2015 (2) TMI 635 - HC - Income Tax

Undisclosed income by way of unexplained investment in purchase of property - sale consideration different from the sale consideration recorded in the sale deed - non reflection of true market value of the transaction - Held that - The revenue has in its attempt to discharge onus recorded the statements of the assessee's vendors, who were duly cross-examined by the assessee and maintained that the true value of the transaction was ₹ 38 lacs. The assessing officer has not only relied upon these statements but has also relied upon other sale deeds and a sale by the PUDA reflecting a sale consideration of ₹ 10,000/- per square yard. The statements are clear, categoric and as they do not suffer from any contradictions are sufficient when read alongwith the other sale deeds and the nature and location of the land to rightly infer that the revenue has discharged its onus. The situation would have been different if the statements by vendors did not inspire confidence being contradictory or vague or there was no other evidence or the assessee had produced evidence to rebut these statements. The assessee apart from his bald statement is unable to refer to any contradiction in the statements of his vendors or any evidence to rebut the material on record. The revenue has discharged its onus of proving that sale consideration reflected in the sale deed is incorrect and the true value of the transaction disclosed in the statements by the assessee's vendors, remain unrebutted. - Decided against assessee.

Summary

Issues:
Delay in refiling appeal, Challenge to order of Income Tax Appellate Tribunal, Nature and evidentiary value of statements by vendors, Burden of proof on revenue, Value of statements by vendors in determining true market value of transaction.

Delay in Refiling Appeal:
The application sought to condone a delay of 134 days in refiling the appeal, which was allowed by the court after considering the averments in the application and arguments presented. The delay was condoned, and the court proceeded to dispose of the appeals.

Challenge to Order of Income Tax Appellate Tribunal:
The appellant contested an order passed by the Income Tax Appellate Tribunal, challenging the assessment of undisclosed income related to a property transaction. The appellant, wife of the deceased assessee, purchased a plot for a certain consideration, which was later revised by the vendors. The assessing officer concluded reassessment proceedings at a higher amount, which was upheld by the Commissioner of Income Tax and the Tribunal. The appellant argued that the statements by vendors were uncorroborated and should not be the sole basis for determining the property value.

Nature and Evidentiary Value of Statements by Vendors:
The court analyzed the statements made by vendors admitting a higher sale consideration, contrasting with the amount in the sale deed. The assessing officer relied on these statements to add undisclosed income to the appellant's assessment. The court examined whether such statements can override the recorded sale deed value and found that the vendors' consistent statements, along with other evidence, supported the revenue's position. The burden to prove the transaction's true value shifted to the appellant, who failed to rebut the presumption raised by the revenue's evidence.

Burden of Proof on Revenue:
The court emphasized that while the burden of proving the actual consideration lies with the revenue, if sufficient material raises doubt on the recorded value, the burden shifts to the assessee. In this case, the revenue presented statements, cross-examination of vendors, and other evidence to support the revised consideration. The court held that the revenue had discharged its burden by providing clear and consistent evidence, which the appellant failed to challenge effectively.

Value of Statements by Vendors in Determining True Market Value of Transaction:
The court concluded that the revenue had successfully proven that the sale consideration in the deed was incorrect, relying on the vendors' statements and supporting evidence. The court held that the vendors' statements remained unrebutted, indicating the true value of the transaction. Consequently, the appeals were dismissed, with the court finding no merit in the appellant's arguments or substantial questions of law raised.

This detailed analysis of the judgment showcases the court's examination of various legal aspects, including burden of proof, evidentiary value of statements, and the role of vendors' disclosures in determining the true market value of a transaction.