SUDARSHAN SHARDA,MUMBAI vs. DCIT-22(1), MUMBAI

आदेश / ORDER PER SMT. BEENA PILLAI, JM: Present appeal filed by the assessee arises out of the order dated 13/09/2025 passed by NFAC, Delhi [hereinafter “the Ld.CIT(A)”] for A.Y. 2018-19, on the following grounds of appeal:-

“1) Ground 1. - On the facts and in the circumstances of the case, and in law, the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre [CIT(A)] has erred in upholding the assessment order passed by Ld. AO under section 143(3) r.w.s. 144B of the Income Tax Act, 1961, thereby confirming the addition made under section 56(2)(x) of the Act amounting to ₹87,35,329/- and in doing so has erred both on facts and in law. That the

ITA 7227/MUM/2025 SUDARSHAN SHARDA impugned appellate order dated 30.09.2025 as passed u/s 250 of the Act is wholly unlawful, opposed to law and against the principles of natural justice. 2) Ground 2.- On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in confirming the initiation of penalty proceedings u/s 270A of the Act, despite the fact that the issue in question involves a bona fide interpretation of law and valuation differences, and therefore does not constitute either under-reporting OR misreporting of income. 3) Ground3. - The appellant craves leave to add, amend, alter, delete any of the ground and to adduce fresh evidence at the time of hearing of the appeal.” 2. Brief facts of the case are as under:- The assessee filed its return of income on 31/08/2018 declaring total income of Rs.1,26,41,550/-, and the same was processed u/s 143(1) of the Act. Subsequently, the case of the assessee was selected for scrutiny and notice u/s 143(2) dated 22/09/2019 was issued, along with notice u/s 142(1) of the Act. In response to the statutory notices, the assessee appeared before the Ld. AO and filed the requisite details as called for. 2.1. The Ld. AO noted that the assessee earned salary income from Positive Move India Consulting Pvt. Ltd. and had claimed deduction of interest in respect of a self-occupied property. It was further noted that there was a loss from a partnership firm and, therefore, the assessee disclosed the same under the head “Profits and Gains of Business or Profession”. The assessee also suffered capital loss under the head “Capital Gains”. The Ld. AO further noted that, during the year under consideration, the assessee purchased an immovable property for consideration lower than the stamp duty value and on which the provisions of section 56(2)(x) of the Act were attracted. 2.2. It was noted that the value reflected in Index-II was Rs.5,70,19,671/-, whereas the sale consideration was Rs.6,54,72,174/-. The Ld. AO thus came to the conclusion that

ITA 7227/MUM/2025 SUDARSHAN SHARDA the difference of Rs.84,52,503/- did not form part of the sale consideration and, accordingly, made an addition to that extent u/s 56(2)(x) of the Act in the hands of the assessee. Aggrieved by the order of the Ld. AO, the assessee preferred an appeal before the Ld.CIT(A). 3. Before the Ld.CIT(A), the assessee submitted that the difference of Rs.84,52,503/- represented taxes and other charges borne by the assessee towards the purchase of the flat and, therefore, the same ought to be included in the total sale consideration. The assessee submitted that the value mentioned in Index-II at Rs.5,70,19,671/- was erroneous and that the actual total sale consideration was Rs.6,54,72,174/-. 3.1. The assessee submitted that the total consideration comprised of the following: • Base purchase price : Rs.5,70,19,671/- • Cost of additional facilities : Rs.18,15,083/- • GST and other statutory charges borne by the assessee : Rs.66,37,420/- The assessee also submitted that the stamp duty was paid as per the Ready Reckoner value. 3.2. The assessee furnished following computation in support of its claim before the Ld.CIT(A):- “Assessee: Sudarshan Sharda AY: 2018-19 Cost Working as per the Agreement: Particulars Amount Reference Consideration 5,70,19,671 Purchase Agreement Additional Costs: Particulars Amount Reference LUC Reimbursement 2,16,972 Purchase Agreement Electricity Deposit Reimbursement 30,000 Purchase Agreement Utility Connection 1,50,000 Purchase Agreement Pipe Gas connection 60,500 Purchase Agreement Share money 600 Purchase Agreement BCAM charges 4,61,430 Purchase Agreement

