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Facts
The assessee purchased an immovable property for Rs. 29,00,000/- with a stamp duty value of Rs. 30,31,900/-. The AO initiated proceedings under section 56(2)(x) of the Act to tax the difference, which was initially calculated based on an incorrect higher stamp duty value mentioned inadvertently by the assessee.
Held
The Tribunal held that the correct stamp duty value was Rs. 30,31,900/-, and the difference between this value and the purchase price was within the 5% tolerance limit. Therefore, no addition was warranted under section 56(2)(x) of the Act.
Key Issues
Whether the addition made under section 56(2)(x) of the Act is justified when the difference between the property's purchase price and its stamp duty value is within the permissible tolerance limit.
Sections Cited
250, 56(2)(x), 148A(b), 148, 147, 144B, 142(1)
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Income Tax Appellate Tribunal, ‘C’ (SMC
Before: SHRI GEORGE GEORGE K
आयकर अपील सं./ITA No.: 1937/CHNY/2025 िनधा�रण वष�/Assessment Year: 2019-20 Shri Koppal Ramachari Ramesh, The Deputy Commissioner 3, Ladakkara Street, Vs. of Income Tax, Shevapet, Circle 1(1), Salem – 636 002. Salem PAN: AATPR 1037M (अपीलाथ�/Appellant) (��यथ�/Respondent) अपीलाथ� क� ओर से/Appellant by : Shri G. Akar, Advocate ��यथ� क� ओर से/Respondent by : Ms. V. Supraja, Addl.CIT सुनवाई क� तारीख/Date of Hearing : 30.10.2025 घोषणा क� तारीख/Date of Pronouncement : 31.10.2025 आदेश/ O R D E R This appeal filed by the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 28.05.2025 passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2019-20.
The solitary issue raised is whether the First Appellate Authority (FAA) is justified in confirming addition made by the AO u/s.56(2)(x) of the Act amounting to Rs.3,31,900/-.
2 -: 3. Brief facts of the case are as follows: The assessee is an individual. For the assessment year 2019-20, the return of income was filed on 26.09.2019 declaring total income of Rs.42,43,470/-. The Department had information that assessee had purchased immovable property for a sum of Rs.29,00,000/- and the stamp duty value was Rs.30,31,900/-. Accordingly, to tax the difference u/s.56(2)(x) of the Act, notice u/s.148A(b) of the Act was issued, calling for the assessee’s objections for issuance of notice u/s.148 of the Act. The assessee filed reply on 13.03.2023 stating that the property was purchased for Rs.29,00,000/- and stamp duty authorities had fixed the value at Rs.32,31,900/- and the difference is less than 10% and therefore, the proposal for reopening is not correct. The AO held that the claim of the assessee is not supported by the provisions of the Act since there is no amendment of 10% at the relevant point of time. Accordingly, the AO passed the order rejecting the assessee’s objection u/s.148A(b) of the Act and issued notice u/s.148 of the Act. In response to the notice issued u/s.148 of the Act, assessee filed return of income declaring a sum of Rs.42,43,472/-. To the notice issued u/s.142(1) of the Act, the assessee filed reply stating that section 56(2)(x) of the Act has been amended with effect from assessment year 2021-22 3 -: increasing the tolerance limit from 5% to 10% and same is applicable in the assessee’s case retrospectively for the concerned assessment year. The AO rejected the assessee contentions and passed an order on 22.03.2024 u/s.147 r.w.144B of the Act. In the said assessment order, AO added a sum of Rs.3,31,900/- and completed the assessment on the total income of Rs.45,75,370/-
Aggrieved by the order of assessment making addition u/s.56(2)(x) of the Act amounting to Rs.3,31,900/-, assessee filed appeal before the First Appellate Authority (FAA). Before the FAA, it was submitted that the stamp duty value of the property is only Rs.30,31,900/- and not Rs.32,31,900/-. It was submitted that assessee had inadvertently, in reply to notice u/s.148A(b) of the Act, had mentioned the figure of Rs.32,31,900/- but however, showed the correct difference of value between purchase and stamp duty value on the correct figure at Rs.1,31,900/- (Rs.30,31,900/- – Rs.29,00,000/-). It was submitted if the correct figure of stamp duty value is taken, the purchase price of assessee being at Rs.29,00,000/-, the difference would be not exceeding 5% of the tolerance limit. Alternatively, it was contended by the assessee even assuming if the stamp duty value is Rs.32,31,900/- section 56(2)(x) of the Act has been amended, whereby tolerance
The FAA however, rejected the contention of the assessee. The FAA held that assessee himself had stated the market value / stamp duty value at Rs.32,31,900/- in proceedings u/s.148A of the Act. It was further held by the FAA since no other documents were filed in support of subsequent claim of the assessee that the market value of the property is Rs.30,31,900/-. Therefore, the market value adopted by the AO is to be upheld. The FAA has also rejected the alternative contention of the assessee by holding that for the relevant assessment year, the tolerance limit is only 5% and not 10%, which was effective only for and from assessment year 2021-22 onwards.
Aggrieved by the order of the FAA, assessee has filed the present appeal before the Tribunal. The assessee has filed two sets of paper-book. In one set of paper-book, assessee has enclosed the notices issued during the course of proceedings before the AO, the FAA, the written submissions filed before the FAA. In the other set of paper-book, assessee has furnished the 5 -: evidences in support of his claim that the market value / stamp duty value fixed for the impugned property is only Rs.30,31,900/- instead of Rs.32,31,900/- as adopted by the AO for making the addition u/s.56(2)(x) of the Act. The Ld.AR reiterated the submissions made before the income-tax authorities.
The Ld.DR strongly supported the orders of the AO and the FAA.
I have heard the rival submissions and perused the materials available on record. The assessee has contended that the Stamp Duty Authority had fixed the value of the impugned property at Rs.30,31,900/- as against Rs.32,31,900/- adopted by the AO. If the correct value of Rs.30,31,900/- is considered, the difference between the stamp duty value and the purchase consideration would be less than 5%. Hence, no addition is warranted under section 56(2)(x) of the Act. It is seen that the AO had adopted the value of Rs.32,31,900/- based on the assessee’s letter dated 13.03.2023, wherein the stamp duty value was inadvertently mentioned as Rs.32,31,900/-, though the difference was correctly shown as Rs.1,31,900/-. Subsequently, the assessee had given reply dated 03.10.2023 stating the inadvertent error committed earlier. The assessee also furnished 6 -: the certificate of Encumbrance which clearly shows that the stamp duty fixed by the Special Deputy Collector (Stamps) was at Rs.30,31,900/-. The said evidence that was produced before the AO is placed on record in the paper-book filed by the assessee. On careful perusal of the same, it is evident that the correct value determined by the Special Deputy Collector (Stamps) is Rs.30,31,900/-. Accordingly, since the purchase price of Rs.29,00,000/- is within the permissible tolerance limit of 5%, no addition is warranted under section 56(2)(x) of the Act. It is ordered accordingly.
In the result, the appeal filed by the assessee is allowed.