TaxTMI 
TaxTMI 
2026 (5) TMI 1418
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....IN LAW, ILLEGAL AND WITHOUT JURISDICTION 1.1 In the facts and the circumstances of the case, and in law, the appellate order u/s. 250 of the Income-tax Act, 1961 ["the Act"] framed and passed on 03.02.2026 by the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre ["Ld. CIT(A)"] is bad in law, illegal and without jurisdiction, as the same is framed in breach of the statutory provisions of the Act and the scheme and as otherwise also is not in accordance with the law. 1.2 Without prejudice to the generality of the above, the appellate order so passed is bad in law, illegal and void as the same is arbitrary and perverse. 2. VIOLATION OF PRINCIPLES OF NATURAL JUSTICE 2.1 In the facts and the circumstances of the case, and in law, the appellate order so framed is bad in law and illegal, as the same is framed in breach of the principles of Natural Justice. 2.2 Without prejudice to the generality of the above ground, in the facts and the circumstances of the case, the Ld. CIT(A) erred in not granting proper, sufficient, reasonable and fair opportunity of being heard to the Appellant while passing the appellate order. ....
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....ssment proceedings, on perusal of the sale deed, the Assessing Officer observed that there existed difference between the actual purchase consideration paid by the assessee and the stamp duty valuation adopted by the stamp valuation authority in respect of immovable property purchased by the assessee. The Assessing Officer noted that the assessee had purchased the immovable property from M/s. D.R. Developers & others for consideration of Rs. 1,50,00,000/-, whereas the stamp duty valuation of the said property was Rs. 1,61,16,500/-. According to the Assessing Officer, there was apparent deviation in the purchase consideration vis-à-vis stamp duty valuation and therefore the differential amount of Rs. 11,16,500/- was liable to be brought to tax under section 56(2)(x)(b)(B) of the Act. Accordingly, show cause notice was issued to the assessee requiring it to explain as to why the difference of Rs. 11,16,500/- should not be added to its total income under section 56(2)(x)(b)(B) of the Act. 5. In response to the aforesaid show cause notice, the assessee submitted before the Assessing Officer that under the Finance Act, 2018, purchase value of immovable property would be deemed....
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....ed by the Finance Act, 2002 as a special provision for adopting stamp duty valuation in cases where declared sale consideration was lower than the value adopted for stamp duty purposes. It was submitted that Finance Act, 2018 inserted proviso to section 50C providing that no adjustment would be made where stamp duty valuation did not exceed 105% of the actual consideration and thereafter Finance Act, 2020 enhanced the tolerance limit to 110%. The assessee contended that although the amendment was stated to be prospective, the same being curative and intended to remove hardship deserved to be applied retrospectively. In support of such contention, reliance was placed upon various judicial precedents including the decisions in the cases of i. Shri Sandeep Patil v. ITO (ITA No.924/Mum/2019) ii. Chandraprakash Jhunjhunwala v. DCIT (ITA No.2351/Kol/2017) iii. Maria Fernandes Cheryl v. ITO (123 Taxmann.com 252) 9. The assessee submitted that where the difference between actual consideration and stamp duty valuation was within 10%, the deeming fiction contained in section 50C could not be invoked and the same principle would apply mutatis mutandis to section ....
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....um/2023; iii. Balkrishna Venkappa Bhandary v. DCIT [2024] 169 taxmann.com 76 (Mumbai-Trib.); and iv. NFAC v. NRB Developers [(2025) 211 ITD 728 (Mumbai-Trib.)]. 14. The learned AR accordingly submitted that since the variation between the purchase consideration and stamp duty valuation was less than 10%, the deeming fiction contemplated under section 56(2)(x)(b)(B) of the Act could not be invoked and therefore the addition sustained by the lower authorities deserved to be deleted. 15. The learned Departmental Representative (DR) strongly relied upon the orders passed by the Assessing Officer as well as the CIT(A). The learned DR submitted that the amendment introduced by the Finance Act, 2020 enhancing the tolerance band under section 56(2)(x)(b)(B) of the Act from 5% to 10% cannot be treated as retrospective in operation in absence of any express legislative intent to that effect. It was contended that the statute itself specifically provides the effective date of applicability and therefore the amended provision is applicable only prospectively. The learned DR further placed reliance upon the judgment of the Hon'ble Supreme Court in the case of Commissione....
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..../4/2019 by the Finance Act 2018 allowed the tolerance band of 5 %. It was held to be applicable retrospectively. Further, by the Finance Act 2020 with effect from 1/4/2021 in the same proviso the tolerance band is replaced by increasing it to 10 %. Therefore, when there is no change in the wording of the proviso but only tolerance band is increased it should also apply retrospectively. 19. Coordinate bench in case of Maria Fernandes Cheryl (supra)has already held that the amendment made by Introducing proviso [ Introduction of tolerance band of 5 % and later on 10 %] applies with effect from 1/4/2003 when the provision of section 50 C was introduced. 20. Further introduction of tolerance band is for removing the hardship in the section. once a statutory amendment is being made to remove an undue hardship to the assessee or to remove an apparent incongruity, such an amendment has to be treated as effective from the date on which the law, containing such an undue hardship or incongruity, was introduced as held by Hon Supreme Court in Alom Enterprises Ltd. [2009] 185 taxman 416 /319 ITR 306 (SC). 21. In view of above, respectfully following the decision of t....
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....tal difference exceeds 10%, i.e. 10.01%. The Ld. AR contended that any excess over 10% should be added. In our considered view, we hold that the provision of section 56(2)(x)(b)(B) has retrospective effect and is applicable to the impugned assessment year. Accordingly, we uphold the view adopted by the Ld. CIT(A) in reducing the addition under section 56(2)(x). However, with respect to section 56(2)(x)(b)(B), we remit the matter to the file of the Ld. AO for allowing the assessee the incremental differences as per the said Act for the alleged properties. In the case of Unit No. 103, the excess over 10% shall be considered for addition. Consequently, the appeal of the assessee is allowed. 23. Thus, there is a consistent line of decisions of the Co-ordinate benches holding that the enhancement of tolerance band to 10% under section 56(2)(x)(b)(B) is curative and beneficial in nature and is applicable to A.Y. 2018-19. The present case stands on a stronger footing since the variation is only 7.44%, which is clearly below 10%. 24. The learned DR has relied upon the judgment of the Hon'ble Supreme Court in CIT v. Vatika Township (P.) Ltd.(supra) to contend that an amendment is pres....
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.... to be strictly construed. The deeming fiction taxes the difference between stamp duty value and actual consideration in the hands of the purchaser. Such fiction cannot be extended beyond its legitimate field. Where the Legislature itself has recognised that marginal variation between declared consideration and stamp valuation should be ignored, such beneficial recognition must be applied in a manner which advances the object of the amendment and avoids unintended hardship. The tolerance band is not in the nature of a substantive exemption granted for the first time. It is a statutory recognition of the practical reality that stamp duty valuation is only a presumptive benchmark and may not, in all cases, represent the true market value with mathematical precision. 28. In the present case, the assessee purchased immovable property for Rs. 1,50,00,000/- and the stamp duty valuation was Rs. 1,61,16,500/-. The difference is Rs. 11,16,500/-, which works out to 7.44% of the purchase consideration. Thus, the variation is admittedly less than 10%. Applying the ratio of the coordinate benches, no addition is sustainable under section 56(2)(x)(b)(B) of the Act. 29. We also find that th....