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TMI Blog1980 (5) TMI 69X X X X Extracts X X X X X X X X Extracts X X X X ..... ate negotiations. Before starting negotiations, Shri Kasturilal Mathuradas sought an assurance from the IAC, AV Range, Bombay and Tax Recovery Officer that no acquisition proceedings under Chapter XXA of the IT Act shall be initiated if the building was sold through private negotiations for Rs. 1,05,000. The IAC concerned referred the matter to the Valuation Cell and the AVO of the Department valued the building with land appurtenant thereto at Rs. 92,000 only and further stated that in view of this, the value of Rs. 1,05,000 offered by the proposed purchasers should be considered as the fair market value. On the basis of the Asstt. Valuation Officer's report the IAC(Acquisition), A. V. Range, Bombay vide his letter No. 473 dt. 23rd June, 1977 gave the assurance asked for by the transferor in the following words; "No acquisition proceeding would be initiated if the property known as Moti Building situated at Sadar Bazar Main Road, Jabalpur, M.P. is sold for Rs. 1,05,000." The Moti Building was accordingly sold by Shri Kasturilal Mathuradas to the four transferees mentioned above on 18th July,1977 for a consideration of Rs. 1,05,000. 3. It appears that subsequently the IAC, Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther assets which have not been disclosed or which ought to have been disclosed by the transferee. Thus the transferees have contended that since the property has been sold through the Department, there is no question of any concealment or any understatement in the value of the property as stated above. (iii) The building is fully tenanted and in dilapidated condition. (iv) Transferees have got no right over the land because the same is a leasehold cantonment land. (v)The tax liability was on Rai Bahadur M. Mathuradas and there was no possibility of any income to Shri Kasturilal Mathuradas. Thus the case does not fall under s. 269A(1)(a). (vi) Since the Property has been purchased at a consideration settled by the Department, the same does not fall under s. 269A(1). (vii) Since the sale has been effected on the specific assurance from the Department that no acquisition proceedings under Chapter XXA would be initiated, the IAC, Acquisition was estopped from initiating acquisition proceedings. 5. After filing the objections mentioned above, the transferees moved the High Court by a writ for quashing the acquisition proceedings and the High Court passed an ad interim ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of s. 269C of the Act. The IAC also referred to certain comparable sales of properties but distinguished the comparable sales cited on behalf of the transferees. In conclusion, he felt satisfied that the fair market value of the Moti building with land exceeded the apparent consideration by more than 25 per cent thereof an din the absence of any evidence to the contrary, ordered the acquisition of the property under Chapter XXA of the Act. 7. Aggrieved, both the transferees and the transferor have referred appeals to the Tribunal against the acquisition order. Several grounds of appeal have been taken in the memorandum of appeal However, at the time of hearing of the appeals, Shri B.L. Nema and Shri B.M. Gupta, the ld. counsel for the appellants, summarised the grounds of appeal as follows: 1. The service of notices on the transferees and the transferor was not within 9 moths of the date of the sale as required by law. 2. No case for invoking the provisions of s. 269C was made out by the competent authority as there was no under-statement of the consideration in the instrument of sale; 3. The transferor was not Shri K.L. Mathuradas but the Tax Recovery officer; 4. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1977, that the proclamation of sale was published in the Govt. Gazette on 1st April, 1978 and the notices on the transferor and the transferees were served on 9th June, 1978 and 10th June, 1971 respectively. Thus, it is clear that although the proclamation was published in the Gazette within the prescribed period of nine months from the date of sale, the notices on the transferor and transferees were served after the expiry of the said period. Therefore, if the initiation of acquisition proceedings is considered complete merely on publication of the proclamation in the Government Gazette, it would be valid. If, however, initiation of the proceedings is complete only on the service of notices on the transferor and the transferees, it would be invalid. Sec. 269D, which sets out the conditions for initiating acquisition proceedings, reads as follows: "s. 269D(1) The Competent Authority shall initiate proceedings for the acquisition, under this Chapter, of any immovable property referred to in s. 269C by notice to that effect published in the official Gazette: Provided that no such proceedings shall be initiated in respect of any immovable property after the expiration of a period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he period of 30 days is evidently to be reckoned from the date of initiation of proceedings under s. 269D(2). If publication of the notice in the official Gazette without personal service under s. 269D(2) is to be taken as completion of initiation of proceedings, many interested persons who do not get a copy of the Gazette would be debarred from questioning the jurisdiction of the Competent Authority. All these sections, viz., s. 269B(3), s. 269B(3), s. 269D and s. 269E have to be read harmoniously and if so read, the reasonable interpretation would, in our opinion, be that the limitation is complete only when notices are published in the official Gazette and are personally served on the transferor and the transferees. Since in the present case the notices were served on the transferor and the transferees, after the expiry of the period of limitation of 9 months, the initiation has to be held as invalid. 9. The second contention of the assessee's ld. counsel that the Department was estopped from initiating acquisition proceedings after the IAC(Acq.), acting as Competent Authority, had given a written assurance in his letter dt. 23rd June, 1977 that no acquisition proceedings shal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt that the IAC (Acq.) had no authority to make such a representation does not have any force for the reason that it was the IAC (Acq.) who was the Competent Authority to initiate such proceedings and he was also competent to drop those proceedings even after they were initiated. He made the representation with the approval of the CIT, Bombay City and acting upon this representation, the transferor and the transferees altered their position and, therefore, on the principles laid down by Their Lordships of the Supreme Court in Union of India vs. Anglo Afghan Agencies(2), and in the case of Motilal Padampat Sugar Mills Limited(1), the Department was estopped from initiating acquisition proceedings. 10. Even on merits, the market value of the property in question could not exceed even by 15 per cent of the sale consideration of Rs. 1,05,000 stated in the sale deed. The Asstt. Valuation Officer of the Departmental Valuation Cell valued this property at Rs. 92,000 as per his report dt. 14th June, 1977. This report was submitted by the Asstt. Valuation Officer at the instance of the Department and it formed the basis of the assurance give by the IAC (Acq.) that the Department would not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o take possession of his own property. In view of these Supreme Court decisions, the matter is no more res integra and the point is finally settled that in such a case rent capitalisation method is the only appropriate method. On facts, there is no dispute that on the basis of gross rent received from the 36 tenants, which was Rs. 1,359 per month only, the market value was determined by the Asstt. Valuation Officer at Rs. 92,000 vide his report dt. 14th June, 1977. He found that after allowing taxes, 1/12th for repairs and collection charges @ 6 per cent, the net annual income worked out to Rs. 10,780. He applied a multiple of 10.38 and determined the value at Rs. 1,11,896 and after deducting for capital repairs to the collapsed portion a sum of Rs. 20,000 worked out the market value at Rs. 92,000 in round figures. As regards the land, he observed that it belonged to the Government of India and the lessee had only a license to occupy it for the erection of a building. In such a case, there appears to be hardly any question of reversion of land to the licensor. In this connection, it has been held by the Calcutta High Court in CIT, West Bengal vs. Smt. Ashima Sinha (3), and CIT, Wes ..... X X X X Extracts X X X X X X X X Extracts X X X X
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