Law: Income Tax Act, 1961

Section: 45,52(2),147

Income-tax--Reassessment---Capital gains---Amount of capital gains shown in return and accepted by Assessing Officer---Subsequent report by Valuation Officer that fair market value of property was greater than that disclosed---No evidence of understatement of consideration for transfer of property-­Reassessment proceedings on the basis of such report was not valid---Indian Income Tax Act, 1961, Ss.45 & 147. Although section 52(2) of the Income Tax Act, 1961, has been omitted from the statute the fact remains that in case of transfer of assets no capital gain tax can be taxed over and above the capital' gain shown and disclosed by the assessee unless there is evidence that there has been an understatement by the assessee and more consideration has passed than disclosed. A valuation report is only an opinion, but that does not show or prove that there is some underhand dealing and consideration has passed more than what is disclosed by the assessee or the petitioner. When no tax or any addition can be made on. the basis of the valuation report, the Assessing Officer cannot assume jurisdiction under section 148 of the Income Tax Act, 1961, to issue notice for escaped capital gain as no addition can be made on the basis of the fair market value of the property in case of capital gain tax. Brooke Bond Lipton India Ltd. v. CIT (1996) 222 ITR 540 (Cal.); Calcutta Discount Co. Ltd. v. ITO (1961) 41 ITR 191 (SC); Indian- Oil Corporation v. ITO.(1986) 159 ITR 956 (SC); Indo Asahi Glass Co. v. ITO (4996) 222 ITR 534 (Cal.); ITO v. Selected Dalurband Coal Co. (Pvt.) Ltd. (1996) 217 ITR 597 (SC); Phool Chand Bajrang Lal v. ITO (1993) 203 ITR 456 (SC); Rattan Gupta v. Union of India (1998) 234 ITR 220 (Delhi) and Varghese (K.P.) v ITO (1981) 131 ITR 597 (SC) ref. THIS JUDGMENT DELIVERED BY: By this petition the petitioner has challenged the impugned notice, dated April 7, 1995, issued by respondent No. l under section 148 of the Act relating to the assessment year 1992-93. After hearing the matter on August 19, 1998, a prima facie view was taken that the notice under section 148 was illegal and that should be quashed. But subsequently after going through the materials…

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