Clarificatory 10% tolerance under section 56(2)(x)(b) defeats addition where property valuation difference stays within the limit.

Section 56(2)(x)(b) did not support an anti-avoidance addition where the difference between the stated purchase consideration and the Departmental Valuation Officer's fair market value was within the enhanced 10% tolerance limit. The Tribunal treated the Finance Act, 2020 increase from 5% to 10% as clarificatory and curative, applying it retrospectively in line with coordinate bench rulings. As the variation remained below the applicable tolerance threshold, the addition was deleted in favour of the assessee.

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Issues: Whether the addition under section 56(2)(x)(b) of the Income-tax Act, 1961, was sustainable where the difference between the consideration and the fair market value determined by the Departmental Valuation Officer was within the enhanced tolerance limit.

Analysis: The dispute arose from the purchase of immovable property for a stated consideration, with the revenue invoking section 56(2)(x)(b) on the basis of stamp duty valuation. The valuation of the same property had already been determined by the Departmental Valuation Officer in connected proceedings, and that valuation showed a difference from the agreed consideration which was less than 10 per cent. The Tribunal noted that the Finance Act, 2020 increased the tolerance limit from 5 per cent to 10 per cent and relied on coordinate bench decisions holding that this enhancement was clarificatory and curative in nature. On that basis, the amended tolerance limit was treated as applicable retrospectively, and the small variation did not justify invoking the anti-avoidance addition.

Conclusion: The addition under section 56(2)(x)(b) was not justified and was deleted, in favour of the assessee.

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