1990 (2) TMI 19 - HC - Income Tax

Summary

Issues Involved:
The main issue in this case is the applicability of section 52(2) of the Income-tax Act, 1961 to the assessee's capital gains calculation based on the discrepancy between the declared sale consideration and the market value of the properties sold.

Summary of Judgment:

Applicability of Section 52(2) of the Act:
The assessee, a private limited company, sold properties to various parties, with the declared sale value being Rs. 2,58,338. The Valuation Officer estimated the market value at Rs. 4,17,000. The Income-tax Officer invoked section 52(2) of the Act, determining the fair market value exceeded the declared consideration by more than 15%, resulting in capital gains tax liability of Rs. 2,76,066. The Appellate Assistant Commissioner held that section 52(2) could not be applied without evidence of additional consideration received. The Tribunal, considering affidavits from buyers indicating additional payments made, remitted the matter for fresh consideration. The High Court upheld the Tribunal's decision, emphasizing the need to ascertain facts for correct tax liability adjustment. The Tribunal's discretion to admit evidence, including affidavits, under rule 29 of the Rules was deemed appropriate in this context.

Relevance of Affidavits and Tribunal's Discretion:
Affidavits from buyers, revealing additional payments beyond the sale deeds, were crucial in determining the applicability of section 52(2) of the Act. The Tribunal's decision to consider these affidavits for adjusting the tax liability of the assessee was justified under rule 29 of the Rules. The High Court emphasized the Tribunal's power to allow additional evidence in the interest of justice, even if not presented earlier in the proceedings. The Tribunal's exercise of discretion in directing a fresh consideration based on the affidavits was deemed appropriate for determining the correct application of the Act.

Conclusion:
The High Court affirmed the Tribunal's decision to remit the matter for fresh consideration based on the affidavits, highlighting the importance of ascertaining facts for accurate tax liability adjustment. The Tribunal's discretion to admit evidence under rule 29 of the Rules was upheld, ensuring a fair assessment process. The question of law was answered in favor of the Revenue, entitling them to costs incurred in the reference.