ITA 7227/MUM/2025 SUDARSHAN SHARDA Particulars Amount Reference FCAM Charges 2,30,715 Purchase Agreement Club Charges 1,80,000 Purchase Agreement Property Tax 2,44,866 Purchase Agreement Building Protection Deposit 2,40,000 Purchase Agreement GST 66,37,420 Total additional Cost .............. 84,52,503 Total Cost .................................. 6,54,72,174 Add : Stamp Duty ...................... 40,74,000 (Challan) Total Consideration ................. 6,95,46,174

Cost Working as per the Stamp Duty Valuation: Particulars Value Carpet Area in sq. metres 159 Multiplier 1 Built up Area in sq. metres 190.52 Rate for CST No. 434 to 444, 445(pt), 446 3,24,900 Total Value 6,19,01,248

3.3. The Ld.CIT(A), however, after considering the submissions of the assessee, observed and held as under: “5. Decision: The assessee failed to submit any additional evidence as per Form No. 35. Section 56(2)(x) of the Income Tax Act is a clear presumptive provision aimed at preventing tax evasion, avoidance, and the creation of black money. This section mandates that when immovable property is purchased at a consideration less than the stamp duty value or the value determined by a competent authority, the difference is to be taxed as income from other sources.

Appeal is dismissed.”

ITA 7227/MUM/2025 SUDARSHAN SHARDA

Aggrieved by the order of the Ld.CIT(A), the assessee is in appeal before this Tribunal. 4. The Ld. AR submitted that the addition of Rs.87,35,329/- u/s 56(2)(x) of the Act is based on the valuation report obtained by the Revenue. The Ld. AR submitted that the rate adopted by the DVO per square meter was Rs.3,02,757/-, which was subsequently taken at Rs.3,32,952/- while computing the rate per sq. meter as on the relevant date. The Ld. AR drew our attention to pages 38 to 43 of the Paper Book, wherein the rate was determined at Rs.3,02,757/- per square meter, whereas at page 44 the rate per square meter was subsequently increased to Rs.3,32,952/-. The Ld. AR submitted that this resulted in overvaluation of the property by Rs.59,63,211/- and, therefore, the proposed addition of Rs.87,35,329/- is not justified. 4.1. Further, the Ld. AR emphasized that the DVO factored and included the value of two car parking spaces amounting to Rs.23,26,775/-. It was submitted that no separate price can be attributed to the parking spaces as the same cannot be independently sold by the builder. It was also submitted that the assessee has not paid anything towards the parking spaces separately. 4.1.1. The Ld. AR submitted that the allotment of car parking is based on the area of the flat in accordance with the rules of the Municipal Corporation and the same cannot be claimed to have been separately purchased or owned by the flat purchaser as per the BMC Rules. It was thus submitted that the stamp duty valuation is overstated and that the DVO's report cannot be relied upon. 5

ITA 7227/MUM/2025 SUDARSHAN SHARDA 4.2. The Ld. AR, referring to page 43 of the Paper Book, submitted that the DVO relied on three sale instances in the same building purchased during the year 2017 and determined the rate per square meter of each such flat, arriving at an average effective rate of Rs.3,32,952/- per square meter. 4.2.1. The Ld. AR submitted that the DVO thus adopted two different rates, namely Rs.3,32,952/- and Rs.3,02,757/- per square meter, based on the comparable instances as well as the valuation of the assessee’s premise, without any basis. The Ld. AR submitted that if the average of these two rates is considered, the resultant valuation would be much lower than the value adopted in assessee’s case to while determine the market value of the property purchased by assessee. 4.3. The Ld. AR emphasised that the entire dispute also lies on the fact that, GST cannot form part of the total sale consideration. The Ld. AR emphasized that, as the property was purchased from the builder in an under-constructed project, the total sale consideration invariably includes the applicable taxes borne by the purchaser. He placed reliance on the decision of the Coordinate Bench of this Tribunal in the case of Jantilal Ubashankar Chawji vs. National E-Assessment Centre, reported in (2025) 171 taxmann.com 618, wherein the Tribunal considered the issue by including GST as part of the total sale consideration. 4.3.1. The Ld. AR further submitted that there was a Press Release issued by the Government calling upon builders to pass on the benefit of GST to purchasers by appropriately factoring the same into the total value of consideration. He thus submitted that, without admitting to the valuation adopted by the DVO, if GST and stamp duty are included in the total cost of acquisition,

