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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI
Before: SHRI KULDIP SINGH
Per : Kuldip Singh, Judicial Member:
The assessee by filing the present appeal, sought to set aside the impugned order dated 28.02.2023 passed by the National Faceless Appeal Centre(NFAC) [Commissioner of Income Tax (Appeals), Delhi] (hereinafter referred to as CIT(A)] qua the assessment year 2018-19 on the grounds inter-alia that :- “First Ground of Appeal: 1. The Commissioner of Income Tax (Appeals) erred in confirming addition of Rs.5,81,264 under section 56(2)(x).
2. He failed to take into consideration that the difference between the fair value reported in the report of District Valuation Officer and the actual purchase consideration was within the permissible tolerance limit of 5% as stated in section 56(2)(x).
3. The appellant prays that the addition of 5,81,264 under section 56(2)(x) be deleted.”
2. Briefly stated facts necessary for consideration and adjudication of the issues at hand are : the return of income filed by the assessee for the year under consideration declaring total income at Rs.6,30,42,304/- was subjected to scrutiny. The Assessing Officer (AO) noticed that the assessee had purchased immovable property for the sale consideration of Rs.75,00,000/- on 12.02.2008, the stamp value of which was determined at Rs.80,81,264/-. The assessee was called upon to furnish the detail regarding the applicability of the provisions contained under section 56(2)(x) of the Income Tax Act, 1961 (for short ‘the Act’). Since the assessee has failed to file any response to the show cause notice the AO proceeded to invoke the provisions contained under section 56(2)(x) of the Act and thereby made the addition of Rs.5,81,264/- being the difference in the purchase value and stamp duty value of the property in question. The AO accordingly framed the assessment under section 143(3) of the Act.
3. The assessee carried the matter before the Ld. CIT(A) by way of filing appeal who has confirmed the addition by dismissing the appeal. Feeling aggrieved with the impugned order passed by the Ld. CIT(A) the assessee has come up before the Tribunal by way of filing present appeal.
I have heard the Ld. Authorised Representatives of the parties to the appeal, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and law applicable thereto.
Undisputedly the assessee has purchased the immovable property during the year under consideration for a sale consideration of Rs.75,00,000/-. It is also not in dispute that the stamp value of the property in question was Rs.80,81,264/-. It is also not in dispute that during the assessment proceedings the assessee was not given adequate opportunity on the pretext that the case is getting time barred and report of District Valuation Officer (DVO) qua the property in question was not received. It is also not in dispute that before the Ld. CIT(A) the report of DVO dated 23.01.2023 qua the property in question was received as has been extracted in para 6.2 of the impugned order.
In the backdrop of the aforesaid undisputed facts the Ld. A.R. for the assessee contended that since the valuation of the property as per valuation report (supra) is Rs.76,59,275/- as against stamp value of the property at Rs.80,81,264/- the difference of Rs.80,81,264/- (–) Rs.76,59,275/- is less than 5%, in which case provisions contained under section 56(2)(x) of the Act are not attracted. In the alternative the Ld. A.R. for the assessee contended that even as per the amended provisions vide which threshold limit has been enhanced to 10% provisions contained under section 56(2)(x) of the Act are not attracted.
However, on the other hand, the Ld. D.R. for the Revenue to repel the argument addressed by the Ld. A.R. for the assessee contended that the amendment is prospective in nature and the assessee is not entitled for getting benefit qua the threshold limit of 10%.
However, this issue is no longer res-integra as has been decided by Tribunal in case of Thiduvil Balakrishnan vs. DCIT (2023) 151 taxmann.com 484 (Chennai-Trib.).
We have perused the order passed by the co-ordinate Bench of the Tribunal in case of Thiduvil Balakrishnan (supra) wherein it is held that the amendment made to section 50C enhancing the threshold limit of 10% w.e.f. 01.04.2021 as per Act No.12 of 2020 is retrospective in nature as has been clarified in the explanatory notes to Finance Act, 2020. So the principle applicable to section 50C is applicable to section 56(2)(x) of the Act of the Act and the amendment made by Finance Act, 2020 is retrospective in nature and applicable to the facts and circumstances of the case.
So when we examine the case of the assessee wherein the assessee has purchased the property for Rs.75,00,000/- as against the stamp duty valuation of Rs.80,81,264/-. Even by ignoring the DVO report (supra) the assessee is covered under the threshold limit of 10% in which case provisions contained under section 56(2)(x) of the Act are not attracted.
In view of what has been discussed above the Ld. CIT(A) has erred in confirming the addition of Rs.5,81,264/- made by the AO under section 56(2)(x) of the Act which is ordered to be deleted.
Resultantly, the appeal filed by the assessee is hereby allowed.
Order pronounced in the open court on 25.07.2023.