TMI Blog1979 (8) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... the IAC of Income-tax, Acquisition Range-I, as the Competent Authority issued a notice under s. 269D of the I.T. Act, 1961, initiating proceedings for the acquisition of the said premises No. 4A. Pollock Street. The said proceedings for the acquisition of the aforesaid property is the subject-matter of challenge in the present rule obtained by the petitioners, inter alia, on the ground that the conditions precedent for the initiation of the said proceedings were absent. According to the petitioners, the Competent Authority had no material before it for forming his belief that the consideration for the transfer as agreed between the parties had not been truly stated with the object either of cl. (a) or of cl. (b) of sub-s. (1) of s. 269C of the I.T. Act, 1961. The Competent Authority under s. 269C(1) of the Act may initiate proceedings for the acquisition of an immovable property when there was a transfer of the said immovable property either by way of sale or by way of exchange. Secondly, if the Competent Authority has reason to believe that: (i) the fair market value of the immovable property exceeds Rs. 25,000 ; (ii) the apparent consideration for the transfer is less than ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se may transfer by way of sale or exchange a property for inadequate consideration without any object of evading income-tax. In these classes of cases it cannot be assumed that the vendor had made any untrue statement in the instrument of transfer about the amount of consideration with the object of evading tax either by the vendor or by the vendee. Thus, every case of transfer of immovable property by way of sale or exchange for less than its fair market value cannot warrant the initiation of acquisition proceeding under Chap. XX-A of the I.T. Act. Section 269C(1) involves the exercise not of judicial or quasi-judicial but administrative powers. In forming its belief for initiation of proceedings for acquisition, the Competent Authority acts on its subjective satisfaction which is arrived at upon the application of his mind to certain objective factors. But in initiating such proceedings the Competent Authority cannot act arbitrarily and he has to form his belief after applying his mind to the relevant factors specified in sub-s. (1) of s. 269C. Therefore, although the court exercising its writ jurisdiction cannot question the sufficiency or adequacy of the reasons for the forma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thority, while adjudicating, may apply the said provisions. In support of the above proposition the learned advocate for the petitioners has relied upon several reported decisions. Ramendra Mohan Dutta J. in Smt. Bani Roy Chowdhury v. Competent Authority, IAC [1978] 112 ITR 111, 121 (Cal), inter alia, held that so far as the provisions of sub-s. (2) of s. 269C were concerned the same was matter of proof and the Legislature intended to simplify the procedure so far as the revenue was concerned by applying such rules of evidence relating to presumptions and to matters of proof, so that in the absence of evidence to the contrary, the Competent Authority might not be faced with any difficulty at the hearing stage of the proceeding in arriving at its conclusion when any positive proof therefor that the transfer was so effected with the object of evading the tax as mentioned. Ramendra Mohan Dutta J. in Mrs. Bani Roy Chowdhury's case [1978] 112 ITR 111 (Cal), inter alia, held that in the process of formation of its belief the Competent Authority cannot rely upon sub-s. (2) of s. 269C and the Competent Authority at the stage of forming his belief, was bound to consider whether a transact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of the Supreme Court in S. Narayanappa's case [1967] 63 ITR 219. The Supreme Court in S. Narayanappa's case had observed that the proceedings for assessment or reassessment under s. 34(1)(a) of the Indian I.T. Act, 1922, started with the issue of a notice and it is only after the service of the notice that the assessee whose income is sought to be assessed or reassessed becomes a party to such proceedings. The earlier stage of the proceeding for recording the reasons of the ITO and for obtaining the sanction of the Commissioner are administrative in character and are not quasi-judicial. Whether the word " proceeding " should be given a narrow or a wide import would depend upon the nature and the scope of an enactment and the particular context in which the expression appears. In its wider connotation, " a proceeding ", according to the judicial interpretation, means every step in an action. But the expression " every proceeding " in subs. (2) of s. 269C clearly indicates that only the proceedings under the Act after their initiation are covered by the said sub-rules. Both cls. (a) and (b) can apply only in judicial proceedings. Where the authority is required to record its fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e rule of conclusive evidence would be a bar to adducing evidence about the fair market value in order to establish that the amount of consideration stated in the instrument of transfer does not in fact exceed by more than 25% the price which the immovable property would ordinarily fetch on sale in the open market on the date of execution of the instrument of transfer of such property. In other words, an objector against proposed acquisition of an immovable property is not precluded from proving by evidence that the fair market value of the property in question has not been correctly determined by the Competent Authority and, therefore, the rule of conclusive evidence contained in s. 269C(2)(a) cannot be applied in such a case. I am inclined to hold that sub-s. (3) of s. 269E in fact is indicative of the fact that the rule of evidence contained in sub-s. (2) of s. 269C is attracted after a proceeding for acquisition has been initiated. At the stage of initiation the authority is not required to record any finding that in fact the consideration has not been correctly stated in an instrument of transfer of immovable property valued at more than Rs. 25,000 with the object of evading t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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