Excess Addition u/s 56(2)(vii)(b) on Jointly Purchased Property: ITAT Restricts It to 50% and Partly Allows Appeal [Read Order]
The CIT(A) had earlier dismissed the appeal for non-prosecution, but the tribunal directed the AO to limit the addition to Rs. 4,30,000, representing the remaining half.
Excess Addition - Jointly Purchased Property - ITAT - Partly - Appeal - TAXSCAN.
Excess Addition - Jointly Purchased Property - ITAT - Partly - Appeal - TAXSCAN.
The Mumbai Bench of Income Tax Appellate Tribunal ( ITAT ) partly allowed the appeal of the assessee, restricting the addition under section 56(2)(vii)(b) of Income Tax Act,1961 on a jointly purchased property to 50%.
Jashoda Khimji Bhadra,appellant-assessee, was an individual who had purchased immovable property for Rs. 93,37,500, while the stamp valuation authority had valued it at Rs. 1,01,97,500. Consequently, the Assessing Officer added Rs. 8,60,000 under section 56(2)(vii)(b) through an order dated 13.05.2023 passed under sections 147 and 144B of the Act.
The Commissioner of Income Tax (Appeals)[CIT(A)] dismissed the appeal in limine for non-prosecution, as the assessee did not respond to any of the hearing notices.
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The assessee counsel stated that the flat had been purchased jointly by the assessee and M/s. Khimji Ladharam Bhadra (HUF) on 31.03.2016. The co-owner had already been charged Rs. 4,30,000, representing 50% of the difference between the purchase price and the stamp duty value, and had accepted it without filing an appeal. The counsel therefore requested that the addition in the assessee’s hands be limited to the remaining 50%.
The two member bench comprising Sandeep SinghKarhail (Judicial Member) and Narendra Kumar Billaiya (Accountant Member) examined the submissions and records and agreed with the assessee counsel that only the remaining 50% addition under section 56(2)(vii)(b) could be made, as the co-owner, M/s. Khimji Ladharam Bhadra (HUF), had already been charged with the other 50%.
The Departmental Representative did not object. Observing that the flat was jointly purchased, the tribunal directed the AO to restrict the addition to Rs. 4,30,000, representing 50% of the difference between the purchase price and the stamp duty value. The tribunal partly allowed the assessee’s appeal.
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