Commissioner Of Income-Tax vs Sushila Mittal And Ors.
2000 Latest Caselaw 1284 Del

JUDGMENT

Arijit Pasayat, C.J.

1. At the instance of the Revenue, the following questions have been referred by the Income-tax Appellate Tribunal, Delhi Bench "C" (in short "the Tribunal"), under Section 256(1) of the Income-tax Act, 1961 (in short "the Act"), for our opinion :

"1. Whether, on the facts and circumstances of the case, the Appellate Tribunal is right in law in holding that Section 52(2) of the Income-tax Act, 1961, is not applicable to the case of the assessee ?

2. Whether, on the facts and circumstances of the case, the Appellate Tribunal was justified in law in deleting the addition of Rs. 21,327 made on account of reversionary value of the land in arriving at the fair market value of the property in question ?"

2. The factual position, as indicated in the statement of case is essentially as follows :

That Tulsi Ram Arun was the assessee and the present respondents are his legal heirs. The late Tulsi Ram Arun was assessed in the status of an individual. For the assessment year 1972-73, Tulsi Ram Arun filed a return declaring income of 8s, 7,840. The Assessing Officer determined the total income at Rs. 49,360. While computing this income, a sum of Rs. 38,252 was added as capital gains to the assessee from the sale of house property situated at 8357, Model Basti, Delhi. The said property was sold by the assessee for Rs. 48,000 to Smt. Rattan Devi and her son, Shri Hem Chand Gupta. The property was valued by the Assistant Valuation Officer who determined the fair market value as on March 31, 1971, at Rs. 80,650. After obtaining the approval of the Inspecting Assistant Commissioner (in short "the IAC"), the Assessing Officer invoked the provisions of Section 52(2) of the Act and adopted the fair market value of the property amounting to Rs. 80,650 as the sale consideration of the property and computed capital gains at Rs. 63,850. In appeal, the Appellate Assistant Commissioner ("the AAC" in short), confirmed the order of the Assessing Officer. The matter

was carried in further appeal before the Tribunal, It has to be noted that the Tribunal upheld the computation of the fair market value but held that the provisions of Section 52(2) would not be applicable even if the declared consideration fell short of the valuation determined by more than 15 per cent. For coming to this conclusion, the Tribunal held as follows :

"The next question for our consideration is whether there was any material for reaching the conclusion that the assessee had received an amount over and above the consideration of Rs. 48,000 specified and declared in the sale deed. We do not find any material which would indicate any such receipt of the amount by the assessee nor have the departmental authorities recorded any finding to that effect either in the assessment order or in the appellate order of the Appellate Assistant Commissioner."

3. Reliance was placed on several decisions of various High Courts to hold that Section 52(2) of the Act was not applicable.

4. On being moved under Section 256(1) of the Act for reference, the questions as set out above have been referred.

5. We have heard learned counsel for the Revenue. There is no appearance for the assessee in spite of service of notice. Learned counsel for the Revenue submitted that the conclusions of the Tribunal are somewhat confusing. In paragraph 6 it held that Section 52(2) was applicable, but finally it held that the said provision was not applicable.

6. We find that the Tribunal made the observations about the difference in the consideration indicated by the assessee and the valuation made by the Valuation Officer. Since the difference was more than 15 per cent, the question of applicability of Section 52(2) would arise. But while considering the materials on record, it was observed that there was no material which would indicate any receipt over and above the consideration indicated in the document. There was no such finding in the assessment order or the appellate order passed by the Appellate Assistant Commissioner. That being the position, it was held that Section 52(2) of the Act had no application. The view expressed by the Tribunal is in line with the decision of the apex court in K. P. Varghese v. 1TO [1981] 131 ITR 597. There fore, the first question has to be answered in the affirmative, i.e., in favour of the assessee and against the Revenue. In view of this answer, the other question really becomes of academic interest and need not be answered.

7. The reference stands disposed of accordingly.