TMI Blog1982 (8) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... 19 of the paper book in response to letter dt. 28th Feb., 1979 received by them from the vendor. In this letter, they informed him that the expected amount which the plot can fetch as its price in the market was Rs. 70,000. They also informed him that in addition to the price mentioned above, the purchaser will be required to pay about Rs. 40,000 to the Government, i.e., 1/3rd of the amount of difference between the allotment price and the present market price. They also informed him that the purchaser will be further spending about Rs.13,000 on the purchase of non-judicial stamp paper for execution of sale deed. The vendor appears to have written to the property dealers, M/s Manohar Singh Co., on the 7th March, 1979 that according to his information the auction price of a 500 sq. yd. plot is around Rs.1,00,000. To this the property dealers replied vide letter No. 478 dt. 20th March, 1979 that they had made everything clear in their earlier letter No. 4456 dt. 7th March, 1979. They, however, reiterated what was said in their earlier letter and also informed him that the purchaser as well as the seller will be required to pay 2 per cent commission to the property dealers as the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt forwarding the copy to Sub-Registrar, Chandigarh, for information indicated that a sum of Rs.22,421 representing 1/3rd of the unearned increase of the value of the plot has been acknowledged vide receipt No. 710/74, 75 dt. 2nd June, 1979. In other words, the permission to sell was granted on payment of Rs.22,421 to the Chandigarh Administration representing 1/3rd of the unearned increase of the value of plot. It appears that the Chief Commissioner, Chandigarh, in exercise of the powers conferred upon him by s.22 of the Capital of Punjab (Development Regulation) Act, 1952, made certain rules called the Chandigarh (Sale of Sites and Buildings) Chandigarh Administration Amendment Rules, 1979, to amend the Chandigarh (Sale of Sites and Buildings) Rules, 1960. These amendment rules inserted r. 8C after r. 8B of the Chandigarh (Sale of Sites and buildings) is as under as appearing at pages 17 18 of the paper book : "8C : Notwithstanding anything contained is the letter of allotment/conveyance deed imposing a ban on the transfer of the site/building as the case may be, or any right, title or interest therein, before the stipulated period, the Estate Officer may grant permission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land on 2nd June, 1979. The vendee paid in all Rs. 92,421 comprised of the amount of Rs. 70,000 for which the plot was agreed to be sold by the vendor and the payment of Rs. 22,421 paid for getting the permission to sell from the Chandigarh Administration through the Estate Officer. In other words, the deed executed showed the apparent consideration of Rs. 92,421. 6. When the deed of transfer was registered on 2nd June, 1979, the competent authority received intimation in Form No. 375 that plot No. 1399 in Sector 33C, Chandigarh, admeasuring 1014 sq. yds. was purchased by the transferee for an apparent consideration of Rs. 92,421. The competent authority thought that, "the apparent consideration appeared to be low. The competent authority referred the matter to the V.O. on 29th Sep., 1979 to have "an authentic opinion about the correct fair market value of the plot on the date of purchase". The V.O. of the Department submitted his report dt.28th Jan., 1980 which was received by the competent authority on 1st Feb., 1980. According to this report, the fair market value of the plot in question was Rs.1,25,702 as against the apparent consideration shown in the transfer deed of Rs.92 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thority rejected these objections, "because of the positive findings of the VO estimating and fixing the fair market value of the plot at Rs.1,25,700". 8. After receipt of the reasons recorded by the competent authority for initiation of the acquisition proceedings along with the copy of the valuation report, the transferee submitted her further objections dt. 8th May, 1980. In these objections, she pointed out that "the VO has erred in estimating the fair market value of the property at Rs.1,25,700 and that he has also ignored some basic and vital points in arriving at this figure". This has been recorded in para 7 of the impugned order of the competent authority. She also pointed out that there was no attempt at evasion of tax on her part. She objected to the value of the land at Rs.122 per sq. yard adopted by the V.O. for valuing the plot. Her further objections have been incorporated by the competent authority in the body of his order as under: "(a) The comparison of the sale rates of plots in Sector 36D with those in Sector 33C is odious and unrealistic. That is because : (i) Sector 6 has no village near it whereas the plot in question in Sector 33C is hardly 300 yard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vide Registration No. 202 dt. 21st May, 1979 and Registration No. 209 dt. 22nd May, 1979. The total value of the plot thus comes to Rs. 76,030 only. In the light of what has been mentioned above, I hope you would feel fully satisfied about the genuineness of the transaction and the fair market value as stated in the conveyance deed. I would, therefore, request you to drop the acquisition proceedings initiated by you, should you feel the necessity for further evidence regarding any specific aspect of the matter, kindly let me know and I shall be too glad to comply with the same." 9. The competent authority, thereafter, heard the transferee personally on 13th June, 1980 at his camp office at Chandigarh. He also called for the comments of the V.O. on the contentions raised by the transferee in her letter dt. 8th May, 1980. These comments he has recorded in the impugned order and are as under: "With reference to the above the vendee's letter referred in your reference is returned herewith and it is stated that; (i) Village Burail is situated quite away from the instant property, there is a wide road running at the end of Sector 36 and Sector 33 and village Burali