POONAMCHAND NATHALAL SHAH,MUMBAI vs. INCOME TAX OFFICER WARD 19(2)(4), MUMBAI

IN THE INCOME-TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI BEFORE SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER & SHRI PRABHASH SHANKAR, ACCOUNTANT MEMBER ITA No.4351/MUM/2026 (A.Y. 2018-19) Poonamchand Nathalal Shah v/s. Income Tax Officer, Ward 503, 504, Silver Arc Building, बनाम – 19(2)(4) Sane Guruji Marg, Opposite Mumbai – 400 034, Gulab Mahal, Tardeo, Mumbai – Maharashtra 400 034, Maharashtra स्थायी लेखा सं./जीआइआर सं./ PAN/GIR No: AOQPS9841D Appellant/अपीलार्थी .. Respondent/प्रतिवादी

Assessee by : Written Submission on record Revenue by : Shri Swapnil Savant, (Sr. AR)

Date of Hearing 08.07.2026 Date of Pronouncement 19.08.2026 आदेश / O R D E R PER PRABHASH SHANKAR [A.M.] :- The instant appeal emanating from the appellate order dated 24.02.2026 is preferred by the assessee against the order passed by the Learned Commissioner of Income-tax (Appeals)/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] pertaining to assessment order passed u/s. 147 r.w.s. 143(3) of the Income-tax Act, 1961 [hereinafter referred to as “Act”] dated 26.12.2023 for the Assessment Year [A.Y.] 2018-19.

P a g e | 2 ITA No. 4351/Mum/2026 A.Y. 2018-19 Poonamchand Nathalal Shah 2. The grounds of appeal are as under: 1. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in confirming the addition of Rs. 4,80,000/-made under section 56(2)(x) of the Act, being alleged difference between stamp duty value and actual consideration, without appreciating that such difference was only 9.4% and squarely within the tolerance band of 10%, and therefore no addition was warranted. 2. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in holding that the tolerance band of 10% provided under section 56(2)(x) is applicable prospectively and not retrospectively, without appreciating that the said amendment is curative, beneficial and intended to remove hardship, and therefore applies retrospectively. 3. On the facts and in the circumstances of the case and in law, the learned CIT[A] has erred in upholding the assessment proceedings initiated and completed in the name of a deceased person, ignoring the settled position of law that such proceedings are void ab initio and without jurisdiction. 4. On the facts and in the circumstances of the case and in law, the learned CIT(A) has erred in confirming the addition without properly appreciating the detailed submissions and judicial precedents placed on record and has passed the order in a mechanical and non-speaking manner, violating principles of natural justice. 3. Brief facts of the case are that the assessee is the legal heir of the assessee, Late Shri Poonamchand Nathalal Shah. The original return of income for AY 2018-19 was filed declaring total income of Rs. 8,51,040/-. The case was reopened under section 147 on the ground that the assessee had entered into a property transaction wherein the stamp duty value exceeded the purchase consideration.It was noted by the AO that the assessee had purchased a residential flat jointly with three family members for a total consideration of Rs. 2,05,00,000/-. The stamp duty valuation of the said property was Rs. 2,24,20,000/-,

P a g e | 3 ITA No. 4351/Mum/2026 A.Y. 2018-19 Poonamchand Nathalal Shah resulting in a difference of Rs. 19,20,000/-. The assessee’s share being 25% amounted to Rs. 4,80,000/-, was added by the Assessing Officer under section 56(2)(x) of the Act. The said difference of Rs.19,20,000/- represented 9.4% of the actual consideration. The Assessing Officer completed the reassessment under section 147 r.w.s. 144B determining total income at Rs.13,31,040/- after making the impugned addition.

P a g e | 4 ITA No. 4351/Mum/2026 A.Y. 2018-19 Poonamchand Nathalal Shah of introducing the tolerance band is to exclude genuine transactions from the rigour of deeming provisions.

5.1 It was further argued that the tolerance band provision is not a new charging provision but a relief provision.It seeks to correct unintended consequences arising from rigid application of stamp duty values.It is a settled principle of law that the provisions like safe harbour values as prescribed under section 56(2)(x) are (a) curative amendment (b) beneficial provisions and (c) it is inserted with the objective of removal ofgenuine hardship to the assessee. In view of the stated purpose and legislative intent such amendment which prescribe safe harbour limit shall be interpreted to have retrospectively applicability.In support of the contention,reliance was placed on coordinate bench decisions in the cases of Maria Fernandes Cheryl v. ITO (Mumbai ITAT),Amrapali Cinema v. ACIT (Delhi ITAT) and Madras High Court decision in CIT v. Vummudi Amarendran (Madras HC) wherein it was held that tolerance band provisions are curative and apply retrospectively and no addition is warranted if variation is within prescribed limits.It is further pleaded that theld. CIT(A) rejected the claim solely on the basis that the amendment is prospective. This approach is legally flawed because it ignores the nature and object of the amendment, disregards binding judicial principles on retrospective

P a g e | 5 ITA No. 4351/Mum/2026 A.Y. 2018-19 Poonamchand Nathalal Shah operation and also adopts a purely literal interpretation defeating legislative intent. He wrongly held that decisions under section 50C are not applicable. The history of insertion of section 56(2)(x) clearly emanates from the already existing provisions in section 50C of the Act. Both provisions are brought in the statute book to address the concern of black money. There were instances of genuine transaction being hit by the provisions because it lacked safe harbour limit and with a view toaddress this genuine concerns the safe harbour limit of 5%/10% were brought in the provisions of section 56(2)(x).Section 50C and section 56(2)(x) operate on identical stamp duty valuation variances.Both deal with same mischief of stamp duty variation. Courts have consistently adopted harmonious interpretation to the effect that the genuine nature of transaction with small differences shall not be subjected to rigours of section 56(2)(x) and 50C more so the tolerance limit shall be made applicable retrospectively. It is submitted that since the difference is only 9.4%, which is within tolerance band, no addition could survive.

