KANWALDEEP KAUR,CHANDIGARH V. DCIT, CIRCLE 1, CHANDIGARH

ITA 89/CHANDI/2024

AI Insights

The case involves two appeals by the Revenue against the orders of the CIT(A) which had deleted the additions made under Section 56(2)(vii)(b) of the Income Tax Act, 1961, concerning the valuation of a property transaction involving Shri Gurtej Singh and Smt. Kanwaldeep Kaur. The property in question was purchased from Mrs. Taranjot Kaur through a series of agreements and legal proceedings that delayed the registration of the property. The main legal contention was whether the valuation for stamp duty purposes should be based on the date of the original agreement to sell in 2009 or the date of registration in 2016. The Tribunal found that the original agreement date should be used, as it met the conditions set out in the first and second provisos to Section 56(2)(vii)(b), which allow for the consideration of the stamp duty value on the date of the agreement if part of the consideration is paid by non-cash means before the date of agreement.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 126045 (ITAT-CHANDIGARH)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROHIT SHARMA
• Assessee Lawyers: YOGESH MONGA; C.A
• Keywords: Capital asset; Sale consideration of property below Jantri Value; Competent authority; Deemed to accrue or arise in india; Reason to believe
• Section: 147; 148; 142(1); 143(2); 56(2)(vii)(b); 56(2); 13; 50C

Judgement Text

"आयकर अपीलीय अिधकरण,चǷीगढ़ Ɋायपीठ “ए” , चǷीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “A”, CHANDIGARH HEARING THROUGH: PHYSICAL MODE ŵी लिलत क ुमार, Ɋाियक सद˟ एवं ŵी क ृणवȶ सहाय, लेखा सद˟ BEFORE: SHRI. LALIET KUMAR, JM & SHRI. KRINWANT SAHAY, AM आयकर अपील सं. ITA No. 806 /Chd/ 2024 िनधाŊरण वषŊ / Assessment Year : 2017-18 The ITO Mohali बनाम Shri Gurtej Singh House No. 245, Sector 16A, Chandigarh-160062 ˕ायी लेखा सं./PAN NO: ABZPS6303A अपीलाथŎ/Appellant ŮȑथŎ/Respondent आयकर अपील सं. ITA No. 89 /Chd/ 2024 िनधाŊरण वषŊ / Assessment Year : 2017-18 Kanwaldeep Kaur House No. 245, Sector 16A Chandigarh बनाम The DCIT Circle-1, Chandigarh ˕ायी लेखा सं./PAN NO: AFFPK4564F अपीलाथŎ/Appellant ŮȑथŎ/Respondent िनधाŊįरती की ओर से/Assessee by : Shri Yogesh Monga, C.A राजˢ की ओर से/ Revenue by : Shri Rohit Sharma, CIT DR सुनवाई की तारीख/Date of Hearing : 08/04/2025 उदघोषणा की तारीख/Date of Pronouncement : 24/04/2025 आदेश/Order PER LALIET KUMAR, J.M: These are two appeals filed by the Revenue and the Assessee against the respective orders of the Ld. CIT(A)/NFAC, Delhi dt 30/05/2024 and 27/12/2023 respectively. 2. Since the appeals were heard together therefore they are being disposed off by this consolidated order. 3. In ITA No. 806/Chd/2024 Revenue has raised the following grounds: 2 1. Whether in the facts and circumstances of the case and in law, the Ld. CIT(A) has not erred in allowing the appeal of the assessee without appreciating the facts of the case? 2. Whether in the facts and circumstances of the case and in law, the Ld. CIT(A) has not erred in law and fact in deleting the addition of Rs.4,63,21,268/- made by the AO by invoking provisions of section 56(2)(vii)(b)(ii) of the Income Tax Act, 1961 while ignoring the fact that whole such addition was clearly based upon enquiry made by the AO during assessment proceedings and by taking into consideration the documentary evidence furnished by the assessee. 3. Whether in the facts and circumstances of the case and in Law, the Ld. CIT(A) has not erred in deleting the addition by taking the view that the fresh agreement to sell dated 02.02.2005 entered between the assessee and Mrs Taranjot Kaur was for the purpose of taking Loan from bank and considering it the continuation of agreement to sale dated 30.07.2009 by completely ignoring the fact that no agreement prior to 02.02.2015 was made between Mrs Taranjot Kaur and the assessee and even the agreement to sell dated 30.07.2009 between Sh. Gurdeep Singh and the assessee got cancelled by the tripartite agreement amongst the assessee, Sh. Gurdeep Singh and Smt Taranjot Kaur dated 02.02.2015. 4. Further, when it is specifically mentioned in the tripartite agreement dated 02.02.2015 that the original agreement to sell executed on 30.07.2009 between the assessee and Sh. Gurdeep Singh has no value and a fresh agreement has been executed between Mrs Taranjot Kaur Sekhon and the assessee, has the Ld. CIT(A) not erred on facts and in law by not accepting the F.Y. 2014-15 as year of agreement as determined by the Assessing Officer for determining the valuation of property r.w. provision of section 56(2) (vii) (b) (ii) of the Income Tax Act, 1961 when no agreement prior to 02.02.2015 was ever made between Mrs Taranjot Kaur and the assessee. 5. It is prayed that the order of the Ld. CIT(A) be set-aside and that of the Assessing Officer may be restored. 6. The appellant craves leave to add or amend any grounds of appeal before the appeal is heard or is disposed off. 4. Briefly, the facts of the case are that Shri Gurtej Singh, a resident individual, filed his Income Tax Return for A.Y. 2017-18 on 29/07/2017, declaring a total income of Rs. 1,23,88,600/-. The case was reopened under Section 147 of the Income Tax Act, 1961, due to escapement of income related to the purchase of a property in Chandigarh. The property, Plot No. 3033, Sector 16A, was purchased for Rs. 4,00,00,000/- from Mrs. Taranjot Kaur, with the final registration occurring on 28/06/2016. The Ld. AO contended that the stamp duty value of the property as on 02/02/2015 was Rs. 8,63,21,268/-, leading to a difference of Rs. 4,63,21,268/- between the purchase price and stamp value. 