To add the difference between Market Value and sale value , department has to prove that the assessee had received more than what is declared

CIT Vs. Rajendra Seclease Ltd. (Delhi HC) – In absence of evidence to show either that the sales were sham transactions or that the market prices were in fact paid by the purchasers; the mere fact that the goods were sold at a concessional rate to benefit the purchasers at the expense of the company would not entitle the Income Tax department to assess the difference between the market price and the price paid by the purchasers, as profits of the company. 

The Supreme Court in the case of K.P. Vargheese v Avtar Mohan Singh (Mrs.) [1982] 136 ITR 645 (Delhi) has held that difference between the market value and the consideration declared was not sufficient, and it was also necessary to show that the assessee had received more than what is declared or disclosed by him as consideration of sale of shares. Even the burden to show this lies on the Department.

HIGH COURT OF DELHI

ITA No. 791/2009

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