RITHIK INNOVATION PRIVATE LIMITED,MUMBAI vs. ITO WARD 4(3)(2), AYAKAR BHAVAN

IN THE INCOME-TAX APPELLATE TRIBUNAL, MUMBAI “D” BENCH, MUMBAI BEFORE SHRI SANDEEP GOSIAN, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER ITA No.1205/MUM/2026 (AY: 2015-16) Rithik Innovation Private Ltd. vs. ITO Ward 4(3)(4) 381 F Narottam Wadi Kalbadevi Aayakar Bhavan, M.K. Road, Mumbai- Road, Mumbai-400 002. 400 020. PAN/GIR No: AAGCR5947Q (Appellant) (Respondent) Assessee by Shri Mahesh Sabu Revenue by Shri Annavaram Kosuri (SR DR) Date of Hearing 30.04.2026 Date of Pronouncement 08.07.2026 O R D E R PER BIJYANANDA PRUSETH, AM:

This appeal filed by the assessee emanates from the order passed under

section 250 of the Income-tax Act, 1961 (in short, ‘Act’) National Faceless Appeal

Centre [in short, ‘CIT(A)’], dated 16.01.2026 for the assessment year (AY) 2015-

16.

“1) On the facts and circumstances of the case and in law, the lower authorities have erred in re-opening of the assessment u/s 147 without any plausible reasons and which s against the provisions of the Act and rules made thereunder.

2) On the facts and circumstances of the case and in law, the lower authorities have erred in making/sustaining the addition of Rs. 41,45,180/- for the reason that the stamp valuation of properties (set forth values) were higher than the agreement values u/s 50C/48 and the other reasons assigned for doing so, were wholly wrong and not in accordance with the provisions of Income Tax Act 1961 and rules made there under. This is despite the fact that all the relevant details and evidences were submitted to FAA.

ITA No.1205/MUM/2026 Rithik Innovation Private Ltd. 3) On the facts and circumstances of the case and in law, the lower authorities have erred in not properly allowing the credit of prepaid taxes of TDS at Rs. 10,56,000/- u/s 199 of the IT Act and instead allowed the credit only of Rs. 6,96,000/- and no reasons were assigned for doing so. 4) On the facts and circumstances of the case and in law, the lower authorities have erred in charging interest u/s 234B and 234C of the Income Tax Act, which is wholly wrong, irrelevant, and not in accordance with the facts and circumstances of the case.

5) On the facts and circumstances of the case and in law, the lower authorities have erred in initiating the penalty proceedings u/s 271(1)(c) of the Income Tax Act, which were wholly wrong, irrelevant, and not in accordance with the facts and circumstances of the case as no income is concealed nor any inaccurate particulars were furnished.

6) The appellant craves leave to add, alter, modify and delete all or any of the aforesaid grounds of appeals on or before the date of hearing.” 3. Facts of the case, in brief, are that the assessee electronically filed return of income for the AY 2015-16 on 31.03.2016 declaring total income of Rs.19,03,550/-. Assessment order u/s 143(3) was passed on 30.11.2017 accepting the returned income. Subsequently, the case was reopened for the reasons that there was incorrect computation of total income by concealing short-term capital gain (STCG) derived by the assessee. Notice u/s 148 was issued on 20.03.2020, in response to which, the assessee filed returned on 04.04.2020 declaring the same total income. The AO after examining the details observed that the six properties sold by the assessee were held for less than 36 months and hence, the gains were STCG. In respect of 3 flats the stamp duty value exceeded the consideration declared by the assessee. Hence, the AO invoke provisions of section 50C of the Act and stamp duty value was adopted as the full value of the consideration. After

