TMI Blog1980 (1) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... e ") for a consideration of Rs. 25,000 at the rate of Rs. 6.25 per sq. yard. This plot of land formed part of the parcel of land of S. No. 458. A sum of Rs. 251 was paid by way of earnest money by the transferee to the transferor. It appears that there was some dispute about the title of the transferor which was ultimately resolved in about the year 1972. A deed of conveyance was accordingly executed by the transferor in favour of the transferee on September 17, 1973. The IAC, Acquisition Range II, Ahmedabad, who happened to be the competent authority, decided to initiate proceedings for the acquisition of the aforesaid plot of land under s. 269D(1) of the said Act since it was found by him that the said transferor had sold his adjoining plot of land admeasuring about 5,982 sq. yards to one co-operative housing society, namely, Kunjvihari Co-operative Housing Society, in May, 1970, at the rate of Rs. 10 per sq. yard, and that since then the valuation of the immovable property had appreciated considerably by the time the plot of land sought to be acquired was conveyed in September, 1973. The competent authority, therefore, by his order of February 21, 1974, initiated proceedings f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port of his contention that this was the only value of the property at which he was bound under the agreement to purchase the property in view of the bar contained in s. 269F(9) of the said Act. The competent authority, therefore, by his order of September 9, 1975, decided to acquire the plot of land in question under s. 269F(6) since all the conditions necessary for the exercise of his powers were satisfied. The transferee being aggrieved by the above order of acquisition, carried the matter before the I.T. Appellate Tribunal. A number of contentions were urged before the Tribunal. One of the contentions urged on behalf of the transferee was that the provisions of s. 269F(9) could not have retrospective effect so as to exclude from evidence those agreements which have been entered into before the provisions contained in Chap. XX-A were put on the statute book on 15th November, 1972, and, therefore, the agreement in question of March 7, 1968, in the present case, is admissible in evidence for proving that the difference in the apparent consideration specified in the instrument of transfer and the fair market value thereof at the relevant date was not due to any other reason but t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or acquisition of the said property initiated and completed by the competent authority were not justified. We are, therefore, unable to sustain the order of the competent authority passed under the provisions of section 269F(6) of the Income-tax Act, 1961. The said proceedings are hereby quashed." This order of the Tribunal is the subject-matter of this appeal before us at the instance of the Commissioner of Income-tax, Gujarat-III. At the time of hearing of this appeal, the learned Govt. Pleader, appearing on behalf of the Commissioner, raised the following three contentions: (1) The Tribunal committed a grave error of law in holding that section 269F(9) of the said Act would not apply to agreements effected prior to the coming into force of Chap. XX-A of the Act of 1961 and they were admissible in evidence for explaining the difference in the apparent consideration and the fair market value of the property, inasmuch as the Tribunal failed to appreciate that the provision contained in the said sub-s. (9) was merely a rule of evidence and on accepted principles of interpretation of statutes it will be retrospective and would, therefore, apply even to agreements entered into bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration and forfeit the difference between such consideration and the fair market value to the Government as penalty .... It is not merely the untrue statement of consideration in the instrument of transfer but, coupled with that, the ulterior motive of tax evasion or concealment of income is the gist of the offence and till that ulterior motive is established and found the power in question cannot be exercised." This court further examined the scope and width of s. 269C(2) while negativing the contention of the revenue that the presumption prescribed in sub-s. (2)(a) and (b) of s. 269C would also arise at the stage of initiation of the acquisition proceedings and not merely at the final stage of decision, and observed as under (p. 175): " Clause (b) of sub-s. (2) provides in effect that where the apparent consideration is less than the fair market value of the property transferred, it shall be presumed, unless the contrary is proved, that the agreed consideration has not been stated truly in the instrument with the object of tax evasion. Clause (a) provides that if the fair market value of a property exceeds the apparent consideration by more than 25% it shall be conclusi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble property, no objection shall be entertained on the ground that although the apparent consideration for the property is less than the fair market value of the property on the date of the execution of the instrument of transfer, the consideration as agreed to between the parties has been truly stated in the instrument of transfer because such consideration was agreed to having regard to the price that such property would have ordinarily fetched on sale in the open market on the date of the conclusion of the agreement to sell the property, except, where such agreement has been