Arvindkumar Jagjivandas Thakkar Vs ITO (ITAT Ahmedabad)
Income Tax Appellate Tribunal (ITAT) Ahmedabad, in the case of Arvindkumar Jagjivandas Thakkar Vs ITO, addressed an appeal challenging an order by the Commissioner of Income Tax (Appeals) [CIT(A)] that upheld an addition of Rs. 11,61,850/- under Section 56(2)(x)(b) of the Income Tax Act, 1961. This addition stemmed from the purchase of a parcel of land by the assessee and co-owners for a total consideration of Rs. 2,01,00,000/-. The stamp duty value of the land was assessed at Rs. 3,32,00,000/-. Due to the stamp duty value exceeding the actual consideration, the provisions of Section 56(2)(x) were invoked, leading to an addition of the difference proportionate to the assessee’s 47.50% share in the land. During the assessment, the assessee informed the Assessing Officer (AO) that for another co-owner with a 0.5% share, the valuation of the land was referred to the Departmental Valuation Officer (DVO), who determined the fair market value (FMV) at Rs. 2,25,46,000/-. The AO accepted this DVO valuation, substituting the stamp duty value with the FMV, and accordingly, added the difference of Rs. 24,46,000/- (between FMV and actual consideration), attributing Rs. 11,61,850/- (47.50% share) to the assessee.
The core of the assessee’s argument before the ITAT was that the CIT(A) had disregarded a previous ITAT order in the case of a third co-owner, Shri Dilip Manibhai Prajapati. In that identical case, the ITAT had deleted a similar addition, reasoning that the difference between the determined FMV (Rs. 2,25,46,000/-) and the actual purchase consideration (Rs. 2,01,00,000/-), which was approximately Rs. 20 lakhs, fell within the 10% tolerance range of the total purchase consideration (Rs. 2.01 crores). Therefore, it was not considered a “material difference” to warrant an addition under Section 56(2)(x). The ITAT in the co-owner’s case also noted that the DVO’s FMV was significantly lower than the stamp duty value, further supporting the deletion of the addition. The assessee submitted the ITAT’s order from the co-owner’s case, arguing that the issue was squarely covered. The Departmental Representative (DR) could not refute the assessee’s contention or distinguish the present case from the precedent set by the co-owner’s order.
