Installment Payments for Immovable property Purchase via cheque on different dates: ITAT deletes Addition u/s 56(2)(x) [Read Order]

The Kolkata bench of the Income Tax Appellate Tribunal ( ITAT ), deleted addition under Section 56(2)(x) of the Income Tax Act, 1961 as the orders of both the lower authorities are not sustainable because the assessee has demonstrated that it has made payment for purchase of this property through account payee cheque in installments on different dates.

The assessee has filed his return of income on 07.08.2018 declaring total income at Rs. 5, 40, 120/-. The case of the assessee was selected for scrutiny assessment and a notice under Section 143(2) of the Income Tax Act was issued and served upon the assessee.

During the course of assessment proceeding, it revealed to the AO that this case has been selected for scrutiny on the basis of information received from the DIT ( I&CI ), Mumbai whereby it was informed that assessee has purchased one immovable property on 17.11.2017 for a consideration of Rs. 32, 93,730/- whose value was assessed by the Stamp Valuation Authority at Rs. 39, 96,440/-.

Thus, the AO was of the view that a difference of Rs. 7, 02,710/- is required to be added. The AO further, observed that he issued a notice under Section 142(1) of the Income Tax Act on 19.01.2021 but the assessee did not details of the transaction

Mr. Vikash Surana representing the assessee submitted that this flat was allotted to the assessee on 11.05.2015. The assessee has placed a record copy of the allotment letter issued by Shree Ganesh Vaishno Developers. In this letter it has been mentioned that the said flat is booked for Rs. 32, 93,730/- and the assessee had made payment of Rs. 5,01,000/- through account payee cheque dated 12.02.2015. Thereafter, the assessee has been making the payments through installments and ultimately purchased the flat

The two member bench consisting Girish Agrwal ( Accountant member ) and Rajpal Yadav ( Vice President ), while deleting the addition, sets aside the file back to the assessing officer for reconsideration with following directions:

1. The AO first find out the stamp duty valuation of the property as on 11.05.2015 and if it is more than Rs. 32,93,730/- then that amount is to be worked out for the purpose of considering it as deemed fit.
2. In case a positive difference is found which is required to be considered as deemed gift in the hands of the assessee then AO shall call for the report of DVO for determining the fair market value of the flat as on 11.05.2015.
3. The AO shall consider the fair market value determined by the DVO as well as the value of Stamp Valuation Authority and whichever is the lower is to be adopted for considering the value of the property as on 11.05.2015. From that amount sum of Rs. 32,93,730/- is to be debited and the balance could be considered as deemed gift in the hands of the assessee.

With the above directions, the appeal of the assessee is allowed and the impugned orders are set aside.

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