RAMESH DNYANDEO DHURI ,MUMBAI vs. INCOME TAX OFFICER -22(3)(6), MUMBAI

Per: Smt. Beena Pillai, J.M.: The present appeal filed by the assessee arises out of order dated 03/12/2024 passed by NFAC, Delhi for assessment year 2018-19 on following grounds of appeal :

“1. Addition of Rs.4.84.000/-u/s. 56(2)(x)(b)(B) 1. The Learned NFAC (Appeals) has erred in law and on facts confirming the addition of Rs 4,84,000/- u/s.56(2)(x) (b) (B) by not considering the amendment made by the Finance Act, 2020, to section 56(2)(x)(b)(B) of the Income-tax Act, 1961, whereby the tolerance limit for the difference in the fair market value as per A.Y. 2018-19 Ramesh Dnyandeo Dhuri valuation report and the actual consideration was increased from 5% to 10%. The amendment is applicable retrospectively for the Assessment Year 2018-19, hence the difference as per the valuation report and actual consideration (64,84,000 60,00000) being less Rs.4,84,000/-, which is less than 10%, hence the addition of Rs. 4,84,000/- may be directed to be deleted.

2. The assessee is an individual having income from Salary from Best Roadways Ltd, Income from other source which includes servicing Intercom Telephones & Pension, Savings & Income from Capital Gain on Redemption from Mutual Funds. During the year, assessee declared total taxable income of Rs.5,23,400/- and e-filed his return of income on 30/07/2018 and claimed deductions, u/s 80C, 80D, 80TTA and 80G sum of Rs.1,50,000/-, Rs.30,000/-, Rs.10,000/- and Rs.2,500/- respectively. 2.2 The case of the assessee was selected for scrutiny as there was information received from the sub-registrar office regarding infringement of section 50C/56(2)(vii) of the Act. Accordingly notice u/s.143(2) was issued to the assessee and the case was selected to verify the difference of the stamp duty valuation with the agreement value paid by the assessee. The Ld.AO issued notice u/s.142(1) calling upon information with regard to the A.Y. 2018-19 Ramesh Dnyandeo Dhuri same and in response to same notice issued vide letter dated 08/02/2021 submitted bank statements computation of capital gains, purchase agreement along with stamp duty and registration fees paid loan confirmation letters. The assessee was also intimated regarding the valuation being subjected to DVO’s report u/s.56 of the Act. 2.3 The DVO’s report was not received before the passing of the assessment order. However, the Ld.AO recorded following observation :

“4.3 Since it is not possible for DVO to determine the fair market value of the property in such a short period hence assessment order is passed with a condition that if DVO determines value of the above property below the circle rate of the property i.e. below than Rs. 87,07,221/- in that condition such value shall be adopted for the purpose of computation of income of the assessee but as of now the case is completed under the provisions of the Act as the case is going to barred by limitation on 30-04-2021.” 2.4 The Ld.AO thus made addition of the difference in the value being the circle rate and the sale consideration in the hands of the assessee u/s.56(2)(x) of the Act.

Aggrieved by the order of the Ld.AO assessee preferred appeal before the Ld.CIT(A).

3. While the appeal was pending before the Ld.CIT(A), the district valuation officer issued valuation report determining the value of the property at Rs.64,84,000/-. The Ld.CIT(A) having regard to the same observed and held as under : “6.2 The Valuation report prepared by the DVO-1, Mumbai dated 06.06.2022 is on record. As per this the value of the property acquired is Rs.64,84,000 as against the consideration of Rs.60,00,000 claimed by the appellant. The AO may determine the liability u/s 56(2)(x)(b)(B) as per the DVO report. Grounds 1 to 5 are partly allowed.”

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

A.Y. 2018-19 Ramesh Dnyandeo Dhuri 5. The issue raised before this Tribunal is whether assessee is entitled to the benefit of tolerance limit of approximately 7% and the whether the tolerance limit applies to the year under consideration. 5.1 Admittedly there is difference of Rs. 4,84,000/- between the agreed sale consideration and the stamp duty valuation as per DVO’s report. Once the matter is referred to the DVO and the DVO took various sales instances of similar property in the same area and the average sale instances was derived at Rs.64,84,000/-. 5.2 The third proviso to section 50C provides that where the value adopted or assessed or assessable by the stamp duty valuation authority does not exceed 10%, the consideration received shall be taken as full value as consideration. This provision was brought into statute w.e.f. 01/04/2019 and similar amendment was brought u/s.56(2)(x)(b)(B). The various courts have held that, same being beneficial provision should be interpreted liberally and that it retrospective with effect from 01/04/2003. 5.3 Hon’ble Supreme Court in case of CIT(A) vs. Alom Enterprise Ltd. reported in (2009) 185 taxmann 416 observed that once a statutory amendment is made to remove an undue hard ship to the assessee, ought to remove an apparent incongruity, such an amendment is to be treated as effected from the date of which the law containing such undue hard ship or incongruity was introduced. The above referred decisions relied by the Ld.AR has also been decided based on similar principals. As consequence I am of the opinion that the assessee is eligible for 10% tolerance A.Y. 2018-19 Ramesh Dnyandeo Dhuri limit u/s.56(2)(x)(b)(B) of the Act. The Ld.AO is thus directed to delete the addition. Accordingly the grounds raised by the assessee stands allowed. In the result the appeal filed by the assessee stands allowed. Order pronounced in the open court on 25/08/2025