Vinod Shridhar Lokhande Vs ITO (ITAT Nagpur)
Section 56(2)(x) Property Valuation Dispute: ITAT Remands ₹6 Lakh Addition for Fresh Examination
Summary: The Nagpur Bench of the Income Tax Appellate Tribunal (ITAT) restored a ₹6 lakh addition under Section 56(2)(x)(b) to the Assessing Officer for fresh adjudication after the assessee sought consideration of the property’s value on the agreement date.
The assessee maintained that he had agreed to purchase the property in 2015, paid an advance by cheque and subsequently obtained a registered valuer’s report supporting the value at that time. That report had not been furnished during assessment proceedings.
In Vinod Shridhar Lokhande vs. ITO, Ward-2(3), Nagpur, ITA No. 362/NAG/2026, concerning Assessment Year 2018-19, Judicial Member Pavan Kumar Gadale granted another opportunity to substantiate the claim. The order was pronounced on 14 October 2026.
Tribunal Condones 161-Day Appeal Delay
Before examining the property addition, the Tribunal considered a 161-day delay in filing the appeal.
The assessee submitted an affidavit explaining the circumstances and requested condonation. After considering the facts and information in the affidavit, the Tribunal found that reasonable cause had been explained.
The Departmental Representative raised no specific objection to condonation. Accordingly, the Tribunal condoned the delay and admitted the appeal.
The substantive dispute concerned the CIT(A)/NFAC’s confirmation of an addition arising from the difference between the purchase consideration and the higher property valuation adopted during assessment.
Property Bought for ₹5 Lakh Against ₹11 Lakh Value
The Department received information that the assessee had purchased immovable property measuring 1,200 square feet during Financial Year 2017-18 for ₹5 lakh, against a stated market value of ₹11 lakh.
The assessee had not filed a return for AY 2018-19. The Assessing Officer proceeded on the basis that income had escaped assessment and sought an explanation regarding the applicability of Section 56(2)(x)(b).
The difference between the two figures was ₹6 lakh, which ultimately became the disputed addition.
The assessee opposed adoption of the later valuation, relying on the earlier agreement and payment history.
Earlier Agreement and Cheque Advance Relied Upon
The assessee explained that the property purchase agreement had been entered into on 3 August 2015.
An advance of ₹50,000 was paid by cheque drawn on Bank of Baroda, and the purchase consideration was stated to have been paid through the bank account.
His representative argued that the relevant value should be determined with reference to the agreement date rather than the sale deed registration date.
Before the Tribunal, it was further submitted that the SRO or guideline value during Financial Year 2015-16 was ₹5 lakh, matching the agreed consideration.
These submissions challenged the basis for comparing the ₹5 lakh purchase price with the ₹11 lakh valuation used by the Assessing Officer.
Assessing Officer and CIT(A) Reject Explanation
The Assessing Officer was not satisfied with the explanation and observed that the property was located within municipal limits.
He added the ₹6 lakh differential amount and assessed total income at ₹6 lakh through an order dated 13 February 2023 under Section 147 read with Section 144.
The assessee appealed before the CIT(A). The appellate authority considered the grounds, statement of facts, assessment findings and submissions but confirmed the Assessing Officer’s action.
The assessee then approached the Tribunal, contending that the earlier agreement and relevant valuation had not been properly appreciated.
Registered Valuer’s Report Supports Further Hearing
Before the Tribunal, the assessee’s representative submitted that a registered valuer’s report had been obtained to support the property’s fair market value on the agreement date.
He acknowledged that the report could not be filed during assessment proceedings and sought another opportunity to produce the supporting material.
The representative also argued that the Assessing Officer had failed to refer the valuation dispute to the Departmental Valuation Officer (DVO).
Maintaining that the assessee had a good case on merits, he requested fresh consideration before the lower authorities. The Departmental Representative supported the CIT(A)’s order.
Tribunal Restores Matter to Jurisdictional Assessing Officer
After hearing both parties and examining the record, the Tribunal considered the valuation report and the assessee’s request to substantiate the agreement-date value.
Taking account of the facts, circumstances and principles of natural justice, it decided that another opportunity should be provided to place evidence and information before the tax authority.
The Tribunal accordingly set aside the CIT(A)’s order and remitted the disputed issue to the jurisdictional Assessing Officer for fresh adjudication.
The Assessing Officer must provide an adequate opportunity of hearing. The assessee must cooperate by submitting the necessary information and supporting documents.
