Lakhdhir Virji Gala Vs ITO (ITAT Mumbai)
The core dispute involved the addition of Rs. 5,85,004/- to the assessee’s income as income from other sources under Section 56(2)(x) of the Income Tax Act, 1961. The assessee, an individual, had filed a return declaring a total income of Rs. 6,57,930/-. The case was selected for scrutiny. The Assessing Officer (AO) observed that the assessee, along with Smt. Pushpa Kumari Lakhdhir Gala, purchased a property on October 10, 2017, for a consideration of Rs. 2,71,01,140/-. The stamp duty value of this property was determined to be Rs. 2,82,71,148/-. The difference between the stamp duty value and the sale consideration was Rs. 11,70,008/-. The AO made an addition of Rs. 5,85,004/-, which represented 50% of this difference value, and passed the assessment order on April 27, 2021, determining the total income at Rs. 12,42,930/-.
The assessee appealed the addition to the first appellate authority, the NFAC, who, vide order dated April 15, 2025, upheld the addition. The NFAC’s rationale was that the amendment introduced by the Finance Act, 2018, which provided for a 5% tolerance limit in Sections 43CA, 50C, and 56 of the Act, was applicable only from April 1, 2019, relevant to A.Y. 2019-20 onwards, relying on Circular No. 8/2018.
