Section 56 of Income Tax Act, 1961— In the instant case, appeal is filed by assessee against the order of CIT. Ground of appeal is related to sustaining the addition of Rs. 62,02,000/- made u/s 56(2)(vii)(b) of the act.

The AO was of the view that the transaction attracts provisions of section 56(2)(vii)(b) of the Act since the purchase price of the property was less than the stamp duty value, hence, issued show cause notice to the assessee as to why the said difference amount of Rs. 62.02 lakhs should not be treated as income from other sources. The .CIT(A) held that the AO has rightly invoked the provisions of 56(2)(vii)(b). 

Held that— there is no dispute that there was agreement and both the parties have agreed. The assessee has made the payments as per the agreements which were acknowledged by the recipient, the cheque payment also was made in the bank account to clear the debt of the vendor which was evidenced in the plaintiff copy filed before the District Judge. Therefore, there is no reason to disbelieve the submissions made by the assessee in the civil suit filed before the Hon’ble District Judge and the case of the assessee is squarely covered as exception as per proviso to section 56(2)(vii)(b) of the act and accordingly, we, hold that there is no case for invoking the provisions of section 56(2)(vii)(b) to tax the difference amount between the SRO value and the actual consideration paid as income from other sources. Accordingly, the orders of the lower authorities are set aside and the appeal of the assessee is allowed.[D.S.N. MALLESWARA RAO VERSUS INCOME TAX OFFICER WARD-2 (3) GUNTUR] [2019] 16 ITCD Online (36) [ITAT VISAKHAPATNAM]