3 This difference was proposed as taxable income under Section 56(2)(vii)(b)(ii) for under-reporting. 4.1 The assessee argued that the transaction originated from an agreement dated 30/07/2009 with Sh. Gurdip Singh, who held rights via an earlier agreement with Mrs. Taranjot Kaur. Subsequent agreements in 2015 were claimed to be procedural adjustments to facilitate a bank loan. Gurtej Singh also asserted joint ownership (50% with his wife), but the AO rejected this, stating that he made all payments. 4.2 The AO noted that Gurtej Singh filed his income tax return on 29/07/2017, declaring a total income of Rs. 1,23,88,600/-. The case was reopened under Section 147 of the Income Tax Act, 1961, due to the purchase of an immovable property valued at Rs. 8,24,08,250/-, with a consideration of Rs. 4,00,00,000/- paid to Mrs. Taranjot Kaur. The AO determined that an additional amount of Rs. 4,24,08,250/-, representing the difference between the stamp duty value and the declared consideration, was not reported in the assessee’s return, thus constituting escaped income under Section 56(2)(vii)(b). 4.3 The AO issued a notice under Section 148 on 31/03/2021, to which the assessee responded by filing a return on 07/04/2021, declaring the same income as before. Thereafter notices under Section 143(2) and 142(1) were issued, but the assessee initially failed to respond adequately. Eventually, the assessee submitted documents, including sale deeds, agreements to sell dated 15/02/2008 and 30/07/2009, and a civil writ petition, claiming the property was purchased in 2009 for /- 4,00,00,000/- via an agreement with Gurdip Singh. The AO found this explanation untenable, as a tri-partite agreement dated 02/02/2015 canceled prior agreements, establishing a new agreement between the assessee and Mrs. Taranjot Kaur for Rs. 4,00,00,000/-. 4.4 The AO further observed that the stamp duty value of the property, based on collector rates effective from 02/08/2013, was Rs. 8,63,21,268/- (Rs. 4 8,24,50,368/- for the plot and Rs. 38,70,900/- for the covered area). Under Section 56(2)(vii)(b)(ii), the difference of Rs. 4,63,21,268/- between the stamp duty value and the consideration paid was deemed income from other sources, as the relevant agreement date was 02/02/2015, not 2009 as claimed by the assessee. 4.5 The assessee argued that the property was jointly purchased with his wife, Kanwaldeep Kaur, each holding a 50% share, and that subsequent agreements were made to fulfill bank loan conditions. The AO rejected this, finding that the cancellation agreement of 02/02/2015 explicitly nullified the 2009 agreement, and no prior agreement existed between the assessee and Mrs. Taranjot Kaur. Additionally, the AO reviewed loan documents and bank statements, which showed the assessee as the primary borrower and sole contributor to EMI payments, concluding that Kanwaldeep Kaur was merely a nominal co-owner and the entire investment was made by the assessee. 4.6 In conclusion, the AO added Rs. 4,63,21,268/- to the assessee’s total income, assessing it at Rs. 5,87,09,870/- for the year. 5. Against the order of the Ld. AO the assessee went in appeal before the Ld. CIT(A). The Ld. CIT(A) carefully examined the assessment order under sections 147 r.w.s. 144B and the submissions made by Gurtej Singh for the assessment year 2017-18. The Ld. AO had reassessed the assessee’s income at Rs. 5,87,09,868/-, adding Rs. 4,63,21,268/- under section 56(2)(vii)(b) due to the difference between the stamp duty value of Rs. 8,24,08,250/- and the purchase price of Rs. 4,00,00,000/- of a property. 5.1 The order passed by the Ld. assessing officer, the assessee filed the appeal before the Ld. CIT(A) , who had granted the relief to the assessee. The finding the Ld. CIT(A) are as under: 5.3.3. Ground No. 1 relates to addition of Rs.4,63,21,268/- on account of differencein stamp duty value and total consideration paid by assessee for 5 purchase of immovable property. In my considered view, the main issue is what is the date to be taken for considering stamp duty value as per section 56(2)(vii)(b). AO has taken date of tri-partite agreement dated 02.02.2015 while assessee has submitted that date of original agreement to sell of 30.07.2009 should be taken. Accordingly, addition was made by AO. Assessee has submitted that advance payments were made at time of original agreement, and that fresh tripartite agreement was made so that assessee can easily avail loan. It was also submitted that in the fresh tripartite agreement it was explicitly stated that terms and conditions of original agreement have become untenable. Therefore, there was no option but to modify terms by entering into the tripartite agreement to execute the while transaction. I have noted that the fresh agreement to sale was only for the purpose of bank loan to make payment, and it was to fulfil the condition of bank. Hence, the agreement to sale dated 03.02.2015 was entered between appellant and Mrs. Taranjot Kaur only for purpose of bank loan. In my view it is only in continuation of agreement to sale dated 30.07.2009 between appellant and Mr. Gurdip Singh. In the remand report, AO has stated that submission of appellant is not tenable since loan is sanctioned jointly in assessee name and his wife. In my considered view this is not relevant and more pertinent is what should be the crucial date. I have noted that terms of original and tripartite agreement are the same. The consideration amount is same as well. Fresh agreement is only to help appellant to avail bank loan. However cancellation agreement dated 02.02.2015 was entered into to safeguard interest of Mr. Gurdip Singh who has already sold the property to Mr. Gurtej Singh. Finally, the