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Facts
The assessee purchased a property for Rs. 47 lakhs, but its market value was assessed at Rs. 50,12,500/-, leading to an addition of Rs. 3,12,500/- to their income under Section 56(2)(vii) by the AO. The assessee appealed, arguing for the application of a 10% tolerance limit as provided for sellers under Section 50C.
Held
The Tribunal upheld the CIT(A)'s order, which had confirmed the AO's addition. The CIT(A) found that the valuation by the valuation officer was significantly higher (141% of stamp value) than the declared purchase consideration (66% of market value), distinguishing it from cases where the 10% tolerance might apply. The Tribunal found no new facts to deviate from the CIT(A)'s lawful findings.
Key Issues
Whether the 10% tolerance limit available to sellers under Section 50C should also be extended to buyers under Section 56(2)(vii) when there is a difference between the stamp duty value and the declared consideration of an immovable property.
Sections Cited
250, 56(2)(vii), 50C
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Income Tax Appellate Tribunal, “SMC” BENCH, MUMBAI
Before: SHRI SANDEEP GOSAIN
Date of Hearing 01.09.2025 Date of Pronouncement 22.09.2025 ORDER Per: SHRI. SANDEEP GOSAIN, J.M.:
The present appeal has been filed by the assessee challenging the impugned orders dt. 15.05.2025 passed under section 250 of the Income Tax Act, 1961 (‘the Act’), by the National Faceless Appeal Centre (NFAC) / CIT(A) for the assessment year 2015-16.
None appeared on behalf of the assessee when the case was called repeatedly. Even no application for seeking adjournment has been filed. On the other hand, Ld. DR present in the court is ready with arguments, therefore I have decided to proceeded with the hearing of this appeal ex-parte.
As per the facts of the present case, the assessee purchased one property for Rs. 47 lakhs as per the purchase agreement. However, the market value of the property is assessed at Rs. 50,12,500/-, thus disallowance u/s 56(2)(vii) of the Act and the difference of the same i.e 3,12,500/- is added to the total income of the assessee.
Although the assessee challenging the said order by filing appeal Ld. CIT(A) after considering the facts of the present case adjudicated the same vide its order dated 15.05.2025. The operative portion of the order of Ld. CIT(A) is contained para 5, which is reproduced herein below:
The sum and substance of appellant's contention vide the grounds raised and submission made is that AO erred in making an addition on account of difference of Rs. 3,12,500/- in Stamp Duty Value & Consideration paid u/s 56(2)(vii) and that section 50C and section 56(2)(vii) are identical provision and benefit given to seller of 10% of tolerance limit u/s 50C of the Income Tax Act, 1961 shall also be given to buyer under section 56(2)(vii) of the act. Appellant is contending that difference between stamp duty value and consideration paid is Rs. 3,12,500/- which is less than 10percent of the value of the property. Further, appellant submitted that the section 50C and 56(2)(vii)(b)(ii) are identical provisions. Only difference being, section 50C is applicable to the seller of an immovable property, whereas, the later provision is applicable to the buyer of the property. Therefore, a benefit given to a seller of the property in respect of marginal variation cannot be denied to the buyer of the property, since, they stand on the same footing. Thus, if the difference in valuation between the value determined by the stamp duty authority and the declared sale consideration is less than 10 per cent, no addition can be made under section 56(2)(vii)(b)(ii).
AO to ascertain the market price by referring for valuation of the property under valued the property at Rs. 70,80,144/-. Whereas, it is further undisputed that consideration, Whereas it is undisputed that valuation report dated 15.09.2022 has appellant declared purchase consideration of Rs. 47,00,000/- and the Stamp Value of the property was at Rs. 50,12,500/-.
After perusal of the facts and circumstances of the case vis a vis the submission put forth by appellant, this appeal is inclined to adhere to the view taken by AO, It is worthy to note that this case is such in which valuation by valuation officer is significantly higher to the stamp value of property. It is seen valued @141% of the stamp value. Further, the retrospective effect to the section charged / applicable i.e. 56(2)(vii)(b) is not provided by statute. The very fact remains the same that market rate assessed by the valuation officer is significantly high to even stamp value and appellant is merely declaring purchase consideration at Rs. 47,00,000/- which is 66% of market value of the property. Therefore, these set of facts are itself distinguishing the case in hand from the case laws quoted by appellant. Therefore, this appeal is of considered opinion that the provision of statute as applicable for the year in consideration are required to be strictly executed.
In view of above, this appeal finds no reason to interfere with the action of AO in charging the difference of Rs. 3,12,500/- u/s 56(2)(vii) of the Act. Addition made is confirmed and grounds raised are accordingly dismissed.
6. In effect, the appeal is dismissed.
No new facts or circumstances have been brought before me during the course of appeal, in order to controvert or rebut the findings so recorded by Ld.CIT(A). Therefore I have no reasons to deviate from the lawful findings so recorded by Ld. CIT(A). Hence, I uphold the
In the result, the appeal filed by the assessee stands dismissed.
Order pronounced in the open court on 22/09/2025