Naynish Harishchandra Rahane Vs ITO (ITAT Mumbai)
The Income Tax Appellate Tribunal (ITAT), Mumbai, considered an appeal filed by the assessee against the order dated 10 November 2025 passed by the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, under Section 250 of the Income Tax Act, 1961 for the assessment year 2018–19. The dispute concerned an addition made under Section 56(2)(x)(b) of the Act relating to the difference between the purchase price of an immovable property and the value determined by the stamp valuation authority.
The assessee, an individual, had filed a return of income declaring total income of ₹4,25,340 from salary. The case was selected for scrutiny in accordance with the CBDT instruction dated 5 September 2019. Notices under Sections 143(2) and 142(1) of the Act were issued and served on the assessee. During the course of assessment proceedings, it was observed that the assessee had purchased a residential property located at New Samta CHSL, MMRDA Colony, Station Road, West Mumbai for a total consideration of ₹24 lakh. However, the stamp valuation authority determined the value of the property at ₹33,32,919.
Since the stamp duty value was higher than the purchase consideration, the Assessing Officer issued a show cause notice asking the assessee to explain why the difference of ₹9,22,919 should not be added to income under Section 56(2)(x)(b) of the Act. In response, the assessee submitted that the flat was located in a building redeveloped by MMRDA for persons displaced due to road widening. The building had been constructed in 2003 and occupation had been granted in 2005. Therefore, at the time of purchase in 2017, the building was around 12 to 14 years old and was not newly constructed. The assessee further submitted that the building was not well maintained as it was occupied by families belonging to poor to average income groups who could not maintain the building properly. According to the assessee, due to these factors the market value of the flat was not more than ₹24 lakh.
