IN THE ITAT, MUMBAI BENCH
ABY T. VARKEY, J.M.
Manohar Madanlal Paliwal v. ITO
ITA No. 51/MUM/2023
31 March, 2023
Appellant by: Bhupendra Shah
Respondent by: Anil Gupta
Aby t. Varkey, J.M.
This is an appeal preferred by the assessee individual against the order of the learned Commissioner (Appeals)/National Faceless Appeal Centre, Delhi dated 28-11-2022 for assessment year 2018-19.
2. The main grievance of the assessee is against the action of the learned Commissioner (Appeals) in confirming the addition of Rs. 21,84,330 under section 56(2)(vii)(b) of the Income Tax Act, 1961 (hereinafter the Act).
3. Brief facts as noted by the assessing officer is that the assessee is an individual who has filed return of income for assessment year 2018-19 on 2-6-2018 declaring total business income at Rs. 3,75,690 under section 44AD of the Act. Later, the case was selected for manual scrutiny. The assessing officer noted that the assessee had entered into a transaction involving purchase of immovable property (Flat No. 15/D/002, Ground Floor, Jay Hind 15/D. S.R.A Sahakarigrihanirm Ansanstha Maryadit, Chandivali, Mumbai) (hereinafter the flat) showing purchase consideration of Rs. 19,50,000 on which he had incurred stamp duty of Rs. 2,37,980. The assessing officer noted that the circle rate of the flat in question (as per the Stamp Valuation Authority) was Rs. 41,34,330. Therefore, the assessing officer confronted the assessee as to why the difference should not be brought to tax as per the section 56(2)(vii)(b) of the Act. Pursuant thereto, the assessee replied that he has only parted with the agreed sale consideration of Rs. 19,50,000 and the flat was situated in a Slum Area (Slum Rehabilitation flat). And therefore, he contended that the fair market value/circle rate as determined by the Stamp Valuation Authority was unreasonably high. And therefore, he pleaded before the assessing officer that the circle rate should not be adopted for determination of income in the hands of the assessee under section 56(2)(vii)(b) of the Act. However, the assessing officer did not accept the plea of the assessee. According to him, the assessee should have contested the valuation at the time of registration of the property. And since he has not done so, he cannot contest the circle rate during assessment proceedings before him. And therefore, he added the difference of Rs. 21,84,330 (Rs. 41,34,330 minus Rs. 19,50,000) in the hands of the assessee. Aggrieved, the assessee preferred an appeal before the learned Commissioner (Appeals) who was pleased to confirm the same. Aggrieved, the assessee is before this Tribunal.