1987 (2) TMI 127 - AT - Income Tax

Summary

Issues:
Acquisition of property under s. 269F(6) of the IT Act based on valuation discrepancy and alleged under-declaration of sale consideration.

Analysis:
The appeals arose from an order by the IAC, Acquisition Range, Jaipur, directing the acquisition of a property, Kishore Talkies, under s. 269F(6) of the IT Act due to a valuation dispute. The property was sold for Rs. 3,16,000, but the departmental valuer estimated its market value at Rs. 8,37,000, leading to acquisition proceedings. Both the seller and purchaser challenged the decision.

The appellants argued that the valuation was incorrect, citing the property's history, rental income discrepancies, and the method of valuation used. They contended that the valuation should have been based on the land and building method, not just rental income. They also questioned the relevance of post-sale rental income in determining market value and highlighted Circular No. 455, exempting properties below Rs. 5 lakhs from acquisition proceedings.

The Tribunal found the IAC's order unsustainable, criticizing the reliance on the valuer's report based solely on rent capitalization. It noted discrepancies in the valuation method, depreciation considerations, and the condition of the property at the time of sale. The Tribunal referenced various case laws to support its decision and emphasized the need for a more thorough evaluation of the property's market value.

Additionally, the Tribunal questioned the timing of the Commissioner's approval in light of Circular No. 455, which should have exempted the property from acquisition proceedings. Citing past Tribunal decisions and procedural errors by the Department, the Tribunal concluded that a fresh valuation would be burdensome to the parties and thus allowed the appeals, quashing the acquisition order.

In conclusion, the Tribunal found the acquisition order unjustified due to valuation discrepancies, procedural errors, and the applicability of Circular No. 455. The decision emphasized the importance of accurate valuation methods and proper consideration of all relevant factors in acquisition proceedings.