9911796707
TMI Blog1988 (11) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... between the period 1971 to 1973 and that the said property had been sold for Rs. 17,00,000. In receipt of the aforesaid form No. 37G, the Competent Authority issued a preliminary enquiry letter to the transferee on 12th April, 1986 asking for the various details including the lay out plan of the building with floorwise covered area, the state of the property whether it was tenanted or in self possession, whether free-hold or leasehold and whether industrial, commercial or residential etc. In response to the aforesaid letter dt.12th April, 1986, the transferee submitted the following documents for this consideration: 1. Agreement to sell dt.25th June, 1985between Shri P.C. Baweja and M/s Ganga Automobiles Pvt. Ltd. 2. Agreement to sell dt.21st Oct., 1985between Shri P.C. Baweja and M/s Ganga Automobiles Pvt. Ltd. 3. Agreement to sell dt.5th Dec., 1985between Sh. P.C. Baweja and M/s G. Sagar Suri & Sons (HUF) 4.Saledeed dt.4th Feb., 1986 5. Stamp Duty Challan for Rs. 1,36,000 6. Brokerage paid Rs. 31,000 and 7. Layout Plan. The aforesaid documents were also submitted by the assessee to Sri P.K. Kohli, District Valuation Officer, IT Department, for the Competent Authority had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the transfer; and (b) facilitating the concealment of any income or any moneys or any other assets which have not been or which ought to be disclosed by the transferee for the propose of the Indian IT Act 1922 or the IT Act, 1961 or the WT Act, 1957. Therefore, in accordance with the provisions of s. 269C of the IT Act, 1961, I am initiating acquisition proceedings for the above mentioned property by issue of notice under s. 269D(1) of the IT Act, 1961." The computation of the value at Rs. 29,76,000 as mentioned in the aforesaid reasons has been given on the reverse of the reasons recorded and it may also be reproduced here below for ready reference as follows: "The property S-24, Green Park Extn. measures 200 sq. yds. and is situated in a commercial area as has been reported on page 13 of the Sale Deed. The land is free hold and it has constructed area of over 4,800 sq. ft. A part of the property has been stated to be on rent with M/s Ganga Automobiles Pvt. Ltd., but this again is a family concern of the Vendees. Neither the date of tenancy nor particulars of annual rent etc. has been mentioned. However, the tenancy appears to be of recent creation and that too with a view to s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nner, the total value came to Rs. 57,37,200. The land and building method was adopted by the Valuation Officer on the ground that, "the vendee got the vacant possession of the property." For arriving at the value of Rs. 29,375 per sq. mtr, for the land the Valuation Officer adopted the exemplar of the following properties : 1. No. 17-Yusaf Sarai,New Delhi. The plot area of which was 225 sq. mtrs. The same was sold on30th July, 1984. It was leasehold property. 2. Another property referred to by the Valuation Officer was 22-Yusaf Sarai,New Delhihaving area of 150 sq. mtrs. It was sold on2nd Jan., 1984. The FAR of both the aforesaid properties was much higher than that of the property under consideration and, therefore, the Valuation Officer adjusted the value of the aforesaid exemplars to arrive at the valuation of the property under consideration. 6. The assessee challenged the aforesaid valuation report of the Valuation Officer and raised many queries about it and it was requested by the assessee that the departmental Valuation Officer may be made available to the assessee for cross examination on the basis of a questionnaire prepared by the assessee. The questions are reproduce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmercial B-1/16, Hauz khas J-10, Green Park Land rates for the givenFARsas worked out in 11(i). 8350 10,166 18,400 9,7 41 7,267 Adjustments : . . . . . For time gap @ 12 per cent p.a, (--)12% (--)15% (--)11% (--)12% (--)14% For FAR of 1.66 of the property. (+) 12% (+) 22% (+) 4% (+) 11% (+) 90% For free-hold nature of subject property (+) 22% -- -- -- -- For commercial nature of subject property (+) 100% (+) 100% -- (+)100% (+)100% Net adjustment: (+) 112% (+)107% (--) 7% (+) 99% (+)176% . (--)9352 (--)11177 (--)1288 (+) 9644 (+)12796 . 17702 21343 17112 19385 20 057 Resultant Adjusted Rates : Average Rate: 17702 + 21343 +17112 +19385 +20057 95599 / 5 = Rs. 19,120 per sq. mtr. If the actually used FAR of 3.54 be taken into consideration, the land rate is liable to exceed even the rate of Rs. 29,375 per. sq. mts. applied by the Valuation Officer." 