BHIKHAMCHAND S. SHAH,NAVSARI V. ITO WARD-2, NAVSARI

ITA 1335/SRT/2024

AI Insights

The case revolves around an appeal by Bhikhamchand S. Shah against the order of the Commissioner of Income-tax (Appeals), which confirmed an addition of Rs.3,00,000 to his income under section 50C of the Income-tax Act, 1961, for the Assessment Year 2014-15. The addition was based on the difference between the sale consideration of a property and its stamp duty valuation. The Tribunal considered previous rulings that allowed a 10% tolerance band for valuation differences, arguing that such provisions, although stated to be prospective, relate back to the date when section 50C was originally enacted. Consequently, the Tribunal directed the Assessing Officer to adopt the value declared by the assessee, which was within the 10% tolerance band.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 397982 (ITAT-SURAT)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Other Referred Cases: Maria Fernandes Cheryl vs. ITO, M/s John Fowler (India) Pvt. Ltd. vs. DCIT, Smt. Sita Bai Ketan vs. ITO, Rahul Construction vs. DCIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH JAIN
• Assessee Lawyers: SURJI D. CHHEDA
• Keywords: Set aside; Sale consideration of property below Jantri Value; Fair market value
• Section: 50C

Judgement Text

" IN THE INCOME-TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI BIJAYANANDA PRUSETH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.1335/SRT/2024 Assessment Year: (2014-15) (Hybrid Hearing) Bhikhamchand S. Shah, Kadampalli Appartment, Samroli, N.H. No.8, Post – Chikhli, Navsari, Navsari – 396521, Gujarat Vs. The ITO, Ward - 2, Navsari èथायीलेखासं./जीआइआरसं./PAN/GIR No: AEZPS9850B (अपीलाथŎ / Appellant) (ŮȑथŎ / Respondent) Appellant by Shri Surji D. Chheda, CA Respondent by Shri Mukesh Jain, Sr. DR Date of Hearing 08/04/2025 Date of Pronouncement 05/06/2025 आदेश / O R D E R PER BIJAYANANDA PRUSETH, AM: This appeal by the assessee emanates from the order passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’), dated 26.10.2024 by the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi [in short ‘CIT(A)’] for the Assessment Year (AY) 2014-15. 2. Grounds of appeal raised by the assessee are as under: “1. The Learned CIT(A) has erred in law and in facts and confirm the addition to the extent of Rs.3,00,000/- u/s 50C of the Act. 2. The learned CIT(A) has erred in making addition ignoring the fact the difference in value adopted by the assessee and FMV (determined by the DVO) of the property u/s 50C is within the range of + / -10% as per the proviso to section 50C and applied retrospectively also. 3. The appellant craves leave to add, amend, alter or delete any or all the above grounds of appeal.” 2 ITA No.1335/SRT/2024/AY.2014-15 Bhikhamchand S. Shah 3. The facts of the case in brief are that the assessee filed return of income for AY.2014-15 on 31.07.2014, declaring total income of Rs.25,27,770/-. The assessee attended hearings before the AO and filed various details and documents. During the year, assessee has sold immovable property at Samroli, Taluka – Chikhli, Navsari for a consideration of Rs.69,00,000/-. As per the information received from the Stamp Valuation Authority, the market value of the said property was Rs.83,74,189/-. Thus, there was difference of Rs.14,74,189/-. On being show caused as to why the said amount of Rs.14,74,189/- should not be taxed u/s 50C of the Act, the assessee did not file any reply. Hence, addition of Rs.14,74,189/- was made u/s 50C of the Act. 3.1 Aggrieved by the order of AO, the assessee filed appeal before the CIT(A), Valsad, who confirmed the addition made by AO. On further appeal, the ITAT, Surat set aside the order of CIT(A) and remitted it to file of CIT(A) to adjudicate the issue afresh on merits. Accordingly, the CIT(A) issued notice for fresh hearing and obtained submission of assessee, which is reproduced at para 5 of the appellate order. It was submitted that the impugned land was considered as NA lndustrial land instead of NA Commercial land for the purpose of stamp valuation by the sub-registrar. If it is considered as land for commercial purpose, the market value would be Rs.69,46,510/- and the difference would be only Rs.46,510/-, which is within the 5% range and cannot be added u/s 50C of the Act. The CIT(A) forwarded the submission of appellant to AO and asked AO to make reference to the DVO. The DVO submitted the valuation estimating the fair 3 ITA No.1335/SRT/2024/AY.2014-15 Bhikhamchand S. Shah market value (FMV) at Rs.72,00,000/- as against the stamp duty valuation of Rs.83,74,189/-. Thus, the