PRAMOD YESHWANT KADAM,MUMBAI vs. ITO, MUMBAI

आयकरअपीलीयअिधकरण�ायपीठमुंबईम�। IN THE INCOME TAX APPELLATE TRIBUNAL “H (SMC)” BENCH, MUMBAI BEFORE SHRI AMIT SHUKLA, JM & SHRI ARUN KHODPIA, AM I.T.A. No.395/Mum/2026 (Assessment Year: 2017-18) Pramod Yeshwant Kadam Income Tax Officer Jai Ambe Digital A 2 Shah and Piramal Chamber, Mumbai-400012 Nahar Industrial Estate Unit No.174, 1st Floor, Sitaram Jadhav Vs. Marg sun Mill compound Lower Parel, West Mumbai 13, Mumbai-400013 PAN: AHCPK2117M Assessee- अपीलाथ� / Appellant Revenue-��थ�/ Respondent :

: Shri Mandar Vaidya a/w Shri Assesseeby Kalpesh Turalkar, Adv’s Revenueby : Shri Pravin Salunkhe, Sr. DR Date of Hearing : 11.03.2026 Date of Pronouncement : 15.05.2026

O R D E R Per Arun Khodpia, AM: The present appeal is preferred by the assessee, against the order of Commissioner of Income Tax Appeals/ National Faceless Appeal Centre (NFAC), Delhi [in short, “the Ld. CIT(A)”] dated 29.11.2025, for the assessment year (AY) 2017-18, which in turn arises from assessment order u/s 147 of the

ITA No. 395/Mum/2026 Pramod Yeshwant Kadam Income Tax Act, 1961 (“the Act”) dated 28.02.2024, passed by Assessment Unit, Income Tax Department (in short, “the Ld. AO”). 2. The case of assessee was selected for reopening assessment u/s 147,based on information about that the assessee had purchased a property amounting to Rs.1,21,00,000/- during the year under consideration,having stamp duty value (SDV) of Rs. 1,61,93,000/-. During the reopening assessment proceedings, a request was made by the assessee for referring the case to Departmental Valuation Officer (DVO). In due course of time, the DVO has furnished valuation report of the said property at Rs.1,29,96,075/-. Still there remains a difference of Rs.8,89,075/- (1,29,96,075 – 1,21,00,000/-) between the sale consideration paid and the market value of property valued by the Valuation Officer. It was the submission by the assessee before the AO that the value determined by the DVO was Rs. 126,30,000/-, which falls within 105% of the agreement value of Rs.1,21,00,000/-. Hence, as per 3rd proviso to section 50C, the amount is within the permissible safe harbor limits. Accordingly, no addition u/s 56(2)(viib) would be warranted. 3. The Ld. AO, however, not agreed with the contentions raised by the assessee, had proceeded to make an addition of Rs.8,89,075/- u/s 56(2)(viib) of the Act and had completed the assessment by enhancing assessed income of assessee at Rs.21,47,955/-. 4. Being aggrieved, the assessee preferred an appeal before the Ld. CIT(A), who had dismissed the appeal of assessee observing that once the Fair Market 2

ITA No. 395/Mum/2026 Pramod Yeshwant Kadam Value (FMV) worked out by the Valuation Officer at Rs.1,29,96,075/- has not been contested by the assessee either for any factual error in terms of rate or in terms of area of property,the AO has rightly adopted the FMV and the said difference which more than 105% of the agreement value,thus attracts the provisionsof 3rd proviso to section 50C of the Act. Thus, there is no merit in the grounds raised by the assessee. 5. Being dissatisfied with the aforesaid observations of Ld. CIT(A) confirming the addition made by the Assessing Officer, the assessee preferred the present appeal. 6. Before us, Ld. AR of the assessee furnished a copy of valuation report prepared by Shri Kota Ganesh, the Valuation Officer-II dated 16.10.2023, wherein at annexure-I, the Fair Market Value of the property is computed at Rs.1,26,30,000/-, which is arrived at by multiplying Built-Up Area (BUA) 75 Sq. Mtr. and rate Rs.1,68,402/-per Sq. Mtr. Ld. AR contented that the Ld. AO has wrongly adoptedvaluation at Rs.1,29,96,075/- instead of Rs.1,26,30,000/-. It is further submitted by the Ld. AR that even if an amount of Rs.1,29,96,075/- is adopted, the difference over the actual consideration is only 7.40% which again is within the permissible limits of 3rd proviso to section 50C of the Act,as amended by Finance Act, 2018 with effect from 01.04.2019 and would be applicable retrospectively for assessment year 2017-18, as held by Hon’ble Special Bench “J (SMC)”, Mumbai in ITA No.4453/Mum/2024for assessment year 2018-19 in the case of Shreyas Naynesh Modi vs. ITO – 23(3)(6), Mumbai vide order 3

ITA No. 395/Mum/2026 Pramod Yeshwant Kadam dated 23.01.2026, wherein the Hon’ble Bench had referred to the judgment of Hon’ble Gujarat High Court In the case of Dr. Rajivraj Ranbir Singh Choudhary vs ACIT, 393 ITR 650 (Gujarat) and observed that the amendment in harbour provisions are intended to avoid hardship to genuine transactions, so are curative and retrospective in nature. It is further held that the safe harbor limit in relation to FMV determined by the DVO was to be applied in terms of provisions of 3rd proviso to section 50C(1) of the Act, as the valuation made by DVO replaces the stamp duty value for all practical purposes. 7. Since, in the present case the difference in valuation adopted by the Ld. AO though it was wrongly taken, still the same is within the permissible limits of safe harbor threshold of 10%. Therefore, in our considered opinion, the addition u/s 56(2)(vii) made by the Ld. AO was not in accordance with mandate of law and cannot sustain. We, therefore, direct to set aside the order of Ld. CIT(A) and to vacate the addition made by the Ld. AO in toto. 8. In result, the appeal of assessee stands allowed on merits, in terms of our aforesaid observations. Order pronounced in the open court on 15-05-2026.

Sd/- Sd/- (AMIT SHUKLA) (ARUN KHODPIA) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated : 15-05-2026. Ankit K., Sr. PS

ITA No. 395/Mum/2026 Pramod Yeshwant Kadam

Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. DR, ITAT, Mumbai 4. Guard File 5. CIT

BY ORDER,

(Dy./Asstt. Registrar) ITAT, Mumbai