9911796707
|
Home
Issues Involved:
1. Validity of the assessment u/s 148 of the Income-tax Act, 1961. 2. Interpretation and applicability of section 52 of the Income-tax Act, 1961. 3. Determination of deemed capital gains on the transfer of shares. Summary: 1. Validity of the assessment u/s 148 of the Income-tax Act, 1961: The respondent-assessee filed his income-tax return declaring an income of Rs. 3,60,448 for the assessment year 1987-88, which was later revised to Rs. 4,18,400. The assessment was completed u/s 143(3) of the Act, assessing the total income at Rs. 16,31,125. Subsequently, the Assessing Officer issued a notice u/s 148 of the Act, and the assessee filed a return declaring the same income of Rs. 4,18,400. 2. Interpretation and applicability of section 52 of the Income-tax Act, 1961: The Assessing Officer concluded that the respondent-assessee had furnished inaccurate particulars by transferring shares at cost price, leading to underassessment of income. The Commissioner of Income-tax (Appeals) and the Tribunal both held that there was no material evidence to show that the sale consideration was understated or that the assessee received anything over and above the declared value. The legal position was supported by the Supreme Court's judgment in K.P. Varghese v. ITO [1981] 131 ITR 597, which clarified that section 52(1) does not deem income to accrue or be received if it never actually accrued or was received. The onus of proving understatement of consideration lies on the Revenue, which was not discharged in this case. 3. Determination of deemed capital gains on the transfer of shares: The Assessing Officer added Rs. 11,66,000 as deemed capital gains. However, the Commissioner of Income-tax (Appeals) deleted this addition, stating that the sale consideration was backed by the yield method, a recognized method for determining fair market value. The Tribunal upheld this decision, finding no evidence of understatement or concealment of consideration. The High Court, referencing the Supreme Court's interpretation in K.P. Varghese's case, affirmed that section 52 could only be invoked if there was proof of understatement or concealment of consideration, which was not present in this case. Conclusion: The High Court dismissed the appeal filed by the Commissioner of Income-tax, finding no merit in the arguments presented. The court upheld the decisions of the Commissioner of Income-tax (Appeals) and the Tribunal, confirming that there was no material evidence of understatement of sale consideration or receipt of any amount over and above the declared value of shares. The provisions of section 52 of the Act were not attracted, and the appeal was accordingly dismissed with no order as to costs.
|
