Addition made u/s 56(2)(x) of Income Tax Act due to Failure of Disclosure of Income on Bank Account: ITAT Directs Re-adjudication [Read Order]

The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT) directed re-adjudication for the addition made by the assessing officer under section 56(2)(x) of the Income Tax Act,1961 due to the failure of disclosure of income on the bank account. 

Benudhar Gokulanand Biswal, the appellant assessee was engaged in the business of manufacturing transformers and electrical intermediate items. The assessee appealed against the order passed by the Commissioner of Income Tax (Appeals) for confirming the addition made by the assessing officer under section 56(2)(x) of the Income Tax Act. 

Tanmay Phadke, the counsel for the assessee contended that the order passed by the Commissioner of Income Tax (Appeals) granting partial relief and sustaining the addition of 50% stamp duty value was not as per the law and The agreement was registered and incorporated Sec. 56(2)(x)of the Income Tax Act from Finance Act 2017. 

It was also submitted that the first payment subsequently after date of agreement, the revenue cannot rely on the second proviso to section 56(2)(x) of the Income Tax Act and tax the difference in stamp duty value of flat and purchase consideration as per agreement.

Since the section56(2)(x) of the Act did not apply to the assessee, as the agreement was entered before 1- 04-2017, hence the second proviso cannot be made applicable and the assessee cannot be fastened the liability in the light of second proviso to section 56(2)(x) of the Income Tax Act. 

Naina K Kumar, the counsel for the revenue strongly opposed the contention made by the assessee. It was also submitted that the addition made by the assessing officer and confirmed by the Commissioner of Income Tax (Appeals) was as per the law and not liable to be deleted. 

The two-member bench comprising B.R. Baskaran(Accountant ) and Pavan Kumar Gadale(Judicial) directed the assessing officer to re-adjudicate the matter to delete the addition made under section 56(2)(x) of the Income Tax Act while allowing the appeal filed by the assessee. 

To Read the full text of the Order CLICK HERE

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