By TIOL News Service

NEW DELHI, JUNE 13, 2014: THE issues before the Bench are - Whether the value declared before the Settlement Commission by the seller of the property can bind the purchasers and whether when the purchaser of the property declares the difference between the value of the property and the amount shown in its return of income before the Settlement Commission, the same amounts to concealment of income. And the verdict goes against the Revenue.

Facts of the case

The assessee is the wife of Mr. Gopal Gupta who was inducted as a director in a company known as D.J. Infrastructure Developers (P) Ltd., which was allotted hotel land at Motia Khan, New Delhi in an auction by the Delhi Development Authority. Thereafter shares were allotted to Gopal Infrastructures (P) Ltd., a group company of Gopal Gupta Group in the DJI. The total cost of land in the books was shown to be Rs 90 crores., however, the AO considered the valuation at Rs 130 crores including a premium computed at Rs 40 crores . It was also the case of the Revenue that since 1/3rd of the shares in DJI were acquired by Gopal Infrastructures the share of the premium would be Rs 13.3 crores which was supposed to be paid by Sh. Gopal Gupta and his wife to the other Group from whom the said shares were acquired.

The issue was taken to the Settlement Commission which passed an order accepting the figure of Rs 16 crores.

In a writ, the Revenue contended that the sellers of the 1/3 rd share in the property had disclosed Rs 16 crores on this account in their statement of facts before the Settlement Commission, whereas the purchasers had disclosed only Rs 7.6 crores . The Revenue contended that this clearly amounted to non-disclosure of income and should not have been accepted by the Settlement Commission.

The Counsel of the assessee submitted that the assessee and her husband had acquired 1/3 rd share in the property amounting to Rs 44.34 crores. Only an investment of Rs 36.73 crores was disclosed in their books and the remaining amount of Rs 7.61 crores was declared before the Settlement Commission. The Counsel also contended that going by the valuation of 1/3 rd share purchased by the assessee and her husband, as shown by the Revenue, this would create discrepancy in the valuation of the property amounting to Rs 158.9 crores as against Rs 133 crores , which has not been challenged by the Revenue itself.

Having heard the parties, the High Court held that,

++ we are of the view that the impugned order dated 21.05.2012 does not call for any interference. The fact that Smt. Lata Jain and Sh. Roshan Agarwal had together declared a sum of Rs 16 crores as undisclosed income in respect of the said transaction cannot, in our view, bind the respondent No.1 and her husband Sh. Gopal Gupta. The respondent No.1 and Sh. Gopal Gupta were not privy to the settlement application filed on behalf of Smt. Lata Jain and Sh. Roshan Agarwal . In any event, what the Settlement Commission has said in the order in respect of Smt. Lata Jain and Sh. Roshan Agarwal , is that as per their calculations the premium amount came to Rs 13.3 crores but since the applicants therein (Smt. Lata Jain and Sh. Roshan Agarwal ) had declared more than that, the disclosure needed no disturbance. It was also noted that Sh. Gopal Gupta had surrendered a lesser amount of Rs 6.5 crores . We may point out that Rs 6.5 crores had been disclosed in the initial statement given by Sh. Gopal Gupta at the time of the search and seizure operation and the figure was subsequently enhanced to Rs 7.61 crores at the time the application for settlement was made before the Settlement Commission. The Settlement Commission in its order dated 31.12.2010 did not fix any figure as to the amount of undisclosed amount. It only stated that since the amount declared by the applicants therein (Smt. Lata Jain and Sh. Roshan Agarwal ), was much more than what had been surrendered by Sh. Gopal Gupta and what had been computed by the Department, the disclosure made by them needed no disturbance.

++ it is evident from the discussion above that there is no dispute that the value of the property in question, even as per the Revenue, was Rs 130 crores. If a further sum of Rs 3 crores was added to it, to which nobody objected, by way of registration charges, the value would be Rs 133 crores. 1/3rd of this would come to Rs 44.34 crores. The respondent No.1 and her husband had disclosed Rs 36.73 crores as investment in the said property leaving a balance of Rs 7.61 crores which they declared as undisclosed amount in their settlement application. In other words, the full value of the 1/3rd share in the property has been accounted for. The Revenue cannot attempt to add anything more to this value in the absence of any concrete evidence. If the stand taken by the Revenue were to be accepted, then the value of the property, as mentioned above, would come to Rs 158.19 crores , which, as pointed out by Mr Tripathi , is nobody's case. In any event there is not an iota of evidence to indicate that the value of the property was anything but Rs 130 crores .

(See 2014-TIOL-958-HC-DEL-IT)