No addition on mere valuation report when stamp duty valuation is available

Addition can not be made relying on the valuation report of property when the stamp duty valuation is also available on record – ITAT 

In a recent judgment, ITAT Agra has held that addition can not be made for inadequate sale consideration of property sold merely relying on the valuation report which cannot be considered as fair market value when the stamp duty valuation is also available on record.

ABCAUS Case Law Citation:
4970 (2026) (01) abcaus.in ITAT

The Assessing Officer received information that the assessee had deposited cash of in his saving bank account during the year under consideration. Accordingly, notice u/s. 148 of the Income-tax Act, 1961 (“the Act”) was issued.

In response, assessee submitted a written submissions and return of income declaring the same income already disclosed in the original return.

During the assessment proceedings, the Assessing Officer inter alia observed that the assessee had declared nil income from capital gains on sale of property of Rs.10,00,000/- after claiming cost of acquisition of Rs.1,01,000/-, cost of improvement of Rs.8,95,000/- and expenditure on transfer of Rs.4,000/-.

Notice was issued to the assessee to explain calculation of capital gains and deposit of cash of in his saving bank account and after adjusting cash towards gross receipts from business and capital asset transferred, the assessee was show caused as to why difference should not be added to the income of the assessee.

Rejecting the submissions of the assessee, the AO added the difference to the total income of the assessee. Further, the AO determined the capital gains and observed that the capital gain declared by the assessee in his ITR was not substantiated by any evidence and there was contradiction to the stamp duty value of the sold property. Accordingly, he treated the same as short term capital gains and brought to tax.

The CIT(A), sustained the additions made by the Assessing Officer relating to cash deposits from undisclosed sources and with regard to short term capital gains, he observed that the assessee has filed a valuation report of the property. Based on the above valuation, after giving notice to the assessee and after considering submissions of the assessee, CIT(Appeals) enhanced the additions made by the Assessing Officer based on the valuation report submitted by the assessee by replacing the sale consideration as per the stamp duty with the valuation report submitted by the assessee.

The Tribunal observed that the assessee had received sale consideration against the sale of land during the year, even though, the stamp duty value was mentioned in the agreement. However, the assessee had actually received lesser amount as sale consideration.

By considering the sources of income, and the fact that the assessee also received money from sale of other house hold assets. The Tribunal opined that the source of cash deposits stood explained and no addition was required to be made on this account u/s. 69A of the Act. 

With regard to the addition made by the Assessing Officer and enhancement made by CIT(Appeals), Tribunal observed the Assessing Officer made the addition for the reason that the assessee had not submitted any document to claim the above transaction. On the other hand, CIT(Appeals) enhanced the addition by relying on the valuation report submitted by the assessee.

The Tribunal observed that the assessee had sold land and also other household items totaling to Rs.10,00,000/-.

The Tribunal held that CI(A) had enhanced the addition merely relying on the valuation report, which cannot be considered as fair market value when the stamp duty valuation is also available on record.

Therefore, the enhancement made by the CIT(Appeals) was accordingly deleted. 

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