COMMISSIONER OF INCOME TAX Vs. SUSHILA MITTAL

JUDGEMENT

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

(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 asst. year 1972 -73, Tulsi Ram Arun filed a return declaring income of Rs. 7,840. The AO 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 8,357, Model Basti, Delhi. The said property was sold by the assessee for Rs. 48,000 to Smt. Ratan 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 31st March, 1971, at Rs. 80,650. After obtaining the approval of the Inspecting Assistant Commissioner (in short "the IAC"), the AO invoked the provisions of S. 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 AO. The matter was carried in further appeal before the Tribunal. It has to be noted that the Tribunal upheld that computation of the fair market value but held that the provisions of S. 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 :

(3.) 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 S. 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 AAC. That being the position, it was held that S. 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 vs. ITO (1981) 131 ITR 597 (Del). Therefore, 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. The reference stands disposed of accordingly. *****