1995 (4) TMI 103 - AT - Income Tax

Summary

Issues:
- Disputed deemed gift assessment based on property sale value and stamp duty discrepancy.

Analysis:
The case involved three appeals with a common issue regarding the disputed deemed gift assessment by the Revenue. The assessees, co-owners of a property in Kanpur, sold it for Rs. 3,25,000, with each having a 1/9th share. The stamp duty and registration charges paid were Rs. 8,65,740, leading the AO to assess a deemed gift of Rs. 5,40,740. The assessees contended that the property was sold at fair market value to unrelated parties, with no element of deemed gift. The Dy. CGT(A) agreed, setting aside the deemed gift assessment of Rs. 60,000 per assessee. The Revenue appealed to the Tribunal challenging this decision.

Before the Tribunal, the Revenue argued that the AO rightly invoked s. 4(1)(a) of the Act based on the property's market value determined by the Registration authorities. The assessees maintained that the sale consideration reflected the property's real market value, emphasizing the lack of evidence supporting the Registration authorities' valuation. The Tribunal considered the arguments and cited legal precedents to establish that the burden lies on the Revenue to prove inadequate consideration for invoking deemed gift taxation. It noted the absence of investigation by the AO into the adequacy of consideration and concluded that the Revenue failed to discharge its burden. Citing a similar case, the Tribunal rejected the Revenue's appeal, affirming the Dy. CGT(A)'s decision.

In its final ruling, the Tribunal dismissed the appeals, upholding the Dy. CGT(A)'s decision and rejecting the Revenue's claim of a deemed gift chargeable to tax. The judgment highlighted the necessity for the Revenue to establish inadequate consideration to invoke deemed gift taxation and emphasized the importance of thorough investigation into property transactions to determine fair market value. The decision underscored the principle that unless the consideration is unreasonably low, it cannot be deemed inadequate, thereby protecting taxpayers from unfounded tax assessments.