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TMI Blog1974 (6) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... missioner of Income-tax cannot be sustained?" For the assessment year 1965-66, an assessment order was made by the Income-tax Officer on June 8, 1966, on a total income of Rs. 29,062, which included share of profits from various firms and also dividends and interest on securities. On March 27, 1965, in the year of account relevant to the assessment year 1965-66, the assessee had sold 4,735 partly paid "B" class ordinary shares of Rs. 10 each (Rs. 7.50 paid) of the Syndicate Bank Ltd., Manipal, to Dr. T. M. A. Pai Benevolent Fund Trust at the cost price. The Commissioner of Income-tax issued under section 263 of the Act a notice dated April 19, 1968, requiring the assessee to show cause as to why the assessment order dated June 8, 1966, sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of the Tribunal, sought a reference to this court. Section 263 of the Act confers on the Commissioner the power of revision; he is empowered to call for the record of any proceeding under the Act, and if he considers that any order passed therein by the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the revenue, he may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment or cancelling the assessment and directing a fresh assessment. The section requires that two conditions should be satisfied in orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow that the transferee of the shares was directly or indirectly connected with the assessee, nor that the transfer was effected with the object of avoidance or reduction of the liability of the assessee under section 45. Therefore, the Commissioner could not have come to the conclusion that the order of the Income-tax Officer was erroneous for not applying the provisions of sub-section (1) of section 52 of the Act. While sub-section (1) deals with the case of transfer for less than the market value with the object of tax avoidance, sub-section (2) has no pretentions whatever to a case of tax avoidance or tax reduction. The provision of sub-section (2) is to the effect that if in the opinion of the Income-tax Officer the fair market value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sub-section (2) of section 52 was attracted and the Income-tax Officer had failed to apply the said provision. But if there was no material to come to any such conclusion, the Commissioner could not have revised the order of the Income-tax Officer. The Commissioner in the notice issued to the assessee had stated that the market value of the shares was Rs. 16.90 per share; but that assertion was disputed by the assessee in his objections to the show-cause notice and it was submitted that the shares in question were partly paid-up shares which were not quoted in the market and that there were no ready buyers for the said shares. The Commissioner has not recorded any finding to the effect that the consideration declared by the assessee was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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