BISHWANATH SINGH SHARMA Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS is an application under Section 66(3) of the Indian Income-tax Act by one Bishwanath Singh Sharma and the question which arises upon this application has been formulated in these words

(2.) THE properties referred to in this question are three sets of properties which were purchased by the petitioner assessee during the year of assessment in execution of his mortgage decree against three of his debtors named Gopal Singh, Palto Rai and Nemo Rai. THE assessee though a money-lender did not mention these purchases in his return, but the Income-tax Officer came to know about them, and he at once proceeded to enquire what effect they would have upon his assessment. During the inquiry the assessee claimed that as a result of these purchases he has sustained losses of Rs. 9,212, Rs. 3,922 and Rs. 5,794 respectively, these sums representing, according to him, the difference between the decretal amounts and the amount fetched by the properties at the sale. THE Income-tax Officer, however, dismissed the claim of the assessee in these words :-

(3.) ANOTHER debtor whose property has been purchased by the assessee is Gopal Singh. The property purchased by the assessee in this case is a 6 annas share of his zamindari and about 9 bighas 5 kathas 5 dhurs kasht lands. It appears from the assessees petition that the decretal amount for which these properties were advertised for sale was Rs. 13,012. The properties were valued at Rs. 1,900 and the assessee himself purchased them for Rs. 3,800. Now the Assistant Commissioner of Income-tax was of the opinion that in spite of the fact that these properties were valued at Rs. 1,900 and were purchased by the assessee at Rs. 3,800 only, the entire decretal amounts for which the property was sold must be deemed to have been realised and the property should be valued at Rs. 13,312. The learned Assistant Commissioner has stated in his order that although two or three opportunities were allowed to the assessee to produce road cess valuation, khewat, khatian or any other evidence to prove the income of the zamindari as well as valuation of the land, the assessee failed to do so. There was no other material before either the Income-tax Officer or the Assistant Commissioner of Income-tax and merely because the assessee failed to produce the papers in question it was assumed that the property must have been worth Rs. 13,012. Now, as was pointed out in Raja Raghunandan Prasad Singh v. Commissioner of Income-tax, Bihar and Orissa (1)(1933) 12 Pat. 305; 1 I.T.R. 113, the price which the assessee bids for the property at the public sale must ordinarily be taken to be its market value, but it is open to the Income-tax Department, if there is anything before it, to hold that the property was worth more or less than the price which the assessee bid for it. In order, however to hold that is worth more than the price fetched at the public sale, the Department must have in its possession some tangible evidence. In this case there was no onus on the assessee, and the mere fact that he has failed to produce certain papers did not justify the department in putting a higher value upon the property than the price fetched at the sale. The point which seems to have weighed greatly with the Income-tax authorities was that the assessee did not bring his suit within six years of the execution of the mortgage bond, and the fact that he had waited for more than six years suggested that the property which was the subject of the mortgage was worth the full decretal amount. This is, however, mere speculation. There may be many reasons why the assessee did not bring the mortgage suit earlier. At any rate, no inference should have been drawn from this fact unless the assessee was given an opportunity to explain why the suit was not brought earlier. In my opinion there is no evidence whatsoever to support the conclusion arrived at by the Income-tax authorities in regard to the value of the properties of the debtor Gopal Singh, and the question, therefore, must be answered in the negative so far as this debtor is concerned.