TMI Blog1992 (1) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 37EE under rule 48DD read with section 269AB(2) of the Income-tax Act. It is the further say of the petitioner that the competent authority referred the matter for determination of the fair market value of the property and, therefore, the District Valuation Officer of the Income-tax Department sought details and documents from the petitioner. By the letter (exhibit "L") dated June 24, 1985, the petitioner sent details to the District Valuation Officer along with a note on various specific aspects relating to plant and machinery as well as land and buildings. As per the note, it was pointed out that the unit was making substantial losses from 1981 onwards ; was having inadequate power supply ; there was labour unrest and the plant was shut down during February to March, 1984, which led to corrosion of various pipelines and other connections relating to utilities ancillary to the plant ; the plant was more than 20 years old; the management has found additional funds and working capital as well as funds needed for repairing, overhauling the above plant and other aspects were pointed out in detail so that the usual method of valuation, viz., replacement cost as new, minus depreci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h rule 48E. The petitioner has challenged the aforesaid notice (exhibit "M") dated March 21, 1986, and the reasons (exhibit "N") recorded for issuance of notice under section 269D(1) of the Income-tax Act, 1961, by filing this petition. In the petition, it has been, inter alia, stated that the Valuation Officer or the Inspector of respondent No. 1 had not valued the property fairly. He has not taken into consideration the fact that the property was purchased as a going concern and the concern was running into huge losses in the three years immediately preceding the agreement to sell dated June 25, 1984. The Valuation Officer has not taken into consideration the fact that the petitioner purchased the losing unit so that hundreds of workers do not lose their employment and their moneys already invested in the ailing unit do not go waste as in response to the Government's policy. Respondent No. 1 has not taken into consideration the fact that the petitioner is a public limited company and that the seller is also a public limited company and the managements of the two companies are not related to each other and there is no reason, basis or evidence with respondent No. 1 at the time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able property worth more than Rs. 25,000 in value ; (ii) excess fair market value of the property over the apparent consideration by 15 per cent. ; (iii) ulterior motive of tax evasion or concealment of income for such untrue statement of apparent consideration in the instrument of transfer of such property ; (iv) recording of reasons by the competent authority ; and (v) publication of notice to that effect in the Official Gazette. The court further held that the presumption under section 269C(2) would not operate at any stage prior to the decision of the competent authority for initiation of the acquisition proceedings and the competent authority can initiate proceedings for acquisition under section 269C on a condition precedent being satisfied only by an appropriate notice in the Official Gazette. The aforesaid decision in the case of Vimlaben Bhagwandas Patel [1979] 118 ITR 134 (Guj) was relied upon by a Division Bench of this court in the case of Sarabhai M. Chemicals (P.) Ltd. v. P. N. Mittal [1980] 126 ITR 1. The court held that the satisfaction of the competent authority for the initiation of proceedings for the acquisition of an immovable property is the subjective satis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which would indicate that the respondent had gathered such material except that "in the facts of the case, there is material to show that the consideration is not truly stated in the instrument of transfer, since there is a huge difference between the apparent consideration stated in the instrument and the fair market value of the property". Considering section 269C(1) and the ratio of the decisions in the cases of Vimlaben Bhagwandas Patel [1979] 118 ITR 134 (Guj) and Sarabhai M. Chemicals [1980] 126 ITR 1 (Guj) before arriving at the conclusion that clauses (a) and/or (b) of section 269C(1) are satisfied, the competent authority must have some material from which it can be stated that consideration for such transfer as agreed to between the parties has not been truly stated in the instrument of transfer with the object of facilitating the reduction of tax or evasion of the liability of the transferor to pay tax or facilitating the concealment of any income or moneys or other assets of the transferee. Further, the contention of the respondent that there is difference in the fair market value (as assessed by the District Valuation Officer) and the consideration stated in the inst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alue and from the consideration stated in the transfer deed, then there was no necessity of incorporating the underlined portion with clauses (a) and (b) of section 269C(1). That is, the Legislature would not have incorporated part of sub-section (1) beginning from the words "and that the consideration for such transfer as agreed to between the parties has not been truly stated in the instrument of transfer with the objects as mentioned in clauses (a) and (b) of sub-section (1)". The decision of this court in the case of Vimlaben Bhagwandas Patel [1979] 118 ITR 134, 164, is relied upon by the Bombay High Court in the case of All India Reporter Ltd. v. Competent Authority [1986] 162 ITR 697, 718. The court relied upon the following observations made by this court (at page 164) : "In the context of section 269C of the Income-tax Act, the competent authority must have reason to believe about the ulterior motive of the transferor of tax evasion or tax reduction or of the transferee about the concealment of income which he should disclose for tax purposes. This is an objective fact about which the competent authority must be satisfied. The same view is taken by the Bombay High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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