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Pushpalata Vs. Inspecting Asst. Commr. of Income-tax and anr. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAllahabad High Court
Decided On
Case NumberSecond Appeal from Order No. 28 of 1976
Judge
Reported in(1984)38CTR(All)120; [1984]150ITR42(All); [1983]15TAXMAN371(All)
ActsIncome Tax Act, 1961 - Sections 269C and 269C(2)
AppellantPushpalata
Respondentinspecting Asst. Commr. of Income-tax and anr.
Excerpt:
.....the iac and the tribunal have held that the vendees had not given any evidence whatsoever, on thebasis of which their case that the house in question was not required to be acquired having been produced by the vendees, even if clause (b) and not clause (a) of section 269c(2) of the act is held to be applicable, it is of no avail to the vendees inasmuch as they have failed to satisfy the requirements of 'unless the contrary is proved'.as regards the finding about the fair market value of the iac including the finding about the amount proved to have been spent towards its renovation, suffice it to say, that the same is a finding of fact and does not call for interference in the present s. the recital in the sale deed that the vendees had undertaken 'to meet all expenses and labour..........the valuation officer, who, adopting the land and building method and submitted a report that the fair market value of the house aforesaid was rs. 71,600. the vendees aforesaid riled their reply contesting the fair market value determined by the valuationofficer and also produced a report in regard to the fair market value ofthe said house of an approved valuer indicating that the fair market valueof, the house was rs. 57,358. the case of the vendees further was thatafter purchasing the house they had got certain renovations done thereinat a cost of rs. 14,000. the iac accepted the report of the valuationofficer that the fair market value of the house was rs. 71,600. in regardto the claim of the vendees about renovation having been done in thehouse after having purchased the same, the.....
Judgment:

Ojha, J.

1. The appellant, Smt. Pushpalata, along with one Smt. Kamlesh jointly purchased from one Dr Raghunath Saran house No. D-61/62-C, Sidhgiri Bagh, Varanasi, on November 9, 1973, for a sum of Rs. 49,500. The IAC, Acquisition Range, Lucknow, on receipt of intimation in Form No. 37G, obtained a report from the Inspector and being of the view that it was a case for initiation of proceedings under Chap. XXA of the I.T. Act (hereinafter referred to as 'the Act') for acquisition, initiated these proceedings. The requisite notice was published in the Govt. of India Gazette, and copies of the same were served on the transferor and the transferees aforesaid. The question of valuation of the properties aforesaid was referred by the IAC to the valuation officer, who, adopting the land and building method and submitted a report that the fair market value of the house aforesaid was Rs. 71,600. The vendees aforesaid riled their reply contesting the fair market value determined by the valuationofficer and also produced a report in regard to the fair market value ofthe said house of an approved valuer indicating that the fair market valueof, the house was Rs. 57,358. The case of the vendees further was thatafter purchasing the house they had got certain renovations done thereinat a cost of Rs. 14,000. The IAC accepted the report of the valuationofficer that the fair market value of the house was Rs. 71,600. In regardto the claim of the vendees about renovation having been done in thehouse after having purchased the same, the IAC held that only a sum ofRs. 8,000 was proved to have been spent by the vendees on the renovations. Deducting this sum of Rs. 8,000 from Rs. 71,600, he held thatthe fair market value of the house on the date of sale was Rs. 63,600.He further held that since the difference between the fair market valueand the apparent consideration in the sale deed was more than 25 percent., there was conclusive proof that the consideration for the transfer asagreed to between the parties had not been truly stated in the instrumentof transfer. According to him, in this view of the matter, it had to bepresumed that the object was to facilitate the reduction or evasion of theliability on the transferor to pay tax under the Act in respect of anyincome arising from the transfer or to facilitate the concealment of anyincome or money or other assets which had not been or which ought tohave been disclosed by the transferee for the purpose of the I.T. Act or theW.T. Act. The IAC also held that no evidence, or material had been produced by the vendees before him to rebut the aforesaid presumptions. . Onthese findings he passed an order under Section 269F(6) of the Act directingthe acquisition of the house aforesaid with the prior approval of theCommissioner.

