IN HIGH COURT OF DELHI AT NEW DELHI Decided on 20th February, 2015 + ITA 605/2014 & C.M.No.15765/2014 COMMISSIONER OF INCOME TAX-XI Appellant Through: Mr.Kamal Sawhney, Adv. versus RAJ KUMAR JAIN Respondent Through: None. CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE R.K.GAUBA MR. JUSTICE S. RAVINDRA BHAT (OPEN COURT) % 1. Revenue is aggrieved by order of Income Tax Appellate Tribunal (ITAT) dated 08.08.2013 in ITA No. 1911/Del/2012 and 2340/Del/2012 and other connected appeals. question of law urged is: Whether ITAT fell into error in upholding assessee s contention that value determined by Assessing Officer (AO) in respect of property was unsustainable . 2. brief facts are that property in question, i.e. E-24, South Extn., Part-I, New Delhi was agreed to be sold by one Sh.Gurdayal Singh, acting as guardian of owner Sh. Tarsem Singh who was sole legal heir of property by virtue of Will of his grandmother dated 02.05.1979. ITA No.605/2014 Page 1 agreement was between Sh.Gurdayal Singh and Sh.Tarsem Singh with purchaser Sh.M.P. Jain. latter was occupying portion, being tenant, since 1985. 20 lacs had been apparently paid by purchaser by cheque dated 27.04.1989. Some disputes arose which led to filing of suit by Sh.M.P.Jain, being Suit No.1345/1989 on file of this Court. 3. During course of suit proceedings, apparently compromise was arrived at and Sh.M.P.Jain paid further 10 lakhs by way of Account Payee cheque dated 06.09.1989. compromise application under Order 22 Rule 3 CPC was moved and statement of parties was recorded. Sh. Gurdayal Singh died on 13.12.1994 and original owner of property Sh.Tarsem Singh died on 13.08.1996. This, however, did not resolve entire issue because some dispute between LRs of Tarsem Singh broke out. By that time agreement to sell had not been acted upon and conveyance deed had not been executed by Sh.Tarsem Singh. Ultimately, LRs parted with property for consideration of 35 lakhs, which was received by them in equal shares on 18.12.2006. This was total value of property mentioned in original Agreement to Sell. When these transactions were reported, AO doubted valuation; suspecting why sale deed was not registered upto 2006, (he did not dispute all these facts) he formed opinion that agreement dated 27.04.1989 might have not been given effect to because sale deed had been executed on l8.12.2006 which ultimately led to suspicion of under valuation of property and was referred to District Valuation Officer (DVO). Based upon his determination, value of property was decided to be 2,75,25,780/-. After adjusting sum of 35 lakhs, AO brought to tax balance amount and determined tax liability of 60,06,445/-. ITA No.605/2014 Page 2 4. assessee s appeal was apparently accepted and CIT (Appeals) directed that instead of market value indicated by DVO, circle rate was to be looked into. This decision was appealed against by both Revenue and assessee. 5. ITAT, by its impugned order, accepted assessees appeals and directed that additions made by AO were not warranted. It is argued that ITAT fell into error in accepting that settlement arrived at in 2006 was genuine. Learned counsel highlighted that entire sequence of events disclosed that there was no dispute, and through dispute LRs sought to take advantage to contrive compromise and to avoid tax. 6. This Court has carefully considered records. It is evident that ITAT took into consideration suit for injunction filed by purchaser Sh. M.P.Jain and compromise statement dated 18.09.1989. It is also evident that despite statement being recorded on 18.09.1989, title was not conveyed to purchaser even though he continued to be in possession of property. It is matter of fact that original owner Sh.Tarsem Singh died in 1996; Sh.Gurdayal Singh, his agent/guardian died in 1994. After his death, LRs continued to contest title and eventually purchaser agreed to pay further amount of 35 lakhs. ITAT took note of several decisions, including CIT vs. Naveen Gera 2010 328 ITR 516 (Delhi) and other decisions, including that of K.P. Varghese vs. Income Tax Officer [1981] 131 ITR 597 (SC) of Supreme Court to show that AO has to base his view with regard to under valuation, upon objective material. 7. In present case, it is matter of fact that on 18.09.1989, statement was recorded by Court. At same time, equally title was not conveyed to purchaser. intervening death of original owner ITA No.605/2014 Page 3 only aggravated problem inasmuch as LRs apparently refused to honour agreement which eventually forced purchaser to shell out further amount mentioned in original agreement even though substantial amounts had been paid earlier. fact that in agreement, parties ultimately agreed to abide by statement recorded by court in year 1989, ifso facto, could not have been ground for suspecting its bonafide. Given fact that order XXII Rule 3 CPC application was filed and compromise duly recorded in Court, we are of opinion that ITAT s order does not lead to any substantial question of law requiring consideration. 8. appeal and pending application are accordingly dismissed. S. RAVINDRA BHAT, J R.K.GAUBA, J FEBRUARY 20, 2015 mr ITA No.605/2014 Page 4 Commissioner of Income-tax-XI v. Raj Kumar Jain