1981 (10) TMI 6 - HC - Income Tax

Summary

Issues Involved:
1. Applicability of Chapter XX-A of the Income-tax Act, 1961 to transfers executed prior to its enactment.
2. Determination of the relevant date for the Competent Authority to initiate proceedings u/s 269C of the Act.
3. Validity of the notice issued by the Competent Authority.

Summary:

1. Applicability of Chapter XX-A of the Income-tax Act, 1961:
The petitioner contended that Chapter XX-A, introduced with effect from November 15, 1972, could not apply to transfers executed before this date. The conveyance in question was executed on November 7, 1972, and thus, the Competent Authority had no jurisdiction to initiate proceedings for the acquisition of the property.

2. Relevant Date for Initiating Proceedings u/s 269C:
The core issue was whether the relevant date for the Competent Authority to initiate proceedings was the date of execution or the date of registration of the document. The petitioner argued that, per s. 47 of the Registration Act, the transfer operates from the date of execution. However, the court held that the sale is not complete until the registration of the instrument. Citing the Supreme Court's decision in Ram Saran Lall v. Mst. Domini Kuer, it was clarified that s. 47 does not determine the completion of a sale but only allows a document to operate from an earlier date once registered. Thus, the right to initiate proceedings arises on the registration of the document, not its execution.

3. Validity of the Notice Issued by the Competent Authority:
The Competent Authority issued a show-cause notice on June 26, 1978, after the document was registered on September 21, 1977. The court found that the proceedings were initiated within the period of limitation as provided under s. 269C. The petitioner's challenge to the notice's legality was dismissed, and the court upheld the Competent Authority's action as lawful.

Conclusion:
The court ruled that the Competent Authority's right to initiate proceedings u/s 269C accrues upon the registration of the document. The petition was dismissed, and the rule was discharged with no order as to costs. The petitioner reserved the right to challenge the validity of s. 269C on constitutional grounds if the Competent Authority decides to acquire the property in the future.