Dwarka Prasad, J.
1. This application under Section 256(2) of the I.T. Act, 1961 (hereinafter referred to as ' the Act'), has been filed in this court by the assessee seeking a direction to the Income-tax Appellate Tribunal, Jaipur Bench, Jaipur, to state the case and refer the questions arising out of the order of the Income-tax Appellate Tribunal dated November 30, 1976, to this court for its opinion.
2. The case of the petitioner is that she is assessed to income-tax under the provisions of the Act as an individual. During the assessment year 1972-73, relating to the accounting year ending on October 19, 1971, the assessee purchased a plot of land, marked B-7A, having an area of 1,799.9 sq. yards in the city of Jaipur from M/s. Vinay Chand Pravin Chand for a sum of Rs. 45,000 by means of a sale deed dated June 5, 1971, which was duly registered on July 17, 1971. In the course of the assessment proceedings for the aforesaid assessment year 1972-73, the ITO, Central Circle-2, Jaipur (hereinafter referred to as ' the assessing authority '), informed the assessee that the fair market value of the said plot purchased by her has been held to be Rs. 81,000, at the rate of Rs. 45 per sq. yard, in the case of M/s. Vinay Chand Pravin Chand and thus it appears that the purchase price of the plot in question was understated in the sale deed by a sum of Rs. 36,000 and the same represents the investment of the assessee in the purchase of the aforesaid property from outside income from undisclosed sources. The assessee, thereupon, wrote back to the assessing authority on March 18, 1975, that the sale price stated by the assessee was duly supported by the registered document executed in respect of the same and the question of estimating its fair market value did not arise and so there was no question of any concealment of income. The assessing authority, in the assessment order passed by him on March 22, 1975, held that the assessee invested Rs. 81,000 in the purchase of the plot of land in question and as the investment of only Rs. 45,000 was disclosed in the sale deed, a sum of Rs 36,000 invested by the assessee out of books in the purchase of the aforesaid plot of land represented her income from undisclosed sources, during the accounting year relevant to the assessment year 1972-73. In doing so, the assessing authority relied upon the order passed under Section 55A of the Act in the case of the vendor, M/s. Vinay Chand Pravin Chand. The assessing authority also issued a notice to the assessee for showing cause why a penalty should not be imposed upon her under Section 271(1)(c) of the Act for concealment of the said income.
3. The assessee filed an appeal before the AAC, who by his order dated September 5, 1975, partly allowed the appeal and reduced the amount of unexplained investment from Rs. 36,000 to Rs. 23,400. A further appeal filed by the assessee before the Income-tax Appellate Tribunal, Jaipur Bench, Jaipur, was dismissed by its order dated November 30, 1976, and thus the Tribunal confirmed the order passed by the AAC. An appeal preferred on behalf of the revenue in the same matter was also dismissed by the Tribunal by the very same order. Then the assessee filed an application before the Income-tax Appellate Tribunal, under Section 256(1) of the Act, for making a reference to this court, but that application was also dismissed by the Tribunal by its order dated March 28, 1977. Hence, this application under Section 256(2) of the Act has been filed before this court.
4. The argument of the learned counsel for the assessee before us was that there must be a positive finding recorded by the ITO to the effect that the assessee had made investments or secured valuable property for an amount in excess of the amount recorded in his account books and that in the absence of a positive finding in that regard, the ITO was not entitled to consider such amount as the income of the assessee during that financial year. It was pointed out by the learned counsel for the applicant that the provisions of Section 69B of the Act were very much different from those of Section 52(2) of the Act and the concept of fair market price does not arise while deciding a matter under 69B of the Act. According to the learned counsel, the concept of fair market value, which is relevant for the purposes of provisions of Section 52(2) and Section 269C(1) of the Act, do not find any place in Section 69B of the Act and is irrelevant for the determination under Section 69B of the Act. He also drew our attention to the report of the Valuation Officer submitted under Section 55A of the Act for the purpose of showing that a large chunk of land measuring 8,707.63 sq. yards was purchased by the assessee and lour others jointly and that the said plot of land was thereafter Sub-divided into five parts, with the approval of the Urban Improvement Trust, Jaipur. It was also argued by the learned counsel for the assessee that there are hardly any buyers available in the case of bigger plots of land and that on that account when large chunks of land are sold, the price thereof is comparatively less, if calculated on the basis of per sq. yard, as compared to the value of smaller plots of land. Learned counsel also submitted, on the basis of the Valuation Officer's report, that the plot of land, which on sub division had fallen to the share of the assessee, is in the rear of all other plots of the main plot. Learned counsel further submitted that the Valuation Officer's report under Section 55A of the I.T. Act, 1961, as well as the proceedings taken against the vendor, M/s. Vinay Chand Pravin Chand, under Section 55A of the Act were taken behind the back of the assessee and the