TMI Blog1983 (8) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... n the property in question was sold for a sum of Rs. 49,000 each. In other words, the entire property was sold for a total sum of Rs. 1,47,000. The impugned order shows that the competent authority received information in Form No. 37G received from the Sub-Registrar, Sangrur, considering total consideration of Rs. 1,47,000 for the property as a whole splitted in three sales of Rs. 49,000 each. The competent authority considered the same to be understatement of consideration and first of all made a reference to the Agricultural WTO, Sangrur, vide his office letter No. 3366, dated 21-11-1974 asking for report about the fair market value of the property as on the date of transfer. The Agricultural WTO got the enquiries made from his Inspector and sent a report on 7-12-1974 as per which the Inspector of Agricultural WTO estimated the fair market value of the property in question at Rs. 2,75,000 comprised, of the following : Rs. " Depreciated value of the covered area of kothi about 8,000 sq. ft. at the rate of Rs. 15 per sq ft. 1,20,000 Electricity fittings, etc. 5,000 Servants' quarters and garage 30,000 Boundary walls 20,000 Value of land 1,00,000 ------------------------ T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 4,26,200 as against Rs. 1,47,000 shown in the three instruments of transfer. 2. I have, therefore, reasons to believe that this is a fit case for initiating acquisition proceedings under the provisions of Chapter XX-A of the Act, since it fulfils the conditions laid down in section 269C(1) read with section 269C(2) of the Act. 3. Issue relevant notices. " 3. In the course of acquisition proceedings, compliance of statutory requirements made by competent authority datewise is available in para 6 of the order of the competent authority. The transferor came forward with a report of approved valuer, Shri J. R. Tandon, and gave his explanation vide several letters, as recorded by the competent authority in para 6 of his order. The transferee also came forward with his own justification relying on the valuation of the said property made by the official cell in the wealth-tax proceedings of HUF of Major Tikka Khushwant Singh in the assessment years 1968-69 and 1971-72, so much so, that the transferee offered acquisition of the property mentioning that the revenue is welcome to acquire the property provided the transferee has paid all the legal dues under law within three months. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... HUF, he relied on CIT v. K. Adinarayana Murty [1967] 65 ITR 607 (SC). He submitted that notice was only issued in time but not served which, according to him, is apparent by going through para 5 of the impugned order. He submitted that every time the matter was sent to the official cell, different valuation was assigned. He drew our attention to page 46 of the assessee's compilation as per which most comparative sales were ignored. He submitted that the building in question was getting Rs. 500 per month as rent and it was with the Food Corporation of India. He drew out attention to page 58 of the comparative sales. He submitted that it is not the date of issue of notice but the service which matters in the acquisition proceedings for compliance of mandatory provisions. He drew our attention to page 50 as per which land in question was under the acquisition proceedings under the Land Ceiling Act. He also drew our attention to pages 6 to 11 in which different explanations were submitted by him before the competent authority. To summarise, he said that there is no service on HUF, the competent authority had no reason to believe but only reason to suspect. He further submitted that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in respect of which proceedings for acquisition may be taken. Proceedings can be initiated under section 269C only if the competent authority has reasons, which are to be recorded, to believe that : " (i) the property concerned which is sought to be transferred has a fair market value exceeding Rs. 25,000 ; (ii) it has been transferred for an apparent consideration which is less than the fair market value of the property by 15 per cent or more and (iii) the consideration has not been truly stated in the instrument of transfer with the object of facilitating the reduction or evasion of the liability or the transferor to pay tax under the Act or with the object of facilitating the concealment of any income or assets which ought to be disclosed by the transferee for the purposes of the Act or the Wealth-tax Act. " 7. This Bench of the Tribunal had held the view that having regard to the purpose underlying the powers vested in the competent authority under section 269C(1), the conditions precedent for exercise of such powers and the presumption to be raised in connection therewith in respect of untrue statement of consideration as well as ulterior object of concealment of inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade, then it will be difficult for the competent authority to acquire the property. " [Emphasis added]---Smt. Lalita Todi v. CIT [1980] 123 ITR 40 (Pat.). 