ITA No.1205/MUM/2026 Rithik Innovation Private Ltd. allowing cost of acquisition, the AO computed STCG at Rs.41,45,180/- and added the same to the total income. 4. Aggrieved by the order of AO, the assessee filed appeal before the CIT(A). The assessee had challenged validity of reopening u/s 147 of the Act and merits of addition of Rs.41,45,180/-. The CIT(A) has dismissed the ground on validity of reopening by observing the reopening was based on tangible material relating to sale of immovable property and difference between declared consideration and stamp duty valuation. Regarding addition u/s 50C of the Act, the CIT(A) upheld the addition by stating that AO has correctly applied provisions of section 50C of the Act, after examining each sale consideration separately. The CIT(A) also observed that the claim of higher cost of acquisition has not been substantiated by the assessee with supporting documentary evidences. In view of the above, appeal of the assessee was dismissed. 5. Aggrieved by the order of CIT(A), the assessee filed appeal before the Tribunal. The Ld. AR of the appellant has filed a paper book and submitted that the assessee had sold six residential flats in one building known as DB Realtors at Goregaon. He submitted that stamp duty valuation was more than the agreement values in respect of three flats and accordingly, STCG was calculated at Rs.41,45,180/- by the AO. However, the assessee has already offered STCG of Rs.19,33,360/-, which should have been reduced by the AO while computing the STCG. If it is done, the addition would be Rs.22,11,820/-. The Ld. AR also submitted that the difference between the agreement value and stamap duty

ITA No.1205/MUM/2026 Rithik Innovation Private Ltd. value was within the tolerance band of 10%. In this regard, the appellant submitted as under: 3) As regards the applicability of the section 50C of the IT Act we would like to state that there can be various technical and financial reasons for the difference in agreement value and that of stamp duty value. They are stated as follows:

In this regard we would like to state that ready reckoner rates as applicable were Rs. 1,42,200/- per sq. mtrs in respect of these flats (CTS No. 156/157 Dindoshi) They were increased by the Maharashtra Govt. on and from 01/01/2015. The same was revised upwards to Rs. 1,49,300/- The following flats were registered in the month of March 2015 and accordingly the rate applied for calculation of market value was @ Rs. 1,49,300/- instead of Rs. 1,42,200/- Kindly refer the calculation sheet attached to each of the sale agreement, where above rate of Rs. 1,49,300/-was applied for the registration after 01/01/2015 and the rate of Rs. 1,42,200/- was applied for the sale agreements registered on or before 31/12/2014.

It is submitted that the price determination also depend on the availability or otherwise of stamp duty concession on re-sale as per section 59(a)(ii) of the Bombay Stamp Act, 1958 which provides that if there are two agreements registered in respect of the same flat within a period of 12 months, then the credit of the stamp duty paid on the earlier sale agreement is allowed as the credit from the second sale agreement. Please refer the calculation sheet.

All the flats were agreed to be sold around the same time, however agreements in respect of subject 3 flats were registered little later and hence the revised ready reckoner price was considered, which resulted in price variation.

Your honour will thus observe that there is only slight difference in the agreement value and that of stamp duty values, if taken together which is at Rs. 10.56 crore as compared to stamp value of 10.73 crores. The price would also differ as per the urgency of the matter of either buyer or seller.

The prices stated in the ready reckoner by the government are only indicative price and that too of a particular area. Within that particular area, the prices of every building would differ for various technical

ITA No.1205/MUM/2026 Rithik Innovation Private Ltd. reasons though, the price stated in the ready reckoner would be same for same CTS number within that area..

The price of each of the floor in the same building differ from other floors. In case of flats which can be joined/merged with other flats, again the price would depend on the particular buyer. At the same time the two flats together would fetch a different price whereas the same two flats, if sold separately would fetch a different price.

The price of the flats would depend upon the preferential location and vastu compliance in the same particular building. The price would also depend on the elevation of the particular building whether glass facet or otherwise.

The price of the particular building would also depend on so many factors like who is the builder, who constructed and year of construction, whether high rise or normal and so many such other factors, whereas the stamp authority value is one for one CTS number/area. Further the section 50C of the I.T. Act provides that if the difference in the agreement value and that of stamp value, is not more than 5/10% then such difference shall be ignored and not to be considered. This was so because there were several reasons and litigation in this regard and to put them at rest, the Govt amended the section from time to time, as small difference can be for variety of technical and financial reasons. Though the provisions of this section 50C had been amended from 01/04/2019 but they are to be considered as curative in nature to be considered as applicable retrospectively to all the pending litigations for such small differences of this nature.

