ORDER
Bijyananda Pruseth, Accountant Member. – This appeal filed by the assessee emanates from the order passed under section 250 of the Income-tax Act, 1961 (in short, ‘Act’) by the Income Tax Ward 3(3)(1), Mumbai [in short, ‘CIT(A)’], dated 29.10.2025 for the assessment year (AY) 2020-21.
2. The grounds of appeal raised by the assessee are as under:
“1. The learned Assessing Officer erred in facts and in law in making addition of Rs. 45,51,307/- u/s 56(2)(x)(b)(B) of the Income Tax Act, 1961 to the returned income of the Appellant being the difference between purchase consideration and the valuation as per the stamp duty authorities, on the date of registration, without appreciating that the flat had been allotted on 29th October 2010 on which date the stamp duty value was 33,27,000.
2. The learned Assessing Officer erred in facts and in law in passing the impugned order, without taking into consideration the documents submitted during the entire proceedings.
3. The learned Assessing Officer completely ignored the fact that the stamp duty valuation is on the basis of a ready reckoner rate which is the standard rate applicable to the said area and that in the same area the valuation of flats may vary significantly, on account of a number of circumstances namely the age of the building, the vicinity the economic status of residents, and various other factors.
4. Without prejudice to the above and strictly in alternative, N considering the proviso to section 56(2)(x)(b)(B), if at all the stamp duty valuation is to be considered, it must be considered as that of FY 2010-11 and not of FY 2019-20 since the date of agreement fixing the amount of consideration for the transfer of immovable property and the date of registration are not the same.
5. The learned Assessing Officer failed to consider that the provisions of the first proviso to section 56(2)(x)(b)(B), shall apply since the amount of consideration or a part thereof, has been paid by way of mode other than cash on or before the date of agreement for transfer of such immovable property.
6. Strictly in the alternative and without prejudice to the above, if at all an addition, is to be sustained under section 56(2)(x)(B), then the addition should be in the ratio of his share in beneficial ownership between him and the other coowner.
7. The appellant previously to add alter or amend any of the grounds of appeal prior to or at the time of hearing.”
3. Facts of the case, in brief, are that the assessee is a non-resident. Based on the information received from the Insight Portal, proceedings u/s 148A of the Act were initiated. Order u/s 148A(d) of the Act was passed and notice u/s 148 of the Act was issued on 08.03.2024. In response thereto, assessee filed return on 05.06.2024 declaring total income of Rs.4,850/-. In response to the notices u/s 143(2) and 142(1) of the Act, the appellant responded from time to time and filed details. During the year under consideration, the appellant registered an agreement for purchase of an immoveable property for a consideration of Rs.1,01,93,807/-. The AO observed that the assessee could provide the payment details only to the extent of Rs.44,87,248/-. The AO considered the total value of the property at Rs.1,08,05,807/-, which is the stamp duty valuation along with the stamp duty of Rs.6,12,000/- as against claim of appellant of Rs.56,42,500/-. Accordingly, the AO proposed an addition u/s 69 of the Act as unexplained investment to the extent of Rs.63,18,559/- [(Rs.1,08,05,807/ (-) Rs.44,87,248/-)] vide draft order u/s 144C(1) of the Act. Aggrieved by the draft order, the appellant filed objections before the DRP-2, Mumbai. Following the directions of the DRP u/s 144C(5) of the Act, the AO vide order u/s 147 of the Act dated 29.10.2025 made an addition of Rs.45,51,307/- u/s 56(2)(x)(b)(B) of the Act being difference between the full value of consideration as per stamp duty valuation of Rs. 1,01,93,807/- and the actual purchase cost of Rs. 56,42,500/-.
4. Aggrieved by the order of the AO, the appellant has filed the present appeal before the Tribunal. The Ld. AR submitted that the immoveable property purchased during the year under consideration is jointly owned by the appellant and his father, Mr. Ramnath Parkar. He submitted that although the property was registered in May 2019, the original agreement for reservation of the property was executed vide letter of allotment dated 29.10.2010 between the Developer and the joint purchasers i.e. the appellant and his father, Mr. Ramnath Parkar. Copy of the Letter of Allotment dated 29.10.2010 is enclosed at page Nos. 5 to 7 of Annexure 1 of the paper book. He submitted that the total amount paid for the said property (including share money, legal charges, entrance fees etc.) is Rs.66,51,165/-, out of which the appellant contributed Rs.44,87,248/- and the balance Rs.21,63,917/- was paid by his father, Mr. Ramnath Parkar, who is the co-owner of the said property. The details of payments made to the Developer vide his letter dated 12.04.2025 along with the summary of payments made is enclosed as Annexure 3 at page no. 30 to 33 of the paper book. The Ld. AR referred to the proviso to section 56(2)(x) of the Act reads as follows:
“56…………………………(2) In particular, and without prejudice to the generality of the provisions of sub-section (1), the following incomes, shall be chargeable to income-tax under the head “Income from other sources”, namely: ………………..
