1998 (8) TMI 105 - AT - Income Tax

Summary

Issues Involved:
1. Assessment of income discrepancy.
2. Determination of the assessment year for capital gains.
3. Determination of market value of the land as on 1st April, 1981.
4. Estimation of the sale consideration of the land.

Summary:

Issue 1: Assessment of Income Discrepancy
The AO assessed the appellant's income at Rs. 21,56,514 against the returned income of Rs. 2,57,555. This was a common substantive ground in all three appeals.

Issue 2: Determination of the Assessment Year for Capital Gains
The AO held that the capital gain from the sale of land fell in the asst. yr. 1994-95, not in asst. yr. 1996-97 as contended by the appellants. The AO based this on the possession of land being handed over in November 1993 and part-payment received, invoking s. 2(47)(v). The Tribunal found that s. 2(47)(v) requires a written contract, which was absent here. Therefore, the capital gain should be assessed in asst. yr. 1996-97, as declared by the assessees.

Issue 3: Determination of Market Value of the Land as on 1st April, 1981
The AO took the market value of the land at Rs. 3,60,950 against the assessees' claim of Rs. 7,31,200 based on an approved valuer's report. The Tribunal upheld the AO's valuation, noting the valuation of structures and the tenanted status of the land.

Issue 4: Estimation of the Sale Consideration of the Land
The AO estimated the sale consideration at Rs. 1,38,79,800, not Rs. 36 lakhs as admitted by the assessees. This was based on a seized paper indicating a higher rate per sq. yd. The Tribunal found the paper to be a "dumb document" lacking necessary details and signatures, and noted consistent statements from all parties involved that the sale price was Rs. 36 lakhs. The Tribunal concluded that the AO was not justified in adopting the higher sale consideration and allowed the assessees' declared amount.

Conclusion:
The appeals were partly allowed, with the Tribunal ruling in favor of the assessees on the issues of the assessment year for capital gains and the sale consideration of the land, while upholding the AO's valuation of the land as on 1st April, 1981.