- (1.) IN compliance of the order of this Court in ITC No. 69 of 1981 dt. 23rd Aug., 1988, the following question of law was referred to this Court for its opinion by the Tribunal, Chandigarh Bench, Chandigarh, arising out of its order dt. 26th Sept., 1980 in ITA No. 278 of 1979, for the asst. yr. 1975 -76 : Whether, in the absence of any evidence on record to prove that the consideration of the impugned plot had been understated by the assessee with the object of avoidance or reduction of his tax liability, the Tribunal erred in law in holding that the provisions of Section 52(2) were applicable to the case of the assessee ?
(2.) THE assessee -firm purchased a plot measuring 1239 sq. yards in Sarabha Nagar, Ludhiana on 8th Oct., 1969 for Rs. 44,337. This plot was sold to Sh. Devinder Singh, son Sh. Sadhu Singh for a sum of Rs. 55,755 on 10th June, 1974 at a sale price of Rs. 45 per sq. yard. Resultantly, the assessee had declared a profit of Rs. 11,418 out of this transaction. Enquiries made on the basis of sale deeds registered in the area for plots of different sizes, the ITO found that the fair market value of the plot in question, on the day of transaction, exceeded by more than 15 per cent of the value of consideration as shown by the assessee in respect of the transfer of the plot. Invoking Section 52(2) of the IT Act, 1961 (for short 'the Act') the AO valued the plot at Rs. 55 per sq. yard against Rs. 45 per sq. yard shown by the assessee, with the result a difference of Rs. 12,390 was found as undervaluation in the transaction of sale, which was added to the income of the assessee. The assessee failed in his appeal before the CIT(A) and also before the Tribunal. The CIT(A) upheld the findings of the AO only on the ground that since the fair market value of the plot, as determined by the AO, exceeded by more than 15 per cent of the value as declared by the assessee, in terms of Section 52(2) of the Act, he was right in taking the fair market value as the consideration for determining the capital gain earned by the assessee on the sale of the plot.
(3.) EVEN the Tribunal rejected the appeal of the assessee by concurring with the findings recorded by CIT(A) in the following terms : 9. Insofar as the appeal of the assessee is concerned, we find that the ITO had quoted the instances of sale of plot near about the time when the plot of the assessee was sold and on that basis adopted the rate of Rs. 55 per sq. yard for sale of the plot. When worked on this basis, the sale consideration which has to be considered as fair market value is the context of the facts set out above gives difference of Rs. 12,390 between the sale consideration and the fair market value as worked out by the CIT(A) in para 5 of his impugned order abstracted by us supra. The provisions of Section 52(2) were, therefore, attracted. 10. It is to be noted that the sale price per sq. yard of the comparable plots taken by the authorities below ranged between Rs. 62 to 67 and it is only after taking into consideration the adverse factors relating to the plot sold by the assessee that the sale price at Rs. 55 per sq. yard was taken by the ITO and confirmed by the CIT(A). We are, therefore, of the opinion that there is no case for an interference in the order of the CIT(A) at the instance of the assessee insofar as the question of capital gains in concerned. We, therefore, dismiss the appeal of the assessee.;