P a g e | 6 ITA No. 4351/Mum/2026 A.Y. 2018-19 Poonamchand Nathalal Shah notice is at much later dates and authorities were aware of the fact that assessee died on 5.10.2020.It is a settled position that the assessment proceedings against a dead person are null and void ab initio and such defect is jurisdictional and not curable.

P a g e | 7 ITA No. 4351/Mum/2026 A.Y. 2018-19 Poonamchand Nathalal Shah was applicability of 10% tolerance band under section 56(2)(x). The relevant findings of the coordinate bench are reproduced hereunder:

"18. We have carefully considered the rival contentions and perused the orders of the lower authorities. Referred facts shows that Assessee has purchased 7 properties. Sale consideration in all the properties is 28,78,28,500/- and stamp duty value is Rs 26,96,75,300/- . Thus difference of Rs 1,81,53,200/- was made by the LD AO u/s 56 92) (x) of The Act. The LD CIT found that out of 7 properties in case of 6 properties the difference between the agreed consideration and stamp duty value is approximately 6 %. In the 7th property, such difference was 14.50 % . Therefore, he confirmed the addition of 7 th properties and deleted the addition with respect to 6 properties holding that Proviso to section 50 C inserted with effect from 1/4/2019 by the Finance Act 2018 allowed the tolerance band of 5 % . It was held to be applicable retrospectively. Further, by the Finance Act 2020 with effect from 1/4/2021 in the same proviso the tolerance band is replaced by increasing it to 10 %. Therefore, when there is no change in the wording of the proviso but only tolerance band is increased it should also apply retrospectively. 19. Coordinate bench in case of Maria Fernandes Cheryl (supra)has already held that the amendment made by Introducing proviso [ Introduction of tolerance band of 5 % and later on 10 %] applies with effect from 1/4/2003 when the provision of section 50 C was introduced. 20. Further introduction of tolerance band is for removing the hardship in the section. once a statutory amendment is being made to remove an undue hardship to the assessee or to remove an apparent incongruity, such an amendment has to be treated as effective from the date on which the law, containing such an undue hardship or incongruity, was introduced as held by Hon Supreme Court in Alom Enterprises Ltd. [2009] 185 taxman 416 /319 ITR 306 (SC). 7.1 The point of consideration before us that the application of the section in impugned assessment year whether it is treated as clarificatory/curative in nature having retrospective application or otherwise qua the provisions of section 56(2)(x) or not. The issue is also squarely covered by the order of the co- ordinate bench of ITAT-Mumbai in the case of Glory Shipmanagement Private Limited vs CIT (Appeals) ITA No.3149/MUM/2023and also the decision of the co-ordinate bench

P a g e | 8 ITA No. 4351/Mum/2026 A.Y. 2018-19 Poonamchand Nathalal Shah of ITAT-Kolkata in the case of Sandeep Kumar Poddar v. ITO, Ward- 44(1), Kolkata ITA No.484/Kol/2022dated 13/03/2023.The said amendment was also held to be applicable retrospectively by various decisions of coordinate bench of this Tribunal ie.Maria Fernandes Cheryl vs. Income Tax Officer- Mumbai ITAT,Aaeshka Riddhi Realty, Mumbai vs. CIT(A)- NFAC - ITO - 19(1)- Mumbai ITAT and Chandra Prakash Jhunjhunwala vs. DCIT ITA- Kolkata ITAT,SulochanaSaijan Modi vs. ITO, Mumbai ITAT ,Gurukrupa Developers D N Nagar vs. Pr. CIT- 32,Mumbai ITAT,Ms. Shilpa Gautam vs. The Income Tax Officer- Mumbai ITAT and in ITA Nos.5352 &No.5218/Mum/2024 in the case of NRB Developers.

7.2 Respectfully following the decisions referred above, we hold that the provision of It is a settled principle of law that the provisions like safe harbour values as prescribed under section 56(2)(x) are (a) curative amendment (b) beneficial provisions and (c) it is inserted with the objective of removal of genuine hardship to the assessee and the tolerance limit laid down therein has retrospective effect and is applicable to the impugned assessment year. Accordingly, we set aside the orders of the lower authorities and direct the AO to delete the

P a g e | 9 ITA No. 4351/Mum/2026 A.Y. 2018-19 Poonamchand Nathalal Shah impugned addition.Consequently, the ground of appeal in this regard is allowed. 8. As the entire addition stands deleted,we do not propose to adjudicate other grounds of appeal which are accordingly,left open.

Order pronounced in the open court on 19/08/2026.

Sd/- Sd/-

(CHALLA NAGENDRA PRASAD) (PRABHASH SHANKAR) JUDICIAL MEMBER ACCOUNTANT MEMBER

Place: म ुंबई/Mumbai ददनाुंक /Date 19.08.2026 Lubhna Shaikh / Steno आदेश की प्रतितलति अग्रेतिि/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त / CIT विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, 4. Mumbai 5. गार्ड फाईल / Guard file. सत्यावपि प्रवि //True Copy// आदेशानुसार/ BY ORDER,

उि/सहायक िंजीकार (Dy./Asstt. Registrar) आयकर अिीलीय अतधकरण/ ITAT, Bench, Mumbai.