sale deed was executed in the name of Mr. Gurtej Singh on 28.06.2016 and after all disputes were cleared. It is pertinent to quote the second proviso to section u/s. 56(2)(vii)(b). Same is as follows: “provided that where the date of the agreement fixing the amount of consideration for the transfer to immovable property and the date of registration is not same, the stamp duty value on the date of agreement may be taken for the purpose of this sub-clause.” “provided further that said proviso shall apply only in a case where the amount of consideration referred to therein, has been made by any mode other than cash on or before the date of agreement for the transfer of such immovable property.” In my considered view appellant fulfils condition laid down under both the provisos. Stamp duty value on the date of agreement is to be taken and further appellant has paid a sum of Rs.1,50,00,000/- on or before date of agreement to sale being 30.07.2009 as part payment through banking channel. Therefore, considering all issues and particularly both provisos as discussed above. I hold that stamp duty value on the date of original agreement in the year 2009 has to be considered. I therefore delete addition made by AO. Ground of appeal no. 1 is allowed. 5.4. Ground of Appeal No. 2 relates to 100% addition whereas properties in question is jointly owned. Since Ground of appeal No. 1 is allowed, this ground becomes not relevant and is dismissed as infructuous. 6. Against the order of the Ld. CIT(A) the Revenue came up in appeal before us on the grounds mentioned hereinabove. 6 ITA no 89/Chd/ 2024 7. Quite contrary to the finding given by the Ld. CIT(A) in the case of Gurtej Singh, the Ld. the Ld. CIT(A), while deciding the appeal of the wife, Kanwaldeep, gave a contrary finding in the following manner:- 5. DECISION: I have very carefully considered the facts of the case, penalty order of the AO, the grounds of appeal and the submissions of the assessee. 5.1 Briefly stated the facts of the case are that the assessee filed her original return of income for the A.Y. 2017-18 declaring total income at Rs.38,73,560/- on 30/07/2017 which was processed u/s 143(1)(a) of the Act at the declared income. It was seen by the AO that the assessee had purchased an immovable Property during the year under consideration at Rs. 4,00,00,000/- and the value of the property adopted by the Stamp Valuation Authority was Rs. 8,24,08,250/-. Thus there was a difference of Rs, 4,24,08,250/- in purchase consideration and the value adopted by Stamp Valuation Authority. The share of the assessee in this transaction was 50%. Therefore, the AO had reason to believe that the income chargeable to tax had escaped assessment within the meaning of the provisions of section 147 of the Act. Accordingly, with the approval of competent authority, the notice u/s 148 of the Act was issued on 31/03/2021. The assessee furnished ITR on 15/04/2021 in compliance to notice u/s 148 of the Act. After the issue of statutory notices, the AO began the assessment proceedings. There was no response from the assessee to numerous notices issued by the AO. The AO was of the view that since the share of the assessee in this transaction was is 50%, therefore, an amount of Rs. 2,12,04,125/- was chargeable under the head 'income from other sources' as per the provisions of section 56(2)(vii)(b) of the Act. Before the AO, the assessee submitted that the said property was purchased by the assessee from Sh. Gurdip Singh vide, agreement to sell dated:30.07.2009 for a consideration of Rs. 4,00,00,000/-. The property was sold to the assessee by Sh. Gurdip Singh on the basis offurther agreement to sell dated 15.02.2008 between Sh. Gurdip Singh and original Owner Mrs. Taranjot Kaur. The assessee furnished before the AO, a copy of sale deed dated 24.06.2016 executed between (1) Taranjot Kaur and (ii) Gurtej Singh and Kanwaldeep Kaur. Agreement to sell dated 15.02.2008 between (i) Taranjot Kaur and (ii) Gurdip Singh and Agreement of sell dated 30.07.2009 between (i) Gurdip Singh and (ii) Gurtej Singh and Kanwaldeep Kaur. Vide notices u/s 142(1) of the Act dated 08.12.2021 issued by the AO to the assessee, the assessee was requested to furnish copy of bank account statements, details of payments made to Sh. Gurdip Singh amounting to Rs. 1,50.00.000/- along with copy of bank statements , Source of investment made in purchase of immovable property along with supporting documents, supporting documents for claim under chapter VI- A amounting to Rs.1,59.003/- etc. The assessee failed to furnish any response to this notice. Therefore vide notice u/s 142(1) dated 24.12.2021, in addition to above, the assessee was also asked to produce three parties agreement if any made between among purchaser, seller and Sh. Gurdip Singh. In response, the assessee did not furnish any detail/ documents as sought by the AO. Therefore, again a notice u/s 142(1) dated 07.01.2022 was issued by the AO to the assessee. The assessee filed her response on 13.01.2022 and sought adjournment, which was granted vide notice u/s 142(1) of the Act dated 18.01.2022 requiring the assessee to file its response by 7 24.01.2022. However, the assessee did not furnish any detail, documents in response to statuary notice issued to her. Again a notice u/s 142(1) dated 25.02.2023 was issued by the AO to the assessee seeking relevant details. The response of the assessee was received by the AO on 06.03.2013. The assessee has furnished copy of Axis bank statement of her Husband Sh. Gurtej Singh, Loan Sanction Letter dated 11/04/2016, copy of agreement between Taranjot Kaur, Gurdip Singh and the assesee dated 02/02/2015 etc. 5.1.1 