PUSHPABEN DHARMENDRABHAI PRAJAPATI,AHMEDABAD vs. ITO.WARD-1(3)(1), AHMEDABAD, AHMEDABAD

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ITA 1774/AHD/2026Status: DisposedITAT Ahmedabad06 November 2026AY 2019-205 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that the issue of stamp duty valuation and its impact on the computation of income under Section 56(2)(x) requires a proper determination of the Fair Market Value (FMV) of the property. The Tribunal noted that the AO had made an addition based on the difference between the sale consideration and the stamp duty value. The assessee contended that the stamp duty valuation, once determined, should not be altered and that the matter should have been referred to the DVO. The Tribunal observed that Section 50C(2) provides for a reference to the DVO for determining the FMV if the assessee disputes the value adopted or assessed by the stamp duty authority. In this case, the assessee's grounds of appeal suggest a dispute regarding the valuation. Therefore, the Tribunal found it necessary to set aside the orders of the lower authorities and restore the issue to the file of the AO for fresh adjudication. The AO was directed to refer the matter to the DVO for determining the FMV of the property in question. The addition made under Section 56(2)(x) was consequently set aside, and the appeal was remanded for fresh consideration after the DVO's report. The specific amount of Rs. 14,40,635/- was not deleted but was subject to fresh determination.

What were the facts?

The assessee, Pushpaben Dharmendrabhai Prajapati, appealed against an order dated March 20, 2026, passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi. This order upheld an addition of Rs. 14,40,635/- made by the Assessing Officer (AO) under Section 56(2)(x) of the Income Tax Act, 1961. The assessment year in question is 2019-20. The assessee had purchased land jointly for Rs. 4,75,000/-. The AO noted a discrepancy between the declared sale price and the stamp duty valuation of the property. The assessee's original return declared a total income of Rs. 8,31,550/-, which was revised to Rs. 10,82,890/- after the case was reopened under Section 148.

What were the issues?

The Tribunal had to decide the following issues: 1. Whether the addition of Rs. 14,40,635/- made under Section 56(2)(x) of the Act by the AO and upheld by the CIT(A) is illegal and against natural justice. 2. Whether the CIT(A) erred in upholding the addition on account of the difference between the revised stamp duty valuation and the sale price, when the stamp valuation authority had already determined the value. 3. Whether the CIT(A) erred in upholding the difference between the revised stamp duty valuation and the purchase deed price as taxable under Section 56(2)(x). 4. Whether the CIT(A) ought to have referred the determination of Fair Market Value (FMV) to the District Valuation Officer (DVO) under Section 50C(2). 5. Whether, alternatively, the CIT(A) ought to have considered the DVO's valuation report in a related case (Kamlaben Prajapati) to reduce the excessive stamp duty valuation. Assessee's contentions: The assessee argued that the stamp valuation authority's determination of value cannot be altered by the same authority. They contended that the CIT(A) erred in upholding the addition and should have referred the FMV determination to the DVO. Alternatively, they argued that the DVO's valuation in a related case indicated an excessive stamp duty valuation which should be reduced. The assessee relied on the principles of natural justice and the provisions of Section 50C(2). Revenue's contentions: The judgment does not record specific contentions for the revenue.

Which sections of the Income-tax Act were involved?

Section 56(2)(x),Section 250,Section 148,Section 50C(2)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AHMEDABAD “SMC” BENCH

Before: Shri Rahul Chaudhary & Shri R. Govindarajan

For Appellant: Shri S.N. Divetia, A.R. &, Shri Samir Vora, A.R
For Respondent: Smt. Ananya Kulshresth, Sr. D.R

आदेश/ORDER

PER R. GOVINDARAJAN, ACCOUNTANT MEMBER:

The assessee has filed the appeal against the order dated 20-03-2026 passed by Commissioner of Income Tax (Appeals), National Faceless Appeal Centre NFAC, Delhi (in short, referred to as the CIT(A)) u/s. 250 of the Income Tax Act, 1961 (herein referred to as “the Act”) relating to Assessment Year 2019-20.

2.

The assessee raised the following grounds of appeal:-

I.T.A No. 1774/Ahd/2026 Pushpaben Dharmendrabhai Prajapati, A.Y. 2019-20 “1.1 The order passed by U/s.250 passed on 20.03.2026 for A.Y. 2019-20 by NFAC, [CIT(A)], Delhi (for short CIT(A)" upholding the addition of Rs. 14,40,635/- made by the FAO u/s 56(2)(x) is wholly illegal, unlawful and against the principles of natural justice. 2.1 The ld. CIT(A), has grievously erred in law and or on facts in not appreciating that once the value has been determined by stamp valuation authority, the same cannot be altered by the same authority and upholding the addition made on account of difference between the revised valuation and sale price as per deed taxable u/s 56(2)(x). 3.1 The ld.CIT(A) has grievously erred in law and or on facts in upholding that the difference between the revised stamp duty valuation and price as per the purchase deed as taxable u/s 56(2)(x). 3.2 That the in the facts and circumstances of the ld. CIT(A) ought to have referred the determination of FMV to DVO u/s 50C(2). 3.3 Without prejudice to above and in the alternative, the Id. CIT(A) ought to have appreciated that as per the valuation report of DVO in case of Kamlaben Prajapati, it was determined at Rs.7,58,100/- as against Rs. 4,75,000/- declared by the assessee so that the stamp duty valuation resulting into difference of Rs. 33,56,269/- was highly excessive and the same should be reduced. It is, therefore, prayed that the addition of Rs. 14,40,635/- upheld by the CIT(A) may kindly be deleted.”

3.

