1987 (6) TMI 18 - HC - Income Tax

Summary

Issues Involved:

1. Limitation for initiation of acquisition proceedings u/s 269D(1) of the Income-tax Act, 1961.
2. Validity of service of notice u/s 269D(1).
3. Determination of fair market value of the property.

Summary:

1. Limitation for initiation of acquisition proceedings u/s 269D(1) of the Income-tax Act, 1961:

The Tribunal held that the proceedings were barred by limitation as the notice u/s 269D(1) was published in the Official Gazette on June 10, 1978, but made available to the public on July 25, 1978, beyond the prescribed period of nine months from the date of the deed of conveyance. The Tribunal followed the decision of the Allahabad High Court in Kishan Lal v. IAC of I.T. [1983] 142 ITR 312, which stated that the date of publication is when the Gazette is made available to the public. The High Court, however, inclined towards the Gujarat High Court's view in CIT v. Shilaben Kanchanlal Rana [1980] 124 ITR 420, which considered the date of printing in the Official Gazette as the date of publication but decided to dispose of the appeal on merits without expressing a final opinion on this point.

2. Validity of service of notice u/s 269D(1):

The Tribunal held that the provision for service of notice was merely directory and procedural. The fact that the subsequent notice served on the transferee was not signed was considered an irregularity that did not vitiate the proceedings or affect the jurisdiction of the Inspecting Assistant Commissioner.

3. Determination of fair market value of the property:

The Tribunal accepted the respondent's contentions regarding the valuation of the property, considering factors such as the actual rent received by the vendors, unauthorized occupation, subletting by tenants, pending title suits, and the joint ownership of the property. The Tribunal found that the valuation by the Department's valuer, which included rents collected by tenants from sub-tenants, was not conclusive. The High Court affirmed the Tribunal's decision, noting that the Tribunal's approach was not erroneous and that the valuation should be based on the rent payable to the owner, not the rent collected by tenants from sub-tenants. The High Court emphasized that it should not revalue the property on the evidence on record and substitute its own estimation for that of the Tribunal.

Conclusion:

The High Court dismissed the appeal, affirming the Tribunal's order and noting the Central Board of Direct Taxes Circular No. 455, which directed dropping acquisition proceedings if the apparent consideration was below Rs. 5 lakhs. The apparent consideration for the 1/5th share was Rs. 90,000, making the total apparent consideration for the entire premises Rs. 4,50,000, thus falling under the directive of the circular. The appeal was dismissed with no order as to costs.