Rajendra Pal Singh Sandhu Vs ITO (ITAT Delhi)
Section 56(2)(x), introduced with effect from 01.04.2017, applies only to property received on or after that date and therefore cannot be invoked for Assessment Year 2017-18.
Issue: Whether the difference between stamp duty value and actual purchase consideration of an immovable property could be taxed under section 56(2)(x) in Assessment Year 2017-18.
Facts: The assessee and his wife jointly purchased a DDA LIG flat in Rohini, Delhi, on 27.07.2016 for ₹21,65,000, while the stamp duty value was ₹36,89,280. The Assessing Officer reopened the assessment and added ₹7,62,500, being the assessee’s 50% share of the difference of ₹15,25,000, under section 56(2)(x).
Tribunal’s Findings: The Tribunal held that section 56(2)(x), inserted by the Finance Act, 2017, expressly applies where property is received “on or after 1 April 2017.” Since the property was purchased and registered on 27.07.2016, the provision had no application to the year under appeal, i.e., AY 2017-18. The Tribunal emphasized that section 56(2)(x) creates a deeming fiction and such provisions must be strictly construed; their scope cannot be enlarged beyond the language used by Parliament.
The Tribunal also noted that the lower authorities invoked only section 56(2)(x) and not sections 69 or 69C, whose conditions are materially different. Therefore, the addition could not be sustained by resorting to any alternative provision.
