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Issues:
1. Competent Authority's valuation discrepancy and initiation of acquisition proceedings. 2. Interpretation of provisions under section 269C of the Income-tax Act, 1961. 3. Application of fair market value in property acquisition cases. 4. Authority of Valuation Officer to submit multiple valuation reports. Competent Authority's Valuation Discrepancy and Initiation of Acquisition Proceedings: The case involved four appeals under section 269H of the Income-tax Act, 1961, concerning the sale of a plot in New Delhi. The Competent Authority initiated proceedings based on valuation reports by two Valuation Officers, showing a significant difference in the fair market value of the property. The Tribunal noted the lack of discussion on the discrepancy and held that the initiation of proceedings was routine and stereotyped, vitiating the acquisition order. Interpretation of Provisions under Section 269C: Section 269C allows the Competent Authority to initiate proceedings if there is reason to believe that property has been transferred for an apparent consideration below fair market value to evade tax or conceal income. The Tribunal emphasized the need for material evidence to support the belief, rejecting the presumption of understatement of consideration. It clarified that the fair market value must exceed the apparent consideration by more than 15% for proceedings to be valid. Application of Fair Market Value in Property Acquisition Cases: The Tribunal criticized the Valuation Officer's arithmetical approach to determine fair market value, highlighting the lack of market-based evidence. The valuation reports were based on theoretical calculations and multipliers, deviating from the statutory definition of fair market value. The Tribunal emphasized the importance of considering actual market value rather than theoretical calculations to justify property acquisition. Authority of Valuation Officer to Submit Multiple Valuation Reports: The Tribunal questioned the Valuation Officer's submission of two inconsistent reports without proper justification. It analyzed the powers granted to Valuation Officers under section 269L and the Wealth-tax Act, concluding that the Competent Authority should disregard the second report. The Tribunal held that without valid market-based evidence, the Competent Authority lacked jurisdiction to initiate acquisition proceedings. In conclusion, the High Court rejected the appeal, emphasizing the need for concrete material supporting the fair market value and criticizing the reliance on theoretical calculations. The judgment highlighted the importance of adhering to statutory provisions and ensuring proper valuation practices in property acquisition cases to prevent tax evasion and maintain legal integrity.
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