registered under the Registration Act, 1908 (16 of 1908). " In our opinion, therefore, the net effect of a conjoint reading of s. 269C(2)(a) and (b), s. 269E(3) and s. 269F(9) is that where the fair market value of a property exceeds the apparent consideration by more than 25%, it shall be conclusive proof that the consideration has not been truly stated subject to the right of the objector to displace the said presumption on the ground that in fact the fair market value does not exceed the apparent consideration by the prescribed margin; provided, however, he will not be entitled, in the course of hearing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may or may not be given and by whom and in what manner such evidence may or may not be given. Consistently with the broad functions of the law of evidence, the Indian Evidence Act also deals with the topics that usually fall within the purview of such law. It prescribes the rules of relevance, it Provides for the exclusion of some evidence, as for instance, exclusion of hearsay evidence or of parol evidence in some cases ; it deals with onus of proof with the competence of witnesses, with documentary evidence and its proof, with presumptions and with estoppel. " (Emphasis supplied by us). It cannot be gainsaid that the provisions contained in s. 269E and s. 269F of the 1961 Act which, inter alia, provide for the period of limitation during which the persons affected or interested are entitled to file their objections, and the procedure for hearing the objections, are parts of the law of procedure. In the course of hearing of objections under s. 269F, if Parliament has shut out the evidence of an unregistered agreement to sell immovable property which the transferor or transferee may intend to adduce for purposes of rebutting the presumption of untruthful statement of consideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D 1 (CA), at page 12, that it must be a vested right in the strict sense in order to raise the presumption, " for there is no like presumption that an Act (of Parliament) is not intended to interfere with existing rights. Most Acts of Parliament, in fact, do interfere with existing rights." The Court of Appeal in that case was concerned with the question whether the operation of s. 3 of the Conveyancing Act, 1892, which sought to prevent in future the exaction of fine by a lessor for giving a lessee a licence to assign should not be restricted to cases where the lease was granted after the commencement of the said Act. Cozens Hardy M. R. said that generally a statute is presumed not to have a retrospective operation unless by express language or necessary implications a contrary intention is manifested. He, however, failed to apply that principle to the statute in question before him. He observed as under (p. 11) : " 'Retrospective operation' is an inaccurate term. Almost every statute affects rights which would have been in existence but for the statute. Section 46 of the Settled Estates Act, 1877, above referred to, is a good example of this. Section 3 does not annul or make v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forbidding the subsequent coming into existence of a debt is not a retrospective operation, but is an interference with existing rights in that it destroys A's right in an event to become a creditor of B." There is no disturbance of the vested right of the transferee-respondent because he is only entitled to have a conveyance executed in his or her favour as held by the Bombay High Court in Matilda Ferreira's case [1978] 112 ITR 934. In Craxfords (Ramsgate) Ltd. v. Williams and Steer Manufacturing Co. Ltd. [1954] 3 All ER 17, the Queen's Bench Division was concerned with the question, whether s. 2 of the Law Reform (Enforcement of Contracts) Act, 1954, repealing s. 4 of the Sale of Goods Act, 1893, which required a note or a memorandum in writing evidencing a contract, was retrospective or not, inasmuch as it deprived the defendant in that case of the plea which he had raised in his written statement in a suit brought by the plaintiff claiming damages for the breach of an oral contract for sale of goods. It was held that no vested right of the defendant which he could have been said to have acquired by raising a plea in the written statement was disturbed because s. 4 which was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht of the evidence which is available that the court will arrive at a determination whether or not a contract for the sale of goods of the value of more than pounds 10 can be enforced. The new Act applies to contracts made before it was passed and I have come to the conclusion that defences based on s. 4 in regard to such contracts can no longer be relied on." In Halsbury's Laws of England, 2nd. Edn., Vol. 31, there is a discussion about the effect of statutes on the right of action. It is observed in para. 672 at p. 516 as under: " Although an existing right of action is not prima facie taken away by a new statute, there is no insuperable objection to construing the language of a statute so as to make it apply to pending proceedings, if such a construction is rendered necessary by the proper interpretation of the language used by the Legislature. Express words are unnecessary to take away vested rights of action for which legal proceedings have been commenced. Clear language is sufficient. There is no rule that when a person has commenced an action he has a vested right in the then state of the law. " The learned advocate for the respondent-transferee, therefore, attempted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 