Addition u/s. 56(2)(vii)(b) due to difference in circle rate & actual amount paid for land sustained

Anwar Hussain Khan Vs ACIT (ITAT Delhi)

ITAT Delhi held that addition u/s. 56(2)(vii)(b) of the Income Tax Act on account of difference between circle rate and actual amount paid for purchase of land as the land in question was a capital asset.

Facts- Vide the present appeal, the assessee has contested that CIT(A) has erred in law and on facts in confirming the action of AO in making addition of Rs.74,55,500/- u/s 56(2)(vii)(b) on the ground of difference between circle rate and actual amount paid for purchase of land, more so when the land was purchased for the purpose of business and the same was shown as stock in trade.

Conclusion- In the present case, expect signing an MOU, there is no action or evidence on record by the assessee and his co-owner brother after laps of three years till his co-owner brother fall ill. There is no other documentary evidence to show that the Shri Safdar Hussain Khan is continuously sick till date. There is no action or efforts by the assessee and his brother before illness of his co-owner brother to show that the assessee and his brother formed any partnership firm or LLP entity or Company for said business venture and showing any action to apply for any approvals or permissions from the Government Authorities regarding development of land as a Multistory Commercial/ Residential Project.

Held that the AO was right in making addition by invoking provision under section 56(2)(vii) of the Act as a land in question was a capital asset and the same was not kept as stock-in-trade by the assessee and his co-owner brother.

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