It was seen by the AO that the assessee had claimed that she had made agreement to purchase the property from Sh. Gurdip Singh on 30.07.2009. However, Gurdip Singh was not the owner of the property purchased by the assessee. The owner of the property purchased by the assessee was Mrs. Taranjot Kaur and as per the sale deed dated 24.06.2016, the property was purchased jointly by Mrs. Kanwaldeep Kaur and Mr. Gurtej Singh from Mrs. Taranjot Kaur. Hence the claim of the assessee that agreement was to purchase the same property from some other person at an earlier date is not valid. Moreover as per sale deed, the total purchase consideration was Rs. 4,00,00,000/- and there was no mention of this payment during the financial year 2009-10 in the agreement. As per sale deed the assessee has made advance payment of Rs. 20,00,000/- on 02/02/2015. However the assessee did not furnish any bank statement in support of this payment. The assessee has also not claimed that this sale transaction was executed in F.Y.2015- was seen that the assessee had been (jointly with her husband) granted loan of Rs. 4,00,00,000/- for purchase of the property in question. The assessee had made full payment to the seller on 23/06/2016 vide cheque Number 732418. 732419 and 732420 amounting to Rs. 3,76,00,000/-. 19,00,000/- and 5,00,000/- respectively. 5.1.2 The AO was of the view that in view of the above it was very clear that this transaction was deemed to be executed during the F.Y. 2016-17. Therefore an amount of Rs. 2,12,04,125/- was added under the head income from other sources as per the provisions of section 56(2)(vii)(b) of the Act. 6. Vide the ground of appeal No.1, the assessee has challenged the action of AO in making an addition of an amount of Rs. 2,12,04,125/- under the head income from other sources as per the provisions of section 56(2)(vii)(b) of the Act. 6.1 Having considered the factual matrix of the case. I find that the AO made addition as per the provisions of section 56(2)(vii)(b) of the Act. the assessee being a purchaser of property. It needs to be borne in mind that the provisions of section 56(2)(vii)(b) of the Act apply when the assessee is a purchaser of property and the consideration paid is less than the value adopted for the purpose of stamp duty. Similarly, the provisions of section 50C apply when the assessee is seller of property and the consideration received by the seller is less than the value adopted for the purpose of stamp duty which is not the case here. I find that the AO was correct in invoking the provisions of section 56(2)(vii)(b) of the Act as the under consideration paid by the assessee and her husband is Rs. 4,00,00,000/-and the value of the property adopted by the Stamp Valuation Authority was Rs. 8,24,08,250/-. Thus there was a difference of Rs. 4,24,08,250/- in purchase consideration and the value adopted by Stamp Valuation Authority. The assessee's share in the property being 50%. It is the contention of assessee that the peoperty was agreed to be purchased in 30.07.2009 and a part of the consideration was paid then and therefore, the assessee's case was covered by the proviso to section56(2)(vii)(b) and the stamp duty as applicable in 2009-10 should be considered. I find that the assessee has failed to establish the provisions 8 of Proviso to section 56(2)(vii)(b) was applicable to her case. The important condition of a part of consideration having been paid otherwise than by cash is not satisfied as clear from the assessment order of the AO as well as from the written submissions of the assessee. No agreement. bank statement and receipt etc in this regard was submitted before the AO or during the appellate proceedings. Moreover, the entire consideration of Rs. 4 croreswas found to bepaid in the F Y. 2016-17 which was funded by bank loan. No part of the consideration was found/established to have been paid earlier by a mode other than cash. Thus, the provisions of Proviso to section 56(2) (vii(b) are not applicable to assessee's case. No part In the circumstances, I do not see any reason to interfere with the Order of the AO making an addition of an amount of Rs. 2,12,04,125/- under the head income from other sources as per the provisions of section 56(2)(vii)(b) of the Act. 8. Feeling aggrieved by the finding given by the Ld. CIT(A)/NFAC, Delhi dt. 27/12/2023 pertaining to Assessment Year 2017-18. the wife is in appeal before us in ITA no 89/Chd/ 2024 , on the following grounds :- 1. That the order of Learned Assessing Officer is bad, and against law and facts. 2. That the learned CIT(A) has wrongly upheld the addition amounting to Rs.2,12,04,125/- on account of difference in stamp duty value and total consideration paid by the appellant for purchase of immovable property. The learned CIT(A) failed to appreciate the fact that agreement to sell for the property was made in 2009 and only registered deed was executed in year 2016 due to certain legal issues As per provisions of section 50C stamp duty value at time of agreement to sell shall be applicable and which was rightly been taken by the appellant at the time of execution of registered sale deed. 3. In the appeal of Gurtej in ITA no 806/Chd/2024 9. Ld. DR submitted that the agreements dated 30.07.2009 and 15.02.2008 were cancelled through a cancellation deed dated 02.02.2015, which returned the advance payment to the assessee. Hence, the original agreement was void ab initio and had no legal bearing. It was further contended that the effective and operative agreement was the one dated 03.02.2015, and therefore, the stamp duty value as on that date was rightly adopted for making the addition under section 56(2)(vii)(b)(ii). 