ASLAM SADULE KHAN,RAIGAD vs. ITO WD-4, PANVEL

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “A”, PUNE BEFORE SHRI RAMA KANTA PANDA, VICE PRESIDENT AND Ms. ASTHA CHANDRA, JUDICIAL MEMBER

ITA No. 632/PUN/2026 Assessment Year : 2016-17 Aslam Sadule Khan, Income Tax Officer, National Palace, Ward-4, Shivaji Chowk Khalapur Khopoli vs. Panvel Raigad, Maharashtra-410203. PAN : AJIPK6083C (Appellant) (Respondent) Assessee by : Shri Hari Krishan Department by : Shri Uodol Raj Singh, DR Date of Hearing : 16-06-2026 Date of Pronouncement : 07-09-2026 O R D E R PER ASTHA CHANDRA, J.M.:

The appeal filed by the assessee is directed against the order dated 11-12-2025 of the Ld. Commissioner of Income Tax (Appeals), NFAC, Delhi [“CIT(A)/NFAC”], u/s. 250 of the Income Tax Act, 1961 (the “Act”), pertaining to Assessment Year (“AY”) 2016-17.

2 ITA No. 632/PUN/2026 Rs.3,91,00,000/-, vide Purchase Deed dated 01-07-2015. The entire consideration was paid through account payee cheque. On perusal of the deed, it was noted by the Ld.AO that the purchase consideration was lower than the stamp duty valuation of Rs.6,00,00,000/- determined by the Stamp Duty Valuation Authority. The Ld.AO was of the opinion that as per Section 56(2)(vii)(b) of the Act, where any immovable property is purchased for a consideration less than its stamp duty value by more than Rs.50,000/-, the difference is taxable as "Income from Other Sources”. Accordingly, in the instant case, the difference of Rs.2,09,00,000/- is chargeable to tax. During the assessment proceedings, the assessee explained that the property is under litigation for cancellation of sale deed and injunction filed by the seller and that the market value of Rs.3,91,00,000/- reflects the true price, while the stamp value is excessive. Hence, the matter was referred to the Departmental Valuation Officer (“DVO”). However, since the assessment was getting time-barred on 31-12-2018, the Ld.AO finalized the assessment u/s. 143(3) of the Act, vide order dt. 28-12-2018, determining the total income at Rs.2,20,54,390/- by making addition of Rs.2,09,00,000/-, subject to rectification upon receipt of the DVO's report. Subsequently, the DVO‟s report was obtained on 03-06-2019 wherein the Fair Market Value (“FMV”) of the impugned property was determined to be Rs. 4,03,10,000/-.

“5. Discussion and appellate decision:- Submission filed by the appellant inter alia facts mentioned in the assessment order have been duly considered. During the assessment proceedings, the Ld. A.O. has found that the appellant had purchased land for a consideration of Rs.3,91,00,000/-, whereas fair market value has been determined by the Stamp Duty Valuation Authority at Rs.6,00,00,000/-. Accordingly, valuation of the land was referred to Departmental Valuation Officer by the Ld. AO. However, to avoid

3 ITA No. 632/PUN/2026 limitation issues the A.O. added Rs.2,09,00,000/- difference between stamp duty value and sale consideration to the total income of the appellant under the head "income from other sources" u/s.56(2)(vii)(b) of the Act subject to amendment u/s. 155(15) r.w.s. 154 of the Act. From the record, it is very clear that the DVO has determined the fair market value of the said land at Rs.4,03,10,000/-, vide his report dated 03.06.2019. Accordingly, the AO passed a rectification order u/s.154 r.w.s. 143(3) of the I.T. Act on 19.02.2019 taking fair market value of the land at Rs. 4,03,10,000/- as determined by Valuation Officer accordingly reducing the addition to Rs. 12,10,000/-. However, the appellant, vide the above submission, has raised modified grounds of appeal, challenging the order passed u/s. 154 r.w.s. 143(3) of the Income-tax Act, by the Ld. A.O. on 19.02.2019, on the ground that the said order is bad both in law and on facts, having been passed without any specific findings or cogent reasoning for making the addition to the returned income. Since the Ld. A.O. has correctly passed the order u/s.154 r.w.s. 143(3) of the Income-tax Act, 1961, on the basis of the valuation report of the DVO and after duly considering the fair market value determined therein, no relief can be granted on the modified grounds of appeal. It is a settled position of law that any relief can be claimed only through specific grounds raised in the appeal memorandum. Accordingly, the modified grounds of appeal filed by the appellant are hereby dismissed.”