is beyond tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the counter comments of the V.O. on her letter dt. 8th May, 1980". The transferee attached a report of the registered valuer. According to the registered valuer, the value of the plot was Rs. 1,01,400. The transferee had drawn the attention of the competent authority to the valuation of the plot made by the Chandigarh Administration at Rs. 83,260 for the purpose of working out profit on unearned increase in the value. She contended that this valuation by the Chandigarh Administration at Rs.83,263 was correct because it was adopted for realising Administration's share of the profit on the transfer of this plot. In her objections dt. 8th May, 1980, the transferee had pointed out to the case of Col. N.N. Syal which was comparable to the case of the transferee but to which the VO had not made any comments. The Valuation Officer had taken into consideration the sale of plot No. 1351 in Sector 33C, Chandigarh, for Rs. 1,25,000 sold on 7th Sep., 1979 and the transferee pointed out that this was not a comparable case as in the transferee's case the plot was sold on 2nd June, 1979 and in the intervening period the prices had gone up and as such the valuation could not be taken on the basi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation in valuing the plot for determining the 1/3rd share in the unearned increase in value. The competent authority sent that letter to the Valuation Officer along with the registered valuer's report who gave his comments thereon. The VO pointed out to the competent authority particularly that in so far as Lt. Col. N.N. Syal's plot stated to have been sold in two parts vide registration No. 202 dt. 21st May, 1979 and No. 209 dt. 22nd May,1979 are concerned, these might have been dealt with within the IAC Acquisition Office and its comparison be made from the notices of the IAC's file. According to the VO, the registered valuer had erred in valuing the property as he did. 14. The competent authority recorded the above comments of the VO given on the objections filed by the transferee. Thereafter in para 17 of the impugned order, the competent authority has observed that he was in agreement with the VO's findings. He held that there was no evidence with the transferee to prove conclusively that the apparent consideration was the real consideration. Thus the onus of proof was thrown upon the transferee and by holding that the transferee had not discharged this onus, the competent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T dt. 11th July, 1979 appearing at page 3 of the transferee's paper book. Referring to this the ld. counsel for the assessee submitted that it is a beneficial sort of circular which should be followed in the case of the assessee because it is well settled now that the beneficial circulars of the CBDT have to be followed by the field officers. In the case of the assessee, he submitted, the Chandigarh Administration had taken a part of the consideration on account of unearned increase. This has been taken by determining the fair market value of the property and, therefore, a Government Department has approved the sale consideration and as such there was no case for the competent authority to have reason to believe that the apparent consideration shown in the deed of transfer was not the same as fair market value of the impugned property. To such cases, it was submitted, the acquisition proceedings are not applicable also in view of the judgment of the Calcutta High Court in the cases of CIT vs. Madho Properties Ltd. (1981) 131 ITR 380 (Cal) and Competent Authority vs. Smt. Bani Roy Chowdhury (1981) 131 ITR 578 (Cal). 16. The ld counsel for the assessee further submitted that takin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... raised under s. 269C (2) are rebuttable presumptions but these presumptions are in favour of the Revenue and, therefore., the onus lay upon the assessee to rebut the same. These presumptions have not been rebutted. The initiation of acquisition proceedings was in accordance with law and the order that resulted therefrom was good in law. 20. It was contented that the valuation taken by the Chandigarh Administration was for different purposes and as stated by the competent authority, that valuation could not be considered for the purpose of acquisition proceedings. Therefore, the competent authority by not following the circular referred to by the ld. counsel for the transferee., in his arguments-in-chief, could not be said to have flouted the circular. The entire acquisition proceedings were in accordance with law and the property had been acquired in accordance with law. The order of the competent authority may, therefore, be confirmed and the appeal of the transferee dismissed. 21. We have given careful consideration to the rival submissions. Before we proceed to consider the nival contentions on merits we may record what appears to us to be the position of law on acquisitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (1) of s. 269C. That is what the Gujarat High Court has held in the case of Vimalaben Bhagwandas Patel. 23. For the purpose of s. 269C, the price which an immovable property may fetch if sold in the open market could be the price that a prudent purchaser will be willing to pay. For this purpose, the conditions like the extent and the quality of title to the property of the vendor and other factors like location, type of construction, the market condition at the time the property sold and in fact all factors which have depressing or appreciating effect on the value of the property have to be taken into account. If the considerations germane for such ascertainment have not been taken into account or if the irrelevant considerations have entered the enquiry, the findings become vitiated in law. 24. 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 the property under Chap XXA of the Act is on the Revenue as held by the Gujarat High Court in the case of Sumatilal Chhotalal Shah and upon which reliance was placed by the Revenue. This High Court h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e purpose behind the requirement of s. 269D is that all interested persons should know that the property is being acquired and should be put on notice so as to prefer any objection under s. 269E. It is equally important that such persons by such means of communication should be able to question the jurisdiction of the competent authority if necessary. 