Manjulaben Himmatlal Jain Vs ITO (ITAT Mumbai)
Summary: ITAT Mumbai considered whether an addition of INR 54,64,000 under section 56(2)(vii)(b) could be sustained where the assessee and her husband had been allotted a flat for INR 25,62,500 under a letter of allotment dated 29/05/2007, while the registered agreement was executed on 25/11/2013 when the stamp authority valued the property at INR 80,26,500. The AO treated the registration date as relevant and taxed the difference between the stamp duty value and purchase consideration. The CIT(A) upheld the addition, observing that supporting evidence had not been furnished in the appellate proceedings.
Before the Tribunal, the assessee relied on the allotment letter, bank statement, builder’s ledger/confirmation and judicial precedents to contend that the allotment letter fixed the consideration and should be treated as the agreement for applying the first proviso to section 56(2)(vii)(b). The Tribunal, following Parth Dashrath Gandhi Vs Addl./Deputy/Asst. Commissioner of Income Tax and the line of decisions considered therein, held that an allotment letter can constitute an agreement to sell. It noted that the letter dated 29/05/2007 fixed the consideration of INR 25,62,500 for Flat A-504 and prescribed a payment schedule, and that the agreed terms were acted upon.
However, the second proviso required the consideration or part thereof to have been paid by a mode other than cash on or before the date of the agreement. The bank statement produced by the assessee covered only the period beginning 11/03/2008 and therefore did not establish any qualifying payment on or before 29/05/2007. In the interest of justice, the Tribunal restored the issue to the jurisdictional AO and directed the assessee to furnish evidence of payment of the agreed consideration or part thereof by a non-cash mode on or before the allotment date. The impugned order on the issue was set aside and the assessee’s grounds were allowed for statistical purposes. The appeal was accordingly allowed for statistical purposes.
