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TMI Blog1975 (5) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... as lying vacant and its possession was delivered to the appellants as such. 3. AT the instance of the competent authority, an Inspector of the IT Department later went to the property, and after inspecting the same, submitted a report estimating the fair market value of the property on the date of its transfer at Rs. 2,59,800 by applying land and building method of valuation. The competent authority also referred the matter to the Valuation Officer, under s. 269(F) of the IT Act, 1961 for determination of that fair market value. The Executive Engineer, Valuation Unit-I in this report dt.13th Feb., 1973then was of the opinion that value on the basis of yield from the property was around Rs. 1,60,000 to Rs. 1,70,000 as against the apparent consideration of Rs. 1,00,000 in the sale deed. 4. The competent authority, further noticed that in the Wealth-tax return for asst. yr. 1972-73, the transferor namely, Shri K.K. Aggarwal had himself declared the value of this property in his hand at Rs. 1,40,750 before its transfer to the appellants. The WTO, however, computed the valuation at Rs. 1,60,750 as done in the preceding year. The competent authority, therefore, observing that he had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld provide good investment so the family for meeting their needs. The property was also stated to be situated at a place which rendered it to suffer from various disqualifications inasmuch as there was no school, hospital or Post Office nearby nor any decent gentry resided in the surrounding area. It was also stated to be near a lake and the green belt and fields which rendered the area as a permanent source of mosquitoes and dampness. It was further pleaded that the appellants did not have any extra money which them which they could have paid under the table to the transferor. Reference was also made to a number of sale transactions in the area in order to show that the apparent consideration was not in any manner on the lower side. A certificate of valuation by an approved valuer namely Sh. Y.R. Puri was further submitted according to which the fair market value on 31st July, 1972 was Rs. 1,02,000 only. He adopted the mean of the two viz: the capitalisation of the rental value and the cost of land and building. The former was computed by him at Rs. 1,05,528 and the latter around Rs. 1,00,000. He took the value of the land at Rs. 77 per sq. yd. and applied the C.P.W.D. rates as in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was for facilitating reduction or evasion of the liability of the transferor to pay tax under the IT Act in respect of income arising from the transfer or facilitating concealment of any income or any money or other assets which had not been or which ought to have been disclosed by the transferees for the purpose of IT Act or the WT Act was not in any manner rebutted. It was found that the transferor and the transferees were not related and, therefore, there was no question of the transferor deliberately selling the property at undervaluation as a sort of gift or out of natural love and affection. The order of acquisition of the property under s. 269 was, therefore, made. 10. Feeling aggrieved, the transferees have now moved the present appeals before us. It has been pleaded that the IT Act does not make any provision for enabling the competent authority to compute the fair market value. This was contended to be a major lacuna in that statute, and, therefore, the steps taken by the competent authority for ascertaining that value were unwarranted in law. The acquisition proceedings were also stated to be not validity initiated in as much as the service of the notices was effected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the property, and theDelhiUniversityis also not much far off. Post Office and other private medical facilities are available in abundance. According to the competent authority, the locality itself is resided by well-to-do people, most of whom are tax payers and owning their own conveyance. It, therefore, cannot be said that the property is situated in a poorly located area. As regards the lake and the green belt nearby, they of course, result in mosquitoes. However, they have advantages of their own as well. 14. For asst. yr. 1970-71, the transferor himself declared the value of the land supported by a certificate from an approved. Valuer at Rs. 95 per sq.yd. The cost of construction disclosed next was Rs. 90,000. The value of this property thus aggregated to Rs. 1,33,000 them. Thereafter the values of properties as also the cost of construction have shown upward trend. In the next two years, the transferor declared the valuation of the property in his hand for wealth-tax purpose at Rs. 1,40,750. The same was computed at Rs. 1,60,750 by the WTO. It is not shown that it was disputed by him in appeals. 15. Reference to sales effected in the area during 1972-73 next shows that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellants as adopted by their Valuer. During the period when this property had remained with the transferor, no part of it had remained vacant. After the transfer the portion which was delivered to the appellants as vacant started yielding much higher rent than what it used to fetch. Moreover in these days of scarcities a tenant leaving any portion of the property is always welcome by the landlord and the same generally results in higher rent. 20. Again, we are not inclined to allow any deduction to wards collection charges. The appellants have been residing in the property itself, and hand not incurred any such expenses. Nor such expenses were claimed in the ITO or Wealth-tax returns by the transferor or the transferees. 21. We are further of the opinion that there is no evidence on record to show that the assessee had to pay water and electric charges on behalf of the tenants. No agreements to that effect exist nor the tenants were examined. The previous owner did not in his income tax returns claim any adjustment for payment of such water and electric charges. 22. Annual letting value of the property thus came to Rs. 14,000 per year at the time of transfer. Multiple of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the evidence on record the case of the revenue is legally made out. We still hope that the revenue may have second thoughts before the final acquisition.. 26. As regards the contention of the assessee that there is no provision under the IT Act enabling the competent authority to get the fair market value of the property evaluated we are of the opinion that this power is inherently incidental to the nature of these acquisition proceedings. There is no specific prohibition against the same. These provisions which have a social object in view have to be given effect to so that the object of the legislation is enhanced and not defeated. The competent authority was, therefore, fully within his powers to get the fair market value of the property assessed. 