2006 (2) TMI 198 - AT - Income Tax

Issues Involved:
1. Jurisdiction of the Assessing Officer.
2. Validity of assessment under section 144.
3. Addition in Long-Term Capital Gains.
4. Estimation of sale price of land.

Detailed Analysis:

1. Jurisdiction of the Assessing Officer:
- Not Pressed: The first ground of appeal concerning the jurisdiction of the Assessing Officer was not pressed by the assessee's counsel. Therefore, this ground was dismissed as not pressed.

2. Validity of Assessment under Section 144:
- Assessee's Argument: The assessee argued that the Assessing Officer had no power to call for information about bank accounts in Canada and other personal details, which were irrelevant for the assessment year under consideration.
- Assessing Officer's Stand: The assessment was completed under section 144 due to the assessee's failure to comply with notices issued under sections 142(1) and 143(2). The information requested was deemed relevant for completing the assessment, especially concerning the sale of agricultural land at allegedly low rates.
- Tribunal's Finding: The Tribunal held that the information about the assessee's affairs in Canada was not relevant for the assessment. The Department could have obtained such information through the Foreign Tax Division of the C.B.D.T. The Tribunal concluded that the Assessing Officer was not correct in completing the assessment under section 144 and set aside the CIT(A)'s order, treating the assessment under section 143(3).

3. Addition in Long-Term Capital Gains:
- Assessing Officer's Addition: The Assessing Officer added Rs. 97,70,390 to the Long-Term Capital Gains, estimating the sale price of the land at Rs. 500 per sq. yard instead of the declared Rs. 112.50 per sq. yard.
- CIT(A)'s Adjustment: The CIT(A) reduced the addition to Rs. 53,48,882, estimating the sale price at Rs. 400 per sq. yard.
- Assessee's Argument: The assessee contended that the sale price should be based on the registered sale deeds and that the Assessing Officer had no authority to estimate the sale proceeds. The assessee provided instances of other sales at lower rates and argued that the revenue officials would not have registered the sale deeds if the consideration was understated.
- Revenue's Argument: The Revenue argued that the sale consideration was understated, citing statements from Sukhbinder Singh and Gurwinder Singh, who claimed a deal at Rs. 22 lakhs per acre. The Revenue also referred to higher rates of nearby land sales and revised rates by District Revenue authorities.
- Tribunal's Decision: The Tribunal found the statements of Sukhbinder Singh and Gurwinder Singh credible and supported by other evidence. The Tribunal held that the Assessing Officer was justified in rejecting the sale consideration shown by the assessee but found no direct evidence to support the rate of Rs. 500 per sq. yard. The Tribunal concluded that the sale consideration should be Rs. 22 lakhs per acre (Rs. 454 per sq. yard), based on the credible testimony of Sukhbinder Singh and Gurwinder Singh.

4. Estimation of Sale Price of Land:
- Assessing Officer's Estimation: The Assessing Officer estimated the sale price at Rs. 500 per sq. yard.
- CIT(A)'s Estimation: The CIT(A) estimated the sale price at Rs. 400 per sq. yard.
- Tribunal's Estimation: The Tribunal determined the sale price at Rs. 22 lakhs per acre (Rs. 454 per sq. yard), based on the credible testimony of Sukhbinder Singh and Gurwinder Singh and other supporting evidence.

Conclusion:
The Tribunal allowed the appeal in part for both the assessee and the revenue. The assessment under section 144 was set aside, and the capital gains were to be computed based on a sale price of Rs. 22 lakhs per acre (Rs. 454 per sq. yard). The Tribunal upheld the rejection of the sale consideration shown in the sale deeds but adjusted the rate based on credible evidence.

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