9.1 It was further submitted that Mrs. Kanwaldeep Kaur was only a name- lender and that the assessee made the investment. The joint bank account and 9 loan documents listed the assessee as the primary holder/applicant. No independent evidence of Mrs. Kaur’s employment or income was furnished. 9.2 The Ld. DR has also filed the written submissions to the following effect: 2. In addition to the oral arguments advanced by the undersigned during the course of hearing, the following facts need reiteration which may be kept in view by the Hon'ble Bench before pronouncing the judgment. (i) The text and content of the modified Agreement (Tripartite) dated 02.02.2015 clearly suggests that new terms and conditions have been entered into which were totally at variance with the Agreement dated 30.07.2009. (ii) In fact, there is not even a mention of the Agreement dated 30.07.2009 in the tripartite Agreement dated 02.02.2015. (iii) The plain reading of the tripartite Agreement dated 02.02.2025 suggests that the earlier Agreement(s) had been cancelled and were not valid any longer. (iv) The assessee's contention that the tripartite Agreement dated 02.02.2015 was to modify the earlier Agreements, fails to enthuse. This is because there is nothing to suggest that the contents of the earlier Agreements are being modified in the tripartite Agreement dated 02.02.2015. On the contrary, the tripartite Agreement uses words like 'untenable' and 'unenforceable' with respect to the earlier Agreements. (v) The amounts paid vide earlier Agreements were returned back by the respective parties to the purported Purchasers(s). This clearly implies that the earlier Agreements ceased to exit. In fact, even compensation and damages have been paid, which again implies that the earlier Agreements were no longer in existence and were terminated to the fullest through the payment of compensation and damages. (vi) Page 21 of the assessee's paper book filed in the case of Shri Gurtej Singh may kindly be referred. Last sentence of para 4 of the said page may kindly be read between the lines. It is implicit from this sentence that in case of default in payments, the properly would be sold only at the minimum sale consideration determined for stamp duty purposes. This implies that in the tri-partite sale Agreement, there is an attempt by the assessee to sell the property at an amount lesser than stamp authorities' value in case payments are made timely. Therefore, it is inherent in the nature of property transactions of the assessee that the sale consideration shall be lesser than the stamp authorities' value. (vii) Whether the full addition is to be made in the hands of husband Shri Gurtej Singh or whether 50% apiece is to be added in the hands of husband and wife (Smt. Kanwaldeep Kaur) can be decided by the Hon'ble Bench in the wake of umpteen judgments on the said issue. Submitted for kind consideration. 10. Per contra Ld. AR submitted that the assesee had entered, into an agreement to sell ,on 30.07.2009 with Mr. Gurdip Singh, to purchase the subject 10 property for Rs. 4,00,00,000/-, and paid Rs. 1.5 crore as part consideration through banking channels. The property was initially owned by Mrs. Taranjot Kaur, who had a legal dispute pending before the Punjab & Haryana High Court which delayed the registration. The said agreement it is mentioned at page 1 and 3 as under: WHEREAS the above said seller is the absolute and undisputed Agreement bolder with the owner of House No. 215 measuring 1001 Sq. yds. Sector 16-A at Chandigarh with all proprietary rights on free hold basis. And whereas the agreement holder Sh. Gurdip Singh has agreed to pursue this entire litigation of LPA No. 646 of 1989 and CWP No. 10269 of 1997 by using his own financial and other resources and in lieu thereof, the seller Ms. Taranjot Kaur has agreed to sell her entire share in House No. 215, Sector 16-A, Chandigarh (the quantum of her share being subject to the decision of LPA No. 646 of 1989) after CWP No. 10269 of 1997 is decided in her favour and the above matter at the time of sale has been inform to the purchaser Shri Gurtej Singh and Smt. Kanwaldeep Kaur. And whereas all the matters, past and now pending before the Hon’ble High Court of Punjab & Haryana and the Union Territory of Chandigarh as well as before the Estate Officer Chandigarh qua the house as well as LPA No. 646 of 1989 are in the full knowledge of the purchaser Shri Gurtej Singh and Smt. Kanwaldeep Kaur who have independently verified all the above mentioned litigation and a copy of the said litigation also has been provided. 11. It is the contention of the assessee that the seller namely Gurdeep Singh was having right under the agreement entered between Mrs. Taranjot Kaur D/o Late Hardayal Singh Sekhon and him by virtue of agreement to sell on 15/02/2008.In the said agreement it is mentioned at page 4 as under : And whereas the purchaser Sh. Gurdeep Singh has agreed to pursue this entire litigation of LPA No.646 of 1989 and CWP No.10269 of 1997 by using his own financial and other resources and in lieu thereof, the seller Ms. Taranjot Kaur has agreed to sell her entire share in House No.215, Sector 16-A, Chandigarh the quantum of her share being subject to the decision of LPA No.646 of 1989] after CWP No.10269 of 1997 is decided in her favour for a consolidated sale price of Rs.ume Crore and Fifty Lacs Only. And whereas all the matters, past and now pending before the Hon'ble High Court of Punjab, Haryana and the Union Territory of Chandigarh as well as before te Estate Officer Chandigarh qua the house as well as 1PA No.646 of 1989 are in the full knowlodge of the purchaser Sh. Gurdeep Singh, who through his own lawyers, has independently verified all the above mentioned Litigation. That the said purchaser shall pay the balance sale consideration of Rs. One Crore only within two months from the date on which CWP No.10269 of 1997 is decided in favour of the said seller. That the purchaser is fully aware that he has agreed to purchase and the seller has agreed to sell a house-property, which presently stands resumed and litigation is also pending regarding its ownership title and the seller can be held liable only to the extent of her entire share in the house that accrues to her after the decisions of L.P.A. No. 645 of 1989 and C.W. P. NO. 10269 of 1997. 