(x) where any person receives, in any previous year, from any person or persons on or after the 1st day of April, 2017-
| (a) |
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any sum of money, without consideration, the aggregate value of which exceeds fifty thousand rupees, the whole of the aggregate value of such sum; |
| (b) |
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any immovable property, – |
| (A) |
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without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property; |
| (B) |
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for a consideration, the stamp duty value of such property as exceeds such consideration, if the amount of such excess is more than the higher of the following amounts, namely: – |
| (i) |
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the amount of fifty thousand rupees, and |
| (ii) |
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the amount equal to 13(five) per cent of the consideration: |
Provided that where the 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 purposes of this sub-clause
Provided further that the provisions of the first proviso shall apply only in a case where the amount of consideration referred to therein, or a part thereof, has been paid by way of an account payee cheque or an account payee bank draft or by use of electronic clearing system through a bank account 14[or through such other electronic mode as may be prescribed), on or before the date of agreement for transfer of such immovable property: ………………….”
4.1 The Ld. AR submitted that as per the first proviso to section 56(2)(x) of the Act, in cases where the date of registration and the date of agreement fixing the consideration are not the same, the stamp duty value as on the date of the agreement is to be considered. In the appellant’s case, the flat had been allotted on 29.10.2010, on which date the stamp duty value was Rs.33,27,000/-. He also submitted that the stamp duty valuation is on the basis of a ready reckoner rate which is the standard rate applicable to the said area and that in the same area the valuation of flats may vary significantly, on account of a number of circumstances namely the age of the building, the vicinity, the economic status of residents, and various other factors. He relied on the following decisions: (i) Pr. CIT v. Vembu Vaidyanathan [2019] 101 taxmann.com 436/261 Taxman 376/413 ITR 248 (Bombay); (ii) CIT v. K. Ramakrishnan [2014] 48 taxmann.com 55/225 Taxman 123/363 ITR 59 (Delhi); (iii) Mrs. Urmila Jagdish Mehta v. ACIT [2026] 182 taxmann.com 12/216 ITD 413 (Mumbai – Trib.) and (iv) Asstt. CIT v. Sanjay Kumath [2014] 42 taxmann.com 38/63 SOT 90 (Indore – Trib.).
4.2 In the alternative and without prejudice to the above, he submitted that if at all an addition is to be sustained under section 56(2)(x)(B) of the Act, then the addition should be in the ratio of his share in beneficial ownership between him and the other co-owner.
5. On the other hand, the Ld. CIT DR supported the order of lower authorities. He submitted that allotment letter cannot be considered as agreement for the purpose of Section 56(2)(x)(b)(B) of the Act. Therefore, the AO has rightly applied the stamp duty valuation of Rs.1,01,93,807/- and actual purchase cost of Rs.56,42,500/-.
6. We have heard both sides and perused the materials on record. We have also gone through the provisions of the Act including section 56(2)(x)(b)(B). We have also deliberated on the decisions relied upon by the Ld. AR. The undisputed facts of the instant appeal are that the appellant was given letter of allotment dated 29.10.2010. Subsequently, another flat was allotted dated 05.04.2016. Hence, contention that value as on 29.10.2010 should be adopted is not at all acceptable because the claim is not supported by the primary facts. In fact, the property registered by the appellant was in respect of the flat which was allotted subsequently. The said property was subsequently registered vide registration deed dated 18.05.2019, where the stamp duty valuation was Rs.1,01,93,807/-. The Ld. AR has relied on the first proviso to section 56(2)(x)(b), as per which where the date of registration and the date of agreement fixing the consideration are not the same, the stamp duty value as on the date of agreement is to be considered. The relevant provisions of Section 56(2)(x)(b)(B) have already been reproduced at para 4 above and hence, not repeated here. What the section requires is “agreement fixing the amount of consideration for transfer of immovable property.” There is a distinction between “allotment letter” and “agreement for sale”. An allotment letter is a preliminary document issued by the developer confirming the reservation of a specific unit and the initial payment. On the other hand, an “agreement for sale” is a formal and legally binding contract registered with the government which details the exact terms, payment schedule and obligation of both parties. The allotment letter has some legal weight to protect the buyer from arbitrary price change etc., but it does not transfer the ownership. On the other hand, an agreement for sale is highly enforceable. It is a primary and detailed contract which defines consequences for delays and defaults. The allotment letter is normally not registered whereas the agreement for sale must be registered at the Sub-Registrar office under the State property law. It is thus clear that “allotment letter” cannot take place of “agreement for sale”, which is both registered and enforceable Therefore, the plea of the assessee that the allotment letter would serve the purpose of Section 56(2)(x)(b)(B) of the Act is not acceptable. Hence, the finding of the AO/DRP is as per law and does not require any interference. The ratio of the decisions relied upon by the appellant are distinguishable on facts because they pertain to computation of income under the head “Capital gains” u/s 14 E of the Act and not “Income from other sources” u/s 14 F of the Act.
7. Having held that the assessee is not entitled for the benefit of the first proviso to section 56(2)(x)(b) of the Act, let us examine the alternative claim of the assessee. It is clear that the property was jointly purchased by the appellant and his father. The same is clear from the allotment letter and the registered deed. Therefore, the entire addition cannot be made in the hands of the appellant. The AO is directed to add the amount in the ratio of the appellant’s share in the beneficiary ownership between him and his father. The ground is partly allowed.
8. In the result, the appeal of the assessee is partly allowed.
