SHEKHAWATI GENERAL TRADERS LTD. vs INCOME TAX OFFICER, COMPANY CIRCLE I, JAIPUR

The Supreme Court held that under Section 55(2) of the Income-tax Act, 1961, the cost of acquisition can be either the cost to the assessee or the fair market value as of January 1, 1954, at the option of the assessee. The Court ruled that the Income-tax Officer's method of averaging the cost of original and bonus shares was incorrect and that the fair market value determined by the assessee was valid. The notice issued under Section 147 was deemed invalid as the assessee was not required to disclose irrelevant facts for assessment purposes.