MR. SHANTILAL GOVIND PATEL ,MUMBAI V. ITO 27(3)(1), MUMBAI

ITA 1608/MUM/2025

AI Insights

The case involves an appeal by Mr. Shantilal Govind Patel against the order of the National Faceless Appeal Centre/Commissioner of Income Tax, which upheld the addition of Rs. 87,84,092 under section 56(2) of the Income Tax Act, 1961. The addition was based on the difference between the declared value of a property transaction and its stamp duty valuation. The assessee argued that the transaction value should be considered from the year of payment (2009), not the year of the registered agreement (2017). The Tribunal referenced similar cases and precedents where it was held that if part consideration is paid by cheque or electronic mode, the stamp duty value on the date of the agreement should be considered.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 633406 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2018-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SATYAPRAKASH R.SINGH
• Assessee Lawyers: NILESH JOSHI
• Keywords: Opportunity of being heard; Sale consideration of property below Jantri Value
• Section: 56(2)

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL, ‘B’ BENCH MUMBAI BEFORE: SHRI PAWAN SINGH, JUDICIAL MEMBER & SHRI OMKARESHWAR CHIDARA, ACCOUNTANT MEMBER ITA No. 1608/MUM/2025(AY: 2018–19) (Physical hearing) Mr. Shantilal Govind Patel 235/6137 Shiv Darshan Building, Pant Nagar, Ghatkopar (East), Mumbai-400077. Vs. ITO, 27(3)(1), Mumbai ITO, Vashi Railway Station Building, Navi Mumbai-400703. PAN: AFQPP6370R (Appellant) .. (Respondent) Assessee by Shri. Nilesh Joshi Advocate Revenue by Shri. Satyaprakash R. Singh, CIT- DR Date of Hearing 11/06/2025 Date of Pronouncement 13/06/2025 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by the assessee is directed against the order of National Face Less Appeal Centre (NFAC)/ Learned Commissioner of Income Tax [Ld. CIT(A)] dated 26.02.202025 for A.Y. 2018-19. The assessee has raised the following grounds of appeal: “ 1. The learned Assessing Officer has erred in making the addition of Rs. 87,84,092/- and made addition under section 56(2) of the Income Tax Act, 1961 upheld by Commissioner of Income Tax. 2. The learned Assessing Officer has erred in passing order hurriedly without giving any opportunity of being heard. ITA 1608/Mum/2025 . Shantilal Govind Patel (AY 2018-19) 2 2. Rival submissions of both the parties and record perused. The learned Authorised Representative (ld. AR) of the assessee submits that during Assessment Year (AY) 2010-11 the assessee purchased a flat from Aditya Enterprises for a consideration of Rs. 35,25,000/-. The builder issued an allotment letter dated 09.07.2009. The allotment letter contained various terms and conditions. Such terms and conditions of allotment letter were duly accepted by assessee on 10.07.2009. Copy of allotment letter dated 09.07.2009 and bearing the acceptance of assessee on 10.09.2009 is placed on record. As per agreed condition of allotment letter, the assessee paid a sum of Rs. 22,90,000/- through cheque drawn on Bank of India, Ghatkopar (East), Mumbai. Copy of bank statement showing clearance of cheque no. 46178 of Rs. 7,00,000/-, cheque no. 46179 of Rs. 8,00,000/- and cheque no. 46180 of Rs. 7,90,000/-, is also placed on record. Thus, at the time of entering into agreement with the builder, the assessee has made substantial part of sale consideration to the builder. The assessee was allotted flat no. 8601, ad measuring 728 square feet in a project “Om Shri Shanti Kunj Co-operative Housing Society”, Tilaknagar Chembur. Due to interse dispute, between builder and the society and various sanctions and approvals from Municipal Corporation of Greater Mumbai and other State Government Agency, the builder could not enter into a registered agreement with the assessee. When all the formalities were completed, the builder entered into agreement with the assessee in the assessment year 2018-19. The stamp valuation authority, thus charged / collected ITA 1608/Mum/2025 . Shantilal Govind Patel (AY 2018-19) 3 stamp on such transaction at the rate applicable on ready beckoner value determined by State Government. The assessee accordingly paid stamp duty on the basis of current ready reckoner value applicable on the date of registration agreement. During assessment, the assessing officer noted that there was a difference of Rs. 87.84.092/- vis-à-vis value declared by assessee and the value determined by stamp valuation authority. The assessee in response to show cause notice issued by assessing officer, explained that assessee has purchased property / flat in 2009 vide allotment letter dated 09.07.2009, copy of which was furnished. The assessee made substantial part of payment in 2009 as there was a dispute and change in the government policy the construction work was not started till 2014. The agreement was entered in 2017 though flat was purchased in 2009. The assessee paid part payment by way of cross cheque in 2009. And it was explained that agreement value has to be considered from the year of payment i.e. in 2009. Despite recording all such facts, the assessing officer disregarded the submission of assessee and made addition of Rs. 87.84 lacs under section 56(2) of Income Tax Act. The copy of reply file before assessing officer with acknowledgement of ITBA portal is placed on record. The assessee also furnished the bank statement of assessee to substantiate his contention. On appeal before ld. CIT(A), action of assessing officer was confirmed. The ld. CIT(A) confirmed the action of assessing officer in ex-parte proceedings. In fact notice of hearing under section 250 was not received by assessee. The ld. AR of the assessee further ITA 1608/Mum/2025 . Shantilal Govind Patel (AY 2018-19) 4 submits that in fact grounds