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Issues:
Challenging the legality of a notice issued under s. 269A of the I.T. Act, 1961 for the determination of fair market value of a property. Analysis: The petitioners, a company, challenged the legality of a notice issued by the IAC under s. 269A of the I.T. Act, 1961. The petitioners had entered into an agreement to purchase a property in 1972, paid the entire consideration, and obtained possession. The conveyance was executed in 1977 and registered in 1978. The income-tax authorities were informed of the transaction during assessments. Subsequently, the IAC issued a notice for the determination of fair market value of the property as on the date of transfer. The petitioners contended that the action by the Department was misconceived as the property was sold in 1972, and the conveyance was a mere formality. The Department's satisfaction that the fair market value exceeded the consideration was based on a misconception that the property was transferred in 1977. The court held that the Department's action was not sustainable as the property was sold in 1972, and the notice was quashed. The petitioners argued that the Department's proceedings under Chapter XXA were misconceived as the fair market value was determined based on the date of conveyance registration in 1977, despite the sale occurring in 1972. The petitioners contended that all necessary steps for the transfer had been completed, and the value paid was known to the income-tax authorities. The Department accepted commencing proceedings based on the 1977 value but failed to consider the actual sale date. The court agreed with the petitioners, stating that the Department's conclusion was based on a misconception. The court ruled in favor of the petitioners, quashing the notice dated April 30, 1979. In conclusion, the court found that the Department's actions were based on a misunderstanding of the property transaction timeline. The court held that the notice issued by the IAC for the determination of fair market value was misconceived and quashed the notice. The court ruled in favor of the petitioners, highlighting that the conveyance registration date in 1977 did not reflect the actual sale date in 1972, rendering the Department's valuation incorrect.
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