Joint Flat Purchase: ITAT Rejects Entire Rs 34.81 Lakh Tax Addition In Husband’s Hands

A difference of Rs 34.81 lakh between a flat’s purchase price and its stamp-duty value led to a tax addition in the husband’s hands. The Income Tax Appellate Tribunal (ITAT), Mumbai, has questioned how the addition was made and sent the case back for reconsideration.

The dispute involved Shyamsunder Bansidhar Reengusia and assessment year 2018-19. He and his wife, Manju Devi Reengusia, bought a Chembur flat on August 14, 2017. The couple bought the flat for Rs 60,00,002. For stamp-duty calculation, however, it was valued at Rs 94,81,500.

How Rs 34.81 Lakh Landed In The Husband’s Tax Bill

The issue surfaced when the husband’s return was reopened. He had not included the Rs 34,81,500 gap in his taxable income. The Assessing Officer (AO) added the full amount under “income from other sources,” invoking Section 56(2)(x)(b) of the Income-tax Act, 1961.

The husband did not get relief at the first appeal stage. In July 2025, the CIT(A) agreed with the tax officer’s decision. The couple held specific shares: 41.08 per cent belonged to the husband and 58.92 per cent to the wife. Yet, the appellate authority reasoned that taxing only the husband’s share would leave Rs 20,51,300 unassessed because the wife’s case had “escaped scrutiny.”

The husband argued that even if the difference was taxable, only Rs 14,30,200—corresponding to his 41.08 per cent share—could be considered in his hands. The wife was also the first-named owner in the sale deed, while payment records reflected their separate shares.

Stamp Value Was Also Contested

The taxpayer challenged the valuation itself. He said the builder had not obtained an occupation certificate and basic amenities were unavailable, lowering the flat’s market value. He submitted valuation material and sought a reference to the Departmental Valuation Officer (DVO).

The lower authorities did not accept the request and relied on the stamp-duty valuation adopted for registration.

What ITAT Mumbai Said

The tribunal held that the entire difference could not be placed in the husband’s hands merely because the department had taken no action in the wife’s case. The property was jointly owned in defined shares, and the lack of scrutiny against one owner could not justify taxing the other for the whole amount.

It also held that once the taxpayer disputed the stamp value and furnished supporting material, the matter should have been referred to the DVO before determining the taxable difference.

The ITAT set aside the CIT(A)’s order and returned the case to the AO, who must give the taxpayer a reasonable opportunity to present his case.

The ruling is a remand, not a final deletion of the addition. The DVO valuation, any taxable difference, and its attribution will now be examined afresh. For joint buyers, the case highlights the need to record ownership ratios and preserve a clear trail of each co-owner’s payments.

FAQs

1. Can the entire stamp-value difference be taxed in one co-owner’s hands?
Not merely because the other co-owner was not assessed. The tax department must consider the ownership shares recorded in the property documents.

2. Can a property buyer dispute the stamp-duty valuation?
Yes. The buyer may submit supporting valuation material and seek a reference to the Departmental Valuation Officer if the stamp duty value appears higher than the market value.

3. Did the ITAT completely delete the Rs 34.81 lakh addition?
No. It sent the case back to the AO to reconsider the valuation and determine how any taxable difference should be attributed.