11 11.1 It was submitted that the litigation pending between Mrs. Taranjot Kaur before the Hon’ble Punjab and Haryana High Court in CWP No. 10269 of 1997 and LPA No. 646 of 1989 with the Estate Officer were decided in favour of Mrs. Taranjot Kaur. 11.2 It was submitted that during the pendency of the litigation the assessee had agreed to purchase the property from Shri Gurdeep Singh. It was also submitted that the Hon’ble High Court vide its judgement dt. 05/09/2014 had decided the issue in favour of Mrs. Taranjot Kaur. 11.3 The Ld. AR had submitted that as per the original agreement entered between Shri Gurdip Singh and Mrs. Taranjot Kaur on 15/02/2008, Mrs. Taranjot Kaur was obliged to execute the sale deed in respect of the property in favour of Shri Gurdip Singh for a consideration of Rs. 1,50,00,000/-. However, as the Shri Gurdip Singh, during the pendncy of the litigation before the Hon'ble High Court had transferred the rights in favour of the assessee vide agreement dt. 30/07/2009, therefore a dispute arose between Shri Traranjit Kaur, Shri Gurdipsingh and the Assessee (alongwith his wife). 11.4 With a view to amicably resolve the issues, and with a view to have declared title a triparte agreement dt. 02/02/2015 was entered between Mrs. Taranjot Kaur, Shri Gurdip Singh, Shir Gurtej Singh and Ms. Kanwaldeep Kaur whereby it was agreed that the initial agreement entered between Mrs. Taranjot Kaur and Gurdeep Singh have became untenable and therefore unenforceable. On account of the above said averments the Mrs. Taranjot Kaur and Shri Gurdeep Singh had agreed to entered into fresh agreement with Shir Gurtej Singh and Ms. Kanwaldeep kaur. In the said agreement it was also mentioned as under: “ As a result of this delay, the circle rate for Stamp Duty and Income Tax purposes increased manifold. Consequently, the Income Tax liabilities of the First Party also increased manifold; and it became untenable for the First Party to fulfil her part of the Contract as per the terms of the original Agreement to Sell dated 12 15/02/2008. On this part, the Second Party perforce had no option but to ask the First Party to give a full refund of the biana and part payment amount of Rs. Sixty Lakhs paid by him, and in addition, pay to him liquidated damages and compensation etc. of Rs. ninety lakhs. However, the First Party found herself unable to pay any amount to the Second Party.” 11.5 The parties have resolved their disputes and Shri Gurdeep Singh had nominated, as per Clause 4 of the Agreement dt. 15/02/2008 Shir Gurtej Singh and Ms. Kanwaldeep kaur as a buyer of the property and the last date of executing the agreement was agreed for 28/02/2015. The sale consideration received by Mrs. Taranjot Kaur was to be refunded to Shri Gurdeep Singh. Shir Gurtej Singh and Ms. Kanwaldeep Kaur shall pay initialbayana of Rs. 25,00,000/- and a further amount of Rs. 3,80,00,000/- before 28/02/2015. 11.6 In the said triparte agreement it is mentioned that Shir Gurtej Singh and Ms. Kanwaldeep kaur has enterered a separate agreement of sale with the Mrs. Taranjot Kaur wherein Shri Gurdeep Sigh has signed as a witness to the agreement. 11.7 It was submitted that the entire change of events and the subsequent agreement dated 03.02.2015 was executed with Mrs. Taranjot Kaur only to fulfill the bank’s condition for sanctioning the loan, and not as a fresh transactionand also to have a clear marketable title. . The consideration remained the same and all parties acknowledged the 2009 agreement. The final sale deed was executed in 2016 once legal disputes were resolved. 11.8 The assessee emphasised that the property was co-owned with his wife, Mrs. Kanwaldeep Kaur, who contributed to the investment. Both were co- applicants on the bank loan and shared a joint bank account from which EMIs were paid. Mrs. Kaur was gainfully employed as a Medical Director and earned a regular salary, which supported the investment. 11.9 Citing the first and second provisos to section 56(2)(vii)(b), the assessee argued that the date of the original agreement (30.07.2009) should be 13 considered for the purpose of valuation, as a substantial part of the consideration was paid before registration through banking channels. 11.10 The Ld. AR had also filed the following written submission which read as under: Ref: Brief synopsis in the matter of Sh. Gurtej Singh (Appeal No.806/2024) and Smt. Kanwaldeep Kaur(Appeal No.89/2024) Hon'ble Sir With reference to above said matter, the detail is as under: - The appellant and her husband had purchased an immovable property during the year under consideration for Rs. 4,00,00,000/-. The stamp duty value of the property was Rs.8,24,08,250/- and: therefore there was difference of Rs.4,24,08,250/- in the Stamp Duty Value and Purchase Consideration of the immovable property. Therefore, the addition u/s 56(2)(vii)(b)(ii) of the Act was made to the returned income of Mrs. Kanwaldeep Kaur and Mr. Gurtej Singh. However, on appeal before the Commissioner of Income Tax(Appeals), the CIT(A) deleted the addition in the case of Mr. Gurtej Singh but in the case of Mrs. Kanwaldeep Kaur the CIT(A) confirmed the addition. Now the department is in appeal before the Hon'ble Bench in the case of Mr. Gurtej Singh and we are in appeal in the case of Mrs. Kanwaldeep Kaur. The detailed sequence of events in relation to the property in question is as follows: - 1. The appellant and her husband had entered into an agreement to sell dated 30.07.2009 with Mr. Gurdip Singh for purchase of immovable property in question for a total sale price of Rs. 4,00,00,000/- and paid Rs. 1,50,00,000/- as advance amount. 