NALIN KANT GALA Vs. COMMISSIONER INCOME TAX

JUDGEMENT

(1.) THIS appeal has been preferred by the assessee aggrieved by order (Annexure A-12) passed by the Income Tax Appellate Tribunal, on 29-10-99 by which appeal filed by the Revenue has been partly allowed.

(2.) THE Commissioner of Income Tax (Appeals) has passed an order (Annexure A-10) and has disbelieved the case of the assessee that though he has received an amount of Rs. 2,05,000/towards sale consideration but has refunded Rs. 1,50,000/- on 1-4-89, as per oral understanding, for failure to carry out repairs and renovations. The Commissioner of Income Tax (Appeals) has reversed the order passed by the Assessing Officer. Assessing Officer has passed an order (Annexure A-8) on 27-3-97. The Assessing Officer has disbelieved the story of renewals, repairs and renovation as totally false and not acceptable. The correctness of the order passed by the Income Tax Appellate Tribunal has been questioned in this appeal.

(3.) FACTS which are necessary for adjudication of this appeal indicate that a search was conducted under Section 132 (1) of the Income Tax Act, 1961 from 11-10-93 to 15-10-93. Certain articles, incriminating documents, books of accounts, diaries etc. were found and seized. During the course of search, it was found that assessee purchased ground floor of House No. 680, Sarafa, constructed on Block No. 48, Plot No. 137/1, area 587 sq. ft. for Rs. 40,000/- from Shri Gopichand Agrawal and his wife Smt. Rajkumari Devi on 19-1-1988. He spent another Rs. 4500/- towards stamp duty and other expenses. This house has been sold in two parts-- one part to Smt. Vimal Bai wife of Shri Madanlal having an area of 300 sq. ft. for Rs. 40,000/- and the Ors. part for Rs. 35,000/- having area of 287 sq. ft. to Smt. Rajkumari, wife of Shri Ashok Kumar. During the course of search several agreements were found as per Annexure AA-1/10 of the Panchnama. The agreement dated 12-12-1988 shows that the assessee agreed to sell the above house on 12-12-1989 for Rs. 2,25,000/- to Smt. Vimla Bai, wife of Shri Madanlal and Smt. Rajkumari Bai, wife of Shri Ashok Kumar. The payments as per agreement dated 12-12-88 were received to the extent of Rs. 2,05,000/- on different dates. During the course of hearing, it has been submitted by the assessee that after purchasing the property, assesses had undertaken certain repairs and renovation prior to sale, which amounted to Rs. 27,910/- for which a bill from Shiv Kumar Rajendra Pandey dated 29-3-1989 has been filed. Affidavits of Smt. Vimal Bai and Smt. Rajkumari Bai, the two purchasers show that they have received back Rs. 1,50,000/- on 1-4-89. It has been stated in their affidavits that oral agreement and mutual undertaking was to make certain repairs and renovations which assessee failed to do, hence the purchasers have taken back Rs. 1,50,000/- on 1-4-89.