TMI Blog1983 (5) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... and had let them out to some tenants. The actual notice of the proceedings was in fact served upon the assessee respondent, but no such notices were served upon the tenants, who were occupying the shops built on the plot in dispute. The Competent Authority, vide its order dated March 21, 1980, held that the case fell under s. 269F(6) of the Act and passed an order of acquisition of the property in dispute. The assessee-respondent went up in appeal, which was allowed on grounds, inter alia, (i) that s. 269D(2) of the Act had not been complied with inasmuch as the tenants occupying the shops built on the land in dispute had not been served with any notices, and (ii) that the conditions precedent for the initiation of proceedings were wanting in this case because the action had been taken by the Competent Authority merely on the report of an inspector of the Department, who had not properly assessed the market value of the property in dispute on the date of its transfer. The grounds urged on behalf of the assessee respondent prevailed with the Income-tax Appellate Tribunal, who reversed the order passed by the Competent Authority and ordered the property to be released forthwith. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t free from difficulty and as indicated earlier, if we were to accept the view expressed by the Gujarat High Court, we might have to doubt the correctness of the decision given in Rattan Singh v. State of Punjab, AIR 1976 P H 279 [FB]. The matter is likely to crop up in a large number of cases. In this situation, we deem it proper that this case should be decided by a larger Bench. Let the papers be placed before Hon'ble the Chief justice for obtaining suitable orders in that behalf. JUDGMENT OF THE FULL BENCH SANDHAWALIA C.J. -In this reference to the Full Bench, the two significant general questions that have come before us are : " (i) Whether the initiation of proceedings for the acquisition of immovable property in certain cases of transfers to counteract evasion of tax under Chapter XX-A of the Income-tax Act, 1961, is complete by the publication of the notice in the Official Gazette under section 269D(1) of the said Act ? and, (ii) Whether the transferee, though himself personally served with an individual notice under section 269D(2)(a) of the Income-tax Act, 1961, can assail the said acquisition proceedings on the alleged non-service on any other person or persons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the instrument of transfer with the object of facilitating the reduction or evasion of the tax liability and for the concealment of an income or money or other assets which have not been and which ought to be disclosed by the assessee-transferee for the purpose of tax statutes. As a necessary consequence, in pursuance of s. 269F(6) of the Act, the orders for acquisition of the property were passed with the prior approval of the Commissioner of Income-tax, Jullundur. The assessee-transferee alone appealed against the order aforesaid. The Tribunal first took the view that even though the assessee-transferee had been duly served under s. 269D(2), yet the mere failure to serve the tenant in the shops of the disputed property was a material defect which vitiated both the proceedings and the consequential order and for that reason alone, the same should be struck down. However, as an additional reason, the Tribunal held that there was not any adequate material for the finding with regard to the objects specified in cl. (a) or (b) of s. 269C(1) of the Act, and, therefore, these findings could not also be sustained. As a result, the order of the Competent Authority was set aside and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of s. 269A to s. 269R, contained in Chap. XX-A, there seems to be little doubt that these provisions were directed to achieve the laudable object of curbing the evasion of tax and the generation of black money by understating and under-valuing the transfer of immovable properties. That this evil had attained enormous proportions (and indeed continues to grow despite these provisions) was not denied at the bar, as also the fact that Parliament was ultimately compelled to legislate in order to counter the same, is again not in dispute. Therefore, on larger canons of construction, the interpretation of the provisions in Chap. XX-A must be one conducive to the avowed purposes of its enactment by Parliament and not one which in the ultimate analysis may tend to frustrate the same in actual practice. It is apt now to read the relevant part of s. 269D of the Act: (1) The Competent Authority shall initiate proceedings for the acquisition, under this Chapter, of any immovable property referred to in s. