ALOK GANGADHARRAO GALGE,PUNE vs. INCOME TAX OFFICER (IT) WARD 2, PUNE

The Assessee has raised following grounds of appeal : “1. The Ld CIT(A), NFAC, erred in dismissing the appeal of the assessee without granting him reasonable opportunity of being heard and impugned order is liable to be set aside. 2. The Ld CIT(A), NFAC, erred in not appreciating that the Ld AO had invoked the provisions of section 56(2)(x) in a mechanical manner without appreciating the full facts of the case. 3. The Ld CIT(A), NFAC, erred in not appreciating that the difference between the sale consideration and the Stamp Duty value was within the tolerance limit of 10% and the addition was not justified. 4. The Ld CIT(A), NFAC, erred in not appreciating that the Ld AO had failed to refer the matter to the Valuation Cell of the Department

Submission of Ld. AR:

Submission of Ld. DR: 4.1 The Ld. DR relied on the order of the AO and the Ld. CIT(A). The Ld. DR submitted that as per section 80A(v) it is mandatory to file return of income and claimed deduction in the return of income. In this case, the Assessee had not claimed deduction u/s 80C of the Act in the return of income. Hence, the Assessing Officer has rightly disallowed it.

Findings and analysis: 5.1 We have heard both the parties and perused the records. Admittedly, during the year the Assessee has purchased flat for Rs.1,26,00,000/- and the value decided by the stamp authority for the purpose of levying stamp duty was Rs.1,31,55,556/-. The Assessing Officer invoked the provisions of section 56(2)(vii)(b) of the Act and made addition of Rs.5,55,556/-. It is a fact that the difference between actual sale consideration paid and the value adopted by the stamp duty authority is less than 5%. The ITAT, Mumbai in the case of Chandra Lalit Sanghvi (supra) has held as under : Quote, “7. Since the facts before us are identical to one as decided by the Co- ordinate Bench of the Tribunal (supra) wherein the difference between the sale consideration and the stamp duty valuation was less than 10%, respectfully following the same, we set aside the impugned order of the Ld.CIT(A) with a direction to delete the impugned addition of Rs. 27,33,204/- made by the AO u/s. 56(2)(vii)(b) of the Act.” Unquote.

The Ld. DR has not brought on record any decision contrary to these decisions. Therefore, respectfully, following the proposition of law laid down by the ITAT, Mumbai, we hold that the difference of Rs.5,55,556/- is within the range of 10%, hence, no addition can be made u/s 56(2)(vii)(b) of the Act. Accordingly, we direct the Assessing Officer to delete the addition of Rs.5,55,556/-. Accordingly, ground Nos. 2, 3 and 4 raised by the Assessee are allowed.

In respect of ground No. 5, the Assessee had claimed deduction u/s 80C of the Act of Rs.8,80,000/-. It is an admitted fact that the Assessee had not filed return of income u/s 139(1) of the Act for AY 2016-17. Based on the information the Assessing Officer issued notice u/s 148 of the Act dated 24.02.2023 for AY 2016-17. The Assessee filed return of income for AY 2016-17 on 24.03.2023 declaring a gross total income at Rs.1,35,819/- and claiming deduction of Rs.1,419/-. These facts are not disputed. It is a fact that the Assessee had not claimed any deduction u/s 80C of the Act for AY 2016-17 in the return of income. Section 80A(5) of the Income Tax Act is reproduced here under : “80A(5) Where the assessee fails to make a claim in his return of income for any deduction under section 10-A or section 10-AA or section 10-B or section 10-BA or under any provision of this Chapter under the heading "C.- Deductions in respect of certain incomes", no deduction shall be allowed to him thereunder.” 8. Thus, as per section 80A(5) of the Act, it was mandatory to claim deduction in the return of income. Admittedly, the Assessee had not claimed any deduction in the return of income. Therefore, the Assessing Officer and the Ld. CIT(A) were right in not allowing the Assessee’s claim of deduction u/s 80C of the Act. We find support from the decision of the Hon’ble Bombay High Court in the case of EBR Enterprises & Anr. Vs. Union of India and Anr. reported in 415 ITR 139 (Bom.), wherein the Hon’ble Bombay High Court has held as under : Quote, “9. This issue can be looked from slightly different angle. In absence of the provision contained in Sub Section (5) of Section 80A of the Act has held by various decisions of the High Courts noted above, the CIT could entertain a fresh claim in Revision Application even if the claim was not made previously before the Assessing Officer. Provision contained in sub- section (5) of Section 80A is a statutory interdict which would prevent the CIT from granting any such claim in exercise of his revisional jurisdiction under Section 264 of the Act. As is often times stated, even High Court in exercise of Writ jurisdiction under Article 226 of the Constitution of India

Similarly, the Hon’ble Gujarat High Court in the case of Rachna Infrastructure (P.) Ltd. Vs. Principal Commissioner of Income Tax reported in (2022) 138 taxmann.com 416 (Gujarat) has dismissed the Assessee’s appeal.

Therefore, we hold that the Assessing Officer was right in disallowing the Assessee’s claim for deduction u/s 80C of the Act. Accordingly, ground No. 5 raised by the Assessee is dismissed.

Ground Nos. 1, 6, 7 and 8 are general in nature and do not need any adjudication. Accordingly, the same are dismissed.

In the result, the appeal of the Assessee is partly allowed.