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TMI Blog1988 (3) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... , more than 36 per cent of the apparent consideration. The acquisition proceedings were initiated after going through Form 37G and this report of the Valuation Officer. The Competent Authority has mentioned in the impugned acquisition that he had reason to believe on the basis of presumptions available under s. 269C(2). He took the view that such presumptions were available to him even at the time of the initiation of the acquisition proceedings. For taking this view, reliance was placed by him on the following decisions : (1) Mahavir Metal Works P. Ltd. Anr. vs.Unionof India Anr. (1974) 95 ITR 197 (Del) (2)SutlejChit Fund and Finance (P) Ltd. vs. CIT (1986) 55 CTR (P H) 114 : (1986) 161 ITR 174 (P H). A number of objections were raised by the transferee appellant before the Competent Authority in its letters dt.12th March, 1987and19th March, 1987which have been dealt with by the Competent Authority. He held that the plot in question was situated on 60 ft.wide main road and that in view of its ideal location its sale price was bound to be more as compared to sale prices of other plots of land in the same locality. He also observed that the plot in question is no doubt a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1958." After obtaining the prior approval dt.31st March, 1987of the CIT(A), Delhi-II,New Delhi, the Competent Authority ordered the acquisition of the plot in question under Chapter XXA of the IT Act, 1961. 3. That is how the transferee has come up in appeal before us. Firstly, Dr. S. Narayanan, the learned counsel for the transferee-appellant submitted that the burden of establishing the conditions of liability under Chapter XXA was on the Revenue. For this proposition, reliance was placed by him particularly on the decision of the Supreme Court in the case of K.P. Varghese vs. ITO (1981) 24 CTR (SC) 358 : (1981) 131 ITR 597 (SC). Secondly, he submitted that the power conferred on the Competent Authority under s. 269C is a penal power and that the proceedings thereunder are quasi criminal in nature. Thirdly he submitted that there had to be reason to believe and relevant material for the formation of belief. He explained that "reason to believe" was different from reason to suspect and that the reasons for the formation of the belief have to have a rational connection with or relevant bearing on the formation of the belief. He further explained that rational connection p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lied upon by the Competent Authority were not at all comparable. In respect of the above submissions a detailed write-up was given by the appellant. Dr. Narayanan also argued that the Valuation Officer had erred in over-looking the following disadvantages of plot No. S-147 in question : (i) It is situated on the outer most road at the rear side of the colony and is at a lower level (distance of 15 plots). (ii) It is 1 km. away from the market. (iii) It is not close to any park. (iv) It is not facing south. (v) It is close to the piece of land belonging to Delhi Municipal Corpn. wherein debris is being dumped and further beyond are DDA flats. (vi) Its front is comparatively larger as compared to its rear side and thus the shape being "Shermukha" it is less acceptable according to popular belief. (vii) Its service lane is at a higher level as compared to the front road side. The appellant also raised in para 19 of the grounds of appeal the contention that the Competent Authority had erred in initiating the proceedings under s. 269D(1) beyond the prescribed period that the Gazette of 15th Nov., 1986 was not available for the public by 30th Nov., 1986. However, at the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the acquisition proceedings the Competent Authority could be said to have reason to believe that the fair market value of the plot in question exceeded the apparent consideration therefor by more than 15 per cent of such apparent consideration on a prima facie look at the report of the Valuation Officer, the matter does not end here. He had to further have reason to believe that the consideration for such transfer had not been truly stated in the instrument of transfer with the object of : (a) facilitating the reduction or evasion of the liability of the transfer or to pay tax, under the IT Act, 1961 in respect of any income arising out of the transfer; or (b) facilitating the concealment of any income or any moneys or other assets which have not been or which ought to be disclosed by the transferee for the purposes of IT the Act or the WT Act." In our view the Competent Authority was not justified in taking the view that the presumptions mentioned in s. 269C(2) could be availed of by him for this purpose even at the stage of the initiation of the acquisition proceedings. In our view the reliance placed by him on the two decisions referred to in the acquisition order was m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would agree with the Competent Authority entirely that the fact that acquisition proceedings were not taken with regard to other properties in the same locality, is not a relevant fact. However, s. 269F(7) provides that if the competent authority is not satisfied as provided under sub-s. (6) he shall, by order in writing, declare that the property will not be acquired under Chapter XXA. In other words if the acquisition proceedings have been initiated in respect of certain properties and thereafter those proceedings were dropped, it would lead to the conclusion that the Competent Authority was not satisfied; that the consideration for such transfer as agreed to between the parties had not been truly stated in the instrument of transfer with such object as is referred in cl.(a) or cl.(b) of sub-s. (1) of s. 269C. Such instances would therefore, be very relevant. So far as the 3rd class of cases are concerned, they would, also be relevant. We need not consider the instances of those plots which were not cited on behalf of the appellant before the Valuation Officer or the Competent Authority. They would be of the same nature as the plots which were relied upon by the Competent Authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s case also. Next, we come to plot No. S-444, Greater Kailash-II having an area of 550 sq.yards. It was sold on22nd Aug., 1985for Rs. 14 lakhs, i.e. @ Rs. 2,545 per sq.yard. After allowing for time-gap, the fair market value of plot No. S-147 at this rate would work out of Rs. 9,47,300 even though plot No. S-444, has clear locational advantages as for example, it is south facing, close to the big park and situated on an 80ft. wide road. In the case of this plot also acquisition proceedings were dropped. The next plot is W-106, Greater Kailash-II. Its area is 565 sq yards. It was sold on22nd June, 1984for Rs. 14,00,000,i.e. @ Rs. 2,477 per sq. yard. On the same basis and after allowing appreciation for time-gap, the fair market value of plot S-147 in question comes to Rs. 8,21,586 only even though plot No. W-106 is a corner plot with three sides pen and abuts on two roads, both of which are 80ft. wide. The acquisition proceedings even in this case were dropped. The next instances is that of plot No. W-165, Greater Kailash-II, having an area of 400 sq. yards. It was sold in July, 1985 for Rs. 8,25,000, i.e. at the rate of Rs. 2,062 per sq. yards. On the same basis the fair market val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Competent Authority took the fair market value of the plot in question at Rs. 12,32,000 was not justified and the facts and instances referred to above clearly show that the apparent consideration of Rs. 9 lakhs represented the fair market value and that in any case the fair market value did not exceed 15 per cent of the apparent consideration. There is another relevant consideration. The assessee is engaged in the business of purchase of plots, construction of houses thereon and sales thereof. Thus it would not serve any useful purpose to it to understate the purchase consideration because in that case it would be paying more income-tax i.e. on an income which never accrued. In fact this factor cuts at the very finding of the Competent Authority regarding the motivation of tax evasion on the part of the appellant. A perusal of the impugned order of acquisition shows that the finding that the consideration agreed to between the parties had not been truly stated in the sale deed, had been reached on the basis of the presumptions available under s. 269C(2). Since we have already seen that on facts the fair market value of the plot in question did not exceed 25 per cent of the appa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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