Sweta Somani Vs ITO (ITAT Kolkata)
The Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) restored a ₹27,42,221 property valuation addition to the Assessing Officer, directing determination of the correct fair market value as on the agreement date. The assessee must establish that part consideration was paid by cheque at that time and received by the vendor.
In Sweta Somani vs. ITO, Ward-44(2), Kolkata, ITA No. 1656/KOL/2026, concerning Assessment Year 2015-16, the Tribunal held that the valuation dispute required examination through the Departmental Valuation Officer (DVO).
Accountant Member Laxmi Prasad Sahu pronounced the order on 14 October 2026, partly allowing the appeal for statistical purposes.
Property Purchase Examined During Scrutiny
The assessee filed her return on 6 November 2015, declaring total income of ₹7,01,340.
The case was selected for scrutiny through CASS, and statutory notices were issued. During assessment, the assessee furnished an explanation concerning the purchase of a property.
She relied on an agreement dated 22 July 2011, executed on stamp paper of ₹20, and maintained that payments had been made through cheques at the agreement stage.
Her contention was that the relevant valuation should be taken with reference to the agreement date rather than the later registration date.
The order records execution of the sale deed on 14 November 2017.
Assessing Officer Adopts Higher Stamp Value
The Assessing Officer questioned reliance on the agreement because it was unregistered, raising concerns regarding its admissibility as evidence.
The assessment narration records a stamp duty valuation of ₹1,14,53,700, consideration of ₹79,09,700, and stamp duty and registration-related amounts of ₹8,01,779.
The Assessing Officer treated ₹27,42,221 as taxable income under Section 56(2)(vii)(b).
The assessee challenged both adoption of the later valuation and the absence of a reference to the DVO.
The assessment also involved a disputed house-property interest deduction. The CIT(A) dismissed the appeal, leading the assessee to approach the Tribunal.
Earlier Cheque Payment Supports Agreement-Date Claim
Before the Tribunal, the assessee’s representative reiterated that the agreement preceded registration and that cheque payments had been made when the agreement was entered into.
He argued that the Assessing Officer had adopted the stamp duty value applicable at registration without properly considering this payment history.
The representative invoked Section 50C read with the valuation-reference proviso to Section 56(2)(vii)(b).
He requested that the matter be restored for determination of the correct value as on the agreement date, supported by the banking transactions.
The dispute therefore involved both the appropriate valuation date and the amount properly attributable to the property on that date.
Revenue Questions Supporting Evidence
The Departmental Representative supported the lower authorities’ orders.
He submitted that the assessee had not furnished the relevant documents satisfactorily establishing the claim for agreement-date valuation.
The Revenue also disputed the evidence supporting the separate ₹2 lakh housing-loan interest deduction under Section 24(b).
The assessee’s representative maintained that the interest claim was genuine and supported by payment evidence.
These competing submissions left factual matters requiring verification. The Tribunal’s substantive reasoning focused on the property valuation issue and the proof necessary to support the earlier payment claim.
DVO Reference Required to Resolve Valuation Dispute
The Tribunal observed that the addition arose from the difference between the assessee’s stated property value and the stamp duty value adopted by the registering authority.
It noted that the Assessing Officer had made the addition without referring the matter to the DVO.
Where such a valuation dispute existed, the Tribunal considered that an independent determination through the statutory valuation mechanism was required.
It referred to Sunil Kumar Agarwal vs. CIT, Siliguri, [2014] 47 taxmann.com 158, a decision of the jurisdictional High Court, in support of the valuation-reference approach.
The Bench consequently remitted the issue for determination of the correct fair market value.
Assessee Must Prove Vendor Received Cheque Payment
The Tribunal directed examination of the fair market value as on the agreement date.
At the same time, it expressly required the assessee to produce evidence establishing that payment had been made by cheque on that date and that the vendor had realised the payment.
The direction therefore does not accept the earlier-payment explanation merely because it was asserted.
The banking evidence must substantiate the factual foundation for the assessee’s valuation claim. The Assessing Officer must obtain the DVO’s determination and decide the issue according to law after providing a reasonable hearing.
Relief Limited to Fresh Examination
The Tribunal directed the assessee to support her case with cogent documents and avoid unnecessary adjournments so that proceedings could be completed promptly.
The appeal was partly allowed for statistical purposes.
The ₹27.42 lakh addition was not finally deleted on merits, and no specific property value was accepted as conclusive. The operative reasoning also did not separately allow the ₹2 lakh interest claim.
The principal relief is fresh valuation and verification, with agreement-date treatment dependent on substantiation of the cheque payment and its receipt by the vendor.
Cases Discussed
- Sunil Kumar Agarwal Vs CIT, Siliguri — [2014] 47 taxmann.com 158 (Calcutta High Court): Relied upon for referring disputed stamp-duty valuation to the DVO before determining taxable property value.
FULL TEXT OF THE JUDGMENT/ORDER OF ITAT KOLKATA
This is an Appeal filed by the Assessee against the order of the Commissioner of Income Tax, Appeal Addl/JCIT (A)-1, Gurugram [“the Ld. CIT(A)”, for short], dated 18.03.2026 with DIN & Order No. ITBA/APL/S/250/2025-26/1087530491(1), passed u/s 250 of the Income Tax Act, 1961 (“the Act”, for short) for the Assessment Year 2015-16, arising out of the Assessment order dated 19.12.2017 on the following Grounds of Appeal:-
1. For that they Ld. CIT(A) erred in confirming the action of the Ld. Assessing Officer in adding back Rs.27,42,221/- u/s 56(2)(b)(vii) when he should have considered the fair market value of the property purchased on the date of agreement since part consideration was paid through banking channels.
