Capital gain on inherited property

How did the other legal heirs released their rights in the property in favor of Mr. X? Did they prepared a release deed for that? And why Mr. X paid them their share even after the above release? 

Since Mr. X has sold the property in his own name, he shall be liable to long term capital gain. And since he has not reinvested the capital gain nor filed the IT returns u/s 139(1), the long term capital gain shall be taxable and Mr. X will be liable to pay 20.36% tax on it. Interest and penalty will be extra.

Thanks for reply.. Yes release deed was prepared for releasing the right. It was done with mutual consent to sale the property in name of Mr. X and then distribute it amongst four.

Since the property was purchased before 1981 how we can determine its FMV on 1/4/1981??

Also Compensation was given to tenant to get the house vacated. How we can prove it??

Also Construction was done in 1990 how we can prove the cost of improvement, since we don't have any bills.

If the FMV as on 1981 is not available, then the assessee can use the actual cost of acquisition before 1981. A rough estimate will be acceptable, and you may get the details from an old real estate agent or refer to stamp duty value.

If you have documents to prove that you made payments to the tenant in order to vacate the premises before or after litigation, you can claim it as transfer expenses in computing your long term capital gain. 

Documents proving the expenditure incurred in making major improvements in the property is necessary. In case, the IT Dept demands the documents and you fail to submit, the whole amount will become taxable.

Thanks Mr Mihir..

Regarding the expenses incured to get the house vacated there is agrement between the buyer and the tenant, but the buyer has made payment to tenant by deducting it from the sale consideration. whether the same will be allowable??

Also House was constructed in year 1986, so its hard to find the bills of construction, whether valuation from engineer for that period would suffice??

If there is a valid agreement between the buyer and the tenant, it should be allowable. Normally, bills are required but a valuation report from a valuer might be accepted. Not sure.