“1) The impugned appellate order dated 11.12.2025 passed by the Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) has erred in law and on facts in confirming the assessment order passed by the Learned Assessing Officer (AO), which is bad in law, arbitrary, unjustified, and contrary to the provisions of the Income-tax Act, 1961. 2) The Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC) has erred on the facts and in the circumstances of the case and in law, by upholding the primary addition of Rs.2,09,00,000/- made under section 56(2)(vii)(b) of the Income-tax Act, 1961, which is unsustainable and liable to be deleted in entirety. 3) The Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), failed to appreciate that the Ld. A.O passed order u/s 154 r.w.s 143(3) dated 19.06.2019 (during the appellate proceeding) on the basis of the findings to the Departmental Valuation Officer (DVO), stating that the fair market value of the property was determined at ₹4,03,10,000/-, and the difference between such value and the actual purchase consideration of ₹3,91,00,000/- is only ₹12,10,000/-. 4) The Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), erred in law in sustaining the addition despite the fact that the difference between the considerations paid and the fair market value as determined by the DVO is less than 10% of the consideration, and therefore falls within the permissible tolerance limit. 5) The Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), erred in not following the consistent judicial precedents of various Hon'ble ITAT Benches which have held that no addition under section 56(2)(vii)(b) is warranted where the discrepancy between consideration and stamp duty / fair market value does not exceed 10%.

4 ITA No. 632/PUN/2026 6) The Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), failed to appreciate that section 56 is a deeming provision and, in view of settled judicial principles, no addition can be made where the statutory conditions are not strictly satisfied, particularly when the variation is within the prescribed safe harbour limit. 7) The appellant craves leave to delete or to modify, alter or amend any or all of the above grounds of appeal.”

5 ITA No. 632/PUN/2026 provisions of section 56(2)(vii)(b) of the Act subject to any change in the amount of addition on receipt of DVO‟s report. Subsequently, DVO‟s report was received on 03-06-2019, wherein the FMV of the impugned property was determined at Rs. 4,03,10,000/- and the addition was reduced to Rs. 12,10,000/- by the Ld.AO, vide his order passed u/s. 154 r.w.s 143(3) dated 19-06-2019. The assessee filed modified grounds of appeal before the Ld.CIT(A)/NFAC since the DVO‟s report was obtained at the time of appellate proceedings, however, the Ld.CIT(A)/NFAC upheld the addition of Rs. 2,09,00,000/- made by the Ld.AO in his original assessment order u/s. 143(3) of the Act and dismissed the appeal of the assessee for the reasons which we have already reproduced in the preceding paragraphs. It is the submission of the Ld. Counsel for the assessee that the difference between the consideration paid by the assessee and the FMV determined by the DVO falls within the permissible tolerance limit of 10% and hence, the addition sustained by the Ld.CIT(A)/NFAC is unsustainable. We find that the DVO determined the FMV of the impugned property at Rs. 4,03,10,000/- as against the actual purchase consideration of Rs. 3,91,00,000/- and therefore, the difference of Rs. 12,10,000/- becomes taxable under the provisions of section 56(2)(vii)(b) of the Act. However, the said difference falls within the permissible tolerance limit of 10% as per 3rd proviso to section 50C(1) of the Act. We find that the Tribunal in various cases has decided the impugned issue in favour of the assessee holding that no addition u/s. 56(2)(vii)(b) of the Act is warranted where the difference between the consideration and the Stamp Duty/FMV falls within the permissible limit of 5% / 10%. The tolerance limit of 5% was introduced by the Finance Act, 2018 w.e.f. 01-04-2019 by way of 3rd proviso to section 50C(1) r.w.s. 56(2)(vii)(b) of the Act. The 5% limit has been substituted by 10% by the Finance Act, 2020 w.e.f. 01-04-2021. We find that there are several decisions of the Co-ordinate Bench(es) of the

6 ITA No. 632/PUN/2026 Tribunal, wherein the applicability of the said proviso has been held to have retrospective effect. Thus, the impugned issue is no more res integra. Considering the totality of the facts and in the circumstances of the case, in our view, the addition made by the Ld.AO and sustained by the Ld.CIT(A)/NFAC u/s. 56(2)(vii)(b) of the Act is not sustainable and hence, we set aside the order of the Ld.CIT(A)/NFAC and direct the Ld.AO to modify the assessment, after due verification of the claim of the assessee, after providing reasonable opportunity of being heard to the assessee. The grounds of appeal raised by the assessee are accordingly allowed.

Sd/- Sd/- (RAMA KANTA PANDA) (ASTHA CHANDRA) VICE PRESIDENT JUDICIAL MEMBER पुणे/Pune; दिन ांक/Dated : 07-09-2026 Tadepalli Naga Digitally signed by Tadepalli Naga Murali Mohan TNMM Murali Mohan Date: 2026.09.08 11:56:16 +05'30' आिेश की प्रदिदिदप अग्रेदिि / Copy of the Order is forwarded to: 1. अपीि र्थी / The Appellant 2. प्रत्यर्थी / The Respondent 3. The concerned Pr.CIT, Pune 4. DR, ITAT, „A‟ Bench, Pune 5. ग र्ड फ ईि / Guard file. आदेशानुसार/ BY ORDER, // True Copy // Assistant Registrar आयकर अपीिीय अदिकरण ,पुणे / ITAT, Pune