The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) has deleted the addition of INR 60.1 Lakhs after the appellant’s bank statements confirmed full payment and compliance with Section 56(2)(x)(b)(B) of the Income Tax Act.
The relevant facts in brief are that the Appellant, a co-operative credit society, filed return of income for the Assessment Year 2018- 19 on 26/12/2018 which was selected for scrutiny. During the assessment proceedings, the Assessing Officer noted that the Appellant had purchased one immovable property vide registered Sale Deed, dated 15/06/2017, for a consideration of Rs. 7,20,000/-.
Whereas the Stamp Duty Valuation of the said immovable property was Rs. 67, 39,506/-. Since the purchase consideration of the immovable property was below the stamp duty valuation, the Assessing Officer made the addition of differential amount of Rs. 60,19,506/- in the hands of the Appellant by invoking provisions of Section 56(2)(x)(b)(B) of the Income Tax Act.
While making the aforesaid addition vide Assessment Order, dated 20/02/2021, passed under Section 143(3) read with Sections 143(3A) & 143(3B) of the Income Tax Act, the Assessing Officer noted that the Appellant had not disclosed the purchase of the aforesaid immovable property in the return of income for the Assessment Year 2018-19.
The Commissioner of Income Tax (Appeals) contended on behalf of the Appellant that the immovable property under consideration was initially agreed to be acquired in the year 2005 and only the formal procedure of registration of the Sale Deed had taken place on 15/06/2017. The Appellant supported the aforesaid submission with copies of the relevant documents which included copy of Agreement, dated 28/01/2005, and copy of bank statements showing the payment of aggregate consideration of Rs.7,20,000/- made towards purchases of immovable property.
It was further submitted that the consideration for purchase immovable property was fixed at Rs. 7,20,000/- vide Agreement, dated 28/01/2005 and the said purchase consideration was paid through banking channel on 16/07/2004 (Rs. 4,00,000/-) on 07/01/2005 (Rs. 3,20,000/-). Therefore, the case of the Appellant was covered by first and second proviso to Section 56(2)(x)(b)(B) of the Income Tax Act.
The bench found that the sole reason cited by the CIT (A) for declining to grant relief to the Appellant was that the consideration of Rs. 7,20,000/- was not paid by the Appellant through a banking channel. On perusal of the bank statement placed before us (placed at page 79 to 94 of the paper-book), ITAT find that the finding returned by the CIT (A) is factually incorrect. The copy of the bank statement placed on record reflects payment of Rs. 4,00,000/- and Rs.3,20,000/- made by the Appellant on 16/07/2004 and 07/01/2005, respectively. Thus, entire consideration of Rs. 7,20,000/- was paid by the Appellant through banking channel.
Further noted that the CIT (A) had accepted the contention of the Appellant that the condition laid down under first proviso to Section 56(2) (x)(b)(B) of the Act stood complied with as there existed Indenture of Sale Deed, dated 20/01/2005, whereby the consideration for transfer of the immovable property under consideration was fixed at Rs.7,20,000/-. ITAT noted that the aforesaid finding returned by the CIT (A) has not been challenged by the Revenue
Accordingly, The two member bench of the tribunal comprising Amarjit Singh ( Accountant Member ) and Rahul Chaudhary ( Judicial Member ) concluded that the conditions laid down in second proviso to Section 56(2)(x)(b)(B) of the Income Tax Act were also satisfied the addition of Rs.60,19,506/- made by the Assessing Officer cannot be sustained and is therefore, deleted. Accordingly, the present appeal preferred by the Assessee was allowed.
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