MANOJ PURUSHOTTAM TODI,MUMBAI vs. WARD 41(3)(2), MUMBAI

आदेश / ORDER PER BEENA PILLAI, HON'BLE JUDICIAL MEMBER: Present appeal filed by assesse arises out of the order passed by NFAC, Delhi [hereinafter referred to as “Ld.CIT(A)”] dated 05/03/2025 for A.Y. 2018-19, on the following grounds of appeal:-

“The following grounds of appeal are without prejudice to one another:- 1. The Hon' CIT (A) has erred in passing the order in ignorance of the facts and submissions made by the Appellant as well as the provision of Law.

The assessee, an individual, filed his return of income for A.Y. 2018-19 declaring total income of Rs.4,05,050/-. The case was selected for scrutiny on the basis of information received from the Sub-Registrar, Borivali-6, Mumbai, that the assessee had purchased an immovable property for a consideration of Rs.2,18,49,230/-, whereas the stamp duty value adopted by the registration authority was Rs.2,34,69,000/-, resulting in a difference of Rs.16,19,770/-. Accordingly, the case was examined for applicability of section 56(2)(vii) of the Act.

2.1. During the assessment proceedings, the assessee submitted that he sold immovable property in F.Y. 2016-17 for Rs.2 crore and invested the sale proceeds in the purchase of flat from M/s Shiva Prasad Realty Pvt. Ltd. for Rs.2,18,49,230/-. The balance amount was financed through housing loan of Rs.25 lakh obtained from DHFL. The assessee further contended that the flat had been booked in F.Y. 2016-17 and the higher stamp duty valuation arose due to revision of reckoner rates with effect from 01/04/2017. Therefore, according to the assessee, the stamp duty value prevailing in F.Y. 2016-17 ought to be adopted for the purpose of section 56(2)(vii).

2.2. The Ld.AO observed that the registered agreement for purchase of the property was dated 29/04/2017 and no documentary evidence was furnished to establish that any agreement had been entered into during F.Y. 2016-17. Since the agreement and registration were in the same financial year, the Ld.AO rejected assessee’s contention and adopted the stamp duty value of Rs.2,34,69,000/- as against the purchase consideration of Rs.2,18,49,230/-. The differential amount of Rs.16,19,770/- was treated as income from other sources u/s 56(2)(vii) of the Act and added to the returned income. Consequently, the total income was assessed at Rs.20,24,820/-.

Aggrieved by the order passed by Ld.AO, assesse preferred appeal before Ld.CIT(A).

2.3. During the first appellate proceedings, the assessee furnished additional evidences in the form of Flat Booking Application Form, Builder's Confirmation Letter and payment receipts to substantiate the claim that the subject flat had been booked in F.Y. 2016-17 and part consideration had been paid prior to execution of the registered agreement. Ld.CIT(A), called for remand report from the Ld.AO. In the remand proceedings, the Ld.AO objected to the admission of the additional evidences and contended that the booking application did not constitute an agreement for transfer of 3 immovable property. The Builder's Confirmation Letter dated 01/06/2022 was also treated as an afterthought and the payment receipts were considered to be merely advances against the unit applied for. Accepting the remand report, the Ld.CIT(A) held that the assessee had failed to establish the existence of any agreement in F.Y.2016-17 and consequently rejected the claim for adoption of stamp duty valuation prevailing on the alleged date of booking. Accordingly, the addition of Rs.16,19,770/- made u/s.56(2)(vii) of the Act was confirmed.

Aggrieved by the order Ld.CIT(A), assessee is in appeal before this Tribunal.

3.1. The Ld.DR, on the other hand, vehemently argued relying upon the orders passed by the lower authorities and prayed that the same be upheld.

We have perused the submissions advanced by both sides in light of the record placed before us.

4.1. The undisputed facts emerging from the record are that the assessee purchased an immovable property for a consideration of Rs.2,18,49,230/-, whereas the stamp duty value adopted by the registering authority was Rs.2,34,69,000/-. Consequently, a difference of Rs.16,19,770/- was brought to tax by the Ld.AO, u/s. 56(2)(vii)(b) of the Act, which action has been upheld by the Ld.CIT(A).

4.2. Before us, the Ld.AR has contended that the difference between the purchase consideration and the stamp duty valuation is less than 10% and, therefore, no addition is warranted in view of the tolerance band recognized by the legislature in similar deeming provisions governing immovable property transactions. We find merit in the aforesaid contention.

4.3. A conjoint reading of sections 50C, 43CA and 56(2)(x) of the Act makes the legislative intent abundantly clear that, wherever the statute provides for adoption of the value determined by the stamp valuation authority as deemed consideration, exceptions have also been carved out where the variation between the actual consideration and stamp duty valuation remains within the prescribed tolerance limit. The object behind such amendments is to address genuine hardships arising on account of marginal variations in valuation and to avoid taxation of notional differences.

4.4. We further find that the Coordinate Bench of the Tribunal in Joseph Mudaliar vs. DCIT (supra) held that the benefit of the tolerance band cannot be denied merely because section 56(2)(vii)(b) did not expressly contain a provision similar to the third proviso to section 50C(1). The Tribunal held that section 56(2)(vii)(b) has to be harmoniously construed with sections 50C, 43CA and 56(2)(x), and the benefit available in respect of marginal variations must equally be extended to transactions governed by section 56(2)(vii)(b). The Coordinate Bench further held that such beneficial amendment being curative in nature would apply retrospectively.

4.5. In the present case, the difference between the purchase consideration of Rs.2,18,49,230/- and the stamp duty value of Rs.2,34,69,000/- works out to approximately 7.41%, which is admittedly within the permissible tolerance band of 10%. Once the variation falls within the prescribed limit, the deeming fiction contained in section 56(2)(vii)(b) cannot be invoked.

4.6. Respectfully following the decision of the Coordinate Bench in Joseph Mudaliar (supra), we hold that the addition of Rs.16,19,770/- sustained by the Ld. CIT(A) is unsustainable.

Accordingly, we direct the Ld. AO to delete the addition. Thus, the grounds raised by the assessee are allowed.

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

Order pronounced in the open court on 25/06/2026

Sd/- Sd/- JAGADISH BEENA PILLAI ACCOUNTANT MEMBER JUDICIAL MEMBER

Mumbai Dated: 25/06/2026 SC. Sr. P.S. Copy to: MANOJ PURUSHOTTAM TODI, C 1707 OMKAR ALTA MONTE KURAR 1 VILLAGE KONKANIPADA MALAD EAST, MUMBAI-400097, MAHARASHTRA

WARD 41(3)(2), 2 KAUTILYA BHAVAN MUMBAI, MUMBAI-400051, MAHARASHTRA

3 THE PCIT / CIT, 4 THE D.R., ITAT, MUMBAI BENCH 5 GUARD FILE