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TMI Blog2023 (11) TMI 848X X X X Extracts X X X X X X X X Extracts X X X X ..... bunal s decision in the case of Radhika Sales Corporation [ 2018 (11) TMI 1788 - ITAT PUNE] and case of Maria Fernandes Cheryle [ 2021 (1) TMI 620 - ITAT MUMBAI] we are of the opinion that the proviso explaining the tolerance limit has to be read retrospectively. Therefore, in the present case in hand as noted difference between the declared sale value i.e. Rs. 9,50,00,000/- and the value decided by the DVO is Rs. 9,91,25,000/- which difference being less than 10% [i.e, 4.35%], no addition is warranted. However, we note that the AO has not passed the consequential rectification order after the DVO had submitted his report dated 21.02.2019. Therefore, we deem it fit to set aside the impugned order and restore the matter back to the file of AO for limited purpose of verification of the facts stated and if assessee s claim as discussed is found to be correct, then, no addition is warranted. Appeal of the assessee is allowed for statistical purposes. - SHRI ABY T. VARKEY, JM AND SHRI AMARJIT SINGH, AM For the Assessee by: Shri Shashi Bekal For the Revenue by: Shri Manoj Kumar Sinha (Sr. AR) ORDER PER ABY T. VARKEY, JM: This is an appeal preferred b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reference to the Departmental Valuation Officer (DVO) on 27.12.2016. Thereafter, the AO vide order dated 29.12.2016 passed the assessment order u/s 143(3) of the Income Tax Act, 1961 (hereinafter the Act ) and made an addition of Rs. 2.44 cr u/s 43CA of the Act. In the assessment order, the AO clarified that on receipt of the valuation report from the Departmental Valuer, the consequential rectification order will be passed accordingly. Aggrieved by the action of the AO, the assessee preferred an appeal before the Ld. CIT(A), who took note of the valuation report submitted by assessee dated 07.03.2017 which is placed at page nos. 71 to 79 PB. And even the assessee brought to the notice of Ld. CIT(A) that the DVO had issued valuation report dated 21.02.2019 wherein the value of the properties were estimated at Rs. 3,00,08,000/- and Rs. 6,91,17,000/- respectively. Therefore, the total value of two units as per DVO were to the tune of Rs. 9,91,25,000/- as against the agreement value as declared by assessee at Rs. 9,50,00,000/-. And in such a scenario, it was pointed out by assessee that the difference between the valuation of the Departmental valuer and the value shown by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amendment in section 50C of the Act as retrospective is even applicable while considering the retrospective application of section 43CA of the Act as well. The Ld. AR also relied on the decision of this Tribunal in the case of A CIT Vs. Sunil B Dalal (2022) (145 taxmann.com 313) wherein it was held that proviso to section 50C of the Act inserted vide Finance Act, 2020 with effect from 01.04.2021, enhancing tolerance band limit for difference between stated sale consideration and stamp duty value from 5% to 10% would be applicable retrospectively w.e.f. 01.04.2003 following the ratio decided in the case of Maria Fernandes Cheryl (supra). Therefore, the Ld. AR prayed that since the DVO estimated value of the properties in question is less than 5% no addition was warranted and therefore prayed for deletion of addition. 6. Per contra, the Ld. DR pointed out that the Ld. CIT(A) has not given any finding in respect of the DVO report dated 21.02.2019 in respect of the flats in dispute. Anyhow, he supported the action of the Ld. CIT(A) and does not want us to interfere with the order of the Ld. CIT(A). 7. We have heard both the parties and perused the records. We note that the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actual sale consideration declared by the assessee and the fair market value determined by the DVO is approximately 9.43%. We find that the Co-ordinate Bench of the Tribunal in the case of Dattatraya Kerba Lonkar Vs. Deputy Commissioner of Income Tax (supra) after considering various decisions including the decision rendered in the case of Rahul Constructions Vs. Deputy Commissioner of Income Tax (supra) and the judgment of Hon ble Patna High Court in the case of Bimla Singh Vs. Commissioner of Income Tax (supra) has held as under: 8. We find merit in the submission of Ld. A.R. The difference between the fair market value determined by the DVO and actual sale consideration is Rs. 7,14,530/- i.e slightly more than 2 per cent of the sale consideration. The co-ordinate Bench of the Tribunal in the case of Rahul Construction V/s. DCIT (supra) has held that where difference between the sale consideration declared by the assessee and fair market value as determined by the DVO u/s 50C is less than 10 percent, the Assessing Officer was not justified in substituting the value determined for sale consideration disclosed by the assessee. The Co-ordinate Bench after considering t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deration of Rs. 19,00,000/- disclosed by the assessee. We, therefore, set aside the order of the CIT(A) and direct the A.O. to take Rs. 19,00,000/- only as the sale consideration of the property. The grounds raised by the assessee are accordingly allowed. 9. The ld. A.R of the assessee has further placed reliance on the decision of Hon ble Patna High Court in the case of Bimla Singh V/s. CIT (supra) wherein Hon ble High Court has held that difference between the cost of construction shown by the assessee and as determined by the Assessing Officer being less than 15 per cent, the same is to be ignored for the purposes of addition. The Hon ble Delhi High Court in the case of CIT V/s. Sadna Gupta 352 ITA 595 held that unless and until there was some other evidence to indicate that extra consideration had flowed in transaction for purchase of property, report of DVO could not form basis of any addition on part of revenue. In absence of any evidence no reliance could be placed on the report of DVO for making addition. 10. Thus, in view of the fact that the difference between sale consideration and the market value determined by the DVO is not substantial and is approximate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e stamp duty valuation for the said immovable property. Obviously, therefore, disturbing the actual sale consideration, for the purpose of computing capital gains, and adopting a notional figure, for that purpose, will not be justified in such cases. On a conceptual note, an estimation of market price is an estimation nevertheless, even if by a statutory authority like the stamp duty valuation authority, and such a valuation can never be elevated to the status of such a precise computation which admits no variations. The rigour of Section 50C(1) was thus relaxed, and very thoughtfully so, to take these bonafide cases of small variations between the stated sale consideration vis- -vis stamp duty valuation, out of the scope of adjustments contemplated in the computation of capital gains under this anti-avoidance provision. In our humble understanding, it is a case of a curative amendment to take care of unintended consequences of the scheme of Section 50C. It makes perfect sense, and truly reflects a very pragmatic approach full of compassion and fairness, that just because there is a small variation between the stated sale consideration of a property and stamp duty valuation of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n words, what is means is that even if the valuation of a property, for the purpose of stamp duty valuation, is 10% more than the stated sale consideration, the stated sale consideration will be accepted at the face value and the anti-avoidance provisions under section 50C will not be invoked. 8. Once legislature very graciously accepts, by introducing the legal amendments in question, that there were lacunas in the provisions of section 50C in the sense that even in the cases of genuine variations between the stated consideration and the stamp duty valuation, anti-avoidance provisions under section 50C could be pressed into service, and thus remedied the law, there is no escape from holding that these amendments are effective with effect from the date on which the related provision, i.e., Section 50C, itself was introduced. These amendments are thus held to be retrospective in effect. In our considered view, therefore, the provisions of the third proviso to Section 50C (1), as they stand now, must be held to be effective with effect from 1st April 2003. We order accordingly. Learned Departmental Representative, however, does not give up. Learned Departmental Representative ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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