Narsaiah Lingaiah Byndla Vs ITO (ITAT Mumbai)
Summary: The Mumbai Bench of the Income Tax Appellate Tribunal, comprising Judicial Member Shri Sandeep Gosain and Accountant Member Shri Jagadish, allowed the appeal of Narsaiah Lingaiah Byndla for Assessment Year 2018-19 and deleted an addition of ₹6,27,499 arising from the difference between the purchase consideration of a residential flat and its stamp duty valuation. The Tribunal held that the enhanced 10% tolerance band under Section 56(2)(x)(b)(B) of the Income-tax Act, 1961, being curative and beneficial, was applicable even to AY 2018-19. Since the valuation difference was only 6.34%, the deeming provision could not be invoked.
The assessee had purchased a residential flat for ₹99,00,000, whereas the stamp duty valuation on the registration date of 31 May 2017 was ₹1,05,27,499. The Assessing Officer treated the difference of ₹6,27,499 as income from other sources under Section 56(2), and the CIT(A) sustained the addition. The assessee maintained that the property had been booked and allotted during FY 2015-16 and that more than 93% of the agreed consideration had been paid through banking channels before registration. It was therefore contended that the stamp duty value prevailing on the earlier agreement or allotment date should be considered. Alternatively, the assessee claimed that the difference was within the enhanced 10% tolerance band.
Before examining the merits, the Tribunal considered a delay of 135 days in filing the appeal. The assessee submitted an affidavit explaining that severe diabetes, significantly elevated blood sugar levels and HbA1c, an MRCP procedure, and subsequent medical advice requiring bed rest had prevented timely compliance. Relying on Collector, Land Acquisition, Anantnag v. Mst. Katiji & Ors., the Tribunal held that the delay was attributable to bona fide medical circumstances rather than deliberate inaction or negligence. Applying the principle that substantial justice should prevail over technical considerations, it condoned the delay and admitted the appeal.
On the substantive dispute, the assessee relied upon ACIT v. Sunil B. Dalal, Glory Shipmanagement Private Limited, NFAC v. NRB Developers, and M/s. Padmavati Developers v. ITO. The Revenue argued that the enhanced tolerance limit introduced by the Finance Act, 2020, with effect from 1 April 2021, was prospective and therefore unavailable for AY 2018-19. The Tribunal rejected that position by following the consistent approach of its coordinate benches, particularly Padmavati Developers, which had treated the enhancement from 5% to 10% as a curative measure intended to prevent taxation of marginal valuation differences.
The Tribunal observed that the Assessing Officer’s reference to Section 56(2)(vii) did not alter the substantive applicability of Section 56(2)(x) to the transaction. It accepted that the difference of ₹6,27,499 represented approximately 6.34% of the actual consideration of ₹99 lakh and was therefore below the 10% tolerance threshold. Accordingly, the Tribunal held that Section 56(2)(x)(b)(B) was not attracted and directed deletion of the entire addition. Having granted relief on this ground, it expressly left open the alternative contention regarding the earlier allotment or agreement date and payments made during FY 2015-16. The assessee’s appeal was allowed in full.
Cases Discussed
- M/s. Padmavati Developers v. ITO (ITAT Mumbai); ITA No. 2616/Mum/2026; 22/05/2026; AY 2018-19. The Tribunal principally followed this coordinate-bench decision, which held that the enhanced 10% tolerance band under Section 56(2)(x)(b)(B) is curative and beneficial and applies to AY 2018-19. In that case, a 7.44% valuation difference resulted in deletion of an addition of ₹11,16,500.
- NFAC v. NRB Developers (ITAT Mumbai); (2025) 211 ITD 728; AY 2018-19. Relied upon by the assessee and considered by the Tribunal as part of the consistent coordinate-bench view supporting retrospective application of the enhanced tolerance band.
- Glory Shipmanagement Private Limited v. CIT(A) (ITAT Mumbai); ITA No. 3149/Mum/2023; 30/01/2024; AY 2018-19. Cited by the assessee and referred to by the Tribunal as a coordinate-bench decision following the beneficial interpretation of the tolerance provision.