7. The learned Competent Authority also brought to the attention of the assessee sale instances of two other commercial properties which had been sold on the basis of per. sq. ft, of constructed area and pointed out that in terms of the aforesaid exemplars, the market value o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he judgment of CIT vs. Arun Mehra (1985) 49 CTR (Del) 119 : (1985) 157 ITR 308 (Del), in this regard to contend that when proceedings were initiated without due material and application of mind the proceedings in question deserve to be quashed. The learned Competent Authority however, brushed aside the above objections as to the initiation of proceedings by observing, inter alia, as below: "9. Regarding non-availability of the presumptions, case laws of various High Courts were cited but on this point, it is brought out that in this regard Hon'ble Delhi High Court in the case of Mahavir Metal Works (P) Ltd. vs. Union of India reported at 95 ITR 197 have held that presumptions are available at the initiation stage. Further the Hon'ble P&H High Court in the case of Sutlej Chit Fund and Financiers (P) Ltd. vs. CIT (1986) 55 CTR (P&H) 114 : (1986) 161 ITR 174 (P&H) have agreed with the view expressed by the Delhi High Court when they have concluded on page 187--First Para--"We, therefore, prefer to agree with the view expressed by the Delhi High Court in Mahavir Metal Works case (95 ITR 195) and hold that the presumptions contained in cl. (A) and cl.(b) of sub-s(2) would be available ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , therefore, being disposed of by a combined order, for the sake of convenience. 13. In respect of appeal No. 5, the following objections were, inter alia, taken by the assessee's learned counsel: (1) That the initiation of the proceedings under s. 269C was void ab initio for the following reasons: (a) the learned Competent Authority had no material before him to believe that the fair market value of the property in question was Rs. 29,76,000 as presumed by him and that all the underlying facts on the basis of which the learned Competent Authority came to hold the opinion in question were incorrect, namely, the following: (i). It was not true that vacant possession of the property in question was given by the vendor to the vendee. (ii). It was not correct to believe that the present property namely S-24, Green Park Extn. was a commercial property; it was partly commercial and partly residential. (iii). That it was not correct for the learned Competent Authority to believe that the FAR of K-114, Hauz Khas on the basis of which he worked out the fair market value of the land in the assessee's case was one only and that the FAR of the present property was higher. (iv). That the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relate either to the year in which the sale of the present property was made or to the approximate vicinity where the property in question was situated. In this connection, our attention was invited to paragraph 61 appearing at page 258 of the assessee's paper book, para 7 appearing at page 244, paras 11 & 12 appearing at page 245, para 24 of page 248 of the paper book, 32 to 34 appearing at page 252. The assessee's submission was that the objections raised in the aforesaid paragraphs have not been met by the learned Competent Authority. (3). That the built up area as taken by the DVO was not correct and that the figure mentioned by the assessee at pages 12&13 of its paper book (Index Part) was the correct figure. (4). The FAR of the property under consideration was not 3.54 as presumed by the DVO and the Competent Authority and that it was only 1.66. In this connection, it was pointed out by the learned counsel for the assessee that FAR is legal concept and has, therefore, to be understood in the sense in which legally permissible area is built and not the actual area built. In respect of the above, our attention was invited by the learned counsel for the transferee to the foll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he learned Department Representative, the presumption of the learned Competent Authority that the property was not a tenanted one, when it was purchased, and that the tenancy in favour of M/s Ganga Automobiles was created lately was not wrong. He also drew our attention to the file of K-114, Hauz Khas wherefrom it appears that the valuation of the land in question in that case had been done by the approved valuer of the vendor @ Rs. 5,500 per sq. yd. therefore, it was not wrong on the part of the learned Competent Authority to mension the aforesaid fact in his reasons to believe. It was this specific example which was relied upon by the learned Competent Authority as it was situated nearabout the area where the assessee's property is situated and which is freehold. It was residential in nature. The sale was made on30th Nov., 1985in that case whereas the sale in the assessee's case was on14th Feb., 1986. The date was also, therefore, near about the date of sale in the present case. That the commercial properties are valued at about 2 times the value of the residential lands is clear from the valuation Schedule of DDA and it was in this context that reference to the said DDA's rates ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exercising its writ jurisdiction cannot question the sufficiency or adequacy of the reasons for formation of the belief by the competent authority it is certainly entitled to know whether or not all the conditions precedent for the formation of such a belief existed an whether the competent authority had applied his mind to the said relevant conditions." 