1979 (12) TMI 98 - AT - Income Tax

Issues Involved:
1. Determination of fair market value.
2. Comparison of property values.
3. Validity of objections raised by the transferee.
4. Application of Section 269F(6) of the IT Act, 1961.
5. Competent Authority's consideration of evidence.
6. Applicability of Section 269C of the IT Act, 1961.

Detailed Analysis:

1. Determination of Fair Market Value:
The Competent Authority valued the property at Rs. 74,800, based on a report by the Valuation Cell. The transferee contended that the fair market value was Rs. 33,000, the price at which the property was sold. The Tribunal emphasized the need for the Competent Authority to apply multiple recognized valuation methods, such as land and building method, contractor's method, rental or yield basis method, and comparable sales method, to ensure accuracy. The Tribunal found that the Competent Authority had relied solely on comparable sales method, which was insufficient.

2. Comparison of Property Values:
The Competent Authority compared the plot in question with plots in Geejgarh House, Civil Lines, Jaipur, which were sold at higher rates. The transferee argued that these plots were not comparable due to differences in location, size, and developmental status. The Tribunal agreed, noting that the plot in question was adjacent to a railway line and an overhead bridge, causing nuisance, and was not as favorably located as the Geejgarh House plots. Additionally, the Tribunal found that the Competent Authority had failed to consider the lower sale prices of nearby plots in Mysore House, which were more comparable.

3. Validity of Objections Raised by the Transferee:
The transferee raised several objections, including the excessive valuation of servant quarters, the location disadvantages, and the leasehold nature of the plot. The Tribunal found that the Competent Authority did not properly consider these objections. The Tribunal emphasized the importance of considering all relevant factors, including nuisances and location disadvantages, when determining fair market value.

4. Application of Section 269F(6) of the IT Act, 1961:
The Competent Authority had concluded that the apparent consideration was not fairly stated and that the transfer was made to evade tax liability. The Tribunal found that the Competent Authority had not provided sufficient evidence to support this conclusion. The Tribunal noted that the Competent Authority should have placed all relevant materials before the Tribunal to substantiate the valuation.

5. Competent Authority's Consideration of Evidence:
The Tribunal criticized the Competent Authority for not considering the evidence provided by the transferee, such as the sale deeds of nearby plots and the objections regarding the comparability of the Geejgarh House plots. The Tribunal emphasized that the Competent Authority must be satisfied by "cogent, reliable and relevant evidence" that the fair market value exceeds the apparent consideration by the prescribed margin.

6. Applicability of Section 269C of the IT Act, 1961:
The Tribunal highlighted that proceedings under Section 269C are quasi-criminal in nature and require a high standard of proof. The Tribunal found that the Competent Authority had not met this standard and had failed to prove that the transfer was made to evade tax liability. The Tribunal concluded that the transaction was genuine and bona fide.

Conclusion:
The Tribunal allowed the appeal, canceling the order of the Competent Authority under Section 269F(6) of the IT Act, 1961. The Tribunal found that the Competent Authority had failed to provide sufficient evidence to support the higher valuation and had not properly considered the objections and evidence provided by the transferee. The fair market value of the property was determined to be Rs. 33,000, as stated in the sale deed.

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