2014 (6) TMI 408 - AT - Income Tax

Condonation of delay - Validity of order u/s 269F(6) of the Act Ancestral property mortgaged Motive to evade tax u/s 269C of the Act - Held that - The assessee has produced the order of Acquisition Officer wherein the Inspecting Assistant Commissioner of Income Tax, Acquisition Range, Dharwar, the Competent Authority has passed the order - the fair market value of the immovable property under consideration would be not less than ₹ 1,40,000 as against the apparent consideration of only ₹ 45,000 - Thus it would be clear that the fair market value of the immovable property would exceed the apparent consideration at least by 25% of such apparent consideration, if not more - This shall be conclusive proof that the real consideration agreed to between the parties had not been truly stated in the instrument of transfer - The immovable property under consideration is a capital asset within the meaning of Section 2(14) of Income tax Act, 1961 and the profits arising on the sale of the same would be liable to capital gains tax - any understatement of real consideration in the transfer document would definitely facilitate the transferor to reduce or evade his liability to capital gains tax in respect of the transfer - In the case of the transferee also the rebuttable presumption that the understatement of the real consideration in the transfer document had been done with a view to facilitate him to evade taxes in the manner laid down in Section 269C(1)(b) of the Income Tax Act, 1961 has not been rebutted with any evidence leave alone convincing evidence. The mere assertion that the price paid is what has been shown in the sale document cannot be accepted in the light of the special Rules of Evidence introduced under Chapter XXA of the Income tax Act, 1961 through Section 269C(2)(b) unless the contrary is shown the assertion is only a self-serving statement without any independent evidence - all the requirements of Section 269F(6) of the Act, 1961 are satisfied - the application for condonation of delay is dismissed and assessee s appeal is dismissed Decided against Assessee.

Summary

Issues Involved:
1. Condonation of delay in filing the appeal.
2. Legitimacy of acquisition proceedings under Section 269F(6) of the Income Tax Act, 1961.
3. Evaluation of the transaction as a normal sale or a mortgage repayment.
4. Alleged evasion of tax and concealment of income.

Detailed Analysis:

1. Condonation of Delay:
The appeal involves a significant delay of 36 years. The appellant argued that the delay was due to ill-advice from their Chartered Accountant, lack of understanding of income tax matters by the family, and the focus on compensation and tenancy rights rather than challenging the acquisition order. The appellant's father, who initially handled the case, was suffering from health issues and eventually passed away. The appellant requested the Tribunal to condone the delay on humanitarian grounds, emphasizing that the family has been pursuing the matter in various courts without neglect.

2. Legitimacy of Acquisition Proceedings:
The property in question was acquired under Section 269F(6) of the Income Tax Act, 1961, by the Inspecting Assistant Commissioner of Income Tax, Acquisition Range, Dharwar. The competent authority issued a show-cause notice and acquired the property, concluding that the fair market value of the property was significantly higher than the apparent consideration, indicating an understatement to evade tax. The order was not challenged within the stipulated time frame, leading to its finality.

3. Evaluation of the Transaction:
The appellant contended that the transaction was not a normal sale but a repayment of a mortgage. The property was initially mortgaged in 1944 for Rs. 16,000 and later auctioned and purchased by the mortgagee for Rs. 39,539 in 1973. The family reacquired the property shortly after for Rs. 45,000. The appellant argued that the transaction was essentially getting back their ancestral property, not a sale aimed at evading taxes.

4. Alleged Evasion of Tax and Concealment of Income:
The acquisition proceedings were based on the premise that the transaction involved an understatement of the property's market value to evade capital gains tax. The competent authority determined that the fair market value was not less than Rs. 1,40,000, significantly higher than the declared Rs. 45,000. The appellant argued that there was no motive to evade tax as the transaction was a mortgage repayment. However, the competent authority's findings were upheld by the Karnataka High Court and the Supreme Court, which dismissed the appellant's petitions.

Conclusion:
The Tribunal dismissed the application for condonation of delay, emphasizing that the matter had already been settled by the Apex Court. The Tribunal found no sufficient cause to condone the delay, given that the original order of acquisition had been clearly communicated and the appellant's family had exhausted all legal remedies. The appeal was dismissed, reinforcing the finality of the acquisition proceedings under Section 269F(6).

Order Pronounced:
The appeal filed by the assessee is dismissed.