of appeal raised by assessee is covered by a series of decision of Mumbai Tribunal including in Manjulaben Himmatlal Jain Vs. ITO in ITA No. 2261/Mum/2024 dated 12.11.2024 and in Pinki Chetan Shah Vs. ACIT in ITA No. 3629/Mum/2023 dated 27.02.2024. The Co-ordinate Bench of Tribunal in the aforesaid cases held that when date of agreement, fixing the amount of consideration for transfer of immovable property is not the same as the date of registration, as per provision to section 56(2)(x)(b), the stamp duty value on the date of agreement may be taken for the purpose of this sub-clause if the assessee has paid part consideration thereof by way of account payee cheque or bank draft or by way of electronic mode. The assessee has paid substantial payment by way of cheque, therefore, no addition under section 56(2) is warranted. The ld. CIT(A) has not considered the material available on record/ITBA system. The ld. AR of the assessee submits that his appeal may be accepted and addition under section 56(2) of Rs. 87,84,092/- may be deleted. 3. On the other learned Commissioner of Income Tax / Departmental Representative (ld. CIT-DR) for the Revenue submits order of ld. CIT(A) is ex-parte. The assessee has not furnished his submission in response to various notices issued by ld. CIT(A). The alleged payment in 2009 has not ben verified either by assessing officer or by ld. CIT(A). The assessing officer allowed video conferencing to the assessee, however, assessee failed to avail such opportunity. There is no written agreement by assessee with the builder in fixing the consideration of immovable ITA 1608/Mum/2025 . Shantilal Govind Patel (AY 2018-19) 5 property in 2009. The assessee has merely filed allotment letter dated 09.07.2009 and bank statement of alleged part payment of consideration. As alleged part payment has not been verified by lower authorities, therefore, matter may be restored back to the file of ld. CIT(A) for passing the order afresh with the direction to assessee to furnish all such evidences. 4. In short rejoinder submissions, the ld. AR of the assessee submits that allotment letter contained various terms and conditions, which was accepted by assessee. The consideration was fixed at the time of issuing allotment letter to the assessee. The payment of part consideration is clearly discernible from the statement in the bank book / pass book of assessee. 5. We have considered the rival submissions of both the parties and have gone through the orders of lower authorities carefully. We find that during assessment, the assessing officer find that assessee has entered into agreement of sale for flat no. A-601, Om Shanti Kunj Building, Tilaknagar Chembur on 07.08.2009 with Aditya Enterprises. The assessee has shown sale consideration of flat at Rs. 35,25,000/-, out of which Rs. 22,90,000/- was made in advance. The stamp valuation authority / Sub Registrar Kurla 3, District Bandar valued the property at Rs. 1,23,09,092/- and collected stamp duty of Rs. 6,15,500/-. Thus, there was a difference of Rs. 87,84,092/-, vis-à-vis the value declared by assessee for purchase of flat and value of flat determined by stamp valuation authority. We find that in response to show cause notice, the assessee explained that he has ITA 1608/Mum/2025 . Shantilal Govind Patel (AY 2018-19) 6 purchased property / flat in 2009 vide allotment letter dated 09.07.2009. The assessee made substantial part of payment in 2009 as there was a dispute and by change in the government policy the construction work was not started till 2014. The agreement was entered in 2017 though, the said flat was purchased in 2009 and part payment of consideration was paid by way of cross cheque in 2009. The assessee made submission that agreement value has to be considered from the year of payment i.e. in 2009. The assessing officer instead of giving any finding on the facts brought on record, straightway made addition of difference of Rs. 87,84,092/-, that is value determined by stamp valuation authority and the value declared by assessee. The ld. CIT(A) confirmed the action of assessing officer in ex-parte proceedings. Before us, the ld. AR of the assessee has filed copy of allotment letter issued on 09.07.2009, showing/ fixing the amount of consideration of Rs. 35,25,000/- of Flat no. A-601 as well as evidence of substantial part of the part payment of consideration of Rs. 22,90,000/-, which is otherwise not disputed by assessing officer. The assessing officer made addition by taking view that assessee was allowed video conferencing, which the assessee failed to join and he has nothing to say. We find that case of assessee is clearly covered by the exception of first and second proviso of section 56(2)(x)(b) as the assessee has shown prima facie evidence of fixing the sale consideration in 2009 and part payment through banking channel in July, 2009 itself. However, such fact is not verified by assessing officer, therefore, jurisdictional assessing officer is ITA 1608/Mum/2025 . Shantilal Govind Patel (AY 2018-19) 7 directed to verify the aforesaid both the facts and allow relief to the assessee. Needless to direct the before passing the order the assessing officer shall allow reasonable opportunity to the assessee. The assessee is also directed to provide requisite detail and evidence to the assessing officer. In the result, grounds of appeal raised by assessee are allowed for statistical purpose. 6. In the result, the appeal of the assessee is allowed for statistical purpose. Order pronounced in the open Court on 13.06.2025. Sd/- Sd/- GI OMKARESHWAR CHIDARA ACCOUNTANT MEMBER ACCOUNTANT MEMBER PAWAN SINGH JUDICIAL MEMBER MUMBAI, DATED: 13.06.2025 Biswajit Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Mumbai; and (5) Guard file. By Order Assistant Registrar ITAT, Mumbai "