Commissioner of Income Tax vs S.S. Shanmughanatha Nadar and Another

Ramanujam, J.—These appeals have been filed u/s 269H of the I.T. Act, 1961 (hereinafter called ""the Act""), in respect of an order passed

by the Income Tax Appellate Tribunal allowing the appeals filed by the transferor as well as the transferee against the orders of the IAC of Income

Tax acquiring certain property u/s 269F(6) on the ground that there has been an undervaluation in selling the property by the transferor to the

transferee.

Premises No. 7, Ratnaswamy Nadar Road, Chockilulam, Madurai, was sold under a sale deed dated May 31, 1973, for a sum of Rs. 90,000

by one Shanmuganatha Nadar to one Prabhu. Treating the said value as one given for evading tax, the IAC took proceedings under Chap. XX-A

of the Act. The order of acquisition was passed u/s 269F(6) after giving notice to both the transferor and the transferee and after hearing their

objections. The said order of acquisition was taken in appeal to the Tribunal. The Tribunal has given three reasons for setting aside the order of

acquisition; one is that having regard to the age of the building 2 1/2 per cent. depreciation has to be allowed and, therefore, the valuation of the

building by the transferor in the sale deed at Rs. 30,000 can be taken to be fair ; second is that, taking the sale price which the Income Tax

department itself adopted for purchasing the adjoining plot, the value given by the transferor in the sale deed for the land cannot be said to be too

low; third is that the sale in question should be taken as a distress sale as the transferor was pressed for payment by his creditors and, therefore,

the property was put in charge of arbitrators for effecting the sale and for discharging the debts due to various creditors. The Tribunal also

proceeded on the basis that since the difference between the value given by the department and the value set out in the sale deed is less than 25%,

the irrebuttable presumption provided for in Section 269C(2)(b) will not apply and that the department has not discharged its onus of establishing

that there is an undervaluation with a view to evade payment of tax. The decision of the Tribunal has been challenged by the Revenue in these

appeals.

Section 269H provides for an appeal to this court from the decision of the Tribunal on a question of law. In this case, no question of law is

involved. What is the depreciation to be granted in respect of a building and what is the market value of the property on the date of the sale are all

questions of fact which will not enable this court to interfere with the order of the Tribunal in the matter. The question whether the sale is a distress

sale or not also is one of fact and this court cannot in exercise of the power u/s 269H of the Act interfere with the order of the Tribunal. Since we

find the order of the Tribunal as one based on certain factual findings, we are not in a position to interfere with its order. The appeals are, therefore,

dismissed. No costs.