Stamp duty valuation versus actual consideration: tribunal applies safe harbour tolerance and quashes revision for change of opinion, granting relief.

Difference between stamp duty value and actual sale consideration was examined under the valuation deeming fiction; tribunal held that a tolerance band (5% then 10%) introduced to prevent marginal additions must be applied and construed beneficially and, on the facts, the assessing officer's decision to ignore a 5.24% difference was a legally permissible view. The revision power was misused as it amounted to a change of opinion; revisionary order was quashed and relief granted to the assessee with retrospective application of the safe harbour tolerance in favour of the taxpayer.

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Issues: (i) Whether the order passed by the Principal Commissioner under section 263 of the Incometax Act, 1961 setting aside the reassessment order dated 25.03.2023 is valid; (ii) Whether the safe harbour/tolerance provisions (third proviso to Section 50C(1) and subsequent enhancement) apply retrospectively to exclude marginal differences between stamp duty valuation and declared consideration.

Issue (i): Validity of the section 263 order setting aside the reassessment order dated 25.03.2023.

Analysis: The reassessment order recorded a conscious decision, approved by the supervisory officer, not to tax a marginal difference of Rs.94,339 arising from Stamp Valuation Authority valuation versus declared consideration. The question is whether that decision amounted to an order which is "erroneous and prejudicial to the interests of revenue" within the meaning of section 263 or only a change of opinion between officers.

Conclusion: The section 263 order is quashed; the revisional power under section 263 cannot be invoked to substitute a possible and legally permissible view taken by the Assessing Officer with supervisory concurrence. The result is in favour of the assessee on this issue.

Issue (ii): Retrospective applicability of the safe harbour/tolerance band under the third proviso to Section 50C(1) and its enhancement.

Analysis: The third proviso to Section 50C(1) and later enhancement of the tolerance band address unintended hardships from literal application of deeming provisions and operate as curative/remedial measures. The legal principle of giving beneficial curative amendments retrospective effect where necessary to mitigate undue hardship supports treating the safe harbour as applicable to prior assessment years for small, bonafide variations.

Conclusion: The safe harbour/tolerance band is held to have retrospective effect such that marginal differences below the relevant tolerance (here below 10%) need not be taxed; conclusion runs in favour of the assessee.

Final Conclusion: The impugned revisional order under section 263 is quashed and the appeal is allowed, with the effect that the marginal valuation difference is not subjected to tax in the reassessment; the overall outcome favours the assessee.

Ratio Decidendi: A curative amendment creating a tolerance band for differences between stamp duty valuation and declared consideration is to be given retrospective effect where necessary to avert unintended hardship, and a revisional order under section 263 cannot be used to overturn a possible and legally permissible assessment view taken by the Assessing Officer with supervisory approval.

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