A property buyer who purchased an immovable property for ₹6.5 crore despite its stamp-duty value being ₹8.85 crore has won relief from the Income Tax Department after the Income Tax Appellate Tribunal (ITAT), Mumbai ruled that a higher stamp-duty valuation alone cannot establish unexplained investment.
According to a report by ET Wealth, the case relates to Assessment Year (AY) 2017-18. The buyer, who had purchased a property in Pune, faced an income tax addition of ₹2.35 crore, representing the difference between the actual purchase consideration and the value adopted by the stamp-duty authorities.
The tax department treated the difference as unexplained investment under Section 69B of the Income-tax Act, 1961. The dispute eventually reached ITAT Mumbai after the Commissioner of Income Tax (Appeals) deleted the addition.
The property was purchased for ₹6.5 crore, as recorded in the registered sale deed. However, the stamp-duty authorities valued the property at ₹8.85 crore for registration purposes.
The Assessing Officer (AO) questioned why the property had been purchased for substantially less than its stamp-duty valuation. According to the report, the AO concluded that the buyer had made an unexplained investment of ₹2.35 crore and invoked Section 69B.
The taxpayer argued that the actual consideration paid to the seller was ₹6.5 crore and that there was no evidence of any additional payment. The buyer also contended that a higher stamp-duty valuation could not, by itself, establish that additional consideration had changed hands.
The buyer further pointed to the provisions governing the taxation of property purchased below stamp-duty value. According to the report, the taxpayer argued that the relevant provision applicable to buyers was introduced prospectively and could not be applied to the AY 2017-18 transaction in question.
The CIT(A) accepted the taxpayer's arguments and deleted the ₹2.35 crore addition. The Income Tax Department then challenged the relief before ITAT Mumbai.
The tribunal ruled in favour of the taxpayer, holding that the Revenue had failed to establish through independent evidence that the buyer had actually paid more than ₹6.5 crore for the property.
The tax department had relied primarily on the difference between the registered purchase consideration and the stamp-duty valuation. However, the tribunal found that the higher valuation, by itself, could not prove that the buyer had made an undisclosed payment to the seller.
This distinction is important for Section 69B. The provision can be invoked where the Assessing Officer establishes that the taxpayer has actually invested an amount greater than what has been recorded or disclosed. A mere difference in valuation does not necessarily establish such an additional investment.
The tribunal also distinguished Section 50C, which provides a deeming mechanism for determining the consideration received by a seller for capital gains purposes. According to the report, the tribunal held that this deeming fiction cannot automatically be extended to presume unexplained investment in the hands of the purchaser.
The ruling therefore does not mean that every property transaction below the stamp-duty value is immune from scrutiny. If the Income Tax Department can establish that the buyer actually paid unaccounted consideration, Section 69B can still be invoked.
In this case, however, the Revenue could not establish any such additional payment. The ITAT Mumbai therefore upheld the deletion of the ₹2.35 crore addition, giving the property buyer relief from the tax department's unexplained-investment claim.
Kirti Jha is a Senior Content Producer at Mint, where she writes on mutual funds, taxation, personal finance and macroeconomic developments. Her reporting focuses on helping readers understand complex financial developments through data-driven, research-backed stories that explain how policy changes, market trends and regulatory decisions affect investors and households. <br><br> Before joining Mint, Kirti worked at ET Money, where she specialised in mutual fund research and investment analysis. She tracked portfolio disclosures, fund manager strategies, sectoral allocation shifts and investment trends, distilling large datasets into investor-focused insights. Her work combined quantitative analysis with consumer-centric storytelling, enabling readers to better understand fund positioning, portfolio changes and long-term investment opportunities.<br><br> Kirti holds a Bachelor's degree in Economics from Indraprastha College for Women, University of Delhi, and a Master's in Finance from the Jindal School of Banking & Finance at O.P. Jindal Global University. Her academic training emphasised analytical thinking, quantitative research and financial decision-making, providing a strong foundation in understanding capital markets, financial systems and economic policy. With a combined experience in investment research and financial journalism, she is committed to producing accurate, accessible and insightful journalism that empowers readers to make well-informed financial decisions.
