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Facts
The assessee purchased a flat in 2013, registered in 2019. The declared consideration was Rs 1,83,20,000, while the market value was Rs 2,52,64,500, showing a difference of Rs 6,944,500. The Assessing Officer (AO) added Rs 595,000 to the assessee's total income under Section 56(2)(x) of the Income Tax Act, citing a difference between the disclosed value and the valuation report.
Held
The Tribunal noted that the difference between the transaction value and the stamp duty value was Rs 595,000, which is 3.25% of the transaction value. The Tribunal held that the benefit of the 10% tolerance limit under Section 56(2)(x) and Section 50C of the Act should be allowed to the assessee.
Key Issues
Whether the addition of Rs 595,000 as income from other sources under Section 56(2)(x) is justified, considering the difference between the sale consideration and stamp duty value falls within the tolerance limit.
Sections Cited
143(3), 144B, 56(2)(x), 50C
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, Mumbai “SMC” Bench, Mumbai.
IN THE INCOME TAX APPELLATE TRIBUNAL Mumbai “SMC” Bench, Mumbai. Before Shri Prashant Maharishi (AM) I.T.A. No. 233/Mum/2024 (A.Y. 2020-21) Jitendra Vanigota Vs. ITO, Ward 20(2)(1) 76, New Municipal Piramal Chambers Building, Shuklaji Mumbai. Street, Kamathipura Mumbai-400 008. PAN : ABOPJ3841P (Appellant) (Respondent) Assessee by Shri Siddharth Kothari Department by Shri R.R. Makwana Date of Hearing 10.06.2024 Date of Pronouncement 29.07.2024 O R D E R 1. This appeal is filed by the assessee appellant against the appellate order passed by the National faceless appeal Centre Delhi (the learned CIT – A) for assessment year 2020 – 21 dated 28/11/2023 wherein the appeal filed by the assessee against the assessment order dated 25/4/2023 passed under section 143 (3) of The Income Tax Act, 1961 (the act) by the assessment unit income tax department (the learned AO) was dismissed. Therefore, the assessee is in appeal before us. 2. Brief facts of the case show that the assessee is an individual and is regularly assessed to income tax. During the year the assessee has shown income in the form of remuneration, interest on capital and share of profit from partnership firm. The assessee has filed its return of income on 29/12/2024 at a total income of ₹ 12,50,380/–. 3. Assessee has entered into an agreement with the builder in the year 2013 to purchase of flat. This flat was registered on 22/11/2019 and the value of the said flat was taken at Rs 183,20,000. The market value of the said flat is ₹ 25,264,500/– thus there was a difference of ₹
6,944,500. The assessee was asked to explain the same. As the assessee has stated that this property was purchased in 2013 the assessee was asked to give the valuation date as 31/1/2013. No reply was received. The assessing officer referred the matter to the valuation cell to value the property as on 31/1/2013. The valuation report of the TPO was received which valued the property at ₹ 18,915,000/– therefore the learned assessing officer was the view that as per the valuation report of the district valuation officer is at ₹ 18,915,000/– whereas the assessee has disclosed consideration of ₹ 18,320,000, therefore the difference of ₹ 595,000 requires to be added to the total income of the assessee under section 56 (2) (x) of the act. Thus, the assessment order was passed under section 143 (3) read with section 144B of the income tax act on 24/4/2023 at ₹ 1,845,380/– whereas the addition was made in the hence of the assessee of ₹ 595,000 to the returned income of the assessee at ₹ 1,250,380/-. 4. Assessee preferred an appeal before the learned CIT – A which was delayed by 30 days. As per Para number 15 of form number 35 the assessee stated the reason of the delay that assessee was travelling out station and hence was unable to appoint a consultant for filing an appeal. The assessee could not produce any evidence to justify the reason cited and therefore the learned CIT – A held in not to be a sufficient cause for condoning the delay. Thus, the delay was not condoned, and the appeal of the assessee was dismissed. 5. Aggrieved with that assessee is in appeal before us. Assessee submits that the delay in filing of the appeal was due to sufficient reason and therefore it should have been condoned. Assessee submits that the delay is nominal, without any mala fide intention, no benefit accrued to the assessee in filing the delayed appeal. Therefore, the learned CIT appeal should have condoned it. 6. On the merits of the case, he submits that the difference between the consideration and Stamp duty value is just ₹ 595,000. Therefore, it
falls within the tolerance limit, the addition should not have been made. 7. The learned departmental representative vehemently stated that the assessee could not convince the learned CIT – A about sufficient cause in filing the appeal and therefore he did not condone the delay and therefore the matter may be sent back to the CIT appeal. 8. We have carefully considered the rival contention and perused the orders of the learned lower authorities. We do not want to enter into the controversy whether the learned CIT – A is right in condoning the delay or not. This is for the reason that if we can solve the issue on the merits here itself, there is no point in clogging the appellate system once again. on merit of the case, it shows that the stamp duty value of the property is ₹ 18,915,000/–. The transaction value of the property is ₹ 18,320,000/–. Therefore, the difference between the two prices is only ₹ 595,000/–. This is merely 3.25% of the transaction value. 9. According to the provisions of section 56 (2) (x) of the act where any person receives from any person on or after the first day of April 2017, any immovable property for a consideration whereas the Stamp duty value of such property exceeds such consideration by more than ₹ 50,000 or amount equal to 10% of the consideration than such amount should be considered as an income chargeable to income tax under the head income from other sources. If the parties have agreed to an agreement prior to the year where the amount of consideration is fixed, and consideration is paid in a specified manner, then stamp duty value on the date of agreement should be considered for the purpose of computing the income of the assessee. It is further stated that provisions of section 50 C will also apply to such provision. Thus, it is apparent that provisions of section 50 C are applicable to the seller and provisions of section 56 (2) (x) applies to the buyer. At present the benefit of 10% of the tolerance limit is provided under section 50 C and the same tolerance limit also applies to provisions of
section 56 (2) (x) of the act. Therefore, in the present case the benefit of 10% of the tolerance limit should be allowed to the assessee as if it has operated since the inception of the provisions of section 56 (2) (x) and section 50 C of the act. In view of this, the addition made in the hands of the assessee is not in accordance with the law and hence the learned assessing officer is directed to delete the addition. 10. Accordingly, the order of the learned assessing officer is reversed and all the grounds of appeal of the assessee are allowed.
Order pronounced in the open court on 29th July 2024. Sd/- (Prashant Maharishi) Accountant Member
Mumbai : 29.07.2024 Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. The CIT(A) 4. CIT 5. DR, ITAT, Mumbai. 6. Guard File. BY ORDER, //True Copy// (Assistant Registrar) PS ITAT, Mumbai