1986-VIL-75-ITAT-DEL

Equivalent Citation: ITD 016, 627, TTJ 026, 001,

Income Tax Appellate Tribunal DELHI

Date: 24.02.1986

MOHINDER KUMAR BHATIA.

Vs

INCOME TAX OFFICER.

BENCH

Member(s)  : S. K. CHANDER., O. P. JAIN.

JUDGMENT

Per Shri S.K. Chander, Accountant Member --- This appeal by the assessee is directed against the order of the AAC dated10-1-1985 relating to the assessment year 1981-82.

2. The issue in this appeal is whether on the facts and in the circumstances of the case, there is any justification for the addition of Rs. 47,500 to the total income of the assessee under the head 'Income from other sources'.

3. The above addition was made by the ITO in the impugned assessment order dated15-2-1984made under section 143(3) of the Income-tax Act, 1961 ('the Act') for the year under appeal. The ITO found that property for House No. 1, Road No. 44, Punjabi Bagh,New Delhi, had been sold for a consideration of Rs. 1,50,000 as stated in the agreement for sale and purchase entered into between the vendor and vendee on11-1-1979. In support of the consideration shown in this instrument, the assessee had filed valuation report from his valuer, the ITO himself obtained the valuation of the said property from the Valuation Officer after making a reference to him under section 55A of the Act. The property was sold by Shri Hari Ram, father and his three sons, Sanjay, was major, Kailash and Sham were minors. Therefore, the father as a natural guardian of the minors was under an obligation to obtain permission of the concerned authorities for the sale of the property in view of the Hindu Minority Act. This took considerable time with the result that the actual conveyance of the property took place only on20-10-1980when the deed was registered. The ITO, therefore, got valuation of the property done on two dates---first valuation was done as on11-1-1979and the other as on20-10-1980. In this judgment, we are not concerned with the valuation given by the Valuation Officer at the instance of the ITO for 20-10-1980 because the ITO himself has recorded after consideration of the submissions made by the assessee that, 'for the reasons explained by the assessee and that the agreement ultimately materialised I take the cost of the property as on 11-1-1979 as the relevant price'. This valuation was Rs. 1,97,500. The vendors had received and the vendee had paid Rs. 1,50,000 for the demised property. Since, there was difference between the valuation as on11-1-1979given by the WTO and as shown in the instrument, the ITO took the difference of Rs. 47,500 as investment made by the assessee in purchase of the property from out of income from undisclosed sources. This was brought to tax. The first appeal filed by the assessee against the said addition before the learned AAC met with failure. Hence, the proceedings before us.

4. On the basis of the authorities noted infra, the learned counsel for the assessee submitted before us that the authorities below erred in adding to the total income of the assessee the impugned sum of Rs. 47,500 because the actual consideration that passed between the vendors and the vendee was only Rs. 1,50,000, that it was for the revenue to prove that anything more than that passed hands, that the plot on which the building was constructed was an oddity that the property was not easily saleable, that the fair market value of the property, therefore, was not comparable with the properties of normal dimension even in the same locality, that the superstructure was very old having been constructed in the year 1962-63 and lacked modern amenities which could fetch good value, that the competent authorities having initiated proceedings under section 269 of the Act had finally dropped the proceedings as per orders made and appearing at pages 51 to 54 of the paper book dated 2-11-1981, that the Valution Officer had not given due consideration to the odd size of the plot and old superstructure on it, that the valuation taken is only an estimate and does not show that in reality the vendors have paid and the vendees have received any amount in excess of the amounts stated in the instrument and that the authorities below have failed to appreciate the entirety of the facts and circumstances of the case and the assessee had been erroneously saddled with the tax liabilities. Authorities relied upon are: Jindal Strips Ltd. v. ITO [1979] 116 ITR 825 (Punj. & Har.) (FB), K.P. Varghese v. ITO [1981] 131 ITR 597 (SC), CIT v. Apsara Talkies [1985] 155 ITR 303 (Mad.) and Unique Associates Co-op. Hsg. Society Ltd. v.UnionofIndia[1984] 16 Taxman 127 (Bom.).

