The Delhi High Court has ruled that no income tax evasion is done by the assessee as it is for parties to settle the sale consideration for transfer of respective shares in the property.
The revenue has challenged the ITAT’s order wherein it was held that it is for the parties to settle the sale consideration for transfer of respective shares in the property while the ITAT failed to note that the parties were closely related and there was no proper basis for the settlement of sale consideration between them and it was done with a view to evade payment of tax.
The Assessing Officer, by the Assessment Order dated 31.03.2015, held that the respondent had the sole ownership right over the plot of land and therefore, should have received the minimum amount of sale consideration at the Circle Rate of Rs. 27,60,03,387/-. The Assessing Officer, therefore, added an amount of Rs. 9,60,03,387/- to the income of the respondent under Section 50C of the Income Tax Act, 1961.
The appellant submits that in terms of Section 48 of the Act the entire sale consideration should have been disclosed as income by the respondent and thereafter, the amount paid to M/s ESS ESS Metals and Electricals could have been claimed as a deduction. She further casts a doubt on the bifurcation of the amount between the respondent and M/s ESS ESS Metals and Electricals, submitting that the respondent is the daughter-in-law of the sole proprietor of M/s ESS ESS Metals and Electricals, that is, Mr. Banarsi Lal Pasricha.
The Assessing Officer had in fact invoked Section 50C of the Act claiming that the sale consideration of Rs. 18 Crores received by the respondent was below the Circle Rate. This was clearly ignoring the fact that the sale consideration was in fact Rs. 35 Crores. The CIT(A) and the ITAT have given concurrent findings on the above. It is also not denied that M/s ESS ESS Metals and Electricals held a lease for 99 years with respect to the land and the vendee has paid consideration of Rs. 17 Crores for cancellation of the said lease. In the present case, the vendor did not have an unencumbered right over the land and M/s ESS ESS Metals and Electricals admittedly had a perpetual leasehold right over the land, which right was also extinguished under the Sale Deed.
The division bench of Justice Navin Chawla and Justice Manmohan held that in a case where from a given set of circumstances two inferences of fact are possible, the one drawn by the lower appellate court will not be interfered by the High Court in the second appeal. Adopting any other approach is not permissible. It has also been held that there is a difference between a question of law and a ‘substantial question of law’.Subscribe Taxscan AdFree to view the Judgment