Fakhruddin T. Malik Vs ITO (ITAT Mumbai)
Addition u/s 56(2)(vii)(b)(ii) – difference between the stamp duty value and the agreement value of two residential flats purchased by the assessee – not referring the valuation matter to the Departmental Valuation Officer (“DVO”) despite the assessee’s request, ITAT Mumbai decision in Fakhruddin T. Malik vs ITO, Ward-21(1)(5), Mumbai (ITA No. 6555/MUM/2024, dated 16.05.2025)
Fact: The assessee, an individual, filed his return declaring income of ₹2,43,890. During scrutiny, it was noticed that he purchased two flats in Olive Apartment, Santacruz. As the stamp duty value exceeded the agreement value, he was asked to explain why the difference should not be added under section 56(2)(vii)(b)(ii). He argued that the deal was agreed in FY 2011–12 and the market value of that period should apply.
The AO rejected the explanation, noting no documented evidence of consideration paid (in any form other than cash) prior to the agreement date. Accordingly, he added ₹14,34,500 under section 56(2)(vii)(b)(ii), being the difference between the stamp duty and agreement values.
CIT – Appeal:- CIT(A) upheld the AO’s addition and dismissed the appeal. Hence, the matter was brought before the ITAT.
Legal Provision: As per the provisions of section 56(2)(vii)(b)(ii) of the Act, if any individual or HUF received any immovable property for a consideration which is less than stamp duty value of the property by an amount exceeding Rs. 50,000/-, then the stamp duty value of such property as it exceeding such consideration shall be chargeable to income tax under the head “income from other sources”. The first proviso to section 56(2)(vii)(b) provides that where the stamp duty of the immovable property as referred to in sub-clause (b) is disputed by the assessee on the grounds as mentioned in section 50C(2) of the Act, the AO may refer the valuation of such property to a Valuation Officer