19. So far as the satisfaction of the competent authority as to the oblique motive of understanding the apparent consideration in the sale deed was concerned, the presumption in question as automatically raised in this regard by the statute on account of the operation of s. 269C(b) r/w second proviso to sub-s.(1) of s. 269C. He disputed the contention of the assessee that the presumptions contained in sub-s.(2) of s. 269C were not available at the stage of formation of the belief under s. 269C(1). According to him, the proceedings of enquiry etc. which were undertaken by the competent authority in terms of sub-s. (1) of s. 269C to satisfy himself whether or not the fair market value of the property was more than what was indicated as apparent consideration in the sale was in itself a proceeding under Chapter XXA and sub-s. (2) cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e impression that the property in question was commercial. It was being used for commercial purposes by the transferee itself and even prior to that since its construction, the property was being used for commercial purposes. The commercial use of the property had been recognised by the Municipal Corpn. ofDelhiwhile fixing the house tax for the building. There was, therefore, no merit in the theoretical contention of the assessee that the property was not purely commercial but commercial-cum-residential. The FAR of the property had to be worked out with reference to the actual area constructed vis-a-vis the area of the plot of land on which the building was constructed and thus computed FAR was 3.54. Here again the assessee's emphasis was on the theoretical FAR and not on the actual condition of the property which was purchased by the assessee from the vendor. That the said property was liable to be demolished was not true. It has been in existence since 1971-1973 and no steps at all had been taken by the Municipal authorities to demolish the excess construction beyond authorised Plan and in fact they had reconciled to the increased construction inasmuch as they had started chargin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s P. C Baweja, and it is they who had nominated Sagar Suri & Sons for purchasing the said property for Rs. 17 lacs, when the property in question was, according to the estimate of Ganga Automobiles itself, worth Rs. 30,000 p.m by way of rent and in respect of which they agreed to pay Rs. 20,80,000 to M/s G. Sagar Suri & Sons, if the use of the said property was permitted to M/s Ganga Automobiles P. Ltd. M/s Ganga Automobiles Ltd would not pay Rs. 20,80,000 for the property, if its real value was Rs. 17 lacs. No doubt, it was a family concern of Suris and Mr. Ashwani Suri, who was one of the Managing Director of the said company was one of the coparceners of the appellant family. But it was the stand of both in their respective Income-tax proceedings that the rent paid was not excessive compared to market rate. These clearly demonstrated the unreality of the sale price of Rs. 17 lacs. The fair market value was certainly much more and the learned competent authority was not wrong when gave finding that if it was much higher than the apparent consideration stated. 23. The assessee had not, continued the learned Deptt. Representative, led any evidence to rebut the two presumptions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tructure was insured by the transferee for Rs. 15 lacs soon after its purchase. Its valuation at about Rs. 4 lacs by the approved valuer was prima facide ridiculously low. It is also stressed by the learned Deptt. Representative that the assessee's approved valuer had taken up instances of sales of flats for comparison and not of building built on its on land. It would be wrong, according to him, to go by such examplars. 25. In rejoinder, the learned counsel for the assessee submitted that FAR of K-114, Hauz Khas will be 1.50 and not 1.00 as was presumed by the learned Competent Authority while adopting the value of the plot of K-114 for the purpose of computing the land value of the property under consideration. He also stressed the fact that Group-III in the Schedule of Land & Development Office, wherein the values of lands in various areas of Delhi were given, did not cover the area of Green Park where the assessee's property was situated and, therefore, according to him the entire basis for forming the opinion that proceedings under s. 269 deserve to be initiated in the present case was erroneous and so he insisted that the proceedings should be quashed as void ab initio. He a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that on the basis thereof, the departmental case should be rejected because on evidence whatsoever has been brought on record to show that there was in fact understatement of the fair market value in the sale deed. 26. Coming to the facts of the case, he stressed that Varandha on the ground floor measuring 72 1/2 ft.x 30ft. was not in the assessee's possession and that it was being used by the general public and, therefore, it should have been excluded while working out the valuation of the structure. He also stressed the fact that the property was residential-cum-commercial and not commercial alone and, therefore, there was mistake in the order in the of the learned competent authority in this regard. He also challenged the submission of the learned