2. For that they Ld. CIT(A) erred in confirming the action of the Ld. Assessing Officer in adding back Rs.27,42,221/- u/s 56(2)(b)(vii) when he should have referred the valuation of fair market value of the property purchased on the date of agreement to the DVO.
3. For that the Ld. CIT(A) erred in confirming the action of the Ld. Assessing Officer in adding back Rs.2,00,000/- claimed as interest paid on loan taken for house property without mentioning any reason whatsoever when evidence of payment was duly filed.
2. Briefly stated, the facts of the case are that the Assessee filed her return of income on 06.11.2015, declaring a total income of Rs.7,01,340/-. The case was selected for scrutiny through CASS, and accordingly, notice u/s 143(2) of the Act and other statutory notices were issued to the Assessee. The Assessee furnished a reply, and it was seen from the reply that the Assessee had purchased a property and submitted that the date of agreement was 22.07.2011, made on stamp paper of Rs.20/-, wherein it was stated that, for determination of the income u/s 56(2)(vii) of the Act, the value as on the agreement date should be considered, whereas, on the said date, the payment was made through cheques, and the property was registered on 14.11.2017. The Assessing Officer noted that the agreement was unregistered and could be accepted only if the agreement was admissible as evidence under the Evidence Act, and the proviso thereto, in the instance of an unstamped and unregistered instrument, empowers any judicial or quasi-judicial forum to consider a question of law. From the deed, it was noted that the purchase consideration as per the Stamp Duty Authority was Rs.1,14,53,700/-, and stamp duty was paid at less registration charges of Rs.8,01,779/-, and less consideration was paid at Rs.79,09,700/-. Accordingly, the difference of Rs.27,42,221/- was treated as income u/s 56(2)(b)(vii) of the Act. During the course of assessment proceedings, it was also found that the Assessee had claimed deduction u/s 68 of the Act and claimed the loss of house property, which was disallowed. Accordingly, the income of the Assessee was assessed at Rs.40,94,736/-. Aggrieved by the above order, the Assessee filed an appeal before the Ld. CIT(A). However, the Ld. CIT(A) dismissed the appeal of the Assessee. Being aggrieved by the order of the Ld. CIT(A), the Assessee is in appeal before this Tribunal. 3. The Learned Counsel reiterated the submissions made before the lower authorities and submitted that the Assessing Officer, without referring the matter to the DVO, had considered the stamp duty value as on the date of registration of the property, whereas the property was purchased as per the agreement dated 22.07.2011, and the sale deed was executed on 14.11.2017, and payment was made through cheques at the time of the agreement, which was also drawn. Accordingly, the fair market value u/s 56(2)(vii)(b) of the Act should be considered as on the date of the agreement, and the Assessing Officer had made the addition without referring the matter to the DVO as per Section 50C of the Act r.w.s. 56(2)(vii)(b), third proviso, of the Act. He further submitted that the Assessing Officer had made an addition for the housing bank loan interest of Rs.2,00,000/- as claimed by the Assessee, which was a genuine claim of the Assessee u/s 24(b) of the Act. However, the Assessing Officer had made the addition as unexplained, which was completely wrong, and requested that the matter may be referred to the Assessing Officer for determination of the F.M.V. as on the date of the agreement of the aforesaid property.
4. On the other hand, the Ld. DR, relying on the orders of the lower authorities, submitted that the Assessee could not furnish the relevant documents, as argued by him and to the satisfaction of the Assessing Officer for taking into consideration the F.M.V. as on 22.07.2021. The Ld. DR further submitted that no evidence was furnished towards the claim of the interest deduction u/s 24(b) of the Act.
5. Considering the rival submissions and perusing the material available on record and the orders of the authorities below, it is noticed that the dispute is regarding the determination of the fair market value(FMV) of the property. The Assessing Officer had made an addition u/s 56(2)(vii)(b) of the Act for the difference between the stamp duty value as adopted by the SRO and the value offered by the Assessee. I noted that the contention of the Assessee is that the agreement for the purchase of the property was made on 22.07.2011, the sale deed was executed on 14.11.2017, and it was further submitted that, on the date of the agreement, the payment was made through cheque which was drawn from the bank on that time. Accordingly, the Assessee’s contention was not accepted for the determination for considering the F.M.V. as on the date of the agreement, and the Assessing Officer had also made the addition without referring the matter to the DVO, whereas, if there is a dispute regarding the value determined by the Assessee and the stamp duty value adopted by the SRO, the matter should have been referred to the DVO for the correct determination of the F.M.V. as per Section 50C of the Act. Considering the entire submissions of the Assessee and the observations of the Assessing Officer, I remit this issue back to the file of the Assessing Officer for the determination of the correct F.M.V. as on the date of the agreement, and I also direct the Assessee to produce the relevant evidence to prove that the Assessee had made payment on the date of the agreement by way of cheque, which was withdrawn by the vendor of the property. I am referring the Judgment of the Hon’ble Jurisdictional High Court of Kolkata in the case of Sunil Kumar Agarwal Vs. CIT, Siliguri, reported in [2014] 47 taxmann.com 158 (Kolkata). The matter has been referred to the DVO by the Assessing Officer for the determination of the correct F.M.V. and a decision as per law, after giving a reasonable opportunity of being heard to the Assessee. The Assessee is also directed to substantiate her case with cogent documents and not seek unnecessary adjournments for the early disposal of the case.
6. In the result, Appeal of the Assessee is partly allowed for statistical purposes.
Order pronounced on 14.10.2026.
