1. These are appeal and cross-objection by the revenue and the assessee.
2. The assessee transferred one-fourth interest in the immovable property at 40, Old Bally gunge Second Lane, Calcutta, in 1970-71 financial year to his wife for Rs. 69,000 by a conveyance deed dated 14-12-1970. The ITO held that the capital value of the rights of the assessee in the portion of the transferred property came to Rs. 1,82,500 and as the assessee had transferred the said property for only Rs. 69,000 the transfer was for inadequate consideration. Accordingly, he computed the income arising to the assessee's wife from the transferred property at Rs. 12,750 and included the same in the hands of the assessee under Section 64(1)(iv) for the assessment year 1976-77. The AAC held that the consideration of Rs. 69,000 for the undivided share comprising one-fourth of the property, was fixed on the basis of the market value of the property. He referred to the certificate of the solicitor who conducted the auction on behalf of the assessee when one-fourth share of the assessee's property was sold in auction to his son, and came to the conclusion that the consideration was adequate. He accordingly deleted the addition of Rs. 12,750. The revenue is in appeal.
3. The learned departmental representative stressed that the consideration paid by the assessee's wife for one-fourth share in the property was totally inadequate. He referred to the Tribunal's order in the case of the assessee for the assessment year 1967-68 where the value of the entire property had been determined at Rs. 7 lakhs. The Tribunal had occasion to consider the sale of one-fourth share in the assessee's property to his son and held that the sale had no evidentiary value. It was further stated that the value of the properties had been rising steadily and reliance on the value which a share of the property fetched in auction was erroneous since that auction did not reflect the correct market value, the transaction having taken place between father and son. The learned departmental representative also pointed out that the earlier assessments had been reopened which went to show that the revenue had not accepted the assessee's valuation of the property.
4. The learned counsel appearing for the assessee urged that the ITO had made an assessment for the assessment year 1971-72 on the assessee where capital gain was determined on the basis that the sale price of half of the property was Rs. 1,38,000. The main reason for the Tribunal not accepting the assessee's valuation of the property for the assessment year 1967-68 was that the events on which the assessee relied to establish that the market value of one-fourth of the property was Rs. 69,000 were subsequent to the valuation date and, as such, were not relevant for the assessment in appeal before them. The Tribunal had also remarked that an undivided share in the property would certainly fetch less than a divided share. On these grounds it was argued that the consideration received by the assessee from his wife for transfer of one-fourth share of the property was adequate. Alternatively, it was contended that if the whole property is valued at Rs. 7 lakhs, the proportionate value of one-fourth share should be taken and further reduction be given for joint ownership.
5. We have considered the rival submissions. It is seen that assessee sold one fourth share of the property at 40, Old Ballygunge Second Lane, Calcutta, in May 1970. It was sold in public auction. The highest bidder was the assessee's son who purchased the property for Rs. 69,000. Since the property was sold in public auction, it was necessary for the revenue to bring on record any material, if any, in their possession to show that the transaction was collusive and the consideration paid by the assessee's son was understated. No such evidence is forthcoming. Further, taking into account the disturbed conditions of the city during 1970, property values ware bound to be low compared to the value prevailing in periods subsequent to 1971. We find that the transfer to the assessee's wife took place on 14-12-1970 and the value is the same as that paid by Gautam Mukherjee. The auctioneers have given the particulars of the bids in the auction held on 9-5-1970. We find that outsiders also participated in the auction and no outsider was prepared to pay more than Rs. 68,000. We have, therefore, to accept that the fair market value of one-fourth share of the property in 1970 was Rs. 69,000. The consideration being adequate, there are no grounds to invoke the provisions of Section 64(1)(iv). We, therefore, agree with the AAC and dismiss the appeal filed by the revenue.