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Issues Involved:
1. Validity of initiation of proceedings under Section 269C of the IT Act, 1961. 2. Determination of the fair market value of the property. Detailed Analysis: 1. Validity of initiation of proceedings under Section 269C of the IT Act, 1961: The appellants challenged the initiation of acquisition proceedings under Section 269C, arguing that the Competent Authority lacked material to justify the belief that the sale consideration was understated with the intent specified in Section 269C(1)(a) & (b). The Competent Authority recorded reasons on 31st October 1984, stating that the fair market value was Rs. 4,38,328, exceeding the apparent consideration by Rs. 1,62,328 (about 58%). The Competent Authority believed the consideration was understated to evade tax liability or conceal income/assets. The tribunal found that the reasons recorded were based on a printed form with inserted figures and no actual enquiries were made. The Competent Authority's calculation of fair market value was conjectural and lacked valid material, thus failing to meet the requirement for a reason to believe that the fair market value exceeded the apparent consideration by more than 15%. The tribunal cited the Hon'ble Delhi High Court's ruling in CIT vs. Arun Mehra, emphasizing that material must be present to show the fair market value exceeded the apparent consideration by more than 15% at the time of initiation. The tribunal concluded that the Competent Authority did not have cogent material to justify the belief, rendering the initiation of proceedings under Section 269C invalid. 2. Determination of the fair market value of the property: The Competent Authority determined the fair market value at Rs. 4,39,400, while the Departmental Valuation Officer assessed it at Rs. 4,45,100. The appellants contended that the fair market value was Rs. 2,76,000, as determined by their valuer. The tribunal examined the valuation methods and exemplars used by the Competent Authority and the Valuation Officer. The Valuation Officer relied on exemplars from Rajouri Garden and Punjabi Bagh, which were 7 km and 11 km away, respectively, and of different character from Inderpuri. The tribunal found these exemplars inapplicable due to distance and differing colony characteristics. The Competent Authority's exemplars were also deemed non-identical and inappropriate for determining the fair market value of the subject property. The tribunal noted that the Competent Authority applied an inconsistent rate of Rs. 1,100 per sq. yard for land, despite initially adopting Rs. 1,000 per sq. yard. The tribunal found the appellant's registered valuer's rate of Rs. 800 per sq. yard more realistic, considering the various exemplars. Regarding the building's value, the Valuation Officer adopted higher rates and lower depreciation, while the registered valuer applied more realistic rates and higher depreciation. The tribunal favored the registered valuer's approach, valuing the building at Rs. 1,16,000. The tribunal concluded that the fair market value did not exceed the apparent consideration by more than 15%, and it was not proven that the consideration was understated in the transfer document. Consequently, the acquisition order was quashed, and the appeals were allowed.
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