Case Law Details
Partha Pratim Chakrabarty Vs ITO (ITAT Kolkata)
ITAT Kolkata held that when date of agreement and date of registration are not same, then, stamp duty value on the date of agreement should be considered. Accordingly, since difference is less than 10%, hence addition u/s. 56(2)(vii) unjustified.
Facts- The case of the assessee was selected for scrutiny assessment and a notice u/s. 143(2) was issued. AO found that the assessee has purchased a flat whose sale deed was got registered for a sum of Rs.81,71,000/-, whereas Stamp Duty Valuation Authority have determined the value of the property for the purpose of charging the Stamp Duty at Rs. 1,16,12,200/-. AO made the addition, though he made a reference to the DVO for determining fair market value as contemplated in the 3rd proviso to section 56(2)(vii) of the Income Tax Act. AO further observed that as and when he will get the DVO’s report, he will make the necessary changes u/s. 154 of the Income Tax Act.
CIT(A) dismissed the appeal. Being aggrieved, the present appeal is filed.
Conclusion- Held that the 1st proviso appended to section 56(2)(vii) would contemplate that where date of agreement fixing the amount of consideration for the transfer of immovable property and the date of registration are not the same, the Stamp Duty value on the date of agreement may be taken for the purpose of this sub-clause. Both the revenue authorities have miserably failed to appreciate that Stamp Duty Valuation as on 08.10.2014 are to be considered for working out any deemed gift in the hands of the assessee and not the date on which sale deed was registered. The assessee has further filed copy of this Valuation Report obtained by him under RTI and the valuer has only determined the fair market value of the property at Rs.89,48,290/-. This aspect ought to have been entertained by the ld. CIT(Appeals). He should have made sure whether DVO’s report has been received or not. He should have not merely upheld the assessment order. The ld. 1st Appellate Authority has miserably failed to exercise its appellate jurisdiction in the present case. We find that the value declared by the assessee was to be determined on the date of agreement when first instalment was paid, i.e. 08.10.2014 and if that date be considered, then certainly Stamp Duty must be on the lower side because fair market value determined by the DVO has only variation of less than 10%, which otherwise not required to be adopted.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
The present appeal is directed at the instance of assessee against the order of ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 18th June, 2024 passed for Assessment Year 2020-21.
2. Though the assessee has taken five grounds of appeal, but his solitary grievance is that ld. CIT(Appeals) has erred in confirming the addition made by the ld. Assessing Officer under section 56(2)(vii) of the Income Tax Act.
3. Brief facts of the case are that the assessee has filed his return of income electronically on 13.11.2020 declaring total income of Rs.34,44,260/-. The case of the assessee was selected for scrutiny assessment and a notice under section 143(2) was issued and served upon the assessee. The ld. Assessing Officer found that the assessee has purchased a flat whose sale deed was got registered for a sum of Rs.81,71,000/-, whereas Stamp Duty Valuation Authority have determined the value of the property for the purpose of charging the Stamp Duty at Rs. 1,16,12,200/-. The Assessing Officer confronted the assessee as to why the difference between the purchase price declared by him, vis-à-vis the price determined by the Stamp Duty Valuation Authority for charging of the stamp should not be considered as a deemed gift in the hands of the assessee under section 56(2)(vii) and (x) of the Income Tax Act. It emerges out that the assessee has submitted that this flat was purchased by his mother Sabita Chakrabarty, who has paid Rs.71,00,000/- and deducted TDS at Rs.71,000/-. The balance amount of Rs.9,89,290/- was paid by him through account payee cheque and TDS of Rs. 10,710/- was deducted by him. He further contended that originally this flat was booked on 08.10.2014, whereby a sum of Rs. 10,00,000/- was paid through account payee cheque. The ld. Assessing Office did not bother to examine all these facts and straightway made the addition, though he made a reference to the DVO for determining fair market value as contemplated in the 3rd proviso to section 56(2)(vii) of the Income Tax Act. The ld. Assessing Officer further observed that as and when he will get the DVO’s report, he will make the necessary changes under section 154 of the Income Tax Act.
4. Dissatisfied with the addition, assessee carried the matter in appeal before the ld. CIT(Appeals). He has reiterated his The ld. CIT(Appeals) has reproduced the details of payment right from 08.10.2014 upto 07.08.2019. On page 4 of the impugned order, all these payments were made through account payee cheques. The ld. CIT(Appeals) has recorded the submissions of the assessee in right perspective, but all of a sudden did not entertain any of the submissions and rejected the ground.
5. With the assistance of ld. Representatives, we have gone through the record carefully. There is no dispute with regard to the proposition that if purchase price paid by an assessee is less than the value determined by the Stamp Duty Valuation Authorities for the purpose of charging Stamp Duty, then, such value will be deemed as an actual consideration paid by the assessee. The difference between two will be added as a deemed gift in the hands of the purchaser, i.e. the assessee in the present case. However, the 1st proviso appended to section 56(2)(vii) would contemplate that where date of agreement fixing the amount of consideration for the transfer of immovable property and the date of registration are not the same, the Stamp Duty value on the date of agreement may be taken for the purpose of this sub-clause. Both the revenue authorities have miserably failed to appreciate that Stamp Duty Valuation as on 08.10.2014 are to be considered for working out any deemed gift in the hands of the assessee and not the date on which sale deed was registered. The assessee has further filed copy of this Valuation Report obtained by him under RTI and the valuer has only determined the fair market value of the property at Rs.89,48,290/-. This aspect ought to have been entertained by the ld. CIT(Appeals). He should have made sure whether DVO’s report has been received or not. He should have not merely upheld the assessment order. The ld. 1st Appellate Authority has miserably failed to exercise its appellate jurisdiction in the present case. We find that the value declared by the assessee was to be determined on the date of agreement when first instalment was paid, i.e. 08.10.2014 and if that date be considered, then certainly Stamp Duty must be on the lower side because fair market value determined by the DVO has only variation of less than 10%, which otherwise not required to be adopted.
6. In view of the above discussion, we are of the view that the additions made by the ld. Assessing Officer are not sustainable. Accordingly, we allow the appeal and delete the additions.
7. In the result, the appeal of the assessee is allowed.
Order pronounced in the open Court on 09/10/2024.
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