5. On the other hand, the learned departmental representative supported the action of the authorities below and contended that the ITO was fully justified in making a reference and asking for the valuation from the Valuation Officer of the revenue as the reference is provided under the Chapter which deals with the computation of income, that the ITO made the addition under section 69 of the Act because the assessee had apparently invested in the property amount more than the stated consideration in view of the report of the Valuation Officer, that the factum of the shape of the plot, the age of the building and other contentions of the assessee had been duly considered by the Valuation Officer in arriving at the value of the property as on 11-1-1979, that the assessee has not shown that the value as on 11-1-1979 was not reasonable and fair, that the dropping of the proceedings by the competent authority does not per se give any right to the assessee to claim that there was no extra consideration than the stated one in the document, that the ITO had been reasonable and fair in taking the value only as on 11-1-1979 and that no case has been made out by the assessee for an interference in the order of the learned AAC and, therefore, the appeal of the assessee be dismissed. These submissions were made on the basis of the following authorities and the orders of the lower authorities : R.K. Garg v. Union of India [1982] 133 ITR 239 (SC), CIT v. Smt. Prem Kumari [1984] 146 ITR 191 (All.) and CIT v. Jumramal Son [1985] 154 ITR 689 (All.).

6. We have given careful consideration to the rival submissions. It has been held by the Supreme Court in the case of K.P. Varghese, while dealing with a case of section 52(2) of the Act that the said sub-section has no application in the case of an honest and bona fide transaction where the consideration received by the assessee has been correctly declared or disclosed by him. However, where the consideration for the transfer of a capital asset has been understated or the full value of the consideration in respect of the transfer is shown at a lesser figure than that actually received by the assessee, the burden of proving such understatement or concealment is on the revenue. These observations of the Hon'ble Court are, in our considered opinion, equally applicable to the type of the case now before us where the ITO made a reference under section 55A and on receipt of the valuation the ITO without doing anything took the difference as shown in the valuation and as shown in the document as the amount that had passed hands. The ITO has neither examined the vendors nor the vendees to show that the actual consideration as stated in the instrument was not the real consideration that passed between the parties.

7. The Hon'bleMadrasHigh Court has pointed out in the case of Apsara Talkies, that valuer's estimate on the cost of consideration could not be taken as sacrosanct. The Court has further observed that a valuation is, even in the most expert hands, and inexact instrument of measurement. It is only an estimate and no two valuers will agree on the same subject. This indicates that on the mere report of a Valuation Officer, the ITO cannot build up a case that something more than the stated consideration had passed between the parties. In order to build up a case of that type, the ITO has to go beyond that and establish after necessary enquiries and on acceptable documentary evidence that the stated consideration was not the real consideration.

8. It is pertinent to note that there was no delay merely because the two parties wanted to understate the consideration shown in the agreement for sale and purchase because the registration took time in view of the minors' involved in the transaction on whose behalf their father and natural guardian had to obtain permission under the Hindu Minority Act from the concerned authorities. It is very important to note that another authority established by the law under the same statute has found after enquiry that there was no case for acquisition of the property as the consideration stated was acceptable.

9. It is important to note that the plot on which the property was constructed was 'Shemukhiya' which is not considered as auspicious generally by the public and the superstructure on it being old the consideration paid or for that matter the fair market value of the property would not be comparable to other properties even in the same locality built up on regular plots. In fact, this aspect of the matter was recognised and taken note of even by the Valuation Officer. In our considered opinion, therefore, on the entirety of the facts of the case, there is no justification for making the addition of Rs. 47,500 merely because there was difference between the valuation determined by the Valuation Officer and the consideration stated in the instrument of transfer. We, therefore, delete the addition and allow the appeal of the assessee. Appeal allowed.

 

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