2. Aggrieved by the aforesaid order of the IAC, the vendees preferred two appeals being Appeals Nos. 34 and 35 of 1975-76 before the Income-tax Appellate Tribunal, Allahabad, under Section 269G(1) of the Act. Even though the Tribunal came to the conclusion that the fair market value of the house on the date of sale Was Rs. 68,090 and hot Rs. 71,600 as held by the IAC, it agreed with the IAC that a sum of Rs. 8,000 only had been proved to have been spent by the vendees, to wards the renovation of the house after its purchase. Deducting the sum of Rs. 8,000 from 68,090, the Tribunal held that the fair market value of the house as on the date of transfer came to Rs. 60,090. It further held that since the apparent consideration was Rs. 49,500 and the difference between the fair market value and the apparent consideration was Rs. 14,190, it was more than 25 per cent. and the order of the IAC did not call for any interference. Both the appeals were accordingly dismissed by a common order on May 31, 1976. Against the aforesaid order, Smt. Pushpalata, one of the co-vendees, preferred the present S.A.F.O. under Section 269H of the Act. Another S.A.F.O.being No. 36 of 1976 against the aforesaid order of the Tribunal was preferred by Smt. Kamlesh, the other co-vendee, in this court. S.A.F.O. No. 36 of 1976, filed by Smt. Kamlesh came up for hearing earlier and after hearing the parties was dismissed by a Division Bench of this court on March 24, 1983. The present S.A.F.O. filed by Smt. Pushpalata has now come up for hearing before us.

3. It was urged by counsel for the income-tax department that since S.A.F.O. No. 36 of 1976 filed by Smt. Kamlesh, one of the co-vendees, against the same order of the Tribunal had. already been dismissed as aforesaid, the present S.A.F.O. by the other co-vendee was liable to be dismissed for the same, reasons as recorded in the order of this court dated March 24, 1983, dismissing S.A.F.O. No. 36 of 1976. .

4. For the appellant it has, on the other hand, been urged by its counsel that a calculation mistake had occurred in the order of the Tribunal inasmuch as the difference between Rs. 60,090, the fair market value as determined by the Tribunal, and Rs. 49,500, the apparent consideration of the house in question, came to Rs. 10,590 only and not Rs. 14,190 as stated by the Tribunal. According to counsel for the appellant, the correct amount of difference being Rs. 10,590 only and not Rs. 14,190 and it was also less than 25 per cent., the Tribunal acted illegally in taking the view that the difference being 25 per cent., it was eonclusive proof under Section 269C(2)(a) of the Act, and that the consideration for such transfer had not been truly stated in the instrument of transfer with the object stated therein. According to him it was not Clause (a) but Clause (b) of Section 269G(2) of the Act which was applicable to the facts of the instant case, which contained the words 'unless the contrary is proved'. It was urged that the appellant had succeeded in proving to the contrary and, as such, the order of acquisition was illegal. It was also urged by counsel for the appellant that this court, while dismissing S.A.F.O. No. 36 of 1976, seems to have overlooked that the fair market value of the house in question had been reduced by the Tribunal from Rs. 63,600 as held by the IAC to Rs. 60,090 only and that the Tribunal had committed a mistake in calculation in its order while holding the difference between the fair market value and the. apparent consideration to be Rs. 14,190 in place of Rs. 10,590.

5. Having heard counsel for the parties, we are of the opinion that even accepting the submission made by counsel for the appellant as aforesaid, no case has been made out for interference in the present appeal. As seen above, if the difference was not more than 25 per cent., it would not constitute conclusive proof of the facts stated in Section 269C and it would be open to the appellant to prove to the contrary. Both the IAC and the Tribunal have held that the vendees had not given any evidence whatsoever, on thebasis of which their case that the house in question was not required to be acquired having been produced by the vendees, even if Clause (b) and not Clause (a) of Section 269C(2) of the Act is held to be applicable, it is of no avail to the vendees inasmuch as they have failed to satisfy the requirements of 'unless the contrary is proved'. As regards the finding about the fair market value of the IAC including the finding about the amount proved to have been spent towards its renovation, suffice it to say, that the same is a finding of fact and does not call for interference in the present S.A.F.O.