- ACIT v. Sunil B. Dalal (ITAT Mumbai); [2022] 145 taxmann.com 313; AY 2018-19. Relied upon by the assessee and considered by the Tribunal for the applicability of the enhanced tolerance limit to AY 2018-19.
- CIT v. Vatika Township (P.) Ltd. (Supreme Court); (2014) 367 ITR 466; (2015) 1 SCC 1. Discussed in the passage reproduced from Padmavati Developers concerning the retrospective operation of beneficial and curative statutory amendments.
- Collector, Land Acquisition, Anantnag & Anr. v. Mst. Katiji & Ors. (Supreme Court); AIR 1987 SC 1353; (1987) 167 ITR 471; Civil Appeal No. 460 of 1987; 19/02/1987. Expressly relied upon by the Tribunal while condoning the 135-day delay on account of the assessee’s medical condition. The Tribunal applied the principle that substantial justice should prevail over technical objections where sufficient cause is established.
FULL TEXT OF THE ORIGINAL JUDGMENT/ORDER
This appeal is filed by the Assessee against the order of Ld. CIT(A) vide DIN: ITBA/NFAC/S/250/2025-26/1080671233(1) dated 12-Sep-2025 for the Assessment Year 2018-19. The Assessee has raised the following grounds of appeal:
A. On facts and in law, the NFAC erred in passing the impugned Appeal Order dated 12/09/2025 under Section 250 of the Act, without properly appreciating the facts of the case, submissions made, and evidences placed on record by the Appellant.
B. The NFAC erred in confirming the addition of Rs. 6,27,499/- made by the Ld. AO under Section 56(2)(vii) of the Act, treating the difference between the stamp duty value and actual consideration as income, without appreciating that the same is purely notional and does not represent any real income.
C. The NFAC failed to appreciate that the property was booked/allotted in F.Y. 2015-16 and substantial consideration was paid through banking channels prior to the date of registration, thereby fulfilling the conditions of the proviso to Section 56(2)(vii)(b), and hence the stamp duty value as on the date of agreement/allotment ought to have been considered.
D. The NFAC erred in ignoring the settled legal position that where the date of agreement and date of registration differ, and consideration is paid through non-cash modes, the stamp duty value on the date of agreement is to be adopted for the purpose of Section 56(2)(vii).
E. The NFAC erred in not appreciating that the difference between the purchase consideration and stamp duty value arose solely due to normal market appreciation during the intervening period and does not result in any real benefit or income to the Appellant.
F. The NFAC erred in not granting the benefit of tolerance band as recognized under the Act and judicial precedents, despite the variation being marginal and within permissible limits.
2. At the outset, it is noticed from the appeal record that there is a delay of 135 days in filing the appeal before us. In this regard, the assessee has filed an affidavit explaining the delay.
3. We have heard the learned counsel for both the parties and perused the material placed on record, including the affidavit filed by the assessee explaining the delay. Considering the entire factual position as explained before us, we note that the delay occurred due to the assessee’s serious and uncontrolled medical condition during the relevant period. The assessee was suffering from severe diabetes, with significantly elevated blood sugar levels and HbA1c, and had also undergone an MRCP procedure shortly before the relevant period. The assessee remained under medical supervision and was subsequently advised complete bed rest, medication, and continuous monitoring by the treating doctor.
4. Due to the resulting physical incapacity and inability to attend to legal and tax-related compliances, the appeal could not be filed within the prescribed period. The delay was neither deliberate nor attributable to any negligence on the part of the assessee, but was caused by bona fide and unavoidable medical circumstances beyond the assessee’s control. The appeal was filed promptly upon recovery.
5. We also take into consideration the principles laid down by the Hon’ble Supreme Court in the case of Collector, Land Acquisition, Anantnag & Anr. v. Mst. Katiji & Ors., 1987 AIR 1353 (SC), wherein it has been held that where substantial justice is pitted against technical considerations arising from a non-deliberate delay, substantial justice should be preferred.