Amendment granting 10% tolerance is Curative / Beneficial The third proviso to Section 50C was inserted to remove genuine hardship arising on account of minor differences between actual sale value and stamp duty value. The tolerance band was first 5% and later increased to 10%. Such amendment is remedial, curative and beneficial, and therefore applies retrospectively to pending matters. Binding / Persuasive Judicial Authority Maria Fernandes Cheryl v. ITO- MUMBAI ITAT

ITAT Mumbai - ITA No. 4850/Mum/2019 dated 15.01.2021. Mumbai Tribunal held:

ITA No.1205/MUM/2026 Rithik Innovation Private Ltd. The amendment introducing tolerance band under section 50C and subsequent enhancement to 10% are curative in nature and relate back to the date when section 50C itself was introduced i.e. 01.04.2003. If variation does not exceed 10%, section 50C deeming fiction should not be invoked. This decision is directly from Mumbai jurisdiction and squarely applicable. There are other judicial judgements in this regard. The copies are submitted. "Now that the legislature has been compassionate enough to cure these shortcomings of provision, and thus obviate the unintended hardships, such an amendment in law, in view of the well settled legal position to the effect that a curative amendment to avoid unintended consequences is to be treated as retrospective in nature even though it may not state so specifically, the insertion of proviso must be given retrospective effect from the point of time when the related legal provision was introduced".

5.1 Accordingly, the Ld. AR submitted that the addition made by the AO and

sustained by the CIT(A) should be deleted.

He further submitted that the increase in safe harbor limit to 10% is not available

for the year under consideration i.e. AY 2015-16.

also carefully gone through the provisions of section 50C of the Act. We have also

deliberated on the decision relied upon by the Ld. AR. The Ld. AR submitted that

there is small difference in the agreement value and the stamp duty value. The

total value as per the agreements was Rs.10.56 Cr. as against stamp value of

Rs.10.73 Crore. The difference is only Rs.17 Lakhs, which is less than 5%. If the

difference in the agreement value and stamp duty value is not more than 5%, such

difference is to be ignored. He further submitted that the tolerance band was

increased to 10% from 5% by the Finance Act, 2018 w.e.f 01.04.2019. The ITAT 6

ITA No.1205/MUM/2026 Rithik Innovation Private Ltd. Mumbai in case of Maria Fernandes Cheryl v. ITO in ITA No. 4850/Mum/2019

dated 15.01.2021 held that the amendment introducing tolerance band under

section 50C and subsequent enhancement to 10% are curative in nature and

relate back to the date when section 50C itself was introduced i.e. 01.04.2003. If

variation does not exceed 10%, section 50C deeming fiction should not be

invoked. The Ld. AR submitted that the variation in the present case is within the

safe harbor limit of 10%. Considering the factual matrix and the decision of the

ITAT in case of Maria Fernandes Cheryl (supra), we deem it proper to set aside the

matter to the file of AO to verify whether the difference between the agreement

value and stamp value is more than 10%. If the difference is not more than 10% ,

the deeming provisions of section 50C should not be invoked. The ground is

allowed for statistical purpose.

in nature and do not require adjudication.

Order is pronounced on 08.07.2026.

Sd/- Sd/- (SANDEEP GOSAIN) (BIJYANANDA PRUSETH) JUDICIAL MEMBER ACCOUNTANT MEMBER *Aniket Chand; Sr. PS MUMBAI Date: 08.07.2026 Copy of the Order forwarded to: 1. The Assessee

ITA No.1205/MUM/2026 Rithik Innovation Private Ltd. 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, MUMBAI 6. Guard File

By Order

Assistant Registrar ITAT, MUMBAI