1986 (10) TMI 95 - AT - Income Tax

Summary

Issues:
- Dispute over the valuation of shops sold by a charitable society
- Initiation of acquisition proceedings under s. 269F(6)
- Allegation of gross undervaluation by IAC (Acq)
- Appellants challenging the acquisition orders
- Consideration of guidelines under Circular No. 455 dated 16th May, 1986

Analysis:
The judgment by the Appellate Tribunal ITAT Jaipur dealt with two appeals involving a common issue of the valuation of shops sold by a charitable society. The appellants purchased shops for Rs. 49,000 each, and acquisition proceedings were initiated under s. 269F(6) based on an allegation of gross undervaluation by the Income-tax Appellate Commissioner (Acq). The Tribunal heard arguments from both parties and found merit in the appellants' contentions. The shops were let out at nominal rent, leading to a valuation estimation of not more than Rs. 12,000 each after deductions. While there were admissions that the shops could fetch a higher price if vacant, the Tribunal noted that the shops were actually let out, impacting their market value. The Tribunal also highlighted that the acquisition proceedings were initiated based on a complaint and not by the Department. The Tribunal rejected the complaint's involvement in the proceedings as it did not concern him directly. Additionally, the Tribunal considered a detailed submission by the assessee's representative justifying the sale circumstances.

Furthermore, the Tribunal referenced Circular No. 455 dated 16th May, 1986, which provided guidelines on the acquisition of immovable properties under Chapter XXA of the IT Act, 1961. The Circular emphasized that acquisition proceedings should not be initiated for minor sales with a consideration below a specified amount. The Tribunal noted that the intention was not to pursue acquisition proceedings for minor sales and found justifications for the consideration shown in the sale deeds. The Tribunal concluded that the shops were not grossly undervalued, especially considering the tenants' lack of objection to the sales. Ultimately, the Tribunal allowed the appeals and canceled the acquisition orders issued by the IAC (Acq).

In summary, the judgment addressed the dispute over shop valuation, the initiation of acquisition proceedings, the allegation of undervaluation, the appellants' challenge to the orders, and the application of guidelines under Circular No. 455. The Tribunal found in favor of the appellants, emphasizing the actual circumstances of the sales and the lack of gross undervaluation, leading to the cancellation of the acquisition orders.