COMMISSIONER OF INCOME TAX Vs. NITIBEN CHAMANLAL PAREKH

JUDGEMENT

(1.) UNDER S. 256(1) of the Income tax Act, 1961 ('the Act' for short), the Tribunal, Ahmedabad, has referred the following two questions for our decision :

(2.) THE aforesaid questions arise in the background of the facts that the assessee transferred the land admeasuring 1026 sq. yd. of village Madalpur, Ahmedabad City, for a sale consideration of Rs. 45,000 during the asst. year 1972 73. After deducting the expenditure of Rs. 1,871, the sale price was mentioned as Rs. 43,129. Out of land admeasuring 1026 sq. yds., actually 900 sq. yds. of land was sold and 126 sq. yds. of land was kept for road and, hence, it was not taken into consideration. The ITO asked the assessee to explain as to why the prevailing fair market value of land of not less than Rs. 90 per sq. yd. should not be substituted in the sale price mentioned by the assessee. In response to this, the assessee submitted a chart pointing out that the prevailing price was from Rs. 53 to 55 per sq. yd. Thereafter, the ITO finalised the assessment by adopting fair market price at rate of Rs. 90 per sq. yd. and worked out the capital gains accordingly. Against that order, the assessee preferred an appeal before the AAC.

(3.) AGAINST that order dt. 24th Dec., 1976, the assessee preferred an appeal before the Tribunal, which was numbered as ITA No. 1879/Ahd/1976 77. The Tribunal arrived at the conclusion that before invoking the provisions of S. 52 of the Act, the Department should have something on record to show that the assessee had received some amount in excess of sale consideration declared by the assessee. For this purpose, the Tribunal relied upon various decisions of the High Courts. The Tribunal held that, in the instant case, admittedly, there was no material or evidence, whatsoever, in the possession of the Department which would indicate that the actual consideration for sale or transfer received by the assessee was much more than what was declared and, therefore, the provisions of S. 52 could not be invoked. The Tribunal further held that the mere fact that there was evidence of other comparative sales which would indicate that the market value was higher did not by itself support the Department's case and that the CIT was not justified in holding that the provisions of S. 52 were applicable and that the ITO ought to have applied them in adopting the market value.