Ashutosh Sinha Vs ITO (ITAT Mumbai)
The Income Tax Appellate Tribunal (ITAT), Mumbai bench, in the case of Ashutosh Sinha vs. ITO, addressed an appeal against an assessment order that had added a significant sum to the assessee’s income under Section 56(2)(vii)(b)(ii) of the Income Tax Act, 1961. The core of the dispute revolved around the taxability of the difference between the actual consideration paid for a property and its stamp duty value, and whether a tax addition was justified when the difference fell within a reasonable margin.
Background of the Case
The assessee, Ashutosh Sinha, had purchased a property for a consideration of Rs. 6.05 crore. However, the stamp duty value of the same property was significantly higher at Rs. 8.23 crore. The Assessing Officer (AO) initiated reassessment proceedings, arguing that the difference of Rs. 2.18 crore was taxable in the hands of the assessee as “income from other sources” under the provisions of Section 56(2)(vii). The assessee contested this, submitting a valuation report from a registered valuer that pegged the fair market value (FMV) at Rs. 6.07 crore, a value close to the purchase price.
The assessee requested that the AO refer the matter to the Departmental Valuation Officer (DVO). The AO did so, but before the DVO’s report was received, he passed a draft assessment order based on the stamp duty value, subject to rectification once the DVO report was available. The assessee filed an objection with the Dispute Resolution Panel (DRP). The DRP, while initially questioning the maintainability of the objection on procedural grounds (a technicality regarding the signing of a form), ultimately proceeded to address the case on its merits.
