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TMI Blog1983 (11) TMI 134X X X X Extracts X X X X X X X X Extracts X X X X ..... f the IAC. The ITO in the assessment made pursuant to section 143 (2) (b) took note of the sale of a property on 23rd August, 1976 at Rs. 1,05,000, considered that this was below the fair market value of the property and applied the provisions of section 52 (2) of the Income-tax Act, 1961. He relied on the decision of the Kerala High Court in the case of ITO v. K.P. Varghese (1973) 91 ITR 49 (Ker.). The contention of the assessee on the validity of the action of the ITO under section 143 (2) (b) is based upon the decision of the Supreme Court in the case of K.P. Varghese v. ITO (1981) 131 ITR 597 (SC) whereby the decision of the Kerala High Court in (1973) 91 ITR 49 (Ker.) was reversed. It was contended that in the absence of any evidence t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n made under section 139 and whether or not an assessment has been made under sub-section (1) of section 143, if the ITO considers it necessary, or expedient to verify the correctness and completeness of the return by requiring the presence of the assessee or the production of evidence in this behalf, the ITO shall serve on the assessee a notice under section 143 (2) after obtaining the prior approval of the IAC. At the time the ITO resorted to this provision the decision of the Kerala High Court in K.P. Varghese's case governed the question and therefore, with the fact enumerated in the note appended to the return, the ITO was well within the his rights to resort to this provision. This point raised by the assessee is, therefore, decided a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m of the assessee that he had invested Rs. 90,000 in the incomplete structure. If that were correct the value of the land at Rs. 15,000 would work out to slightly more than Rs. 300 per cent. The AAC was the of the view that this cannot be correct because the assessee had himself shown a value of Rs. 600 per cent for this property as on 16th August, 1976, in the Wealth- tax return for the assessment year 1975-74. The AAC also rejected the valuation of the land by the Valuation Officer at Rs. 2000 per cent on the ground that on this basis the value of the incomplete structure would only be Rs. 8,500 which according to him would be absurd. He also stated that in calculating the capital gains only the cost of the asset and the cost of improveme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lete structure. Such an incomplete structure might not, in our opinion, fetch the same price as the material that has gone to make up the structure. In other words, the cost of such material that have been used for erecting the super-structure would be ordinarily more than the market value of the super-structure especially as in this case the super-structure was an incomplete building fixing the layout of the building without finishing the structure. We, therefore, consider that the cost to the assessee of the super-structure would be higher than the value of Rs. 76,756 fixed by the valuation officer. The assessee had claimed Rs. 90,000 as this cost. Taking into account the admitted position that the assessee is not able to produce any coge ..... X X X X Extracts X X X X X X X X Extracts X X X X
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