Section 56(2)(x) addition fails where property valuation stays within the permissible tolerance range and declared consideration is broadly supported.

Addition under section 56(2)(x) for purchase of immovable property was found unsustainable where the Departmental Valuation Officer's figure was broadly aligned with the declared consideration and the difference was within the applicable tolerance range. The assessee had recorded the investment at the purchase price plus stamp duty and registration charges, while the Assessing Officer relied on the stamp valuation authority's value to make an addition for alleged inadequate consideration. Because the valuation material placed on record showed only a minor variation, there was no basis to treat the transaction as giving rise to taxable income under section 56(2)(x), and the addition was deleted.

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Issues: Whether the addition made under section 56(2)(x) of the Income-tax Act, 1961, in respect of the purchase of immovable property, was sustainable when the valuation adopted by the Departmental Valuation Officer was broadly in line with the declared consideration and the difference was within the permissible tolerance range.

Analysis: The assessee purchased agricultural land and recorded the investment at the stated purchase price together with stamp duty and registration charges. The Assessing Officer adopted the stamp valuation authority's figure and made an addition for alleged inadequate consideration. The Departmental Valuation Officer's report, received after completion of the assessment, valued the property at a figure close to the declared purchase price. On the material placed, the difference between the declared consideration and the valuation was less than 10%, bringing the case within the tolerance range applicable to the provision. In those circumstances, there was no basis to treat the transaction as attracting an addition under section 56(2)(x).

Conclusion: The addition under section 56(2)(x) was not sustainable and was deleted.

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