difference was Rs.3,00,000/-, which was less than 10% of the valuation by the DVO. Hence, according to appellant, no addition is liable to be made as per the 3rd Proviso of section 50C of the Act. The CIT(A) did not accept the contention of the assessee, which is at para 6.5 and 6.6 of the appellate order. He observed that 3rd Proviso was inserted by Finance Act, 2018 w.e.f. 01.04.2019 to the effect that where the valuation of stamp valuation authority does not exceed 105% of the consideration received as a result of transfer, the consideration so received shall be deemed to be the full value of consideration for the purpose of section 48 of the Act. This margin was revised upward to 110% w.e.f. 01.04.2021. The appellant’s case pertains to AY.2014-15 when the said proviso had not been inserted in the Act. He, therefore, held that in absence of any provisions in the statute for providing such margin of tolerance between the valuation as per the DVO and actual sale consideration, the contention of assessee cannot be accepted. Accordingly, he directed AO to adopt the value of Rs.72,00,000/- as arrived at by the DVO as full value of consideration. 4. Aggrieved by the order of CIT(A), the assessee filed appeal before the Tribunal. The learned Authorized Representative (ld. AR) of the assessee has contested the findings of CIT(A) in confirming addition of Rs.3,00,000/- and has relied on the decision of ITAT, Mumbai in cases of Maria Fernandes Cheryl vs. ITO, in ITA No.4850/Mum/2019 for AY.2011-12, dated 15.01.2021 and M/s John Fowler (India) Pvt. Ltd. vs. DCIT, in ITA No.7545/Mum/2014 for AY.2010-11, dated 4 ITA No.1335/SRT/2024/AY.2014-15 Bhikhamchand S. Shah 25.01.2017. He submitted that since the difference is less than 10%, the addition made by the AO should be deleted. 5. On the other hand, the learned Senior Departmental Representative (ld. Sr. DR) for the revenue supported the orders of lower authorities. He submitted that the 3rd Proviso to Section 50C of the Act was inserted by Finance Act, 2018 and is effective from AY.2019-20. The tolerance limit of 10% was subsequently inserted by Finance Act, 2020 w.e.f. AY.2021-22. Hence, case of the appellant for AY.2014-15 is not covered by the said insertion by the Finance Act, 2020. 6. We have heard both parties and perused the materials available on record. We have also deliberated upon the decisions relied upon by both sides. We find that the decisions of the Co-ordinate Bench of ITAT, Mumbai in cases of Maria Fernandes Cheryl (supra) and M/s John Fowler (India) Pvt. Ltd. (supra) are directly on the issue. In case of M/s John Fowler (India) Pvt. Ltd. (supra), the ITAT, Mumbai referred to the decision of the ITAT, Jaipur in case of Smt. Sita Bai Ketan vs. ITO, in ITA No.823/Jp/2023, dated 27.07.2016 and ITAT, Pune in case of Rahul Construction vs. DCIT, 38 DTR 0019 and allowed the appeal in favour of the assessee by directing the AO to adopt the value of sale consideration declared by the assessee. The ITAT, Mumbai in case of Maria Fernandes Cheryl (supra), has also decided the issue in favour of the assessee by elaborate discussion on the subject issue of tolerance band of 10% in valuations of property. It was held that similar situation needs to be addressed in entirety for the entire period in which the legal provisions had effect, and not for a specific time period only. The ITAT, 5 ITA No.1335/SRT/2024/AY.2014-15 Bhikhamchand S. Shah Mumbai Tribunal further held that the tolerance band for variation between the stated sale consideration vis-à-vis stamp duty valuation to 10% is curative in nature, and therefore, the provisions, even though stated to be prospective, must be held to relate back to the date when the related statutory provisions of Section 50C of the Act, i.e., 01.04.2003 was brought into the statute. We find no reason to deviate from the decisions cited supra. We have noted that as against the sale consideration of Rs.69,00,000/-, the DVO has arrived at the FMV at Rs.72,00,000/-. Therefore, the difference of Rs.3,00,000/- is within the tolerance band of 10%. Following the decisions of Tribunals cited supra, the order of CIT(A) is set aside, and AO is directed to accept the value adopted by the assessee. Hence, the grounds raised by the assessee is allowed. 7. In the result, appeal of the assessee is allowed. Order is pronounced under provision of Rule 34 of ITAT Rules, 1963 on 05/06/2025. Sd/- Sd/- (SANJAY GARG) (BIJAYANANDA PRUSETH) JUDICIAL MEMBER ACCOUNTANT MEMBER Surat Ǒदनांक/ Date: 05/06/2025 SAMANTA Copy of the Order forwarded to: 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat "