TMI Blog1981 (2) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... respect of another immovable property being house No. 512, situate on plot No. 17, Circle No. 19/27, Ward No. 1, Congress Nagar, Nagpur, with built-up area of 2,246 sq. ft. and plot area of 9,540 sq. ft. The Inspecting Assistant Commissioner of Income-tax, Acquisition Range, Nagpur, who has been joined as respondent No. 1 in all the above four petitions, issued two notices dated November 2, 1973, purporting to be individual notices by the Competent Authority under the provisions of section 269D of the Income-tax Act, 1961 (referred to hereinafter as " the Act "), in respect of the above-referred two transfers intimating the transferor and transferees that the two transfers of immovable properties referred to above, registered at Nagpur on May 14, 1973, for an apparent consideration of Rs. 61,000 and Rs. 85,000, respectively, were transfers in respect of which proceedings for acquisition could be taken under the provisions of section 269C of the Act because the authority had reason to believe that the fair market value of the said two properties exceeded the apparent consideration thereof by more than 15% and that the two transfers were executed with the object of facilitating reduc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their objections within the statutory period, showing their willingness to pay the costs of the supply of copies but this request was turned down on the very next day by the Competent Authority by informing them that it was not possible to give copy of the reasons recorded for initiation of acquisition proceedings and valuation report at that stage and pointing out that the transferor and transferees would be apprised of these reasons and other information in the possession of the Competent Authority in the course of hearing of the objections. This was followed by a request by the transferor and the transferees on November 27, 1973, that inspection of the records may be granted to them and the case of the petitioners is that their letters dated November 27, 1973, requesting inspection were not replied to up to the date of filing of the petition on November 29, 1973. Section 269D of the Act provides that the Competent Authority shall initiate proceedings for acquisition of immovable property under Chapter XX-A " by notice to that effect published in the Official Gazette " and provides that no such proceedings shall be initiated after the expiration of a period of nine months from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts of the advocates appearing for both the sides, we feel that the following four questions fall for our decision in these petitions : " 1. Whether the very initiation of acquisition proceedings by the Competent Authority is bad for want of publication of notice in the Official Gazette under section 269D of Income-tax Act, 1961, within nine months from the last date of the month in which the impugned transfers took place ? 2. Whether publication in the Official Gazette is a condition precedent for giving of individual notice and whether on that count the individual notice dated November 2, 1973, given before its appearance in the Gazette dated November 10, 1973, is bad ? 3. Is the impugned notice bad for ambivalence or indefiniteness and, therefore, invalid? 4. What is the consequence of failure to communicate reasons and afford inspection thereof on the validity of the proceedings? " Regarding question No. 1.-Section 269C of the Act indicates the conditions which must exist for initiation of proceedings by the Competent Authority for acquisition of immovable property transferred with the object of facilitating evasion of income-tax or concealment of income. Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 clause (a) or clause (b) of sub-section (1). 269D. (1) The competent authority shall initiate proceedings for the acquisition, under this Chapter, of any immovable property referred to in section 269C by notice to that effect published in the Official Gazette Provided that no such proceedings shall be initiated in respect of any immovable property after the expiration of a period of nine months from the end of the month in which the instrument of transfer in respect of such property is registered under the Registration Act, 1908 (16 of 1908): Provided further that (a) in a case where it is determined under sub-section (4) of section 269B by the competent authority who has initiated proceedings for the acquisition of any immovable property under this Chapter or by the Board that such competent authority has no jurisdiction to initiate such proceedings, the competent authority having jurisdiction may initiate such proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ealment of income or assets by the transferee which ought to have been disclosed under the Act or under the Indian Income-tax Act, 1922, or under the Wealth-tax Act, 1957; 2. The Competent Authority must record its reasons for reaching subjective satisfaction on the above three points on objective factors; 3. After fulfilment of the above two conditions, the Competent Authority can initiate proceedings for acquisition of the immovable property 'by notice to that effect published in the Official Gazette', within nine months from the last date of the month in which the instrument of transfer was registered under the Registration Act, followed by publication of such notice in the prescribed manner on the office notice board of the Competent Authority, in the locality in which the immovable property is situate and by service of such notice upon the transferor, transferee and occupier of the immovable property. It was contended on behalf of the petitioners that " publication " of the notice in the Official Gazette was a jurisdictional fact which must be established before valid initiation of acquisition proceedings by the Competent Authority and that " publication " of notice i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the date of service of individual notice upon them, whichever period expires later. However, any other person interested in the property must register his objection within 45 days from the publication of the notice in the Gazette. It is, therefore, clear that publication of notice in the Gazette is a must which cannot be dispensed with before proceeding further in the process of acquisition by the Competent Authority though individual notice or locality notice, if it may be so called, could be considered as an additional safeguard to apprise the transferor, transferee and occupants and it may not be jurisdictional fact for initiation of acquisition proceedings. Transfers of immovable property in this petition have taken place in the month of May, 1973. It is, therefore, clear that the outer limit for publication of notice under section 269D of the Act in the Official Gazette can be the end of February, 1974, and we will have to examine as to whether the Official Gazette dated November 10, 1973, in which the relevant notice has admittedly been " printed " was " published " at any time prior to the end of February, 1974. If, on consideration of the entire circumstances, pleadin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... placed on record. With all these efforts, the petitioners could for the first time get a copy of the relevant Gazette of Government of India dated November 10, 1973, only on March 18-19, 1974, under a bill dated March 15, 1974, from the Controller of Publications, New Delhi. This bill has been produced as annexure " N ". The petitioners have specifically alleged in para. 11C of their petitions that : " To the best of the knowledge and information of the petitioner copy of such Gazette was not available even with the first respondent at any rate till March, 15, 1974. " and As already stated, even the Government Offices at Nagpur, including the Office of the first respondent, were not holding a copy of the aforesaid Gazette till March 15, 1974, and even in spite of the repeated attempts made on behalf of the petitioners, the said copy was not available to the petitioners or others even as late as till 17/18th March, 1974, a point of time beyond the prescribed period of nine months even under the Amending Act, 1973. " These allegations pertain specifically to respondent No. 1 but there is neither denial of these allegations in the return filed by respondent No. 1 nor a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the petitioners, relied upon a decision of a Division Bench of the Allahabad High Court in the case of Awasthi v. IAC [1977] 107 ITR 796. In that case, the sale deed of the property in question was registered on December 29, 1973, and notice under section 269D of the Act was printed in the Gazette dated September 28, 1974, that is, within 9 months from the end of December, 1973. But, by reference to its non-availability in the office of the Controller of Publications, New Delhi, up to October 4, 1974, to the fact that it was despatched to subscribers for the first time on October 14, 1974, to the fact that it was received in the Judge's Library of the Allahabad High Court and Government Pleader's office on October 17, 1974, and to the fact that it was received in the Bar Association of Allahabad on October 20, 1974, coupled with the further fact that those averments were not specifically controverted, it was held that the notice in question was not published within 9 months from the end of the month during which the instrument of transfer was registered and after referring to a Full Bench decision of the Allahabad High Court in Sri Hiralal v. District Magistrate, Etah (Civil Mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gujarat High Court. The view of the Tribunal that publication of notice on the last date of the prescribed period of 9 months invalidated the proceedings because it was no publication in the sense that copies of Gazette could not have been available to interested parties on that very day was sought to be based on the reasoning in Awasthi's case [1977] 107 ITR 796 (All). The Gujarat High Court observed that " Now, such facts (facts similar to Awasthi's case) regarding non-availability of Gazette in the first instance, have not been established at all before the Tribunal. " The court felt that there was great force in the argument on behalf of the Revenue that there was no requirement in law that the Gazette in which the notice under section 269D of the Act is published should be available to interested parties within 9 months of the last date of the month in which the transfer took place and, to that extent,the view in Awasthi's case [1977] 107 ITR 796 (All) was contrary to the earlier pronouncement of the Gujarat High Court in the case of CIT v. Vimlaben Bhagwandas Patel [1979] 118 ITR 134. However, the court hastened to add (p. 432 of 124 ITR). " We must clarify that we do not in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f section 269D provides that the Competent Authority shall cause " a notice under sub-section (1) " in respect of the immovable property to be served upon the transferor, transferee, occupant and shall publish it in the locality in the prescribed manner besides putting it on the notice board of the office. It was urged that this provision clearly contemplates earlier publication of the said notice in the Gazette because reference is to the notice under sub-section (1). In the present case, the Gazette is dated November 10, 1973, while individual notice is dated November 2, 1973. According to the petitioners, this was contrary to provisions of sub-section (2) and on that count alone, apart from the question of publication of notice in the Gazette within the prescribed time, the initiation of proceedings for acquisition was liable to be quashed. We are not inclined to agree with this submission. We feel that giving of individual notice and locality notice are not jurisdictional requirements, non-compliance of which must result in invalidity of initiation of acquisition proceedings. There is no doubt that giving of such notices is mandatory but we feel that its non-compliance in the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property exceeds the apparent consideration therefor by more than fifteen per cent. ", the Competent Authority also further goes on to say that the apparent consideration has not been truly stated in the said instrument of transfer with the object either of " facilitating reduction or evasion of tax under the Income-tax Act and/or facilitating concealment of any income or moneys or other assets which have either not been or which are required to be disclosed under the Income-tax Act or the Wealth-tax Act." The two parts of the objects in the notice are joined with " and/or ". We have already pointed out that the condition precedent to the exercise of power under section 269C of the Income-tax Act apart from entertaining that reason to believe by the Competent Authority that the property had been transferred for an apparent consideration which is less than the fair market value, the property has been transferred with the object either with a view to reduce or evade the tax liability of the transferor or for the purpose of concealment of income or assets of the transferee. Unless the Competent Authority, therefore, has reason to believe that the transfer for an apparent consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f jurisdiction does not arise. It was permissible for the authority to join the two clauses (a) and (b) by the conjunction " and " or either clause (a) or clause (b) which in its opinion was the object of the transfer. These provisions were likened to similar provisions of penalty under section 271 of the Income-tax Act. It was pointed out that similar to section 271, just as penalty in that case can be imposed only upon the pre-existing conditions conferring the jurisdiction to initiate penalty proceedings being found, similarly, under section 269 and Chapter XX-A, initiation of acquisition proceedings can be commenced with the formation of the requisite opinion or belief and not a vague possibility which may or may not exist. It was contended that the Competent Authority was not certain whether the object of the transfer was either one or both and if the Competent Authority itself was not seeking (sic), then it was contended that the notices would not be able to make a representation against the initiation of proceedings and would not know in regard to what representation had to be made by them. Neither the transferors nor the transferees would be able to know as to what was alle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee must know as to what the Competent Authority holds against him; whether the object was concealment of income by the transferor or whether it was for the concealment of income or assets of the transferee. He cannot be left to guess as to what could be the stand of the Competent Authority during the proceedings, nor could the authority be permitted to take up a vague stand and change that stand at any time it suits him. The initiation of the proceedings is contingent and dependent upon particular kind of infringement being alleged, or both the infringements being alleged, and not a vague statement that it may be both or it may be one or it may be either this or that. It is true that the satisfaction or having a reason to believe at the time of the commencement of the proceedings can only be and has to be only prima facie. But it cannot be left to be guessed. For, unless that opinion or belief is crystallised, the initiation of the proceedings itself cannot be allowed to be commenced. We think that this requisite formation of belief or opinion is a jurisdictional fact and unless a fair prima facie opinion is formed in regard to the categories of infringements or any one of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i's case [1972] 85 ITR 77 (Guj) was followed in Padma Ram Bharali v. CIT [1977] 110 ITR 54 (Gauhati). Padma Ram's case was one under section 271 of the Income-tax Act where penalty proceedings were initiated. There, penalty proceedings were commenced on an allegation that a particular breach or infringement was committed while the conclusion was that another breach was disclosed and made and not the one complained of. A penalty was imposed on the discovery which was ultimately quashed. There, the penalty proceedings could be started for concealment of income or furnishing of inaccurate particulars of income. Penalty proceeding was commenced on the allegation that a particular item of income was concealed. It was, however, found in appeal and ultimately by the Tribunal that what was done by the assessee was not concealment of income but furnishing inaccurate particulars thereof. It was observed that " the basis of the initiation is not identical with the ground on which the penalty had been imposed and this must have deprived the assessee Of reasonable opportunity of showing cause against the penalty proceedings which is after all a quasi-criminal proceeding ". It was recognised tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h, AIR 1969 SC 966 and State of Maharashtra v. Babulal Kriparam Takkamore, AIR 1967 SC 1353. In all those cases, the question as to whether a particular satisfaction of the authority based upon the facts which were found to be non-existent or irrelevant can still form the basis or sustain an action subsequently taken was considered. Such a question does not arise before us. Initiation of the proceedings in this case itself, initiated by the notices is challenged. We may, however, observe that the conclusion deduced by the Gujarat High Court on the basis of the decision in State of Maharashtra v. Babulal Kriparam, AIR 1967 SC 1353, does not appear to be warranted as in that particular case, the order of the State of Maharashtra itself said that even one of the grounds was serious enough to take the action which it took. The non-existence of the other ground, therefore, in the opinion of the Supreme Court was of no avail and the order could be sustained on the remaining ground also. Such a situation does not obtain here. However, in Vimlaben's case [1979] 118 ITR 134 (Guj), it was held that individual notices under sub-section (2), clauses (a) and (b) of section 269C did not lay down ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not correct. The ambivalence or indefiniteness and uncertainty as to the object would affect the representation and incapacitate the objector from doing so. We are, therefore, inclined to think that it is one of the requisite jurisdictional facts and a condition precedent to the exercise of the power and acquisition of jurisdiction by the Competent Authority, that he must come to a prima facie positive conclusion as to the object and not be indefinite about it. In the present case, by the use of conjunction " and/or " for the two clauses of section 269C(1)(a) and (b), the pre-condition and requirement for seizing jurisdiction and exercise of power is defective. We do not think, therefore, even if it is possible to consider in the present case that individual notices contemplated under section 269C(2) would be possible to be given, that would in any way improve the matters. We have already pointed out that the reasons for the order have not been disclosed. The inspection has also not been allowed. The prescribed period for making an objection on the basis of the notices already served has expired. We do not know whether the site notices have been issued. The defect or impairmen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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