Deptt. Representative that the property was being used as commercial from the very beginning. According to him it was a mere presumption and not a fact based in evidence and that the learned Deptt. Representative should not be allowed to make averments as to facts without any evidence. He did concede that the Municipal Corpn of Delhi had taken no action against the assessee for what it described as unauthorised construction since 197 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 269D had been duly served on M/s Ganga Automobiles Pvt. Ltd and there was no time limit of nine months for the service of the notice under s. 269D(2). Under s. 269D(1), there was no mandate regarding the name of the tenant being included. He drew our attention to the decision of the Hon'ble Delhi High Court in the case of Jawahar Lal vs. Competent Authority wherein it has been held by their Lordships that the tenant of the property which was a subject matter of acquisition proceedings was not a "person interested" as defined under s. 269A (g) and, therefore, there was no need to include his name in the notice which was published in the gazette under s. 269D(1). So far as the assessee's reliance on the Full Bench judgment ofPunjaband Haryana High Court in the case of CIT vs. Amrit Sports Industries was concerned, according to the learned Departmental Representative, it supported the departmental contention and, therefore, he could not understand as to how the assessee drew support from the above judgement. As regards the judgment of Smt. Phoolmati Devi, the facts there were altogether different. Notice under s. 269D(2) had not been served on the minor son who was admittedly one ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... That property No. K-114, Hauz Khas Enclave, a residential one measuring 500 sq. yds. was sold for Rs. 35 lacs and that the vendor had himself estimated the value of the land @ Rs. 5,500 per sq. yd. in Nov., 1985. (10) That in comparison, the property under consideration was not only commercial but had a smaller plot area with FAR expatiation of more than 2.66, that of K-114, being only 1. (11) That Govt. of Indian's for leasehold properties for commercial purposes in identical localities had been given at Rs. 6,000 per sq. mt. which was for a FAR of 1.5. converting it to FAR of 2.66, the price would be Rs. 10,640 as below: 600x2.66/1.50=10,640 (12) That the aforesaid commercial properties would have greater value, if they are made freehold and for this, there would be a difference of about 30 per cent and that if the aforesaid difference was adjusted the rate per sq. mt would work out to Rs. 13,832. (13) That in view of the aforesaid data it would be appropriate to take the rate of Rs. 12,000 per sq. yd for the plot in question and that thus computed the value of the plot would come to Rs. 24 lacs. (14) That the total value of the property would thus be Rs. 29,76,000, Rs. 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht of the law as laid down by their Lordships in the aforementioned case and which has also been by their Lordships of Hon'ble Delhi High Court in the case of Jawahar Lal. vs. Competent Authority & Ors.. When we view the facts stated as above and the reasons recorded by the competent authority, we find that it is not a case where there was no evidence whatsoever before the competent authority to form the belief that the fair market value of the property in question would be Rs. 29,76,000 as against the apparent consideration of Rs. 17 lacs. All the various factors which he took note of while coming to the above valuation were relevant pieces of information and there was a live link between the aforesaid information and the formation of belief by the competent authority. To say, therefore, that there was no material before the competent authority to come to the tentative conclusion as above, would be palpably wrong. There is no comparison between the facts of this case and that of CIT vs. Arun Mehra. In that case, there was no material whatsoever on record except two valuation reports of the DVO and it was only on the basis of the second report of the Valuation Officer that the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which read as below: "(2) In any proceedings under this Chapter in respect of any immovable property-- (a) where the fair market value of such property exceeds the apparent consideration therefor by more than twenty-five per cent of such apparent consideration, it shall be conclusive proof that the consideration for such transfer as agreed to between the parties has not been truly stated in the instrument of transfer; (b) where the property has been transferred for an apparent consideration which is less than its fair market value, it shall be presumed, unless the contrary is proved, that the consideration for such transfer as agreed to between the parties has not been truly stated in the instrument of transfer with such object as is referred to in cl. (a) or cl. (b) of sub-s. (1)." A perusal of cl (a) quoted above would show that if the fair market value of he property exceeds the apparent consideration therefore by more than 25 per cent of such apparent consideration, the presumption automatically arises that the