27. And lastly, there is the plea of the appellants that the acquisition proceedings were not validly initiated. Reference in this respect was made to the provisions of s. 269-D which show acquisition proceedings by the competent authority are initiated by notice to that effect published in the Official Gazette. It has been pointed out that though that notice was singed by the competent authority on16th March, 1973, the same was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cial gazette, on individual notices are required to be issued to the owners. Under the IT Act, however, such notices are mandatory. The object of the publication in the gazette and the notices to the individual is that they and the general public may have full notice of the proceedings and contest them if they so choose. In the present cases, those notices have in fact reached the appellants and they have been duly provided opportunity of leading evidence and being heard. No prejudice was thus caused. It, therefore, cannot be said that the entire acquisition proceedings were invalid simply because the official gazette was published two days after the actual service of notices on the appellants. 29. In the light of discussion, above we are constrained to reject these appeals. It may be, however, added before concluding that these appeals could not be disposed of within 90 days of their filing as some time was taken in the service of the respondents and certain adjournments were granted. The appeals itself took some days in the hearing. ITA Nos. 4371 to 4373 (Acq.)/Del/1973-74. Per Accountant Member I have had the advantage of going through the order of my learned brother. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e day on which it was withdrawn shall be excluded in computing the period during which such proceedings may be initiated under this sub-section. (2) The competent authority shall (a) cause a notice under sub-s. (1) in respect of any immovable property to be served on the transferor, the transferee, the person in occupation of the property, if the transferee is not in occupation thereof, and on every other whom the competent authority knowns to be interest in the property; (b) cause such notice to be published (i) in his office by affixing a copy thereof to a conspicuous place; (ii) in the locality in which the immovable property to which it relates is situate, by affixing a copy thereof to a conspicuous part of the property and also by making known in such manner as may be prescribed, the substance of such notice at convenient place in the said locality". 3. Counsel pointed out the following facts in this regard : (a) The notice under s. 269D(1) to be published in the official Gazette was signed by the competent authority on16th March, 1973. (b) The notice was published in the official Gazette on24th March, 1973. (c) The above said notice under s. 269D(1) was se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... datory. This according to the Departmental Representative was a difference of significance, secondly, according to him the transferees were fully heard in the matter and hence they could have no grievance on the ground that publication of the notice under s. 269-D(1) in the Official Gazette had not proceeded the individual notice; in substance the provisions of the act had been carried out and hence the irregularity, if any, in form could not vitiate the entire proceedings. It was further emphasized by the Departmental Representative that the transferees themselves never pointed out any uncalled irregularity in the initiation of proceedings at any time before the competent authority and hence they must be deemed to have acquiesced in the validity of the initiation and continuation of the acquisition proceedings. 6. I fail to see how a mandatory requirement could be looked upon as a mere formality which could be ignored in such a manner or after having been so ignored could be described of as only an irregularity of not such consequence. The provisions of the Land Acquisition Act are no doubt different from the provisions of Chapter XXA the IT Act, 1961. But both Acts deal with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he notification in the concerned locality. Unless both these conditions are satisfied s. 4 of the Act cannot be said to have been complied with. The purpose behind such a notice was that interest persons should know that the land is being acquired so as to prefer any objections under s. 54 which confers a valuable right." 7. The contentions taken for the State (of Uttar Pradesh) there was : it was only when the persons interested could file objections under s. 5A that public notice of the substance of the notification. Under s. 4(1) by the Collector would be necessary whereas in the case before the Court the applicability of s. 5A had been dispensed with under s. 17(4) of the said Act, at the same time the notification under s. 4(1) was issued; that it was wholly unnecessary that the interested parties should have the requisite information of the acquisition proceedings when they were not entitled to file objections. The Court repelled these contentions. It held that the provisions of s. 4(1) could not be held to be mandatory in one situation and directory in another, that it laid down in unequivocal and clear terms that both things had to be simultaneously done under s. 4(1) i.e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e matter. 10. I do not find that any of these arguments is relevant. We are not concerned here with violation of principles of natural justice. We are concerned here with statutory provision and the question is whether the requirement of these provisions have been complied with. The answer has to be in the negative. Nor can it be said that the effect stands cured by the transferees "waiver". In Khem Raj Dhingra s case (98 ITR 397) the ITO proceeded under s. 155 to revise an assessment which had been completed earlier, not under s. 143(3), but under s. 141. In fact no regular assessment was made under s. 143(3) and such cause became barred by limitation. In response to the notice under s. 155(1) however the assessee s brother appeared and recorded no objection . The order under s. 155 was then passed. The assessee then preferred a revision petition under s. 264 raising an objection that the entire proceedings were without jurisdiction, because there was no prior completed assessment. The CIT dismissed the petition. The assessee then filed a writ. The Court held that the rectification under s. 155 was not valid in Law. For the Department it was argued that the assessee had recorde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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