27. If the initiation is taken as final, as contended by the Revenue, with only notification in the Official Gazette, then it must be presumed that every person who has interest in any immovable property worth more than Rs. 25,000 must keep himself informed of at all times of publication of all notices in the Gazette in terms of s. 269D. Unless he keeps track of such notices, he may lose his right of questioning the competent authority regarding his competence to initiate the proceedings and his jurisdiction in a given case. This to our mind is a preposterous presumption in a type of proceedings which are quasi-criminal in character. Therefore, this contention has to be rejected. In fact, the legislature in its wisdom has provided under s. 269D itself that after recording of reasons, the competent authority has to cover various sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Estate Officer determined the fair market value for the purpose of determining his share of unearned increase, the payment required was only of Rs.22,421 as mentioned in paras 4 and 5 above. It is clear that a Department of the Central Government, to say, had itself intervened before the actual transfer took place in fixing the fair market value of the impugned plot. In our considered opinion, in such a situation, the competent authority was not having any basis for the presumptions to be raised under s. 269C. 30. The Calcutta High Court in the case of Smt. Bani Roy Chowdhry, cited supra, has held that under subs-s. (1) of s. 269C, the competent authority has, inter alia, to form his belief that the consideration for the transfer of immovable property as agreed to between the parties has not been truly stated in the instrument of transfer and the untrue statement must be due to the collusion of the transferor and the transferee. The Court has further held that where the transferor or the transferee is the Government or a statutory body there cannot be any scope for such collusion between the parties. The untrue statement about the agreed consideration is made only for the pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, could not be available to the competent authority. 32. The competent authority could have initiated the proceedings by getting report from the VO but in order to complete initiation and to make an order of acquisition it was for the competent authority to apply his judicial mind to discharge his judicial obligations in a matter in which the proceedings are quasi-criminal and penal in character. The whole order of the competent authority, however, shows that whatever objection or evidence was put to him by the transferees, it was not examined independently by him. The evidence or the objections were merely sent to the VO for his comments and whatever comments were made by the VO were simply adopted by the competent authority as his own. There is neither any evidence nor any basis for the competent authority to raise the presumptions under s. 269C and to have the right to acquire the property. On this ground as well the acquisition proceedings are bad in law because he has failed to discharge the onus that lay upon his shoulders. It is to be noted that the competent authority is acting under the special provisions and is not bound to accept the report of the VO as a WTO is u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e took the rate at Rs. 124 and valued the plot at Rs. 1,25,700 as against the sale consideration of Rs. 92,421 shown in the transfer deed. He also took into consideration the sale of plot No. 1351 in Sector 33C admeasuring 1014 sq.yd. sold vide registration No. 1179 dt. 7th Sept., 1979. In this deed the land was valued @ Rs. 124 per sq.yd. However, he did not take into consideration that there was sea change in the real estate prices from what they were at the time when the agreement to sell and the sale deed in the case of the assessee was executed as against the month of September when this plot No. 1351 was sold. In the interregnum there had been factors like the interest of migrant Indians desirous to return home and spurt in the prices of real estate beginning from Sept., 1979. Therefore, the sale that had taken place at a time when the prices were low could not be compared with a sale that took place when the prices had increased. This difficulty in appreciating the case of the assessee led the VO to adopt the value of the land at the rate of Rs. 124 per sq.yd. without justification. He forgot to consider that this sale consideration shown in the transfer deed was constituted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de registration No. 202 dt. 21st May, 1979 and registration No. 209 dt. 22nd May, 1979. Thus the total value of the plot was Rs. 76,030 only and the plot had been sold in May, 1979. The admeasurement of this plot was 1014 sq.yds. The admeasurement of the plot that has been acquired was incidentally 1014 sq.yds. This however, has not been compared by the VO or by the competent authority and we do not find any comments from the VO when the objections of the transferees were sent to him by the competent authority. To this, the VO has stated that "Lt. Col. N.N. Syal's case referred by the vendee may be available in your office and it can be compared from there". However, we find that the competent authority has not given any convincing reasons for not taking this particular sale instance which is of an identical plot in the same Sector into consideration. The competent authority appears to have taken the observations of the VO as sacrosanct which could not even be scrutinised by him though under the law it was the competent authority that was required to exercise a judicial mind before acquisition of the property. 35. There should have been serious considerations given and serious c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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