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Facts
The Assessing Officer (AO) made an addition based on the difference between the stamp duty valuation and sale consideration of a property. The Assessee challenged this, and subsequently, a valuation report showed a lower Fair Market Value (FMV). The AO sustained a reduced addition based on this new valuation.
Held
The Tribunal noted that the difference between the FMV and the sale consideration was less than 5% of the statutory leverage. Therefore, the addition sustained by the AO was considered excessive.
Key Issues
Whether the addition made by the AO, considering the revised valuation report, is justified when the difference is within the statutory limit?
Sections Cited
56(2)(vii)(b), 143(3), 155(15), 250
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, NAGPUR BENCH “SMC”, NAGPUR
Before: SHRI NARENDER KUMAR CHOUDHRY
Per : Narender Kumar Choudhry, Judicial Member:
This appeal has been preferred by the Assessee against the order dated 21.02.2025, impugned herein, passed by the ADDL/JCIT Commissioner) (in short Ld. Commissioner) u/s 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2016-17.
In this case, the Assessing Officer (AO) vide assessment order dated 14.12.2018 u/s 143(3) of the Act, has made the addition of Rs.18,66,670/- being 1/3rd of the difference between the stamp duty valuation on market value of Rs.2,56,00,000/- and sale consideration shown by the Assessee, u/s 56(2)(vii)(b) of the Act with a rider that addition will be subject to modification, if any, on receipt of valuation report, from the Assistant Valuation Officer, Nagpur.
The Assessee challenged the said disallowance/addition by filing first appeal before the Ld. Commissioner on dated 08001.2019, however, subsequently the AO received the valuation report from the Valuation Officer, Income Tax Department, Nagpur, who valued the property at Rs.2,06,25,000/- and therefore the difference of FMV as per the valuation officer report and as per sale consideration shown by the Assessee comes to Rs.6,25,000/- and the Assessee’s share comes to Rs.2,08,333/- being 1/3rd of the said amount and thus, the AO vide order dated 03.03.2020 u/s. 155(15) of the Act, sustained the addition to the extent of Rs.2,08,333/-.
The Ld. Commissioner by taking cognizance of such facts and the order dated 03.03.2020 referred to above, ultimately held the appeal of the Assessee being infructuous/merging of assessment order dated 14.12.2018 u/s 143(3) of the Act with the order dated 03.03.2020 u/s 155(15) of the Act and consequently dismissed the same.
This Court has given thoughtful considerations to the peculiar facts and circumstances of the case. Admittedly, the difference between the FMV as per the valuation report and the consideration shown by the Assessee was of Rs.6,25,000/- which is lower than 5% of the leverage granted by the statute under the relevant provisions of law, as also applicable to the instant case. Thus, considering the same, the addition sustained by the AO to the extent of Rs.2,08,000/- vide order dated 03.03.2020 u/s 155(15) of the Act, is deleted by allowing the appeal of the Assessee.
In the result, the appeal filed by the Assessee is allowed.
Order is pronounced in open Court on 26.06.2025 .