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acquisition. This initiation is in terms provided for by sub-s. (1) of s. 269D of the Act. The plain language thereof lays down that the Competent Authority shall initiate the proceedings by notice to that effect published in the Official Gazette. Therefore, the conclusive step which, in essence, amounts to the assumption of jurisdiction for acquisition, is in these terms spelt out by the law itself. When the language of s. 269D(1) of the Act itself declares when and how initiation of the acquisition proceedings is to be done, it seems inapt to go on and hold that despite this mandate, the initiation would still be incomplete till the fortuitous circumstance of the issue of notices to the transferor, the transferee, the occupants and persons interested, and not only that, but much later, by their effective service as well. Viewed in the correct perspective, sub-s. (1) of s. 269D of the Act is the primary and the main provision for the initiation of acquisition proceedings. Sub-section (2), which obviously follows, is in a way a subsidiary and a supplementary provision to the aforesaid basic one. It seems elementary that where public notice by publication in the Official Gazette i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned advocate for the respondents that individual as well as locality notices are conditions precedent for initiating acquisition proceedings. If that had been the legislative intent as contended on behalf of the respondents, it would have been appropriately expressed as has been done in s. 4 of the Land Acquisition Act. The Legislature would have said in no uncertain terms by prescribing that the competent authority shall initiate proceedings for acquisition of immovable property by a notice to that effect published in the Official Gazette as well as by individual and locality notices. There was no necessity, if the legislative intent had been to treat individual and locality notices as jurisdictional facts or conditions precedent for exercise of the jurisdiction, to provide for such notices in sub-s. (2) instead of in sub-s. (1). " The aforesaid view has been expressly reiterated in the later Division Bench judgment in CIT v. Shilaben Kanchanlal Rana [1980] 124 ITR 420 (Guj). On this specific point the view in the Allahabad High Court is also in consonance with the one which I am inclined to take. In U. S. Awasthi v. IAC [1977] 107 ITR 796 (All), Gulati J., speaking f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Division Bench. The earlier consistent view in the Gujarat and the Allahabad High Courts was not brought to the notice of the Bench. The issue seems to have been treated as one of first impression and the sharp distinction betwixt sub-ss. (1) and (2) of s. 269D seems to have gone wholly unnoticed. Reliance was primarily placed on authorities under the Land Acquisition Act, 1894, the provisions where or are not even remotely in pari materia with s. 269D of the Act. The legislative background and the particular language of s. 269D and the sequence thereof was equally not adverted to. With the greatest respect to the learned judges of the Andhra Pradesh High Court, I would wish to record my dissent from Mohammed Mahboob Ali Saheb's case [1978] 113 ITR 167 (AP). Before parting with this aspect of the case, a passing notice is also called for to the tenuous reliance of Mr. Gupta on ss. 147 and 148 of the Act and precedents thereunder, This appeared to me as an argument of desperation. Plainly enough, the language of ss. 147 and 148 of the Act does not have even a remote similarity to that in s. 269D of the Act. Undoubtedly, the very content, import and, purpose of those sections ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erved in no uncertain terms as follows (p. 1940): "Apart from that there is a good deal of force in the argument that the objection of non-service of notice could properly be taken only by the person on whom the notice is not served and not by third parties." Following the above in the particular context of s. 269D of the Act, the Division Bench in CIT v. Premanand Industrial Co-operative Service Society Ltd. [1980] 124 ITR 772 (Guj), has held that a third party cannot make a grievance of non-service in the following terms (p. 781): " It may also be pointed out that no individual member of the society of any of the three co-operative societies has made any grievance about any non-service of notice upon him. In the context of notice required to be served under the provisions of the Administration of Evacuee Property Act, it was held by the Supreme Court in Begum Noorbanu v. Deputy Custodian-General of Evacuee Property, AIR 1965 SC 1937, that an objection as to non-service of notice can properly be taken not by third parties, but only by the person on whom the notice is not served. In the instant case, no objection whatsoever has been raised by the members. The objections were ..... X X X X Extracts X X X X X X X X Extracts X X X X
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