Section 52(2) applies only on proof of understated consideration, with the Revenue bearing the burden of establishing it.

Section 52(2) of the Income-tax Act, 1961 applies only where the consideration for transfer of a capital asset is understated, meaning the declared consideration is less than what was actually received. The Revenue bears the burden of proving such understatement or concealment. On the Tribunal's finding that there was no understatement and no basis to infer receipt of more than the declared amount, the provision was held inapplicable. On that footing, the matter did not raise a referable question of law, and no direction to call for a reference under section 256(2) was warranted.

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Issues: Whether section 52(2) of the Income-tax Act, 1961, could be invoked on the facts found by the Tribunal, and whether the High Court was justified in refusing to direct a reference under section 256(2).

Analysis: Section 52(2) applies only where the consideration for transfer of a capital asset has been understated by the assessee, that is, where the full value of consideration shown is less than what was actually received. The burden of proving such understatement or concealment lies on the Revenue. On the Tribunal's finding that there was no understatement and no basis to infer receipt of more than what was declared, the provision had no application. In that situation, the issue did not give rise to a referable question of law warranting a direction under section 256(2).

Conclusion: Section 52(2) was not attracted, and the High Court was right in ing to call for a reference under section 256(2).

Ratio Decidendi: Section 52(2) of the Income-tax Act, 1961 can be invoked only on proof of understatement of consideration by the assessee, and the Revenue bears the burden of establishing such understatement.

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