1990 (3) TMI 54 - HC - Income Tax

Summary

Issues:
1. Challenge to the jurisdiction of the Competent Authority under section 269D(1) of the Income-tax Act, 1961.
2. Publication of notice under section 269D(1) in the Official Gazette within the statutory period.
3. Non-application of mind by the Competent Authority in specifying the object of understatement.
4. Satisfaction of conditions under Unique Associates Co-operative Housing Society Ltd.'s case [1985] 152 ITR 114 for assuming jurisdiction under section 269C/269D.
5. Compliance with the conditions requisite for assuming jurisdiction under section 269C/269D.

Analysis:
The petitioners challenged the jurisdiction of the Competent Authority under section 269D(1) of the Income-tax Act, 1961, regarding the acquisition of a property. The petitioners contended that the notice under section 269D(1) was not published in the Official Gazette within the required nine months, and even if published, it was not available to the public within that period. The Competent Authority failed to specify the object of understatement in the notice, using "and/or" which indicated non-application of mind. The court held that the use of "and/or" showed a lack of proper judgment, affecting the assumption of jurisdiction under section 269C/269D.

Regarding the conditions for assuming jurisdiction under section 269C/269D, the court analyzed if the sale consideration, fair market value, and true consideration as agreed between parties were correctly evaluated. The court found discrepancies in the Competent Authority's assessment of fair market value, lack of evidence for understated consideration, and failure to prove that additional consideration passed beyond the sale deed amount. The court emphasized the need to satisfy all conditions under Unique Associates Co-operative Housing Society Ltd.'s case [1985] 152 ITR 114 before assuming jurisdiction under section 269C/269D.

Additionally, the court considered Circular No. 461 dated July 9, 1986, issued by the Board, which clarified the conditions required under Chapter XXC before invoking sections 269C and 269D. The court concluded that the impugned notice was not valid as the conditions were not met, quashing the notice and ruling in favor of the petitioners. The court made the rule absolute in favor of the petitioners, with no order as to costs.