Relief Remains Subject to Fresh Verification
The appeal was allowed for statistical purposes. The Tribunal did not finally accept ₹5 lakh as the applicable valuation or delete the addition on merits.
Its operative direction granted fresh examination; it did not expressly mandate a DVO reference or conclusively decide the agreement-date argument.
The renewed proceedings will therefore require consideration of the agreement, advance payment, valuation evidence and applicable law before the taxability of the disputed difference is determined.
FULL TEXT OF THE ITAT JUDGMENT/ORDER
The assessee has filed the appeal against the order of CIT(A)/NFAC, Delhi passed usec 147 r.w.s144 of the Act sustaining the addition u/sec. 56(2)(x)(b) of the Act made by the Assessing Officer
2. At the time of hearing, the Ld.AR submitted that there is a delay of 161 days in filing the appeal before Hon’ble Tribunal and the assessee has filed the affidavit for condonation of delay. On consideration of facts and information mentioned in the affidavit, there is a reasonable cause explained and the Ld. DR. has no specific objections. Accordingly, the delay is condoned and the appeal is admitted
3. The brief facts of the case are that the Income Tax Department has received information that assessee has purchased immovable property admeasuring 1200 sq.ft. in F.Y. 2017-18 for a consideration of Rs. 5,00,000/- against the market value of Rs. 11,00,000/- and the assessee has not filed the return of income for A.Y.2018-19, the A.O has reason to believe that the income has escaped assessment and issued notice u/sec. 142(1) of the Act requesting the assessee to explain as to why the provisions of section 56(2)(x)(b) of the Act should not be invoked. Whereas the assessee has submitted that the said property was purchased for Rs. 5,00,000/- and the consideration is paid out of the bank account and the agreement was entered on 3.8.2015 with the payment of advance of Rs.50,000/- through cheque drawn on Bank of Baroda and the Ld.AR also submitted that the provisions of section 56(2)(x)(b) of the Act are not applicable as the value as on date of execution of the agreement has to be considered and not at the time of sale deed registration. Whereas the A.O observed that the property is located within the municipal limits and the A.O was not satisfied with the explanations and invoked the provisions of section 144 of the Act and made the addition of differential amount of Rs. 6,00,000/- and assessed the total income of Rs.6,00,000/- and passed the order u/sec. 147 r.w.s. 144 of the Act dated 13.02.2023.
4. Aggrieved by the order, assessee has filed an appeal before the Ld.CIT(A). Whereas Ld.CIT(A) has considered the grounds of appeal, statements of facts and finding of the Ld.AO and the submissions of the assessee, but has confirmed the action of the AO and dismissed the assesse appeal. Aggrieved by the order of CIT(A), the assessee has filed the appeal before the Honble Tribunal.
5. At the time of hearing, The Ld.AR submitted that CIT(A) has erred in sustaining the addition u/sec. 56(2)(x)(b) of the Act overlooking the facts that assessee has entered into agreement in the F.Y. 2015-16 and the SRO/ guideline value was Rs. 5,00,000/- and the same amount should be considered for computing the tax. Further the CIT(A) erred in relying on the findings of the assessing officer ignoring the explanations of the assessee. The Ld.AR submitted that assessee has got the property valued by the registered valuer and obtained the valuation report which support the fair market value on the date of agreement and the same could not be filed in the assessment proceedings and the A.O has erred in not refereeing the disputed issue to the DVO. The Ld.AR emphasized that the assessee has a good case on merits and prayed for granting one more opportunity to substantiate the case with material evidences before the lower authorities. Per Contra, the Ld.DR relied on the order of the CIT(A
6. Heard the rival submissions and perused the material on record. The disputed issue envisaged by the Ld.AR that the Ld.CIT(A) has erred in sustaining the addition u/sec. 56(2)(x)(b) of the Act in respect of purchase of the property. The Ld.AR emphasized that the assessee has purchased the property and has received valuation report which support the fair market value on the date of agreement and the same could not be filed in the assessment proceedings and also the A.O has not referred the disputed issue to the DVO and the assessee has good case on merits. Therefore, considering the facts, circumstances and principles of natural justice, shall provide with one more opportunity of hearing to the assessee to substantiate the case with evidences and information. Accordingly, set aside the order of the CIT(A) and remit the disputed issue to the file of the jurisdictional assessing officer to adjudicate afresh and the assessee should be provided adequate opportunity of hearing and shall cooperate in submitting the information. And the grounds of appeal of the assessee are allowed for statistical purposes.
7. In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 14th Oct., 2026