6. Counsel for the appellant then urged that the apparent consideration of the sale of the house in question was not Rs. 49,500 only but was more. According to him since it was apparent from the sale deed itself that the vendees had undertaken 'to meet all expenses and labour relating to the execution of the document of sale deed', the amount spent towards purchasing stamps and meeting the registration charges had to be added to the sum of Rs. 49,500 and it was the total thereof which constituted apparent consideration for the sale deed. According to counsel for the appellant, it was not the price actually paid by the vendees to the vendor but the entire amount spent by them for purchasing the house in question which constituted consideration for the sale deed and since the definition of the term 'apparent consideration' used the word 'consideration' and not 'price', the sum of Rs. 49,500 alone had wrongly been held to be the apparent consideration.

7. Having given our anxious consideration to the argument advanced by learned counsel for the appellant, we find it difficult to accept the same. Firstly, this plea does not appear to have been raised by the vendees either before the IAC or before the Tribunal. Even in the grounds of appeal in the present S.A.F.O., no such ground has been taken. The case of the I.T. Dept. that the apparent consideration of the sale deed of the house in question was Rs. 49,500 has never been controverted and seems to have been accepted by the vendees. The only objection which was raised by them against the proposed acquisition of the house in question was in regard to the fair market value of the said house and consequently the appellant is, strictly speaking, not entitled to raise this plea for the first time during the course of arguments in the present S.A.F.O. This plea cannot be said to be one which raises a pure question of law. The recital in the sale deed that the vendees had undertaken 'to meet all expenses and labour relating to the execution of the document of sale deed' at best only raised a presumption that the vendees may have done so, but this presumption was rebuttable. Had this plea been raised at the appropriate stage, evidence could have been led by the I.T. Department that notwithstanding the said recital the expenses were borne by the vendor himself and the recital aforesaid wasnot true and had been made with some ulterior motive. Due to the conduct of the vendee in not raising this plea at the appropriate stage, the I.T. Dept. is likely to be prejudiced if this plea is permitted now to be raised in arguments and is accepted.

8. Secondly, even on merits, we do not find any force in this submission. It is true that the sale deed does indicate that the vendees had undertaken 'to meet all expenses and labour relating to the execution of the document of sale deed' but the amount spent by them on this score did not constitute a part of the sale consideration. There is intrinsic evidence about it in the sale deed itself. At page 5 of the photostat copy of the sale deed which was produced before us occurs the following sentence :

'Accordingly the vendor after negotiations with the vendees agreed to sell the house to them for a consideration of Rs. 49,500 (Rupees forty-nine thousand and five hundred) '.

9. At page 6 thereof are to be found the following sentences :

'As an earnest of this agreement the vendee advanced a sum of Rs. 5,000 on 19-7-73 which the vendor accepted. As such the vendees have to pay the balance of the consideration money, viz., Rs. 44,500 (Rupees forty-four thousand and five hundred), at the time of the execution of the document of the sale deed before the Sub-Registrar concerned.'

10. These unequivocal assertions in the sale deed leave no manner of doubt that the apparent consideration thereof was Rs. 49,500 only.

11. Further, no provision of law has been brought to our notice to indicate that the liability to bear the cost of stamps and expenses for registration is of the vendor and if the vendee bears this liability for the vendor,it would be deemed that the amount spent in this behalf by the vendeehas been a gain or receipt by the vendor. It is not like payment by thevendee of a prior debt of the vendee to the creditor of the vendor overand above the amount actually paid in cash by the vendee to the vendor.In the result, we find no merit in this appeal. It is accordingly dismissed with costs.


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