TMI Blog1995 (9) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... owing in the notice as well as in the order, the consideration under the agreement has not been shown to be significantly undervalued by more than 15 per cent. of its fair market value to take proceedings under section 269UD and to raise any presumption of intention to evade tax. It is also contended that in the order dated May 30, 1995, the appropriate authority has hiked the estimated fair market price by adding the alleged difference between the cost of built-up area to be provided by the purchaser by estimating the actual cost to be less than the one agreed between the parties under the agreement to make the consideration for transfer. This estimated difference between the cost envisaged under the agreement and estimated by the appropriate authority while passing the order was never the subject matter of enquiry from the petitioner, neither it was disclosed in the notice to show cause nor from the order is it reflected how the appropriate authority has fixed the cost of construction to be supplied by the purchaser at Rs. 350 sq. ft. instead of Rs.434 sq. ft. agreed between the parties in the agreement for the purpose of fulfilling the consideration. It is by taking into conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of agreement to sell by themselves do not go to show that there is a difference of 15 per cent. between the per square metre rate calculated by the appropriate authority. However, he contends that that part of the land covered by the SIP is situated adjacent to a railway line, on the one side of it and to the extent of the width of the plot the property under consideration is situated away from the railway line. That gives it a superior locality and on that material, the appropriate authority could reach the conclusion which it has reached. This court not being a court of appeal ought not to interfere under article 226 in the matter. We have carefully considered the contentions raised before us and gone through the material made available to us. It has to be noticed that Chapter XX-C under which the provisions of pre-emptive purchase have been enacted are not laws enacted as such for acquiring the property but are provisions relating to implementation of the Income-tax Act. It is also true that any provision under such statute may not only contain the provisions related to levy, but may contain all incidental and necessary provisions to make the levy effective. That provision m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iate authority is satisfied that the apparent consideration shown in the agreement for sale is less than the market value by 15 per cent., or more, it may draw a presumption that this undervaluation has been done with a view to evading tax. Such a presumption, however, is rebuttable and the intending seller or purchaser can lead evidence to rebut it. Moreover, the reasons for such acquisition which are required by section 269UD to be in writing must be germane to the object for which the chapter was introduced, namely, to counter attempts to evade tax. From the aforesaid, it can be fairly concluded that before any action under section 269UD can validly be taken, the appropriate authority must on material before it, prima facie, be satisfied that there is a significant undervaluation of the property by 15 per cent. or more and, secondly, that such undervaluation is an attempt at tax evasion. On coming to this satisfaction, the appropriate authority is further required to offer reasonable opportunity permissible in the limited time-frame prescribed for making an order of purchase under section 269UD, to the concerned parties, namely, the intending purchaser, the intending seller an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... king the order for coming to the conclusion that the presumption raised by him does not stand rebutted. Law is well-settled that what amount of evidence is necessary to rebut the presumption of the nature raised depends upon the facts and circumstances of each case and no specific mode of proof or methodology is required to be followed. The affected party may not lead any evidence, yet, it may draw the attention of the authority to the material already existing on the record to rebut the presumption raised against him. In this connection, we may refer to the decision of this court in the case of CIT v. Vinaychand Harilal [1979] 120 ITR 752, wherein the court said, while dealing with presumption : " In order to rebut the presumption raised by the Explanation to section 271(1)(c), it is open to the assessee to point to the record of the case and point to materials on the record which would enable him to show that he had not concealed the particulars of his income or furnished inaccurate particulars of his income.... It is also not necessary that any positive material should be produced by the assessee in order to discharge this burden which rests upon him. The assessee may claim to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ropriate authority and which has not been disputed and the impugned order are that the property under consideration and the SIP are adjacent plots, the purchaser of both the plots is the same party, the agreement to sell in respect of both the plots has been entered on the same day ; the PUC and the SIP are part of one ancestral property divided between heirs and, therefore, two separate agreements were entered into between the co-tenants of the two plots. Out of the total consideration agreed to, in both the cases, part of the consideration is to be adjusted by the purchaser making available certain constructed area to the sellers, for value which has been determined in the agreement itself ; on one side of the SIP is situated a railway line and the railway signal lines and telephone poles are passing through the property under consideration. The notice to show cause disclosed there was no substantial difference in the valuation of the two properties on the basis of the apparent consideration in both the cases to give rise to any presumption about understatement of the consideration or about the transaction having any nexus with evasion of tax. It was only by hiking the fair marke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ears to have been adopted only for assuming the existence of facts for the purpose of raising the presumption of understatement or attempt at tax evasion rather than on any relevant consideration on existing material germane to fix the fair market value of the property under consideration. The order under challenge further discloses that it has proceeded on the grounds other than the one disclosed in the show-cause notice. One fails to understand when the subject-matter of transfer is an open piece of land, for the reason that part of the relevant rate for the purpose of deciding the fair market value for the purpose of section 269UD has to be taken on saleable FSI. What has been sold is an open land. Part of the price was payable in the form of area constructed. The parties have also agreed to a rate at which such area is to be valued for the purpose of setting off the total consideration. As a matter of fact the agreement clearly envisages that the total consideration for the PUC shall be a fixed sum. Construction has been agreed to be sold to the vendor by the buyer at an agreed rate, and such sale price has further been agreed to be adjusted against consideration of the agree ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h understatement being with a view to evade tax. In these facts and circumstances, the assumption of 20 per cent. higher value of the PUC over the SIP appears to be based on no material and is such as no person of reasonable prudence would arrive at. We are also of the view, that even if it be assumed that the appro priate authority could have reasonably hiked the fair market value of the property under consideration by 20 per cent. on the basis of assumed superior location, there is sufficient material on the record as discussed above to rebut the presumption assumed to have been raised by the appropriate authority. The impugned order, therefore, cannot be sustained not only on the ground that it does not disclose the satisfaction about the condition necessary for sustaining the order under section 269UD, but also on the ground that the order suffers from errors apparent on the face of the record and having been made in breach of the principles of natural justice inasmuch as it is founded on grounds which were not disclosed to the petitioner and for which no explanation was called for. Accordingly, this petition succeeds. The impugned orders of the appro priate authority exh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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