6. In our view, the principle of advancing substantial justice is of paramount importance. Accordingly, considering the explanation furnished by the assessee, which, in our considered view, constitutes sufficient and reasonable cause for the delay, and keeping in view the settled principle that the expression “sufficient cause” should receive a liberal construction, we are inclined to condone the delay in filing the appeal before us.
7. Consequently, the delay of 135 days is hereby condoned and the appeal is admitted for hearing on merits.
8. Briefly stated, the facts of the case are that during the previous year relevant to assessment year 2018-19, the assessee purchased a residential flat for a stated consideration of Rs.99,00,000/-. The formal agreement was registered on 31.05.2017. The stamp duty value adopted by the Stamp Valuation Authority as on the date of registration was Rs.1,05,27,499/-.
9. The Assessing Officer noted that the stamp duty value exceeded the declared consideration by Rs.6,27,499/- and brought the said difference to tax under the deeming provisions of section 56(2) of the Act under the head “Income from Other Sources”.
10. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A). The assessee contended, inter alia, that the property had originally been booked/allotted during F.Y. 2015-16 and that substantial payments had already been made through banking channels before the date of registration. It was further submitted that, in any event, the difference between the consideration and the stamp duty value was within the permissible tolerance limit contemplated under section 56(2)(x)(b)(B) of the Act.
11. The Ld. CIT(A), however, sustained the addition. Aggrieved by the order of the Ld. CIT(A), the assessee is in appeal before us.
12. Before us, the Ld. AR reiterated the submissions made before the lower authorities. He submitted that the property had been booked and allotted to the assessee in F.Y. 2015-16 for an agreed consideration of Rs.99,00,000/- and that more than 93% of the consideration had already been paid through banking channels during F.Y. 2015-16. The formal agreement was subsequently registered on 31.05.2017.
13. The Ld. AR submitted that, for the year under consideration, the applicable provision in respect of receipt of immovable property for inadequate consideration is section 56(2)(x)(b)(B) of the Act. He submitted that the difference between the purchase consideration of Rs.99,00,000/- and the stamp duty value of Rs.1,05,27,499/- works out to only 6.34% of the purchase consideration. Relying upon the decisions of the coordinate benches, including the decision in ACIT v. Sunil B. Dalal [2022] 145 taxmann.com 313 (Mumbai-Trib.), Glory Shipmanagement Private Limited (ITA No.3149/Mum/2023), NFAC v. NRB Developers [(2025) 211 ITD 728 (Mumbai-Trib.)] and, in particular, M/s. Padmavati Developers v. ITO (ITA No.2616/Mum/2026, order dated 22.05.2026), the Ld. AR submitted that the enhanced tolerance band of 10% under section 56(2)(x)(b)(B), though introduced by the Finance Act, 2020 with effect from 01.04.2021, has been held by the coordinate benches to be curative and beneficial in nature and applicable to A.Y. 2018-19.
14. The Ld. DR, on the other hand, relied upon the orders of the lower authorities and submitted that the provisions applicable for the relevant assessment year should be applied as they stood during the relevant period. According to him, the enhanced tolerance limit of 10% was introduced prospectively and, therefore, could not be applied to A.Y. 2018-19.
15. We have heard the counsels for both the parties, perused the material placed on record, the judgments cited before us, and the order passed by the Revenue Authorities. From the records, we noticed that the dispute before us, insofar as the addition under consideration is concerned, is whether the difference of Rs.6,27,499/- between the stated consideration and the stamp duty value is liable to be brought to tax under section 56(2)(x)(b)(B) of the Act.
16. At the outset, we note that the transaction in question pertains to A.Y. 2018-19. Therefore, the applicable provision governing receipt of immovable property for inadequate consideration is section 56(2)(x) of the Act. The reference by the Assessing Officer to section 56(2)(vii), to the extent applicable to the transaction under consideration, cannot alter the substantive issue which arises for our consideration, namely, the applicability of the tolerance band under section 56(2)(x)(b)(B).
17. The undisputed figures are that the consideration declared by the assessee is Rs.99,00,000/- and the stamp duty value is Rs.1,05,27,499/-. Thus, the difference is as under:
Stamp duty value: Rs.1,05,27,499/-
Actual consideration: Rs.99,00,000/-
Difference: Rs.6,27,499/-
The difference as a percentage of the actual consideration is:
Rs.6,27,499 ÷ Rs.99,00,000 × 100 = 6.34% approximately.
