RAMA RAJENDRA SAWANT,MUMBAI V. ITO 23(3)(6), MUMBAI, PIRAMAL CHAMBER

ITA 1835/MUM/2025

AI Insights

The case involves an appeal by Rama Rajendra Sawant against the order of the CIT(A)/NFAC, which pertained to the assessment year 2018-19. The primary issue was the addition of 50% of the difference between the purchase price and the stamp duty value of a jointly purchased residential property to the assessee's income under section 56(2)(x) of the Income Tax Act. The assessee argued that the addition was incorrect as the difference was within the tolerance range of 10% and that the majority of the purchase consideration was paid by her husband, not her. The Tribunal agreed with the assessee, referencing several precedents and the retrospective amendment to the relevant section of the Income Tax Act.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 708380 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2018-2019
• Other Referred Cases: Puspa Lachman Samtani Vs ITO, ACIT Vs Sunila B Dalal, Sandeep Kumar Poddar Vs ITO
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURENDRA MOHAN
• Assessee Lawyers: NAMRATA DEDHIA
• Keywords: Retrospective amendment; Sale consideration of property below Jantri Value

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER ITA No. 1835/MUM/2025 (AY: 2018-19) (Physical hearing) Rama RajendraSawant 13/11, R.S. Compound, T.J. Road, Sewree, Mumbai-400015. [PAN No. AZLPS1612C] Vs ITO, Ward-23(3)(6), Mumbai Piramal Chambers, Lalbaug, Mumbai – 400012. Appellant / Assessee Respondent / Revenue Assessee by Ms. Namrata Dedhia, CA Revenue by Sh. Surendra Mohan, Sr. DR Date of hearing 14.07.2025 Date of pronouncement 14.07.2025 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER; 1. This appeal by assessee is directed against the order of Ld. CIT(A)/NFAC dated 24.04.2024 for assessment year (AY) 2018-19. The assessee has raised following grounds of appeal: “1. The learned Assessing officer has erred in observing that the details of the assessee's relationship with her husband was not mentioned along with documentary evidence and that it had any bearing on the taxability of the purchase of immovable property. 2. The learned Assessing Officer has erred in adding 50% the difference of purchase price and stamp duty value of the jointly purchased residential property as income under section 56(2)(x) even though the same has been offered to tax in the return of the first owner Mr. Rajendra Sawant and the assessee has hardly paid any amount towards the purchase consideration for the said property. 3. Without prejudice to Ground no. 2 above, the learned assessing officer has erred in making addition to the extent of 50% of the difference, instead of restricting the addition to 16.56% of the difference, being the ratio of purchase consideration for the residential property paid by the assessee. ITA No. 1835/Mum/2025 Rama Rajendra Sawant 2 4. The learned assessing officer has erred in not allowing standard deduction against income from house property. 5. Without prejudice to Ground nos. 1 to 3 above, the learned assessing officer has erred in computing tax on the addition made at special rate of 30% instead of the slab rate applicable to the assessee.” 2. Rival submissions of both the parties have heard and record perused. The learned Authorised Representative (ld. AR) of the assessee submits that a very short question is in the present appeal. During the relevant financial year, the assessee and her husband purchased residential property. Substantial part of sale consideration was arranged from housing loan. More than 80% of purchase consideration was arranged and paid by her husband. The name of assessee was included as a co-owner. There is difference in the agreement value of said property and the value determined by Stamp valuation authority. The assessee and her husband paid stamp duty of Rs. 8,46,000/- The Stamp Valuation Authority valued the said property for the purpose of registration of transaction at Rs. 1.62 crore. Thus, there was a difference of Rs. 11,40,797/- vis-à-vis ready reckoner rate and the price declared by assessee. The assessing officer treated the assessee as owner of 50% shareholder and 50% of difference of ready reckoner rate and agreement value was added in the income of assessee. The ld. AR of the assessee submits that the difference vis-à-vis ready reckoner rate and agreement value is only 7.00% and within the tolerance range as per prescribed in section 56(2)(x). Thus, no addition is liable to be made against the assessee. Even otherwise the property was purchased from the finances arranged / paid by her husband and no additions were made in the hand of assessee. Majority of amount was paid after filing housing loan i.e. Rs. 1.16 crore and other payments were made by her ITA No. 1835/Mum/2025 Rama Rajendra Sawant 3 husband. The lower authorities failed to appreciate such vital fact. The ld. AR of the assessee relied upon the following decision:  Puspa Lachman Samtani Vs ITO in ITA No. 5736/Mum/2019,  ACIT Vs Sunila B Dalal (2022) 145 taxmann.com313 (Mumbai-Trib),  Sandeep Kumar Poddar Vs ITO (2023) 151 taxmann.com 18 (Kolkata-Trib) 3. On the other hand, learned Senior Departmental Representative (ld. Sr. DR) for the revenue supported the order of lower authorities. The ld. Sr. DR submits that addition was made in the assessment order for the want of proper reply and explanation. The assessee has not taken specific ground of appeal for seeking relief of tolerance range of 10% of difference viz a viz sale consideration and the value determined by stamp valuation authority. 4. I have considered the contentions of both the parties and have gone through the orders of lower authorities carefully. I also deliberated on various case laws relied by ld. AR of the assessee. I find that a very short question is involved in the present appeal. There is no dispute that there was a difference vis-à-vis the value declared by assessee and her husband as per agreement value and the value determined by Stamp Valuation Authority. I find that the assessing officer on page No. 4 of assessment order recorded that purchase consideration as per sale deed 27.06.2017 is of Rs.1,51,46,000/- and the Stamp Valuation Authority valued the asset 1,62,86,797/-, and difference of Rs.11,40,797/-. The assessing officer made addition of Rs.570,399/- that is 50% of Rs.11,40,797/-. Admittedly the difference viz a viz value declared by assessee and her husband and value determined by Stamp Valuation authority is less than 10%, which is with the tolerance range of 10%. I further find that coordinate bench of this Tribunal in ACIT Vs Sunil B ITA No. 1835/Mum/2025 Rama Rajendra Sawant 4 Dalal (supra) and in Sandeep Kumar Poddar Vs ITO (supra) by following earlier decision of this bench in Maria Fernandes Cheryl Vs ITO (2021) 123 taxmann.com 252 (ITR (T)/ 674 ITD 738 (Mum) held that amendment to section 56(2)(x) by Finance Act, 2020 with effect from 01.04.2021 pertaining to increase of tolerance range band from 5.00 % to 10.00% is clarificatory / curative in nature having retrospective effect and no addition could be made on account of difference being less that tolerance limit of 10.00% during relevant year 2018-19. This appeal also relates to AY 2018-19. Considering the aforesaid factual and legal position when the difference between the value declared by the assessee and her husband and the value determined by stamp valuation authority is less than the tolerance limit of 10.00%, no addition is liable to be made. Hence, the ld AR of the assessee succeeded on her primary submissions. Once, I accepted the primary submissions of ld AR of the assessee, thus, adjudication of other without prejudice grounds of appeal have become academic. 5. In the result, the appeal of the assessee is allowed. Order was pronounced in the open Court on 14/07/2025 at the time of hearing. Sd/- PAWAN SINGH JUDICIAL MEMBER MUMBAI, Dated 14/07/2025 Biswajit ITA No. 1835/Mum/2025 Rama Rajendra Sawant 5 Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Mumbai; and (5) Guard file. By Order Assistant Registrar ITAT, Mumbai "