Rashmi Seventilal Vakharia Vs ITO (ITAT Mumbai)
The appeal before the ITAT Mumbai arose from the order of the Commissioner of Income Tax (Appeals), NFAC, Delhi, for Assessment Year 2018-19, wherein the Assessing Officer had invoked Section 56(2)(x) of the Income Tax Act, 1961 and added Rs. 3,17,30,016/- being the difference between the stamp duty value and the actual purchase consideration of an immovable property purchased by the assessee.
The assessee challenged the addition on the ground that the Assessing Officer adopted the stamp duty value without referring the matter to the Departmental Valuation Officer (DVO), despite specific objections regarding the fair market value of the property. The assessee contended that the property situated at Pathanwadi, Malad (East), Mumbai, suffered from several title defects, encroachments, legal disputes, road setback issues, and possession-related uncertainties. It was submitted that the property had a disputed ownership history, unauthorized occupants had constructed temporary structures, and the purchasers had been unable to remove encroachments or obtain clear title even after several years.
The assessee argued that because of these defects and legal complications, the actual market value of the property was substantially lower than the stamp duty valuation. Reference was also made to the purchase deed, which allegedly contained the history of disputes and title issues relating to the property. It was submitted that despite these objections, the Assessing Officer proceeded to invoke Section 56(2)(x) without making a reference to the DVO for determination of fair market value.
