Capital gains cannot be taxed where no consideration accrued to the assessee, and deeming valuation cannot create income.

Capital gains should be assessed only in the hands of the person to whom transfer consideration actually accrues or is received. Where an assessee signs a sale deed only as a consenting party and the evidence shows that the entire sale consideration was paid to other co-owners, no taxable gain arises in her hands on the basis of real income. A deeming valuation rule such as section 50C cannot be used to create an income tax burden on a person who has not received any consideration from the transfer.

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Issues: Whether capital gains could be assessed in the hands of an assessee who signed the sale deed only as a consenting party and received no sale consideration, and whether the deeming mechanism under section 50C could justify such addition.

Analysis: The sale deed showed that the entire consideration was paid to the assessee's two brothers in equal shares, while the assessee received nothing from the transfer. The assessee's role as a consenting party was accepted on the record, and the brothers' affidavits as well as the bank details supported the absence of any receipt in her hands. In such circumstances, the taxable capital gain had to be examined on the basis of real income and the person who actually received the consideration. A deeming provision for valuation could not be used to fasten an income tax burden on a person to whom no real consideration accrued or was received.

Conclusion: The addition of capital gains in the assessee's hands was not sustainable and was deleted.

Final Conclusion: The appeal was allowed because the transfer consideration had accrued to the brothers and not to the assessee, so no taxable capital gain could be assessed against her on these facts.

Ratio Decidendi: Capital gains cannot be assessed in the hands of a person who has not received or accrued any consideration from the transfer, and a deeming valuation provision cannot create taxable income where no real income exists in that person's hands.

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