Commissioner of Income Tax vs Raji Sanalkumar

C.N. Ramachandran Nair, J.—These connected appeals arise from the assessment of capital gains made pursuant to search u/s 153A of the income tax Act. Respondents are husband and wife and the properties sold was in the name of the wife, which according to her, was purchased with funds borrowed from her husband. In search, the Department collected information from the computer in the house of the assessees and have also recovered documents from father and uncle of the lady who are adjoining land owners, whose property also was sold along with the property of the assessees. Assessment was made in the name of the husband for the income arising from the investment made by the wife u/s 64(1)(iv) of the income tax Act. Capital gains was assessed u/s 64(1)(a) and another protective assessment was made in the name of his wife which was also u/s 153A of the Act. In appeal filed against the assessments, The Commissioner of income tax (Appeals) allowed both the appeals. In Second appeal, the Tribunal confirmed the orders of the first appellate authority. It is against these orders, the Revenue has filed separate appeals.

We have heard the Senior Counsel appearing for the Revenue and counsel appearing for the assessees. After hearing both sides, we feel that the orders of the two appellate authorities are not sustainable for more than one reason. In the first place, the first appellate authority and the Tribunal have not considered the significance of the documents seized particularly, information collected from the computer from the assessees house. All the three items of properties sold are adjoining properties and the neighbouring owners, who are none other than the father and uncle of the lady, have conceded that more than the documented value was received as sale consideration. In the normal course, unless the assessee proves that her property is of lower value than the adjoining property, her property would have fetched the same or almost the same price as that of the property of the uncle and father, which was simultaneously sold. In the circumstances, we see no reason why the particulars including the sale value at which the property is sold, collected from the computer found in the house of the assessees, cannot be believed. This Court has in several decisions taken note of the notorious practice of underestimation of value in documents to reduce the high incidence of stamp duty. The property in this case is also valuable land located in prime area of the city and we see no reason why adjoining three items of property should be sold at substantive different price.

The senior counsel appealing for the Revenue rightly contended that the first appellate authority went wrong in cancelling the assessment merely because the assessing officer did not take a confirmation from the purchaser. The approach of the appellate authority and the Tribunal in our view is unrealistic because no purchaser will disclose to the Department that there was unaccounted payment in the purchase of property. If receipt of more than the declared amount as consideration is proved by documents, necessarily, the assessment is sustainable. We do not find the first appellate authority or the Tribunal has considered the case with reference to the seized documents. We, therefore, allow the appeals by setting aside the orders of the Tribunal and that of the first appellate authority and remand the matter to the CIT (Appeals) for reconsideration by giving one more opportunity to the assessee to prove that her property is of lesser importance and lesser value than neighbouring properties simultaneously sold to justify its sale at a lesser price which, of course, arises only if the materials gathered from her computer is proved by her to be false which burden shall also be on the assessee. The appeals are, allowed as above.