2. Mr. Gurdip Singh was the owner of property through another agreement to sell dated 15.02.2008 between original owner Mrs. Taranjot Kaur and Mr. Gurdip Singh. 3. Mrs. Taranjot Kaur was the lawful owner of the said property through will of her father dated 21.05.1986. But the said property was a matter of dispute between Taranjot Kaur Vs. Estate Officer and others in Hon'ble Punjab and Haryana High Court for wrongful resumption of plot as well as ownership post death of her father vide civil writ petition no. 10269 of 1997, which delayed the registration of property from the original owners. The legal cases were finally settled and were decided in favor of Mrs. Taranjot Kaur and the transactions were further proceeded with. 4. Further the appellant and his wife wanted to avail bank loan to make payment for purchase of said property and the lending bank of the appellant imposed a precondition of an agreement to sell directly with original owner of the property. 14 5. So, an agreement to sell dated 03.02.2015 was entered between the appellant and her husband and Mrs. Taranjot Kaur for the purpose of bank loan in lieu of agreement to sell dated 30.07.2009 which was made between the appellant and Mr. Gurdip Singh. It is pertinent to mention here that it was for the same consideration amount of Rs. 4,00,00,000/- as the previous agreement to sell between Mr. Gurdip Singh and the appellant and her husband. 6. Before this agreement to sell dated 03.02.2015 between the appellant and her husband and Mrs. Taranjot Kaur, a Tripartite Agreement, dated 02.02.2015, was also entered into between the appellant and her husband, Mrs. Taranjot Kaur and Mr. Gurdip Singh. In this tripartite agreement all the details of the earlier agreement, i.e. 15.02.2009 and 30.07.2009, entered into between these above three parties were mentioned and it was also mentioned that a new agreement would be made so that the appellant and her husband could take bank loan for purchase of the said property. In this Tripartite Agreement, the detail of cases before Hon'ble Punjab & Haryana High Court regarding dispute regarding title of property was also mentioned. 7. Besides this, a cancellation agreement dated 02.02.2015 was also entered at the same time between Mr. Gurdip Singh and the appellant and her husband to cancel agreement to sell dated 30.07.2009 to safeguard the interests of Mr. Gurdip Singh. It is also worth mentioning that the fact that the agreement to sell dated 03.02.2015 between Taranjot Kaur and the appellant and her husband had been entered only in lieu of original agreement to sell dated 30.07.2009 at the same consideration amount and was only entered to help the appellant and her husband to fulfil condition of bank to avail bank loan from ICICI Bank for purchase of the said property. This had also been clearly mentioned in cancellation agreement between Mr. Gurdip Singh and the appellant and her husband dated 02.02.2015. 8. The sale deed of the property was finally executed in name of the appellant and her husband on 28.06.2016 after all the disputes pertaining to the said property were decided by the Hon'ble Punjab & Haryana High Court and the title of the owner was made clear. But the said sale deed was executed only on the basis of original agreement to sell dated 15.02.2008 and 30.07.2009 and on same terms and consideration as well as the value/sale consideration of Rs. 4,00,00,000/- as was mentioned in the original agreement to sell dt. 30.07.2009 between the parties. We now wish to submit that the said addition u/s56(2)(vii)(b)(ii) of the Act should not have been made due to following reasons: - 1. The appellant and her husband had purchased the property only vide agreement to sell dated 30.07.2009 between the them and Mr. Gurdip Singh and other agreements/arrangements were entered into just to fulfil the preconditions imposed by the bank to avail bank loan for payment of purchase of the property. Otherwise, all the terms and conditions as well as value of original agreement had been valid and followed by all the parties. 2. The fact that there were some legal complications in transfer of the said property was clearly mentioned in both the agreements to sell, i.e. agreement to sell dt. 15.02.2008 between Mrs. Taranjot Kaur and Mr. Gurdip Singh and agreement to sell dt. 30.07.2009 between Mr. Gurdip Singh and the appellant 15 and her husband and also in Tripartite Agreement dated 02.02.2015 between appellant and her husband, Mr. Gurdip Singh and Mrs. Taranjot Kaur. When those legal matters were decided in favour of Mrs. Taranjot Kaur and the title of the said property got cleared in favour of Mrs. Taranjot Kaur then the Sale Deed was finally executed in favour of the appellant and her husband. Legal Provision: - As per first proviso to section 50 C \"provided that where the date of agreement fixing the amount of consideration and the date of registration for the transfer of the capital asset are not the same, the value adopted or assessed or assessable by the stamp valuation authority on the date of agreement may be taken for the purposes of computing full value of consideration for such transfer\" From the above reading and the explanations as provided above it is clear that the value adopted or assessed or assessable by stamp valuation authority on the date of agreement may be taken for the purpose of computing full value of consideration for such transfer. So, it is clear that the circle rates/ stamp duty value on date of agreement to sell dated 30.07.2009 only should be considered for valuation and not the rates which were prevailing on date of registration of property which was merely delayed due to legal issues. So, on the basis of above explanations and legal provisions I request Your Honour to provide the benefit to the appellant and her husband and oblige. 