The assessee, an individual, filed his return of income for Assessment Year 2017–18 declaring total income of ₹14,45,090/-. Subsequently, the assessment was reopened under section 147 on the basis of information regarding purchase of immovable property during the relevant year. Reassessment proceedings culminated in an order passed under section 143(3) read with sections 147 and 144B of the Income-tax Act, 1961, wherein multiple additions were made.

One of the principal additions was made under section 56(2)(vii)(b) on account of the difference between the agreement value and the stamp duty valuation of a jointly purchased immovable property. The assessee had purchased the property jointly with his spouse, with a 50% share. The difference between the agreement value and stamp duty valuation worked out to 4.87%, and the assessee’s proportionate share was added as income from other sources.

The Tribunal observed that the difference between the actual consideration and the stamp duty valuation was undisputedly within the permissible tolerance limit. Relying on the decision of the co-ordinate Bench in Sri Sandeep Patil v. ITO, it was reiterated that the tolerance proviso, though inserted subsequently, is curative in nature and applies retrospectively to avoid unjust and inequitable taxation. Accordingly, the addition made under section 56(2)(vii)(b) was held to be unsustainable and was deleted.

The Tribunal further dealt with additions made on account of savings bank interest. It was noted that the Assessing Officer had ignored the netting of interest income against interest expenditure and made the addition solely on the basis of gross credits appearing in the bank statement. Since the net interest income had already been offered to tax and the expenditure was not disputed, the addition was deleted.

With regard to the addition on account of alleged omission of long-term capital gains on sale of shares, the Tribunal found that the assessee had duly substantiated the claim of exemption under section 10(38). The shares were held for the requisite period, and neither the Assessing Officer nor the CIT(A) recorded any adverse finding regarding fulfillment of statutory conditions. Consequently, the addition was deleted.

As regards the addition relating to interest income allegedly omitted from taxation, the Tribunal noted the assessee’s contention that the interest had either already been taxed in the preceding assessment year or duly disclosed in the return. Since this claim required factual verification and had not been examined by the lower authorities, the issue was restored to the file of the Assessing Officer for limited verification to ensure that no income is subjected to double taxation.

In the result, the appeal of the assessee was partly allowed, with substantive relief granted on legal issues and limited remand ordered on factual verification.

Source Link- https://itat.gov.in/public/files/upload/1768294714-Tq6s7W-1-TO.pdf

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