ITA 7227/MUM/2025 SUDARSHAN SHARDA the rate per square meter would fall within the permissible tolerance band of 10%. 4.4. On the contrary, the Ld. DR relied upon the orders passed by the authorities below. We have perused the submissions advanced by both sides in light of the records placed before this Tribunal. 5. Admittedly, the purchase value of the flat premises was Rs.5,70,19,671/- plus other taxes and the cost of additional facilities. Thus, the total value of consideration as per the sale agreement was Rs.6,54,72,174/-. In the Index-II, the value was mentioned at Rs.5,70,19,671/-, which did not take into consideration the additional costs and GST borne by the assessee. 5.1. The Ld.AR furnished a comparative chart based on the valuation reports determined by the DVO in respect of the subject flat as well as comparable instances, which is reproduced as under:- “1. Total Consideration paid (Excluding GST and Stamp duty) Particulars Amount Purchase Price 5,70,19,671 Cost of additional facilities 18,15,083 Total consideration paid 5,88,34,754 Add: 10% relaxation 58,83,475 Value with relaxation 6,47,18,229

ITA 7227/MUM/2025 SUDARSHAN SHARDA

************************* Statement of Calculation of Average Rate by DVO for Flat No A-4202 based on comparable instance Details/factors Sr Subject Sale Instance - Sale Instance - Sale Instance affecting No. Property 1 2 - 3 valuation 1 Flat No B-4202 C-2502 Flat No 1301 Flat No 2204 190.52 + 2 Car 200.00 + 3 Car 257.51 + 3 Car 2 Area Sq Mtr 124 Sq mtr parking parking parking Consideration in 3 5,70,19,671.00 2,02,27,577.00 10,08,00,000.00 4,05,00,000.00 Rs. Rate in Rs per Sq 4 2,88,722.00 95,827.00 3,76,169.00 3,26,613.00 mtr-as per DVO Average as 5 calculated by DVO 3,32,952.00 Correct simple 6 2,74,832.75 Average Correct Weighted 7 2,73,003.20 Average

3.2. On analysis of the above, it is noted that the average value of the instances considered by the DVO comes to Rs.3,32,952/- per square meter based on comparable instance. These values also include the value attributable to car parking spaces. He submitted that if the valuation report determined by the DVO in the assessee's case, the rate per square meter, after excluding the value attributable to car parking spaces is considered, it also comes at at Rs.3,32,952/-. This rate represents the average price derived from the three comparable instances relied upon by the DVO.

ITA 7227/MUM/2025 SUDARSHAN SHARDA 5.3. It is, however, noted that the case of the assessee, however, the value attributable to car parking is excluded, therefore, the value per sq. meter will be in line with the comparable instances relied upon by the DVO. 6. We, therefore, do not find any rationale or basis for the DVO to determine two different valuations in respect of the comparable instances, for the purpose of determining the market value to be adopted per sq. meter in the case of the assessee. As rightly submitted by the Ld. AR, car parking spaces cannot be independently valued, as the same cannot be sold by the builder. Under such circumstances, we do not find any infirmity in the value adopted by the assessee. We, therefore, hold that no addition is warranted u/s 56(2)(x) of the Act.

Accordingly, the addition made by Ld. AO and sustained by the Ld.CIT(A) stands deleted.

In the result, the appeal filed by the assessee stands allowed.

Order pronounced in the open court on 05/06/2026

Sd/- Sd/- JAGADISH BEENA PILLAI ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai Dated: 05/06/2026 SC. Sr. P.S.

ITA 7227/MUM/2025 SUDARSHAN SHARDA Copy to: SUDARSHAN SHARDA, NO 36, AMRITA BUNGLOW PUSHTIKAR, JOGESHWARI 1 WEST S.O, MUMBAI, 400102, MAHARASHTRA, INDIA., MUMBAI-400102, MAHARASHTRA DCIT-22(1), 2 PIRAMAL CHAMBERS, LALBAUG, MUMBAI – 400 012., MUMBAI-400012, MAHARASHTRA 3 THE PCIT / CIT, 4 THE D.R., ITAT, MUMBAI BENCH 5 GUARD FILE