Ita/360/2010 Of The Commissioner Of Income Tax, Cochin v. Sri.t.k.sanalkumar, Vaduthala, Kochi

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE P.S.GOPINATHAN MONDAY, THE 18TH JULY 2011 / 27TH ASHADHA 1933 ITA.No. 360 of 2010() --------------------- ITA.822/COCH/2008 of INCOME TAX APPELLATE TRIBUNAL,TRIBUNAL,COCHIN BENCH .................... APPELLANT/APPELLANT -------------------------- THE COMMISSIONER OF INCOME TAX, COCHIN. BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENTS: RESPONDENT ------------------------- SRI. T.K.SANALKUMAR, THANDASSERIL HOUSE, 12-SKYLINE CRYSTAL WATERS, VADUTHALA, KOCHI-23. BY ADVS.M/S. ANIL D. NAIR & NIVEDITA A.KAMATH THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 18/07/2011, ALONG WITH ITA NO. 392 OF 2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: APPENDIX ANNEXURES: ANNEXURE-A COPY OF ASSESSMENT ORDER 153A r.w.s. 153C/143(3)DATED 31.12.2007 FOR THE ASST. YEAR 2005-06.DATED 31.12.2007 FOR THE ASST. YEAR 2005-06. ANNEXURE-B, C & D COPY OF PAPERS FOFUND DURING THE SEARCHFOR ADDITIONAL CONSIDERATION.FOR ADDITIONAL CONSIDERATION. ANNEXURE-E COPY OF THE ORDER DATED 4.4.2008 OF THECOMMISSIONER OF INCOME TAX (APPEALS).COMMISSIONER OF INCOME TAX (APPEALS). ANNEXURE-F C OPY OF THE ORDER DATED 19.3.2010 OF THE INCOMETAX APPELLATE TRIBUNAL, COCHIN BENCH ITANO. 822/Coch/2008.TAX APPELLATE TRIBUNAL, COCHIN BENCH ITANO. 822/Coch/2008. // TRUE COPY // P.S. TO JUDGE. knc/- J U D G M E N T C.N. Ramachandran Nair, J. These connected appeals arise from the assessment of capital gainsmade pursuant to search under Section 153A of the Income Tax Act.Respondents are husband and wife and the properties sold was in the nameof the wife, which according to her, was purchased with funds borrowedfrom her husband. In search, the Department collected information from thecomputer in the house of the assessees and have also recovered documentsfrom father and uncle of the lady who are adjoining land owners, whoseproperty also was sold along with the property of the assessees. Assessmentwas made in the name of the husband for the income arising from theinvestment made by the wife under Section 64(1)(iv) of the Income TaxAct. Capital gains was assessed under Section 64(1)(a) and anotherprotective assessment was made in the name of his wife which was alsounder Section 153A of the Act. 2. In appeal filed against the assessments, The Commissioner of Income Tax (Appeal) allowed both the appeals. In Second appeal, theTribunal confirmed the orders of the first appellate authority. It is againstthese orders, the Revenue has filed separate appeals. 3. We have heard the Senior Counsel appearing for the Revenue andcounsel appearing for the assessees. After hearing both sides, we feel thatthe orders of the two appellate authorities are not sustainable for more thanone reason. In the first place, the first appellate authority and the Tribunalhave not considered the significance of the documents seized particularly,information collected from the computer from the assessees' house. All thethree items of properties sold are adjoining properties and the neighbouringowners, who are none other than the father and uncle of the lady, haveconceded that more than the documented value was received as saleconsideration. In the normal course, unless the assessee proves that herproperty is of lower value than the adjoining property, her property wouldhave fetched the same or almost the same price as that of the property of theuncle and father, which was simultaneously sold. In the circumstances, wesee no reason why the particulars including the sale value at which theproperty is sold, collected from the computer found in the house of theassessees, cannot be believed. This Court has in several decisions taken ITA Nos. 360 & 392/2010 ITA Nos. 360 & 392/2010 note of the notorious practice of underestimation of value in documents toreduce the high incidence of stamp duty. The property in this case is alsovaluable land located in prime area of the city and we see no reason whyadjoining three items of property should be sold at substantive differentprice. 4. The Senior counsel appearing for the Revenue rightly contendedthat the first appellate authority went wrong in cancelling the assessmentmerely because the assessing officer did not take a confirmation from thepurchaser. The approach of the appellate authority and the Tribunal in ourview is unrealistic because no purchaser will disclose to the Departmentthat there was unaccounted payment in the purchase of property. If receiptof more than the declared amount as consideration is proved by documents,necessarily, the assessment is sustainable. We do not find the first appellateauthority or the Tribunal has considered the case with reference to theseized documents. We, therefore, allow the appeals by setting aside theorders of the Tribunal and that of the first appellate authority and remandthe matter to the CIT(Appeal) for reconsideration by giving one moreopportunity to the assessee to prove that her property is of lesserimportance and lesser value than neighbouring properties simultaneously ITA Nos. 360 & 392/2010 sold to justify its sale at a lesser price which, ofcourse, arises only if thematerials gathered from her computer is proved by her to be false whichburden shall also be on the assessee. The appeals are allowed as above. Sd/- C.N. RAMACHANDRAN NAIR, (JUDGE). knc/- Sd/- P.S. GOPINATHAN,(JUDGE)