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TMI Blog2025 (4) TMI 982X X X X Extracts X X X X X X X X Extracts X X X X ..... ned Assessing Officer is right making & Learned CIT (Appeal) in confirming the additions of Rs. 8,46,000/- to the returned income of the Appellant? 4. Appellate crave to add, amend, modify, alter, revise, substitute, delete any or all grounds of appeal, if deemed necessary at the time of hearing of the appeal." 3. In this case, the assessee is an Individual. For the year under consideration, on 29/11/2014, the assessee filed his return of income disclosing total income at Rs. 2,65,770, after claiming deduction under Chapter-VI-A at Rs. 1,00,000. The books of account of the assessee have been audited under section 44AB of the Income Tax Act, 1961 ("the Act") and Audit Report was furnished on 2/11/2014. The assessee purchased an immovable property as a co-owner from M/s. Sri Balaji Betala INfracon, Nagpur, for a consideration of Rs. 25,92,000. However, the Assessing Officer found that the market value of the said immovable property was Rs. 42,84,000, vide sale deed registration executed on 15/03/2014. The Assessing Officer was of the view that according to the provisions of section 56(2)(vii)(b) of the Act, if any immovable property for a consideration which is less than the stamp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amendments by way of CBDT circular, etc. The Assessing Officer again sought explanation from the assessee in response to which the assessee, vide reply dated 25/12/2021, reiterated that the provisions of the said section 56 of the Act are not applicable in his case, which were rebutted by the Assessing Officer in his assessment order vide Para-8 therein. Accordingly, the Assessing Officer, while concluding the assessment, held as under:- "11. Vide show cause notice dated 27.01.2022 containing draft assessment order as discussed above, assessee was provided one final opportunity to comment on proposed addition. But, assessee did not respond to the show cause notice before the due date mentioned in show cause notice. In the absence of any reply from assessee, assessment order is passed based on draft assessment order. 12. The assessment of income is done as per computation sheet and the sum payable is determined as per the demand notice. 13. Assessee has not declared income to the extent of Rs. 8,46,000/- under the provisions of Income Tax. This amounts to under reporting of the income. Hence, penalty proceedings u/s. 271(1)(c) of the IT Act for under-reporting is initiated sep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iib) read with the provisos below, are squarely applicable in this case. Therefore, as per the 1st proviso below that Section, which provides that, where date of agreement, fixing the amount of consideration, for the transfer of immovable property and the date of registration are not same, the stamp duty value on the date of agreement may be taken for the purpose of sub-clause (b) of Clause (vii) of sub-section 2 of Section 56. In this case, in the duly registered agreement of sale, dated 29.05.2012, the Market Value of the property, was determined for Rs. 42,84,000/-, on which Stamp Duty of Rs. 2,35,620/-was paid, by the assessee, along with his joint owner. The Market Value on the date of actual registration, dated 15.03.2014, was also the same value of Rs. 42,84,000/-. Therefore, even if the Market Value as on the date of agreement of sale is considered, it is not different from the Market Value on the date of actual registration of the property. Therefore, I do not find any merit in the appeal filed by the assessee and the addition made by the AO, for Rs. 8,46,000/- u/s. 56(2)(viib), is completely upheld. 6. The appeal of the assessee is, therefore, dismissed." The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision cited, this Tribunal has considered the decision of Hon'ble Supreme Court in the case of K.P. Varghese and held that the provisions of section 50C which were not available in the statute cannot be applied during the interim period. For the sake of clarity and convenience, we extract relevant part of the order of the Ld.CIT(A) in 6.3 and 6.4 which reads as under: 6.3. On a careful perusal of the judicial pronouncement cited by the appellant, I find that the facts are almost identical in nature to the facts of the appellant's case. In the said case of M. Siva Parvathi & Drs., (Supra) the decision was rendered in the context of s. SOC of the Act. s.56(2)(vii)(b) is nothing but an extension of the provisions of s.50C of the Act. The provisions of s. SOC are applicable to the vendor and the provisions of s.56(2)(vi) (b) are applicable to the buyer. But for this difference, the provisions are identical in all respects. In the case before the Hon'ble ITAT, Visakhapatnam Bench the agreement was entered into in August, 2001 and the sale took place in October, 2004. In the interim period, the provisions of s.50C were introduced we.f. AY. 2003-04. Thus, the agreement w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ical to the facts of the appellant. The agreement was entered mt6 prior to insertion of the provisions of s.56(2)(vii)(b) of the Act and the sale deed was registered subsequent thereto. Therefore, respectfully following the decision of the jurisdictional bench, I hold that the provisions of s.56(2)(vii) (b) are not applicable to the appellant and I hereby direct the Assessing Officer to delete the entire addition of Rs. 4,55,11,750/-. Thus, the appeal made by the appellant on this ground stands allowed." 6.1. Hon'ble Supreme Court in the case of K.P. Vargheese observed that the vendor has fulfilled the contractual obligation which was cast up on him by sale agreement. It was held by the Hon'ble Apex court in Nirmal Textiles that the character of the transaction vis-à-vis I.T. Act to be decided on the basis of the law that is prevalent as on the date of transaction which was initially entered into. Final transaction was only the fulfilment of the contractual obligation, thus, this Tribunal viewed that the proviso which was not in existence at the time of entering into the transaction would not apply at the time of completion of the transaction also. As observed fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the assessee's case and deleted the addition. Hence, we do not find any infirmity in the order of the Ld.CIT(A) and the same is upheld. 7. Ground No.(vi), (vii) and (viii) are related to the adoption of fair market value as certified by the registered valuer for the purpose of section 56(2)(vii)(b) of the Act. Since, we have decided the appeal on the issue with regard to application of provision of section 56(2)(vii) (b) in favour of the assessee and against the revenue, we consider, it is not necessary to adjudicate the ground Nos. (vi), (vii) and (viii), though the Ld.AR argued that the assessee's case is covered by the decision of this Tribunal in the case of Venkateswara Vara Prasad Rao Karipineni in I.T.A.No.178/Viz/2019 dated 15.11.2019. Accordingly, the appeal of the revenue is dismissed." 9. Since the issue for our adjudication being identical, consistent with the view taken therein in Revenue's cited supra, respectfully following the findings given therein, we find no scope to differ from the above view. Accordingly, the impugned order passed by the learned CIT(A) is hereby reversed by allowing all the grounds raised by the assessee. 10. In the result, appea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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