1986 (4) TMI 143 - AT - Income Tax

Summary

Issues:
- Determination of fair market value of land for acquisition proceedings under section 269D of the Income-tax Act.
- Burden of proof on the Department to establish true market value.
- Proper adjudication of the matter by the authorities.
- Adequacy of evidence and consideration in passing the final order.
- Correctness of Inspector's report in determining market value.
- Requirement for detailed enquiry into market value and use of the land.
- Duty of appellate authority to correct errors and provide directions for reevaluation.

Analysis:
The judgment pertains to seven appeals challenging a common order of the IAC (Acq.), Jaipur, regarding the fair market value of land sold by seven parties to seven other parties. The IAC initiated acquisition proceedings under section 269D of the Income-tax Act based on an Inspector's estimate of the land value at Rs. 30,000 per portion. The appellants argued that the Department had the burden of proving the true market value and that the market value could not be determined solely based on residential plot prices in the locality. The Tribunal found that there was no proper adjudication by the authorities, and the IAC's order was hasty. The Inspector's report cited similar sales in the locality, but the Tribunal noted the importance of considering the nature and use of the lands sold. The Tribunal criticized the lack of detailed enquiry and evidence production by the appellants, emphasizing the need for a thorough examination of market value and land use.

The Tribunal referenced the Supreme Court decision in Kapoorchand Srimal v. Commissioner, highlighting the appellate authority's duty to correct errors and provide directions for a fresh decision. The Tribunal set aside the IAC's orders, directing a reevaluation with the opportunity for the appellants to present evidence supporting their contentions. The judgment underscores the significance of a detailed inquiry into market value, land use, amenities, and conversion charges, especially when valuable lands are involved. It emphasizes the appellants' right to lead evidence and the authority's duty to conduct a proper examination before passing orders affecting substantial property rights.

In a concurring opinion, another Judicial Member expressed agreement with the decision but raised concerns about the Inspector's report's relevance. The Member highlighted the need for sale instances to involve lands of identical nature, not just adjoining lands, especially if unauthorized conversion to residential plots has occurred. The Member advised the IAC to consider all aspects of the sale instances and the nature of the lands before making a decision on market value. This additional perspective emphasizes the importance of comparing like-for-like land sales to determine fair market value accurately.