with 1 car parking at a consideration of Rs.82,88,000/-
Further on perusal of Sale Agreement dated 23/10/2017 executed between Mrs. PurviNihal Shah & Mr. NihalMaikant Shah and Mishal Construction Pvt Ltd. It is observed that the assesse had entered into agreement of sale for the first time for flat no.905, 9th floor, Gahadhiraj CHS Ltd, Bldg.no5, Pant Nagar, Ghatkopar (E) Mumbai along with one covered car parking at a total sale consideration of Rs.99,00,536/-. The assesse had paid Rs.41,00,000/- before execution of sale agreement and for remaining payment of Rs.58,00,536/-, a payment schedule has been provided to the assesse.
From the above, it is clear that the assesse had purchase the flat jointly with her husband at a sale consideration of Rs.99,00,536/- and entered into sale agreement on 23/10/2018 i.e. during financial year 2017-18.
As per the information provided by the SRO office of Kurla-1, it is observed that the stamp valuation of the property register by you on the date of registration is Rs.1,11,41,000/- and the sale consideration as per agreement is Rs.99,00,536/- only. As per the section 50C of IT act if stamp valuation of the property is more that 110% of sale consideration than the stamp value of the property is taken a value of the property. In the instant case 110% of Rs.99,00,536/-comes to Rs.1,08,90,589/-. In such case the stamp value of the property is more that 110% of the sale consideration as per agreement. Hence, Stamp Valuation of the property of Rs.1,11,41,000/- is taken as sale consideration.
In view of the above, as the assessee had purchased immovable property below the stamp duty value, the provision of section 56(2)(x)(b)(B) of the Income Tax Act, 1961 is attracted and the difference of stamp duty value and agreement value of the property i.e. Rs. 12,40,464/- shall be chargeable to income-tax under the head Income from Other Sources. The assesse was show caused so as to why addition amounting to Rs. 12,40,464/- should not be made to the total income on account of income from other sources and penalty provision u/s 270A of the Income Tax Act, 1961 should not be initiated for the same separately under reporting of income which is in consequence of misreporting thereof.”
5. The Ld. AR further contended that the assessee before the revenue authorities was not able to submit the valuation report and the ready reckoned value. As the assessee now submitted the application for additional evidence under Rule 29 of the Income Tax Appellate Tribunal Rule 1964. Considering the said value of the property even is amount to Rs.52,99,247/- it is substantially lower than the allotment consideration of Rs.82,88,000/-. So, the section 56(2)(x)(b) is not therefore to be attracted before the assessee.
6. The Ld. DR contended that though the assessee had paid the amount in 2011 and the allotment letter was duly issued by the promoter in favor of the assessee. The valuation pertained the financial year 2010-11 is duly differ in the registered sale deed. In the allotment letter the valuation was duly mentioned Rs.82,88,000/- but in the registration the amount was duly Rs.99,00,536/-. The Ld. DR has stated that due to the change of valuation the assessee had entered in new agreement which is effective only from the impugned financial year. The Ld. DR stands in favor of the order of revenue authorities.
7. We have heard the rival submissions and examined the documents available on record. A plain reading of the provisio to Section 56(2)(x)(b)(B) of the Act reveals that:-
“56(2)(x) where any person receives, in any previous year, from any person or persons on or after the 1st day of April, 2017,—
(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;
(b) any immovable property,—
(A) without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property;
59[(B) for a consideration, the stamp duty value of such property as exceeds such consideration, if the amount of such excess is more than the higher of the following amounts, namely:—
(i) the amount of fifty thousand rupees; and
(ii) the amount equal to 60[ten] per cent of the consideration:]
Provided that where 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 :
Provided further that the provisions of the first proviso shall apply only in a case where the amount of consideration referred to therein, or a part thereof, has been paid by way of an account payee cheque or an account payee bank draft or by use of electronic clearing system through a bank account 61[or through such other electronic mode as may be prescribed62], on or before the date of agreement for transfer of such immovable property:
Provided also that where the stamp duty value of immovable property is disputed by the assessee on grounds mentioned in sub-section (2) of section 50C, the Assessing Officer may refer the valuation of such property to a Valuation Officer, and the provisions of section 50C and sub-section (15) of section 155 shall, as far as may be, apply in relation to the stamp duty value of such property for the purpose of this sub-clause as they apply for valuation of capital asset under those sections:”
[Emphasis Supplied]
8. We have carefully considered the rival submissions and perused the material available on record. In the present case, the assessee entered into an agreement for purchase of the property, pursuant to which an allotment letter was duly issued by the promoter. The consideration was paid through proper banking channels. Therefore, for the purpose of section 56(2)(x)(b)(B) of the Act, the stamp-duty valuation prevailing on the date of allotment, i.e., during F.Y. 2010-11, is required to be considered. On examination of the Ready Reckoner value and the valuation report applicable to F.Y. 2010-11, it is observed that the stamp-duty valuation of the property was ₹52,99,247/-, whereas the actual consideration paid by the assessee was Rs.99,00,536/-, which was substantially higher than the Ready Reckoner value. It is an undisputed fact that the assessee purchased the flat for a total consideration of Rs.99,00,536/-. Although the stamp-duty valuation at the time of registration was Rs.1,11,41,000/-, the documentary evidence placed on record clearly establishes that the flat had been booked during F.Y. 2010-11 and that the allotment letter was duly issued during the said financial year. The increase in valuation between the date of allotment and the date of registration was attributable to the escalation in the cost of the property, which was accepted and paid by the assessee to the developer.
We further note that the assessee was unable to furnish the valuation report before the lower authorities. However, the same has now been produced before us by way of an application for admission of Additional Evidence. Considering the relevance and materiality of the said evidence for proper adjudication of the issue, we admit the Additional Evidence and direct that the same be placed before the Ld. AO for examination and verification.
In terms of section 56(2)(x)(b)(B) of the Act, where part or whole of the consideration has been paid through banking channels on or before the date of the agreement/allotment, the stamp-duty value as on the date of such agreement/allotment is required to be adopted. Therefore, the findings recorded by the Ld. AO as well as the Ld. CIT(A), based upon the stamp-duty valuation prevailing on the date of registration, are not in consonance with the statutory provisions of section 56(2)(x)(b)(B) of the Act.
Considering this we set aside the impugned appellate order and restore the matter to the file of the Ld. AO with a direction to consider and examine the valuation report and the ready reckoner value furnished by the assessee. The Ld. AO shall verify the authenticity and correctness of the valuation report and the applicable ready reckoner value as on the date of allotment and thereafter pass a reasoned and speaking order in accordance with law.
Needless to say, the assessee shall be afforded a reasonable and adequate opportunity of being heard and shall be at liberty to furnish such further documentary evidence as may be considered necessary in support of its claim. Accordingly, the grounds raised by the assessee are allowed for statistical purposes.
9. In the result, the appeal of the assessee bearing ITA No.470/Mum/2026 is allowed for statistical purpose.
Order pronounced in the open court on 22nd day of June 2026.
