Section 260A of the Income-tax Act, 1961

Last updated: 27 September 2007

Court :
SUPREME COURT OF INDIA

Brief :
Section 260A of the Income-tax Act, 1961 – High Court – Appeal to – Assessee purchased certain land at a consideration as shown in sale deed executed therefor – Subsequently, certain notes on loose sheets allegedly written by assessee were found and seized by revenue during a search operation – When confronted, assessee contended that he could not remember as to why said nothings had been made but, vendor admitted in his statements that he received substantial cash amount over and above sale deed amount – Though said statements were subsequently retracted by vendor, Assessing Officer adopted said as enhanced figure admitted by vendor as actual sale consideration for purpose of assessment and made addition of difference as assessee’s undisclosed income – Commissioner (Appeals) deleted addition on ground that vendor’s contradictory statements could not be relied upon – An appeal preferred thereagainst by revenue was also dismissed by Tribunal – High Court also dismissed revenue’s said appeal in limine on premise that no substantial questions of law were raised by revenue – Whether fact as to actual sale price of property, implication of contradictory statements made by vendor or whether reliance could be placed on loose sheets recovered in course of raid were all questions of fact – Held, yes – Whether, therefore, there was no infirmity in order of High Court – Held, yes FACTS The assessee vide a registered sale deed purchased certain land, for a sum of Rs. 4.10 lakhs. Subsequent to the purchase of land, certain notes on loose sheets allegedly written by him were found and seized by the revenue during a search operation. When confronted, the assessee maintained his stand that he could not remember as to why the notings had been made. But the vendor, in his statements, admitted that he had in fact received a total consideration of Rs. 34.35 lakhs and that the sum of Rs. 4.10 lakhs reflected in the sale deed had been received by him by way of a demand draft and the balance in cash. Subsequently, vendor retracted from his statements. The Assessing Officer, however concluded that the sale consideration was actually Rs. 34.85 lakhs and not Rs. 4.10 lakhs as had been recited in the sale deed. He accordingly adopted the aforesaid enhanced figure for the purpose of assessment and made an addition of Rs. 3,75,005 as undisclosed income. On appeal, the Commissioner (Appeals) observing that the statements given by the vendor could not be relied upon more particularly as the floor price fixed by the authorities for such property was much lower than the value which would result if the sale deed had been registered at Rs. 34.85 lakhs, deleted the addition. An appeal preferred there against by the revenue was dismissed by the Tribunal. On further appeal under section 260A, the High Court dismissed the same in limine by holding that no substantial questions of law had been raised by the revenue. In the appeal before the Supreme Court, the revenue raised serious objection to the impugned order in question pointing out that Division Bench had merely plagiarized substantial portions from the order of the Commissioner (Appeals) and the Tribunal in arriving at its conclusion and no independent assessment on the questions of law that arose for consideration had been made.

Citation :
Commissioner of Income-tax, Salem v. P.V. Kalyanasundaram

HELD It was true that the Division Bench of the High Court had borrowed extensively from the orders of the Tribunal and the Commissioner(Appeals) and passed them off as if they were themselves the authors. Quoting from an order of some authority particularly a specialized one cannot per se be faulted as this procedure can often help in making for brevity and precision, but any ‘borrowed words’ used in a judgment must be acknowledged as such in any appropriate manner as a courtesy to the true author(s). Be that as it may, the questions raised by the revenue could, in no way, be called substantial questions of law. The fact as to the actual sale price of the property, the implication of the contradictory statements made by the vendor or whether reliance could be placed on the loose sheets recovered in the course of the raid were all questions of fact. Therefore, there was no infirmity in the order of the High Court. Accordingly, the appeal was to be dismissed. [Para 6] CASE REVIEW The decision of the Madras High Court in CIT v. P.V. Kalyanasundaram [2006] 155 Taxman 454 affirmed.