consideration for such transfer has not been truly sated in the instrument of transfer. It is, of course, open to the assessee to show in terms of sub-s. (3) of s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o subscribe to this view. The word "proceedings" has to be interpreted in the context in which it has been used in the various sections. The word "for the acquisition of such property". Similarly, this word has been qualified in sub-s. (1) of s. 269D. The word "proceedings" in the above context obviously means the proceedings for the acquisition of the property under the said Chapter. However, in sub-s. (2) the words used are "any proceedings under this Chapter" and not "proceedings for the acquisition of such property". The word "proceedings" in sub-s(2), therefore, does not signify the proceedings for the acquisition of such property which are initiated only after the publication of the notice in the official gazette under s. 269D. When the Competent Authority has to form an opinion under s. 269C(1), there has to be some material to support the same. Obviously, he has to probe in to the matter and collect some material which will provide reasons to believe that the consideration has been understated with the object specified in cl. (a) or cl.(b) of the said sub-section. The Competent Authority would have no authority to do so except in exercise of the powers under s. 269C. All th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if the material is already available on the record for the Competent Authority in form a belief that the consideration has been understated with the objects contained in cl. (a) or cl. (b) of sub-s. (1), there would be no necessity to make a provision for raising a presumption at the final stage of the proceedings. In such a situation, the vendor and the vendee would be confronted with the said material and required to prove the contrary. It would be then for the Competent Authority to arrive at its own conclusion after taking into consideration all the material available on the record including the material produced by the vendor and the vendees as to whether the consideration has been understated with one of the said objects or not. A resort to the presumption at the final stage in these circumstances would have no meaning. Secondly, the presumptions contained in sub-s. (2) are nothing but rules of evidence. The necessity to provide them was felt by the Legislature because the facts constituting the requisite ingredients are always in the special knowledge of the vendor or the vendee and it is very difficult, if not impossible for the Competent Authority, to prove them by tangibl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The law merely required that he should be able to show that the property which had been acquired by him had fair market value more than 15 per cent of the apparent consideration mentioned in the sale deed. Sub-s. (6) of s. 269F was read in this connection and reliance was placed on it. The said sub-section reads as below: "(6) If after hearing the objections, if any, and after taking into account all the relevant material on record, the competent authority is satisfied that,-- (a) the immovable property to which the proceedings relate is of a fair market value exceeding (one hundred) thousand rupees: (b) the fair market value of such property exceeds the apparent consideration therefor by more than fifteen per cent of such apparent consideration; and (c) the consideration for such transfer as agreed to between the parties has not been truly stated in the instrument of transfer with such object as is referred to in cl. (a) or cl.(b) of sub-s. (1) of s. 269C: he may, after obtaining the approval of the Commissioner, make an order for the acquisition of the property under this Chapter." The underlined portion as above do to support the contention of the learned Deptl. Represent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee's own valuer be added namely Rs. 4,04,790, the fair market value of the aforesaid property would work out to Rs. 35,77,790. The aforesaid valuation eliminates all the various objections raised by the assessee's learned counsel as to the FAR of the property and as to the cost of structure of the property. The contention of the assessee's learned counsel that the property in question was residential-cum-commercial does not appeal to us for the stark fact remains that the property is situated in the Uphar market complex which is a commercial area and the property in question is being used entirely for commercial purposes and this has not been denied that the house tax determined by the Municipal Corpn. ofDelhitakes note of commercial nature of the said property. Any potential buyer would take note of the actuality on the ground and even if one had to grant discount on account of the unauthorised construction on the aforesaid property, the aforesaid valuation of Rs. 35,77,790, takes note of the aforesaid points of discount for it is based on the presumption that the value of the structure was only Rs. 4,04,790. In fact, it was much more as has been worked out by the DVO and a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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