2003 (1) TMI 48 - HC - Income Tax

Registered land sale price vs prior agreement showing higher amount in s.132 search; capital gains upheld on deed value

In determining capital gains arising from a land transfer unearthed during a search under s.132, the dominant issue was whether the stated consideration ... Capital gains - search u/s 132, conducted at the residential premises - sale deed - actual sale price of land based on documentary evidence - HELD THAT:- It is true that on the basis of the agreement the sale deed was executed. But it is not necessary that the price stated in the agreement will be the price shown in the sale deed. Sometimes, it may be higher and sometimes it may be lower. Sometimes intentionally a lesser value may be shown in the sale deed. Even if it is assumed to be so, unless it is proved that the agreement was acted upon and unless the amount stated in the agreement was paid for the sale, we cannot come to the conclusion that the price mentioned in the sale deed is not correct. In this case, further it is found that in the assessment of Pasha, it was finally found that the amount was received only at Rs. 8,000 per cent. It is taking into all these matters into consideration that the Tribunal held that the property was sold at the rate of Rs. 8,000 per cent. Thus, the Tribunal, on the basis of the facts and circumstances of the case and on the appreciation of evidence, came to the conclusion that Rs. 12,951 was not the amount for which the property was sold. According to us, there is no rule that the amount shown in the receipt was the actual amount paid. So far as the other questions are concerned, we do not find that any substantial questions of law arise because as already stated, the only question in this case is whether the amount stated in the sale deed is correct or not. According to us, the amount stated in the sale deed is the correct amount unless there are circumstances to ignore the same. Thus, we answer the questions in favour of the assessee and against the Revenue. Issues:1. Interpretation of receipt acknowledgment and actual amount received by the assessee.2. Determination of the actual sale price of land based on documentary evidence.3. Validity of an agreement not acted upon in relation to the sale price.4. Verification of payment intended for a third party.Issue 1 - Interpretation of receipt acknowledgment:The case involved questions regarding the acknowledgment of receipt by the assessee and the actual amount received. The Tribunal questioned whether the acknowledged amount of Rs. 5,98,999 was actually received in full, or only Rs. 2,00,000 was received and accounted for. The Tribunal considered the agreement and receipts to determine the actual amount received by the assessee, leading to a conclusion in favor of the assessee.Issue 2 - Determination of actual sale price of land:The Assessing Officer concluded that the land was sold at Rs. 12,951 per cent, differing from the declared Rs. 8,000 per cent by the assessee. The Commissioner (Appeals) upheld this finding, but the Tribunal set it aside, determining that the property was sold at the declared rate of Rs. 8,000 per cent. The Tribunal considered the agreement and receipts, ultimately accepting the assessee's claim based on the evidence presented.Issue 3 - Validity of agreement not acted upon:The Tribunal analyzed an agreement dated March 1, 1983, which stated a sale price of Rs. 12,951 per cent. The assessee argued that the agreement was not acted upon, and the receipt was incorrect. The Tribunal, after considering the evidence and the assessment order against another party, accepted the claim that the property was purchased at Rs. 8,000 per cent, disregarding the higher amount mentioned in the agreement.Issue 4 - Verification of payment intended for a third party:The Tribunal also examined whether a sum of Rs. 1,36,060 was intended to be paid to a third party. After reviewing the evidence and circumstances, the Tribunal concluded that the amount received was at the rate of Rs. 8,000 per cent, aligning with the assessee's position. The Tribunal emphasized the importance of the sale deed price as a presumed correct amount unless proven otherwise, ultimately ruling in favor of the assessee and against the Revenue.In conclusion, the High Court of Kerala ruled in favor of the assessee on all issues, emphasizing the significance of the evidence presented, particularly the agreement, receipts, and sale deed, in determining the actual amounts involved in the transactions.