1986 (12) TMI 8

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..... ax Act, 1961, for the assessment years 1965-66 and 1966-67 was ab initio void for the reason that the previous approval of the Inspecting Assistant Commissioner was not obtained before treating the full value of the consideration for the concerned capital asset as the fair market value as on the date of the transfer under the above provision and, therefore, the Appellate Assistant Commissioner has no jurisdiction to direct the Income-tax Officer to rectify the defect ?" Having regard to the settled law concerning the interpretation of section 52(2), we consider it unnecessary to answer the question in the form in which it is referred by the Tribunal. As we shall presently indicate, we will reframe the question and answer it. The facts are .....

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..... round that the Income-tax Officer did not obtain the prior approval of the Inspecting Assistant Commissioner for estimating the fair market value pursuant to the provisions contained in section 52(2) of the Act. As the prior approval of the Inspecting Assistant Commissioner of Income-tax is a condition precedent for estimating the fair market value, the Appellate Assistant Commissioner set aside both the assessments with a direction to the Income-tax Officer to redo the assessments according to law. Against the order of the Appellate Assistant Commissioner, the assessee filed appeals before the Income-tax Appellate Tribunal. The contest was that, in the facts and circumstances, the Appellate Assistant Commissioner should have annulled the .....

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..... uestion whether the Revenue is entitled to apply the provisions of section 52(2) in a case where there is no allegation of understatement of sale price had engaged the attention of several High Courts including this court in CIT v. Ankinidu Prasad (sic). This court had held that in a case where there is no specific allegation that the sale price is actually understated, it is not open to the Revenue to apply the provisions of section 52(2) of the Act and estimate the fair market value for determining the capital gain. The matter has eventually come up for consideration before the Supreme Court in K. P. Varghese v. ITO [1981] 131 ITR 597, referred to above and the Supreme Court had upheld the aforementioned view taken by the various High Cou .....

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