Nilesh Pravinchandra Doshi Vs ITO (ITAT Mumbai)
Tolerance Limit Applies to Section 56(2)(vii)(b) — ITAT Deletes Property & LTCG Additions
The Mumbai SMC Bench of the Income Tax Appellate Tribunal partly allowed the assessee’s appeal for AY 2017-18, granting substantial relief on multiple additions made in reassessment proceedings.
On the issue of addition under section 56(2)(vii)(b) relating to purchase of immovable property, the Tribunal noted that the difference between the agreement value and stamp duty valuation was only 4.87%, which falls within the permissible tolerance band. Following the coordinate bench ruling in Sri Sandeep Patil v. ITO, it was held that the tolerance proviso is curative in nature and applies retrospectively to avoid unjust taxation. Accordingly, the addition of ₹1,26,730 was deleted.
The Tribunal also deleted the addition on account of savings bank interest, holding that once net interest income was offered after adjusting interest expenditure, addition on gross credits was impermissible. Further, the addition of ₹80,639 towards alleged omission of LTCG was deleted after holding that the assessee had satisfied all conditions of section 10(38) and the gain was exempt.
However, with respect to interest income of ₹17,789, the Tribunal noted the assessee’s plea that the amount had already been taxed in an earlier year. As this factual aspect was not verified by the lower authorities, the issue was remanded to the Assessing Officer for limited verification to avoid double taxation.
Overall, the appeal was partly allowed for statistical purposes, reinforcing the principle that minor valuation differences and exempt incomes cannot be mechanically taxed.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
Nilesh Pravinchandra Doshi Vs ITO (ITAT Mumbai)
This appeal is filed by the assessee against the order passed by the Commissioner of Income-tax (Appeals), National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”], dated 09.10.2025, for A.Y. 2017–18, arising out of the assessment order passed by the Assessing Officer under section 143(3) read with sections 147 and 144B of the Income-tax Act, 1961[hereinafter referred to as “the Act”], dated 04.05.2023.