SC 1052, if the basic fact that the difference between the apparent consideration in an instrument of transfer and its market value exceeds more than 25% is proved, the Legislature has prescribed that the presumption would be raised about the untruthfulness of the statement of consideration in an instrument of transfer and it will be conclusive proof of the inference that the apparent consideration has been untruly stated subject to the right of an objector to lead evidence in rebuttal thereof as provided in s. 269E(3). It has been further provided by the Legislature that on such conclusion having been reached, a further presumption would arise that the apparent consideration was untruly stated with the ulterior motive of tax evasion or concealment of income. It cannot be urged successfully that the basic fact of the difference of 25% between the apparent consideration and the fair market value of a property is inherently irrelevant or has no probative or persuasive value to the inference permitted to be drawn as to the untruthfulness of the consideration. In any case, from the basic fact that the statement of apparent consideration is untruly made, the further inference that it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd (ii) ulterior object as to tax evasion or concealment of income. It is no doubt true that the first circumstance about the untruthfulness of the consideration is to be presumed from the prescribed margin of 25% between the apparent consideration and the fair market value of a property. On such presumption being raised, the ulterior object for making such statement is also to be presumed that it is for tax evasion or concealment of income. The learned advocate for the respondent-transferee was not justified in urging that the ratio of the decision in Izhar Ahmad's case, AIR 1962 SC 1052, would not be attracted in the present case. As a matter of fact it was throughout his contention that inasmuch as s. 269F(9) virtually makes the presumption irrebuttable, though an objector has been given liberty to rebut the presumption raised under s. 269C(2)(a) the former provision should be considered to be a substantive provision of law. It was with a view to repel this contention that the learned Govt. pleader for the revenue relied on the decision of the Supreme Court in Izhar Ahmad's case, AIR 1962 SC 1052. In our opinion, sub-s.(9) of s.269F does not raise are but table or an irrebutta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... directed, and accordingly the husband's evidence of absence of intention to condone the wife's adultery had been held admissible. Lord Denning enunciated the rule in the following terms while holding that such evidence was admissible (p. 535): " The rule that an Act of Parliament is not to be given retrospective effect only applies to statutes which affect vested rights. It does not apply to statutes which only alter the form of procedure, or the admissibility of evidence, or the effect which the courts give to evidence. (Emphasis supplied by us). In Herridge v. Herridge [1966] 1 All ER 93 (CA) a question arose before the Court of Appeal whether resumption of cohabitation constituted condonation and would disentitle a wife to relief of divorce on the ground of matrimonial offence of cruelty under s. 2(1) of the Matrimonial Causes Act, 1963, which came into force on July 31, 1963, after the alleged cohabitation on November 5, 1962. The Court of Appeal held that s. 2(1) of the said Act was a procedural provision, for it dealt with the adducing of evidence in relation to an allegation of condonation in any trial after July 31, 1963, and accordingly the sub-section was applicable e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore or after the commencement of the said Act yet not as to affect anything done or omitted during any such period. The Court of Appeal reversed this decision and held that the effect of ss. 9 and 10 of the new Act was to make the tenant retrospectively a protected tenant although at the date of the issue of the proceedings he was not entitled to remain in possession of the premises. Lord Evershed M.R. observed that if the necessary intendment of the Act is to affect pending causes of action, the court will give effect to the intention of the Legislature even though there is no express reference to pending actions. In Anant Gopal Sheoray v. State of Bombay, AIR 1958 SC 915, the facts were that a complaint was filed against the appellant and three others before the Supreme Court under s. 282 of the Indian Companies Act read with ss. 465 and 477A of the Indian Penal Code on January 13, 1953, and the proceedings commenced in 1954 before a magistrate but they were transferred to a Court of Special Magistrate on May 18, 1955, who commenced recording evidence on July 4, 1955. The Criminal Procedure Code (Amendment) Act (26 of 1955) came into force on January 2, 1956. The appellant made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether an enactment is meant to operate prospectively or retrospectively, has to be decided in accordance with well settled principles. The cardinal principle is that statutes must always be interpreted prospectively, unless the language of the statutes makes them retrospective, either expressly or by necessary implication. Penal statutes which create new offences are always prospective but penal statutes which create disabilities, though ordinarily interpreted prospectively, are sometimes interpreted retrospectively when there is a clear intendment that they are to be applied to past events... There are, however, statutes which create no