1997 (6) TMI 47 - AT - Income Tax

Assessing Officer Assessment Year Deemed Gift Gift Tax Assessment Income Tax Act Market Value Stamp Duty Tax Proceedings

Issues Involved:
1. Determination of the correct sale consideration for the shop.
2. Validity of the deemed gift assessment under section 4(1)(a) of the Gift-tax Act.
3. Evidentiary value of the altered figures in Form No. 34A.
4. Appropriateness of using U.P. Government's market value for stamp duty purposes to determine the fair market value.

Detailed Analysis:

1. Determination of the Correct Sale Consideration for the Shop:
The primary issue was the correct sale consideration of a shop sold by the assessee. The assessee declared the sale price as Rs. 1 lakh, while the Assessing Officer (AO) computed the long-term capital gain based on a sale consideration of Rs. 2,50,000, citing the income-tax clearance certificate in Form No. 34A and the stamp duty authority's valuation. The CIT(A) directed the AO to accept the sale consideration at Rs. 1 lakh, and the DC(A) also concluded that no deemed gift occurred, canceling the gift-tax assessment. The Tribunal upheld these findings, noting that the AO did not record statements from the seller and buyers to substantiate the higher sale consideration and that the burden of proof lies with the revenue to prove the declared sale consideration incorrect.

2. Validity of the Deemed Gift Assessment under Section 4(1)(a) of the Gift-tax Act:
The GTO assessed a deemed gift of Rs. 1,50,000, the difference between the market value (Rs. 2,50,000) and the declared sale consideration (Rs. 1 lakh). The Tribunal found that the AO's acceptance of the declared sale consideration in the gift-tax assessment contradicted the income-tax assessment. The Tribunal emphasized that the burden of proving a deemed gift lies with the GTO and cannot be based solely on suspicions arising from corrections in Form No. 34A.

3. Evidentiary Value of the Altered Figures in Form No. 34A:
The Tribunal noted multiple alterations and corrections in Form No. 34A, particularly in the sale consideration and buyer details. The original sale consideration was not legible, and the rewritten figure was Rs. 2,50,000. The Tribunal held that these corrections justified suspicion but did not constitute conclusive evidence against the assessee. The Tribunal stressed that the AO should have investigated further by recording statements from involved parties.

4. Appropriateness of Using U.P. Government's Market Value for Stamp Duty Purposes to Determine the Fair Market Value:
The Tribunal rejected the reliance on the U.P. Government's market value for stamp duty purposes, noting that such values do not account for specific property features, such as tenancy encumbrances. The Tribunal cited precedents, including the Hon'ble Madras High Court and various Tribunal decisions, to support that the value determined by the registering authority cannot be the basis for concluding a deemed gift. The Tribunal emphasized that the AO did not provide evidence of market value considering similar properties with tenant encumbrances.

Conclusion:
The Tribunal concluded that the revenue's appeals lacked merit, dismissing both appeals. The Tribunal upheld the CIT(A) and DC(A) decisions, affirming the declared sale consideration of Rs. 1 lakh and rejecting the deemed gift assessment. The Tribunal underscored the necessity of clear and unambiguous evidence to support a deemed gift and the inadequacy of relying on altered documents and general market values for stamp duty purposes.

Separate Judgment Analysis (Judicial Member's Remarks):
The Judicial Member concurred with the Accountant Member, emphasizing the lack of clear and unambiguous evidence in Form No. 34A to support the deemed gift assessment. The Judicial Member highlighted that the evidentiary value of admissions depends on their clarity and the circumstances under which they were made. The Judicial Member also criticized the use of U.P. Government's rates for stamp duty purposes, reiterating the need to consider specific property features and established valuation methods under direct tax laws. The Judicial Member concluded that the revenue authorities failed to justify the deemed gift assessment, agreeing with the dismissal of the appeals.

← Previous Next →