12. We have heard the rival contentions of both parties and carefully perused the materials available on record. The issue under adjudication is limited to the determination of the correct date to be adopted for the purpose of valuation under stamp duty – whether it is the date of the original agreement to sell dated 30.07.2009 or the date of subsequent registration of the property on 28.06.2016. 12.1 It is not disputed that: (i) An agreement to sell dated 15.02.2008 was executed between Mrs. Taranjot Kaur and Shri Gurdeep Singh, under which Shri Gurdeep Singh acquired a right to further enter into agreements concerning the said property. (ii) Pursuant to such right, Shri Gurdeep Singh entered into an agreement to sell with the assessee on 30.07.2009 concerning the same property. 16 (iii) In accordance with the said agreement dated 30.07.2009, the assessee made a payment of ₹1.5 crores through proper banking channels. (iv) Shri Gurdeep Singh was litigating before the courts on behalf of Mrs. Taranjot Kaur regarding the ownership/title to the said property. (v) The Hon’ble High Court, vide judgment dated 05.09.2014, decided the dispute in favour of Mrs. Taranjot Kaur, thereby regularising the title in her favour. (vi) It is also not in dispute that the original agreement dated 15.02.2008 provided the right to Shri Gurdeep Singh to nominate or substitute any other person in his place as the purchaser. (vii) Furthermore, a tripartite agreement/fresh agreement was entered into, whereby the assessee and his wife agreed to pay the sale consideration of ₹4,00,00,000 either to Shri Gurdeep Singh or directly to Mrs. Taranjot Kaur. (viii) It is equally undisputed that the tripartite agreement must be construed holistically. Selective reliance on isolated clauses by the Assessing Officer is misplaced, as the interpretation must account for the entire contractual framework and the surrounding factual matrix. 13. In light of the above, we find no infirmity in the well-reasoned order of the Learned CIT(A). The CIT(A), after a comprehensive examination of the facts and legal position, rightly held that the date of the original agreement to sell dated 30.07.2009 should be adopted as the relevant date for the purpose of determining the stamp duty valuation under section 56(2)(vii)(b). The subsequent increase in the circle rate as of the date of registration in 2016 cannot be a ground to deny the benefit where substantial payments had 17 already been made based on the 2009 agreement, and the parties were engaged in legal proceedings to establish and perfect their title.It is also pertinent to note that the genuineness of the agreement dated 30.07.2009 cannot be disregarded merely due to delayed registration, especially when the payments were made through banking channels, and the legal rights were being actively pursued and ultimately affirmed by the Hon’ble High Court. 14. Accordingly, in view of the second proviso to section 56(2)(vii)(b), which provides that if the date of agreement and date of registration are different, and part of the consideration has been paid by account payee cheque or bank draft or by electronic clearing, then the stamp duty valuation as on the date of the agreement shall be adopted – we hold that the date of the agreement to sell dated 30.07.2009 shall be considered for valuation purposesand no addition can be made under the provisions of Section 56(2)(vii)(b) of the Act. We, therefore, uphold the findings of the Ld. CIT(A) and dismiss the appeal filed by the Revenue. 15. In the result, appeal filed by the Revenue in ITA No. 806 /Chd/ 2024 is dismissed. ITA No. 89/Chd/2024 16. Since we have already dismissed the Revenue's appeal by holding that the agreement dated 30.07.2009 shall be considered for stamp duty valuation under the Income Tax Actand no addition can be made under the provisions of Section 56(2)(vii)(b) of the Act., we find it appropriate to apply the same reasoning to the appeal filed by the assessee in ITA No. 89/Chd/2024. 17. The assessee in the said appeal is the wife of the original assessee and is a co-signatory as well as a beneficiary of the transaction relating to the subject property. There is no distinguishing fact or legal proposition that warrants a 18 different view. Accordingly, on the principles of consistency and parity, the appeal of the assessee is allowed. 18. In the result, the appeal of the assessee in ITA No. 89/Chd/2024 stands allowed. Order pronounced in the open Court on 24/04/2025. Sd/- Sd/- क ृणवȶ सहाय लिलत क ुमार (KRINWANT SAHAY) (LALIET KUMAR) लेखा सद˟/ ACCOUNTANT MEMBER Ɋाियक सद˟ /JUDICIAL MEMBER AG आदेश की Ůितिलिप अŤेिषत/ Copy of the order forwarded to : 1. अपीलाथŎ/ The Appellant 2. ŮȑथŎ/ The Respondent 3. आयकर आयुƅ/ CIT 4. िवभागीय Ůितिनिध, आयकर अपीलीय आिधकरण, चǷीगढ़/ DR, ITAT, CHANDIGARH 5. गाडŊ फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar "