TMI Blog1991 (9) TMI 354X X X X Extracts X X X X X X X X Extracts X X X X ..... f section 52 one has to consider the sale price actually fetched on the transfer of the capital assets. 3. The view taken and reasonings relied on by the learned Commissioner of Income- tax (Appeals) for upholding the applicability of section 52(2) are erroneous, unsound and unwarranted by the facts and material on record. 4. On the facts, circumstances, evidence and material on record both the conditions as envisaged by 52(2) are lacking insofar as there is nothing to show much less to prove that the market value of items sold were much more than selling price obtained and secondly there was any under hand dealing between the parties and the assessee has actually received much more money than shown by way of selling price, the action of learned Commissioner of Income-tax (Appeals) in upholding the applicability of section 52(2) is erroneous, misconceived and untenable in law. 5. For upholding the applicability of section 52(2), the reliance placed by the learned Commissioner of Income-tax (Appeals) on the order of the CIT(A) in the case of Shri Rampati Singhania by presuming that the facts of that case are similar to the instant case, is mistaken and a self-contradi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Diamond and Pearl Studded ornaments: 1. Necklace 3 Lines with pennant 7 10 0 2. Ear Rings one pair 1 8 0 (iii) Diamond and Emerald Studded ornaments: 1. Necklace 5 0 0 2. Pair Kundan 3 8 0 3. Mang Tika 1 4 0 (iv) Diamond Studded ornaments: 4. Bangles 4 0 0 The value of the jewellery was estimated at ₹ 1,50,000 in the wealth-tax assessment for the assessment year 1977-78 by the learned CWT(A) in the appeal filed by the assessee. Most of the jewellery was sold in August, 1979 for ₹ 72,000. Four items of the said jewellery were not mentioned in the alleged sale bill. They were as follows:- 1. One diamond and ruby studded Broach. 2. Diamond Emerald studded one pair of Kundan. 3. Diamond Emerald s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ges 8,9 and 10. He has further relied upon the decision of the Hon ble Supreme Court in the case of K.P. Varghese v. ITO [1981] 131 ITR 597 in which their Lordships had held that sub-section (2) of section 52 of the Income- tax Act, 1961, can be invoked only when the consideration for the transfer of a capital asset has been under-stated by the assessee, or, in other words, the full value. of the consideration in respect of the transfer is shown at lesser figure than that actually received by the assessee, and the burden of proving such under-statement of concealment is on the revenue. The sub-section has no application in case of an honest and bona fide transaction where the consideration received by the assessee has been correctly declared or disclosed by him. 5. It has been further argued by the learned counsel for the assessee that in this case no effort has been made by the Revenue to discharge the said onus. The only circumstances shown by the Department is that these ornaments were valued at ₹ 1,50,000 as back as in 1977-78 in the wealth-tax assessment of the assessee and thus normally it must have been of higher value in 1980-81. The other circumstance taken is tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e are not available for verification, thus the actual value of the same cannot be ascertained and to say that they might be worth ₹ 4,000 or so is only a conjecture and, in our opinion, that conjecture cannot be taken to be a sufficient piece of evidence to conclude that the sale price was under- stated. It is an admitted fact that the assessee was a minor at the time of sale. The jewellery received by him was received on the death of her mother. It is also admitted that all of a sudden his father died soon after the sale. The sale was also effected by the father of the assessee-In Indian Hindu families it is not very uncommon that when father is alive, it is he who manages the whole show and if all of a sudden he dies, then it becomes very difficult for the minor sons to know, control and manage the whole show of the family including that of the jewellery. Thus, as a natural corollary, it cannot be said to be unnatural or improbable that some ornaments might have been misplaced somewhere and the statement of the assessee on that score cannot be completely disbelieved. Hence, from this very fact of the wealth-tax assessment, a positive inference cannot be drawn that the sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 as against the consideration of ₹ 16,500 for which the house was sold and assessed the difference of ₹ 48,500 as capital gain in the hands of the assessee. The objections raised by the assessee were over-ruled and an order of re-assessment was passed including a sum of ₹ 48,500 as capital gains and bringing it to tax invoking the aid of section 52(1). The Hon ble High Court had also dismissed the writ petition filed by the assessee and sustained the re-assessment. In special appeal, filed by the assessee, the Hon ble Supreme Court held that sub-section (2) of section 52 can be invoked only where the consideration for the transfer has been under-stated by the assessee or, in other words, the consideration actually received by the assessee is more than what is declared or disclosed by him and the burden of proving such an under-statement or concealment is on the revenue. This burden can be discharged by the revenue by establishing the facts and circumstances from which the reasonable inference can be drawn that the assessee has not correctly declared or disclosed the consideration received by him and there is an under-statement or concealment of the consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee s brother regarding capital gains also does not much militate against the cause of the assessee as in that case the amount was received in cash and, secondly, the decision of the Hon ble Supreme Court on the point was-not available or discussed. In view of the Hon ble Supreme Court s decision, we are left with no doubt that in absence of any direct or indirect evidence td prove or suggest that the consideration has been understated, we have no option but to hold that what appears to be on paper is correct. No doubt, it is rather difficult to prove any evidence regarding the consideration received over and above the consideration shown in the paper, yet after the above decision of the Hon ble Supreme Court, we are helpless as we have to interprete the law as it stands. It may be possible that even the legislature in its wisdom might have thought likewise and thereafter might have deleted this very provision by amendment in 1988. Anyhow, as the facts and the law stands, we hold that there was no evidence on record to prove that there was any under-statement of the consideration received by sale of alleged jewellery and in absence of that evidence, we have to observe that th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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