1991 (2) TMI 46 - HC - Income Tax

Summary

Issues Involved:
1. Initiation of proceedings u/s 269C(1).
2. Availability of presumption u/s 269C(2) at the time of initiation.
3. Valuation method adopted by the Competent Authority.
4. Ignoring factors affecting valuation.
5. Existence and effect of tenancy.
6. Applicability of L & D.O. rates for unearned increase.

Summary of Judgment:

1. Initiation of Proceedings u/s 269C(1):
The Tribunal found that the initiation of proceedings was improper, as there was no material available with the Revenue at the time of initiation. The High Court agreed, stating that the recording of reasons and initiation of proceedings by the Competent Authority was wrong in the facts and circumstances of this case.

2. Availability of Presumption u/s 269C(2):
The Tribunal held that the presumption u/s 269C(2) was not available at the time of initiation. The High Court noted that it was not necessary to go into this question due to the other findings and left the question open for determination in an appropriate case.

3. Valuation Method Adopted by the Competent Authority:
The Competent Authority valued the property at Rs. 2.02 crores, using sale instances from Green Park and Hauz Khas. The Tribunal found this method erroneous, noting that small plots in developed colonies fetch higher prices compared to large areas of land. The High Court agreed, emphasizing that the Competent Authority ignored significant factors such as the Urban Land Ceiling Act, low F.A.R., and the property's location in a low-density area.

4. Ignoring Factors Affecting Valuation:
The Tribunal found that the Revenue erroneously ignored factors affecting the valuation, such as the Urban Land Ceiling Act and the low F.A.R. permissible in the area. The High Court concurred, stating that these factors significantly impact the property's potential value.

5. Existence and Effect of Tenancy:
The Tribunal noted that the Competent Authority erred in ignoring the tenancy in favor of Messrs. Kalki Investments Ltd. The High Court agreed, stating that the existence or non-existence of tenancy is an important factor in such matters. The Tribunal's spot investigation found the tenancy to be a "make-believe affair," but the High Court emphasized that the Competent Authority's failure to investigate this aspect vitiated its order.

6. Applicability of L & D.O. Rates for Unearned Increase:
The Tribunal found that the Competent Authority ignored the L & D.O. rates fixed by the Government for charging unearned increase. The High Court agreed, stating that these rates should have been considered before initiating any action.

Conclusion:
The High Court dismissed the appeal, agreeing with the Tribunal's findings on questions of fact and leaving the question of the presumption u/s 269C(2) open for future determination. The Competent Authority's order was quashed due to its erroneous approach and failure to consider relevant factors.