PCIT(A)'s Change in Opinion from AO’s Reassessment Overruled : ITAT Reiterates Safe Harbour Rules of 10%, Invokes ‘Law Prospicit Non Respicit’ [Read Order]
ITAT implements the safe harbour rules of 10%, according to which when the difference between the Stamp Duty Valuation and the actual consideration is less than 10%, it should be ignored in taxation assessments.
![PCIT(A)s Change in Opinion from AO’s Reassessment Overruled : ITAT Reiterates Safe Harbour Rules of 10%, Invokes ‘Law Prospicit Non Respicit’ [Read Order]](https://images.taxscan.in/h-upload/2026/02/10/2124460-ao-reassessment-overruled-itat-reiterates-safe-harbour-rules-law-prospicit-respicit-taxscan.webp "PCIT(A)s Change in Opinion from AO’s Reassessment Overruled : ITAT Reiterates Safe Harbour Rules of 10%, Invokes ‘Law Prospicit Non Respicit’ [Read Order]")
The Income Tax Appellate Tribunal (ITAT), Raipur Bench, placed reliance on several judgments and held that if the difference between Stamp Duty Valuation and actual consideration of a property is less than 10%, then it should be ignored. The facts that led up to this appeal included the assessee buying a property for INR 18,00,000/-. The Assessing Officer (AO) inferred...
The Income Tax Appellate Tribunal (ITAT), Raipur Bench, placed reliance on several judgments and held that if the difference between Stamp Duty Valuation and actual consideration of a property is less than 10%, then it should be ignored.
The facts that led up to this appeal included the assessee buying a property for INR 18,00,000/-. The Assessing Officer (AO) inferred an escapement of income chargeable to tax under Section 56(2)(x)(b) of the Income Tax Act,1961 (the Act). AO reassessed but made no addition under Section 56(2)(x)(b). The case was reviewed by the Principal Commissioner of Income Tax (Central) who referred the valuation of the property to the District Valuation Officer (DVO). DVO valued it at INR 18,94,339/-, the difference of which was not taxed as it comes to INR 94,339/- or 5.24% in ratio.
The counsel for the assessee-appellant argued that the PCIT(C) had erred in holding that the reassessment order was erroneous as AO had not completed the requisite inquiries and investigations. It was argued that since the PCIT(C) claimed the AO had not completed inquiries and investigations, he would himself be taking a different view/opinion on the same set of facts. This was not taxing an amount whose difference was only 5.24%.
The Commissioner of Income Tax - Department Representative defended PCIT(C)’s opinion that the reassessment order was erroneous, taking into consideration the Explanations in Section 263 of the Act.
The tribunal noted that stamp duty may not accurately reflect the market rate as factors such as size, location, shape, amenities, transportation, etc., are varied with every property. ITAT observed that the tolerance band of 10% between difference in Stamp Duty Value and actual consideration is a remedial measure mentioned in the Finance Act 2020.
The two member bench also considered the legal maxim ‘law prospicit non respicit’ which presumes law to be prospective not retrospective. This was necessary as the tolerance band was 5% in the Finance Act 2018. Rule of beneficial construction, principle of reasonable construction instead of strict interpretation also were discussed.
Partha Sarathi Chaudhary (Judicial Member) and Avdesh Kumar Mishra (Accountant Member) while considering this matter through the Raipur Bench of ITAT held that the appeal stands allowed. The stay application by the assessee has also been dismissed as withdrawn.
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