ITAT Mumbai Quashes Rs. 59.87 Lakh Addition, Saying Property Valuation Must Match Allotment Year

ITAT Mumbai Quashes Rs. 59.87 Lakh Addition, Saying Property Valuation Must Match Allotment Year

The case has been filed by a taxpayer named Awadhnarayan Bhagwanta Singh in the ITAT Mumbai, challenging an order passed by the National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] on September 16, 2025. The order originated from an order passed by the income tax officer on December 10, 2019, under section 143(3) of the Act. The case is related to the assessment year 2017-18.

The taxpayer purchased a property for Rs. 1.10 crore. The stamp value of the property was Rs. 1.69 crore. The tax department selected the case for scrutiny and, after processing the return, made an addition of the differential amount of Rs. 5,987,000 to the income of the taxpayer under section 56(2)(vii)(b) of the Income Tax Act. When the case was taken before the CIT(A), the authority gave taxpayer relief in respect of the applicability of section 115BBE; however, it upheld the addition of Rs. 59,87,000 to the taxpayer’s income.

The aggrieved taxpayer thereafter approached the ITAT Mumbai. There, the taxpayer claimed that he was given the property through an allotment letter issued by M/s Shah Housecon Pvt. Ltd on November 29, 2012, in respect of Flat No. B-3102. He made the advance payment (Rs. 5 lakh) for the property via his bank account in Canara Bank, Matunga Branch, on August 18, 2011. The authorised representative of the taxpayer stated that all the relevant documents in support of his claims were submitted to the tax department before the scrutiny of the case through a letter issued on November 14, 2019.

The tax department agreed that the property should be valued based on the financial year 2012-13 (assessment year 2013-14). But since there was no valuation report from that time, the AO used the stamp duty value applicable for the year under assessment instead.

When the tribunal analysed the case, it noted that the taxpayer entered into an agreement and an allotment letter was issued by the promoter. The advance payment was indeed made through banking channels. Thus, the stamp duty valuation of the property should be taken as on the date of allotment, i.e., F.Y. 2012-13. The tribunal did not notice any mistake in the purchase value stated by the taxpayer and that determined by the registered

Valuer. Therefore, the addition of Rs. 5,987,000, representing the difference between the set forth value and the stamp duty value, was not justified and cannot be sustained in the impugned assessment year. In the final decision, the tribunal quashed the said addition and remanded the case back to the tax authorities for fresh consideration with directions to use the stamp duty value from the financial year in which the agreement was made (F.Y. 2012-13) and to redo the assessment based on that. The assessee must also be given a fair chance to present their case during the fresh proceedings. The appealed order is cancelled, and the case is returned to the AO for this limited purpose.