assessee had no opportunity of contesting the valuation officer's reporter the order passed under Section 55A of the Act and as such the same could not have been considered as a piece of evidence against the assessee and that under Section 69B of the Act the burden was cast upon the revenue to prove that the amount invested by the assessee or expended by the assessee in securing the valuable assets exceeded the amount recorded in the books of accounts of the assessee. It was also submitted that the assessee was not given an opportunity to offer an explanation, which is required to be given under Section 69B of the Act. According to the learned counsel, the sale in question was perfectly a bona fide transaction and according to him there was no suggestion on the part of the revenue that the purchase of the plot of land in question did not represent an honest and genuine transaction and that there could be no case of concealment of capital gain unless the ITO comes to the conclusion, on the basis of the material placed before him, that there was under-statement of the consideration. Learned counsel for the petitioner placed reliance on the decision of the Madras High Court in Addl. CIT v. P.S. Kuppuswamy : 112ITR1012(Mad) and that of the Karnataka High Court in Addl. CIT v. M. Ranga Pai : 100ITR413(KAR) in support of his submission that honest and genuine transactions are not hit by Section 52 of the Act, which could only apply in case of understatement but not when the taxing authority merely presumed that the property would have fetched higher price.
5. On the other hand, learned counsel for the revenue argued that no question of law arises in the matter as the finding of the Tribunal is based on appraisement of evidence placed before it and reliance was placed by him upon the decision of the Delhi High Court in Hari Chand and Prem Chand Bassi v. CIT : 94ITR557(Delhi) and that of the Allahabad High Court in Sahu Dharmata Satan v. CWT : 80ITR194(All) for the submission that the question of determination of the correct value of a valuable asset cannot be regarded as a question of law.
6. We have considered the submissions put before us by the learned counsel for the parties. Section 69B of the Act requires that if in any financial year the assessee has made investments or if he is found to be the owner of some valuable property and the ITO finds that the amount spent on making such investments or in securing such valuable property exceeds the amount recorded in this behalf in the books of account maintained by the assessee from any source of income and the assessee offers no explanation about such excess amount or the explanation offered by the assessee is not satisfactory in the opinion of the ITO, then such excess amount may be deemed to be the income of the assessee for such financial year. According to Section 52(2) of the Act, the ITO has to consider the fair market value of a capital asset transferred by the assessee and if such fair market value exceeds the value of the consideration declared by the assessee on the date of the transfer by an amount not less than 15% of the value so declared, then the value of the consideration of such capital asset has to be considered to be the fair market value on the date of the transfer. Further Section 269C(1) of the Act provides for acquisition of such property if the apparent consideration for which the property is transferred is less than the fair market value thereof and the consideration for such transfer as agreed to between the parties, has not been truly stated in the deed of transfer with the object of evasion of the liability of the transferor to pay tax under the Act in respect of any income arising from the transfer or facilitating the concealment of any income from other assets, which have not been disclosed by the transferee.
7. In our view, the case involves matters relating to the proper interpretation of the provisions of Sections 52(2), 55A and 69B of the Act and as such the following two questions of law do arise out of the order of the Income-tax Appellate Tribunal, Jaipur Bench, dated November 30, 1976 :
'1. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in computing the undisclosed investment of the assessee on the basis of the fair market value of the property in question, as determined under Section 55A of the Act ?
2. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was legally justified in holding that the sum of Rs. 23,400 could be considered as unexplained investment of the assessee and that the same represented the income of the assessee from undisclosed sources during the relevant accounting year '
8. The assessee desired that the Income-tax Appellate Tribunal be required to refer seven questions to this court for its opinion which have been enumerated in para. 10 of the reference application submitted before this court. However, we do not consider it necessary to reproduce those questions, as in our view, questions Nos. 1 to 6, sought by the assessee to be referred, relate to the same matter in respect of which we have framed question No. 1 above, which we have redrafted for the purposes of clarity. Question No. 7 desired by the assessee to be referred has also been slightly modified by us in the form of question No. 2, in order to bring out clearly the dispute between the parties in this case.
9. We, therefore, allow this application for making a reference and direct the Income-tax Appellate Tribunal, Jaipur Bench, Jaipur, to state the case and refer the above mentioned two questions of law arising out of its order dated November 30, 1976, to this court for its opinion.
10. In the circumstances of the case, the parties are left to bear their own costs.