18. The issue as to whether the enhanced tolerance limit of 10% under section 56(2)(x)(b)(B) is available for A.Y. 2018-19 has been considered by several coordinate benches of this Tribunal.
19. In ACIT v. Sunil B. Dalal (supra), the Mumbai Bench considered the applicability of the tolerance limit in the context of A.Y. 2018-19. The said view has subsequently been followed in other decisions of the coordinate benches, including Glory Shipmanagement Private Limited and NFAC v. NRB Developers (supra).
20. More recently, the coordinate bench in M/s. Padmavati Developers v. ITO (ITA No.2616/Mum/2026, order dated 22.05.2026), while considering an identical issue for A.Y. 2018-19, examined the statutory scheme as well as the earlier decisions of the coordinate benches. The Coordinate Bench held that the enhancement of the tolerance band from 5% to 10% is curative and beneficial in nature and, therefore, is applicable to A.Y. 2018-19. In that case, since the difference between the purchase consideration and stamp duty value was 7.44%, the addition made under section 56(2)(x)(b)(B) was deleted. The operative portion of the same is reproduced herein below:
“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%.
…
26. …In the present case, the amendment does not create a new charge, does not enlarge the tax base, and does not impose any fresh burden upon the assessee. On the contrary, it relaxes the rigour of a deeming provision by recognising that minor variations between actual consideration and stamp duty valuation may arise on account of several bona fide factors. The amendment is therefore curative and remedial in nature. The principle in Vatika Township, properly understood, supports the assessee to the extent that beneficial provisions introduced to cure hardship may be given retrospective operation.
27. The scheme of section 56(2)(x)(b)(B) is a deeming provision and therefore has 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.
…
30. In view of the foregoing discussion, we hold that the assessee is entitled to the benefit of 10% tolerance band under section 56(2)(x)(b)(B) of the Act for A.Y. 2018-19. Since the difference between the purchase consideration and stamp duty value is only 7.44%, the addition of Rs. 11,16,500/- made by the Assessing Officer and confirmed by the CIT(A) is directed to be deleted.”
21. The reasoning adopted by the coordinate bench in Padmavati Developers (supra) is applicable to the facts of the present case. Section 56(2)(x)(b)(B) contains a deeming provision in respect of the difference between the consideration paid and the stamp duty value of an immovable property. The subsequent enhancement of the tolerance band recognises that a marginal variation between the actual consideration and the stamp duty valuation may arise for various bona fide reasons and that such marginal variation ought not, by itself, attract the deeming fiction.
22. We also note that the coordinate bench decisions relied upon by the assessee have consistently taken the view that the benefit of the enhanced 10% tolerance band is available for A.Y. 2018-19. The said view has been reiterated in subsequent Mumbai Bench decisions.
23. In the present case, the difference between the actual consideration and the stamp duty value is only 6.34%, which is less than the tolerance limit of 10% considered applicable by the coordinate benches for A.Y. 2018-19.
24. In view of the above discussion and respectfully following the aforesaid decisions of the coordinate benches, including the decision in M/s. Padmavati Developers (supra), we hold that the assessee is entitled to the benefit of the 10% tolerance band under section 56(2)(x)(b)(B) of the Act for the year under consideration. Since the difference between the actual consideration and the stamp duty value is only 6.34%, the deeming provision contained in section 56(2)(x)(b)(B) is not attracted.
25. In view of our decision on the issue of tolerance band, it is not necessary for us to adjudicate upon the alternative contention of the assessee concerning the date of allotment/agreement and the payments made during F.Y. 2015-16. The said issue is, accordingly, left open.
26. Accordingly, the addition of Rs.6,27,499/- made by the Assessing Officer and sustained by the CIT(A) is deleted.
27. The grounds raised by the assessee are accordingly allowed.
28. In the result, the appeal of the assessee stands allowed.
Order pronounced in the open court on 05.10.2026.