new punishment, but authorise some action based on past conduct. To such statutes, if expressed in language showing retrospective operation, the principle is not applied. As Lord Coleridge C.J. observed during the course of arguments in R. v. Birwistle [1889] 58 LJ MC 158 : 'Scores of Acts are retrospective and may without express words be taken to be retrospective, since they are passed to supply a cure to an existing evil.' Indeed, in that case which arose under the Married Women (Maintenance in Case of Desertion) Act, 1886, the Act was h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ended that the transaction was a loan transaction. On remand, the Assistant Custodian held that it was a deposit and was recoverable when the property vested in the Custodian. An appeal from the said order was dismissed by the Custodian-General. The appellant moved the Supreme Court by way of special leave. Wanchoo J., speaking for the court, held that sub-ss. (1) and (2) of the amended s. 48 were clearly procedural and would apply to all cases which were to be investigated in accordance therewith after October 22, 1956, even though the claim might have arisen before the amended section was inserted in the Act, since it was well settled that procedural amendments to a law apply in the absence of anything to the contrary, retrospectively in the sense that they apply to all motions after the date they came into force even though the actions may have begun earlier or the claim on which the action may be based may be of an anterior date. Wanchoo J. considered the entire s. 48 and observed as under: ".. ...... It will be seen that this is mainly a procedural section replacing the earlier s. 48 and lays down that sums payable to the Government or to the Custodian can be recovered there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ective as was the case in In re Joseph Suche Co. Ltd. [1875] 1 Ch D 48 (Ch D). By no stretch of imagination can it be contended that any vested rights are sought to be divested nor can it be urged successfully that a substantial provision of law is enacted for the first time prescribing new disabilities or remedy. In J. P. Jani, ITO v. Induprasad Devshanker Bhatt [1969] 72 ITR 595 (SC), a contention that under s. 148 of the I.T. Act, 1961, an ITO can reopen the assessment of an assessee even though that right might have been barred under the 1922 Act, was sought to be re-enforced by placing reliance on s. 297(2)(d)(ii) of the 1961 Act, and it was negatived by the Supreme Court since neither by express language nor by necessary implications of the said section there was a revival of the right of the ITO to reopen an assessment which was already barred under the old Act. The Supreme Court reaffirmed the recognised principle of interpretation of statutes that unless the terms of the statute expressly so provide or unless there is a necessary implication, retrospective operation should not be given to the statute so as to affect, alter or destroy any right already acquired or to re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, therefore, urged in the alternative that it would be contrary to all the recognised canons of construction of statutes to allow a procedural section to whittle down or modify a substantive provision of law (vide Rustom Dinshaw v. State of Bombay [1953] 55 BLR 268; AIR 1953 Bom 271). We do not think that the interpretation which has been canvassed on behalf of the revenue about the retrospectivity of the impugned provision would, in any way, whittle down or modify a substantive provision of law. It is no doubt true that the width of s. 269C(2)(a) which permits an irrebuttable presumption to be raised is sought to be curtailed by enabling an objector to raise objections under s. 269E(3) for purposes of showing that there was no untrue statement of consideration in an instrument of transfer. We do not think that this substantive right of filing objections, assuming that it is a substantive one, is sought to be whittled down or modified by the impugned provision. It merely provides, as we have stated above, what quality of evidence would be required for purposes of effectively rebutting the presumption about the untrue statement of consideration. The learned advocate for the respond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut the genuineness, validity of, factum of, the existence of such an agreement, but it cannot exclude the evidence from its consideration for purposes of finding out the ulterior object underlying the conceded difference between the market value and the apparent consideration of an immovable property. An objector can successfully persuade a competent authority that there was no ulterior motive about the presumed untruthfulness in the statement of consideration and the object, for the obvious difference was not motivated but was the result of the agreement entered into between the parties. We are, therefore, of the opinion that this is the only width and scope of the impugned provision. The learned advocate for the respondent-transferee in this connection invited our attention to the fact that the Tribunal has considered this limited scope of the impugned provision in its order and he relied on the following passage in that behalf : ".. ...... There is yet another aspect of the matter, viz., that when the agreement of sale was entered into, the provisions contained in Chapter XX-A were not on the statute book. Therefore, it could not be presumed that the said agreement was made wi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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