TaxTMI 
TaxTMI 
2026 (5) TMI 1405
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....e Income Tax Act by stating that the proviso of Section 43CA will not be applicable in the case of the appellant. 3. The addition of Rs. 2020500 confirmed by Commissioner of Income Tax (Appeals) is bad in law. 4. The appellant craves leave to add to alter or amend the above grounds of appeal. 2. Briefly stated, the assessee, a partnership firm engaged in the business of building construction and development, filed its return of income on 19.10.2018 declaring total income of Rs.9,22,26,450/. The return filed by the assessee was selected for scrutiny and statutory notices under the Income-Tax Act, 1961 (in short "the Act") were issued and complied with. During the course of scrutiny assessment, the Assessing Officer observed that four immovable properties had been sold by the assessee at values lower than those adopted by the stamp valuation authorities for the purpose of stamp duty. The assessee furnished valuation reports prepared by an approved valuer; however, the Assessing Officer did not accept the same and referred the matter to the Departmental Valuation Officer ("DVO"). Since the DVO's report was not received before completion of assessment, the Assessin....
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....idered the submissions made by the Appellant. I have also perused the assessment order. I find that the AO has referred the valuation of the properties to DVO for valuation. However, pending receipt of the report from the DVO, the AO has added an amount of Rs. 1,91,46,297/- u/s 43CA of the Act. I find that valuation report has since been received. Copy of the same has been furnished by the Appellant in the present proceedings. The valuation of properties as determined by the DVO as compared to the sale consideration is tabulated below for better appreciation: S. No. Office No. Stamp duty Value in Rs. Value as determined by DVO in Rs. (A) Consideration received in Rs. (B) 110% of (B) in Rs. Addition u/s 43CA in Rs. (A)(B) in Rs. 1 305 12488972 89,33,000 8325000 9157500 608000 2 405 12488972 90,12,000 8325000 9157500 687000 3 503 13113420 79,32,000 7862500 8648750 69500 4 612 10807433 78,96,000 7240000 7964000 656000 Total 20,20,500 Thus, it can be observed that the value of the properties for the purpose of payment ....
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.... vs. ITO in ITA No.4453/Mum/2024 dated 23.01.2026, wherein it has been authoritatively held that once the valuation by the DVO substitutes the stamp duty valuation, the benefit of the safe harbour tolerance band is equally applicable with reference to the DVO valuation. 5. We have heard the rival submissions and carefully perused the material available on record. The undisputed factual position emerging from the record is that the assessee had transferred four immovable properties for consideration disclosed in the registered agreements, whereas the stamp valuation authority adopted a higher valuation for the purpose of stamp duty. Consequently, the Assessing Officer invoked Section 43CA of the Act. However, the valuation having been disputed by the assessee, the matter stood referred to the DVO, who determined values substantially lower than the stamp duty valuation. 5.1 The principal issue requiring adjudication is whether the benefit of the tolerance band prescribed under the proviso to Section 43CA is to be tested with reference to the value determined by the DVO once such valuation substitutes the stamp duty valuation. 5.2 The said controversy now stands conclusively ....
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....d proviso with which we are presently concerned, which was introduced by the Finance Act, 2018 w.e.f 01.04.2019. In this regard, it is significant to note that the learned CIT(A) has gone mainly on the ground that the said proviso does not apply to assessment year 2018-19, as in the opinion of the learned CIT(A), the proviso applies from assessment year 2019-20. In this regard, it is significant to note that the Division Bench in para 9.1 of the referral order dated 06.03.2025 has already held that the amendment is curative and retrospective in nature. The issue referred to this Special Bench is also not on the question whether the amendment is retrospective in nature. Therefore, it is neither necessary nor possible to dwell on the same. Thus, the only question with which we are dealing with is about the applicability or otherwise of the safe harbour limit in relation to the FMV determined by the DVO. 14. The third proviso to Section 50C and the cognate Section 56(2)(x) of the Act was introduced by the Finance Act, 2018. The explanatory note 16 to the same reads as under :- "16. Rationalization of section 43CA, section 50C and section 56 16.1 Before amend....
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....vantages and its potential possibilities when laid out in its most advantageous manner. "Fair Market Value" is the estimated price which any asset in the opinion of WTO/VO would fetch, if sold in the open market on the valuation date. The terms "Market Value" and "Fair Market Value" are synonym except the word "Fair" introduces an element of a hypothetical market. The expression "if sold" does not contemplate actual sales or actual sate of market. The expression "Open Market" does not contemplate a purely hypothetical market exempt from restriction imposed by law. The fair market value excludes sentimental value advertisement, brokerage, stamp-duty, commission etc. for affecting the sale transaction." (Emphasis supplied) 17. It is well settled that valuation of an asset involves some amount of guess work and estimation. No valuer can pinpoint the actual value of an asset. Therefore, there would always be difference between the value determined by two or more independent valuers. There cannot be a more glaring example of this position than the present case, where three sets of valuation of the very same property determining the value at different figure....