During the year, the assessee had purchased a residential house property which was why her case was selected for scrutiny under CASS. The AO after considering the assessee’s submission and on application of mind, found no malicious component to the purchase transaction. Accordingly, no addition was made to this regard. However, the CIT observed that the stamp duty value was significantly higher than the purchase consideration and therefore the AO ought to have made addition under the amended section 56(2)(vii)(b) and therefore the order passed by the AO was erroneous and prejudicial to the interest of the revenue.

On appeal by the assessee against the order passed under section 263, the Hon’ble Tribunal adjudicated the matter in favor of the assessee and held that where a valid and lawful agreement was entered by the parties prior to 1 April 2014 but the property was registered after said date, the provisions of the section 56(2)(vii)(b), as it stood prior to its amendment, shall apply. Further, the pre amended law did not cover a situation where an immovable property was received by an individual/ HUF for a consideration (whether adequate or inadequate) less than the stamp duty valuation by an amount exceeding Rs. 50,000/-which was provided for by way of amendment by the Finance Act, 2014 and operative from 1 April 2014 (applicable from AY 2015-16 onwards). Reliance is also placed on the decision of the Hon’ble Ranchi Tribunal in the case of Bajranglal Naredi vs. ITO (2020) 203 TTJ 925 (Ranchi). Accordingly, assessment order passed after due consideration of all facts but without invoking the provisions of the amended section 56(2)(vii)(b) cannot be said to be erroneous and prejudicial to the interest of the revenue and consequently the order under section 263 was quashed.  (AY. 2015-16)