1975 (9) TMI 59 - AT - Income Tax

Summary

Issues Involved:
1. Validity of acquisition proceedings under Chapter XXA of the IT Act, 1961.
2. Compliance with statutory requirements for service and publication of notices under Section 269D.
3. Interpretation of the term "initiate" in the context of Section 269D.
4. Consequences of serving notices before publication in the Official Gazette.

Detailed Analysis:

1. Validity of Acquisition Proceedings Under Chapter XXA of the IT Act, 1961:
The judgment addresses the validity of acquisition proceedings initiated by the competent authority. The appellants contested the acquisition on the grounds that the notice was served before its publication in the Official Gazette, which they argued rendered the proceedings invalid. The competent authority had issued a notice on 16th March 1973, proposing to acquire the property due to the apparent consideration being less than its fair market value and with the intention to evade income tax or conceal income/assets.

2. Compliance with Statutory Requirements for Service and Publication of Notices Under Section 269D:
The appellants argued that the service of the notice on 22nd March 1973, prior to its publication in the Official Gazette on 24th March 1973, was insufficient and invalid. The learned Accountant Member accepted this argument, quashing the acquisition order for being bad in law. However, the Judicial Member held that there was substantial compliance with statutory requirements, and the acquisition proceedings couldn't be invalidated merely because the Gazette publication occurred two days after the notice service.

3. Interpretation of the Term "Initiate" in the Context of Section 269D:
The judgment discusses the interpretation of the term "initiate" as used in Section 269D. The competent authority must initiate proceedings by publishing a notice in the Official Gazette. However, the judgment clarifies that there is no statutory requirement that notices under Section 269D(2) must only be issued or served after the Gazette publication. The term "initiate" is used to mark the commencement of proceedings, which is crucial for recording reasons for action and ensuring the initiation is within the limitation period specified.

4. Consequences of Serving Notices Before Publication in the Official Gazette:
The judgment concludes that the competent authority can undertake various modes of publication simultaneously or in any convenient order. The mandatory requirement is the service of notice in all prescribed modes to comply with natural justice, not the order of service. The judgment emphasizes that the statute does not mandate that the Gazette publication must precede the service of notices under Section 269D(2).

Conclusion:
1. The statute does not require that notices under Section 269D(2) be issued only after the publication of the notice under Section 269D(1) in the Gazette.
2. All the notices having been served or published in this case, the mandatory provisions of the statute have been complied with, and there is no irregularity or invalidity in the proceedings.
3. Even if the service of notices under Section 269D(2) was deemed invalid, it does not affect the initiation's validity but only the acquisition order's validity. The competent authority can continue the proceedings from the initiation stage by re-serving the notices under Section 269D(2) and completing them afresh.

The case is remanded to the original Members for disposal in conformity with Section 255(4) of the Act.