Section 50C addition fails where declared sale consideration exceeds the applicable stamp valuation for the transferred property.

Section 50C did not justify the addition because the stamp valuation adopted by the Assessing Officer related to the wrong location and not to the property actually transferred. The record showed that the land was at village Dhandari Khurd and that the applicable circle rate for that property was lower than the declared sale consideration. As the declared consideration exceeded the applicable stamp valuation and the Revenue produced no independent evidence of understatement, the deeming fiction under section 50C did not operate. The addition was therefore deleted and the Revenue's challenge failed.

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Issues: Whether the addition made by invoking section 50C of the Income-tax Act, 1961 by adopting a higher circle rate was sustainable when the evidence showed that the land transferred was situated at the lower-rate location and the consideration declared was higher than the applicable stamp valuation.

Analysis: The material on record, including the correspondence of the revenue and registration authorities, established that the land sold was situated at village Dhandari Khurd and that the applicable circle rate for the relevant year was Rs. 1,300 per sq. yd. The valuation adopted by the Assessing Officer proceeded on an incorrect location of the property and on a higher rate applicable to another area. Section 50C operates only when the value adopted or assessed by the stamp valuation authority for the very same transferred property is less than the declared consideration. On the facts found, the declared sale consideration was itself higher than the applicable circle rate, and the Revenue did not establish understatement by independent evidence.

Conclusion: The addition under section 50C was not sustainable and was correctly deleted; the Revenue's appeal failed.

Ratio Decidendi: Section 50C can be invoked only on the basis of the stamp valuation of the very property transferred, and where the declared consideration exceeds the applicable stamp valuation for that property, the deeming fiction does not operate absent proof of understatement.

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