Brief facts of the case are that assessee, an individual, purchased land at Sirohi for a consideration of Rs. 4,75,000/- jointly with Smt. Pankuben Dashrathlal Prajapati during the year. She filed original return of income admitting total income of Rs. 8,31,550/-. The case was reopened and in response to notice issued u/s. 148 of the Act, assessee filed her return of income admitting total income of Rs. 10,82,890/-. AO noticed that the assesee has purchased the property jointly for a total consideration of Rs. 4,75,000/-. However, stamp value of the said property was fixed by Deputy Registrar, Sirohi, at Rs. 33,56,269/-. Assessee’s share in the said transaction is 50%. Hence, as provisions of section 56(2) are attracted, AO issued a letter as to why the difference between stamp value of the property and actual purchase consideration made by the assessee as per the records should not be brought to tax under the head income from other sources u/s. 56(2)(x)(b) of the Income Tax Act. In reply thereto, assessee requested for 2

I.T.A No. 1774/Ahd/2026 Pushpaben Dharmendrabhai Prajapati, A.Y. 2019-20 reference to DVO (Department Valuation Officer) u/s. 50C(2) of the Act. AO held that no reference to DVO was required as the stamp value adopted by the Deputy Registrar, Sirohi was disputed by assessee and the matter reached Court Collector (Stamps) who in turn determined the stamp value vide order no. 256/2018 date 11-12-2019. AO assessed the difference amount of Rs. 14,40,635/- [50% of (33,56,269 - 4,75,000)] as income from other sources u/s. 56(2)(x)(b) of the Income Tax Act.

4.

Aggrieved by this order, assessee filed appeal.

5.

CIT(A) held that immoveable property was purchased for the consideration which was less than stamp duty value, difference between stamp duty value and purchase consideration shall be treated as income of the purchaser under the head income from other sources.

6.

He further pointed out that assessee did not object to stamp duty levied by SRO and paid it before execution of the registered purchase deed. This clearly attracted provisions of section 56(2)(x) of the Act. Hence, he dismissed the appeal of the assessee.

7.

Aggrieved by the order of CIT(A), assessee filed this appeal.

8.

We have heard both the parties and perused the materials available on record. During the course of appellate proceedings, assessee submitted in the paper book, valuation report dated 13- 05-2025 of DVO in respect of the same property in the case of co-purchaser of the property (paper book page no. 17 to 20). The DVO had estimated the value of the property at Rs. 7,58,100/-

I.T.A No. 1774/Ahd/2026 Pushpaben Dharmendrabhai Prajapati, A.Y. 2019-20 as on 29-06-2018. The difference between the DVO’s fair market value and the purchase consideration worked out to Rs. 2,83,100/- (Rs. 7,58,100 - 4,75,000). This variance (60% of the registered purchase value) is more than specified tolerance limit.

8.1 Further, as per section 50C(2)(b), assessee should not have disputed the stamp valuation authority’s value in appeal for referring the same to department valuation officer. As the proceedings before Collector(Stamp) constituted an appeal, fresh reference to DVO is not permissible in assessee’s case. The DVO’s report is also not contemporaneous. Hence, much reliance cannot be placed on DVO’s report. AO’s action relying upon the stamp authority value for FMV is justified. Hence, assessee’s grounds of appeal on this issue is dismissed.

8.2 Assessee submitted that out of the total consideration of Rs. 4,75,000/-, assessee had paid a sum of Rs. 2,25,000/- by cheque and Rs. 12,500/- in cash for her 50% share. Further, in the alternative, assessee submitted that in the case of co- purchaser, the value of the property was estimated at 7,58,100/- as per DVO’s report as against registered value of Rs. 4,75,000/. Pursuant to notice issued u/s. 148 of the Act, assessee filed a return of income on 06-05-2023 declaring the total income at Rs. 10,82,890/-. In the said return, assessee offered for tax Rs. 2,51,337/- i.e. 50% of (Rs. 9,77,674 – 4,75,000) u/s. 56(2)(x) representing her share of 50% in the difference between original stamp duty valuation of Rs. 9,77,674/- and actual purchase consideration of the property at Rs. 4,75,000/-. Assessee paid additional tax of Rs. 92,700/-. This has not been taken into account while assessing the total income. Hence, the claim of assessee that addition, if required, should be restricted to Rs.

I.T.A No. 1774/Ahd/2026 Pushpaben Dharmendrabhai Prajapati, A.Y. 2019-20 11,89,298/- i.e. (Rs. 14,40,635 – Rs. 2,51,337) as submitted in para 2.2.1 of paper book page no. 16 is found to be in order. Therefore, AO is directed to adopt the correct figure of Rs. 11,89,298/- in lie of Rs. 14,40,635/- mentioned in the assessment order.

9.

In the result, the appeal filed by the assessee is partly allowed.

Order pronounced in the open court on 06-11-2026

Sd/- Sd/- (RAHUIL CHAUDHARY) (R. GOVINDARAJAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad : Dated 06/11/2026 a.k. आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee Digitally signed by JEETENDRA JEETENDRA 2. Revenue DEVENDRABHAI UPADHYAY DN: c=IN, o=PERSONAL, title=6087, 3. Concerned CIT 2.5.4.20=7e5568a89b633f174b28a80f5e63c DEVENDRABH 638da40b7313fb47ebaefda841cf59d1703, 4. CIT (A) postalCode=380059, st=Gujarat, serialNumber=816dc56e896211a1a21ccc4a AI UPADHYAY bc94ddc94458f4a1b37be8e1854e93992951 5. DR, ITAT, Ahmedabad 06d4, cn=JEETENDRA DEVENDRABHAI UPADHYAY 6. Guard file. Date: 2026.11.06 17:31:56 +05'30' By order/आदेश से,

उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद

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