10. The determination of the fair market value should not be arbitrary or capricious. The burden of proof about the fair market value of the properties in proceedings for the acquisition of property under Chapter XX-A is on the revenue. It has to be established by the revenue, before it decides to acquire an immovable property under section 269F, that the apparent consideration of its transfer was less by the prescribed margin than its fair market value and it is only then that the presumption arises about the tax evasion or concealment of income. The onus would shift to the transferor or transferee or any other interested person under section 269E(3) of the Act only when the presumption as prescribed under section 269E(2) arises in Sumatilal Chhotalal Shah's case. 11. Section 269D has a title note 'Preliminary notice'. This in fact deals with the initiation of acquisition proceedings. In our considered opinion, initiation of proceedings includes the following steps : (i) issuance of a notice to that effect and publishing i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section (2) of section 269D was brought on the statute book for no purpose. 13. Section 269B(3) lays down that no person shall be entitled to call in question the jurisdiction of the competent authority in respect of any immovable property after the expiry of thirty days from the date on which such competent authority initiates proceedings under section 269D for the acquisition of a particular property. The period of 30 days is to be counted from the date of initiation of proceedings under section 269D as a whole and not under section 269D(1) alone. If the publication of notice in the Gazette without personal service which is mandatory under section 269D(2) is to be taken as proper initiation of acquisition proceedings, the very purpose of serving individual notice is brought to nought and section 269(2) is rendered otiose. As we have stated earlier, such a situation cannot be attributed as having been envisaged by Legislature because there is no place for redundancy in a statute. 14. We are of the considered opinion that in every appeal against the order of acquisition, we have to see whether these requirements of law have been strictly complied with by the competent authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e competent authority no other evidence in respect of comparable sale instances is available, the competent authority or the Tribunal cannot brush aside or refuse to consider the evidence of the sales which may be, in a given case, remote in point of time from the date of initiation of the acquisition proceedings in Sumatilal Chhotalal Shah's case. 16. Now when we come to examine the case before us in the light of above position of law, it is very clear that the competent authority merely relied on the report of the Valuation Officer of the department for all intents and purposes to acquire the property. From a clear reading of the impugned order, it becomes clear that the competent authority merely used the valuation report as bulwark against any argument put forth by two of the transferees who received the notices under section 269D. The competent authority did not make any enquiry of his own to bring on record any evidence that could justify such a drastic step as acquisition of a lawfully transferred property and, if at all it did so in the form of Inspector's report, it does not find place in reasons recorded by the competent authority. On this account alone, the whole order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t without address, this presumption cannot be applied blindly. In the case before us, we have pointed out that the proceedings are penal in character and quasi-criminal, as held by the Gujarat High Court in the case of Sumatilal Chhotalal Shah. In such proceedings, the presumption that the revenue wants to raise in its favour, cannot be said to be available at all. 18. When we scrutinise the facts of the case, we find that according to the revenue, notice under section 269D(2) were sent by registered post acknowledgement due to only Major Tikka Khushwant Singh and it came back with the remark that the addressee is not available as he left without address and then subsequently served on 30-7-1977 without writing as karta of his HUF. Therefore, in view or the nature of powers of the competent authority described above, it was incumbent upon him to serve the notice, if not on all the coparceners, at least on Major Tikka Khushwant Singh as karta of his HUF. It has not been made clear why the competent authority did not do so which he was bound to do about the service of notice upon Major Tikka Khushwant Singh as karta of his HUF. This is very important aspect of the matter. 19. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceedings are, therefore, bad in law. We have also pointed out that the question with regard to the fair market value is a question of fact which has to be decided on the facts brought on record. It would be seen from what is described above that but for the valuation report, the competent authority did not bring on record any evidence for justification of the acquisition proceedings and the order of the acquisition. The burden that lay upon the shoulders of the revenue to establish that the apparent consideration adopted in the sale deed falls short of the fair market value by more than 15 per cent has not been discharged. 21. In the present case, originally the official valuer assigned value of Rs. 3,41,200 without any details and on asking of the competent authority he made the details available and again after the matter was sent back to him by the competent authority to meet the objections of Mr. Tandon valuer of the assessee, the official valuer adopted the valuation of the building at Rs. 85,300 and including tube-well and land overall he assigned value of Rs. 2,64,800. Once again the matter went back to him and he changed the valuation to Rs. 2,54,550. The valuations ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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