Law: Income Tax Act, 1961

Section: 45,256(2)

Income-tax----Reference---Capital gains---Sale-deed for sale of land at Rs.8,000 per cent.---Search resulting in seizure of agreement showing higher price--¬Tribunal holding that agreement was not meant to be acted upon---Questions of law do arise--Indian Income Tax Act, 1961, Ss.45 & 256(2). Under a sale-deed the assessee sold land at Rs.8,000 per cent. Pursuant to a search at the premises of the purchaser certain receipts and an agreement in English showing a higher price were seized. The Income-tax Officer assessed the capital gains on the basis of the higher sale price of Rs.12,951 per cent. The Tribunal accepted the argument of the assessee that the seized agreement was not meant to be acted upon and the higher price was shown to facilitate resale. On an application to direct a reference: Held, that the following questions of law arose: (i) Whether the Tribunal was right in holding that in spite of the assessee acknowledging receipt of Rs.5,98,999 in the agreement cited, it could be said that only a sum of Rs.2,00,000 was actually received by him on March 1, 1983? (ii) Whether the Tribunal was justified in holding that the land was not actually sold at the rate of Rs.12,591 per cent. and that the agreement, dated March I , 1983, was not acted upon? (iii) Whether the Tribunal was right in its finding that it was no'. established that the sum of Rs.1,36,060 had gone to T or was intended to be paid to him? JUDGMENT K.K. USHA, J.---These petitions filed under section 256(2) of the Income Tax Act, 1961, relate to the assessment years 1983-84, 1984-85 and 1985-86. The respondents are the legal heirs of an individual assessee. The original assessee purchased land admeasuring 3.73 acres in Fort Cochin in February-March, 1982, for a consideration of Rs.21.26 lakhs which would work out at the rate of Rs.5,700 per cent. Out of the above, the assessee sold 1.21 acres in March, 1982. From the remaining portion, 60 cents was sold to two minor daughters of Muhammad Salim Pasha of Bombay under a saledeed, dated February 25, 1983, for a consideration of Rs.8,000 per cent. Another 1.10 acres of land was sold during the year relevant to the assessment year 1984-85 to two…

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