9911796707
TMI Blog1986 (1) TMI 179X X X X Extracts X X X X X X X X Extracts X X X X ..... fe of the said Shri Hari Singh Mehra and Shri R.C. Mehra, Shri B.C. Mehra, Shri D.C. Mehra and Shri R.C. Mehra all sons of Late Shri Hari Singh Mehra. According to the appellants, there was an agreement to sell between the parties which was executed on 12-2-1975 by which the said property was agreed to be transferred for a consideration of Rs. 15,03,500. The sale deed executed on 1-11-1975 was presented for registration on 14-11-1975 before the Sub-Registrar, Delhi but it was ultimately registered on 15-12-1978. 4. The competent authority received intimation of the sale under section 269B of the Act and as the order under appeal shows an inspector was deputed to enquire and, compute the fair market value. The inspector reported the value of the property at Rs. 31,90,800 which exceeded the apparent consideration by more than 15 per cent. The competent authority also referred the matter to the valuation cell and the Valuation Officer reported the value of the property in question as in December 1978 at Rs. 26,37,000. Since both the officers estimated the fair market value of the property at a figure that exceeded the apparent consideration by more than 15 per cent the learned compe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d counsel for the transferees as well which were as under : 1. that the notices having not been served on the transferors---the proceedings are illegal; 2. the publication of the notice under section 269C(1) was not made in the Official Gazette within the time prescribed; 3. initiation of proceedings under section 269C(1) was void because (i) there was no material before the learned competent authority for believing that the fair market value of the property in question exceeded the apparent consideration by more than 15 per cent, and (ii) that there was no material before the competent authority to believe that the sale consideration has not been truly stated in the instrument of transfer with the object of facilitating reduction or evasion of liability of the transferors to pay a tax in respect of any income arising from the transfer or facilitating the concealment of income or any moneys or other assets which have not been or which ought to be disclosed by the transferees for the purposes of the Act; and 4. that there was no cogent material before the competent authority to hold that the consideration as agreed between the parties had not been truly stated in the instrum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7-Court Road. This is about a notice under clause (b) of section 269D(2) and does not serve the purpose of individual notices contemplated by section 269D(2)(a) and, therefore, of no effect. 9. As regards the despatch of notice by registered post, firstly, it is of no effect because it did not reach the addressees and was received by an unauthorised person, namely, O.P. Arora. Secondly, a single notice was sent. Notices kept in one envelope and sent by registered post addressed to several persons makes it impossible for the postman to deliver a single letter to several persons. He can deliver it only to one and there will be valid service only on that particular individual. 10. Although the learned competent authority has mentioned in the order under appeal that the notice was served on the transferors on 15-2-1984 the mode of service has not been specified and the state of the record as pointed to or by the learned departmental representative has already been narrated above. We, therefore, hold that no notice as required under section 269D(2)(a) was served on the transferors who are the appellants in Acquisition Appeal Nos. 3 and 4 of 1985. 11. Now, the question arises as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that after the notice under section 269C(1) has been published in the Official Gazette proceedings can be legally concluded without service of notice on the transferors. From the above rulings, it is clear that it was necessary for the competent authority to serve individual notices on each of the transferees and the failure to do so renders the acquisition invalid. In the face of the other rulings the view of the Hon'ble Andhra Pradesh High Court and the Chandigarh Bench of this Tribunal cannot be followed and we hold that the non-service of a notice on the transferors-appellants in Acquisition Appeal Nos. 3 and 4 of 1985 has the effect only of invalidating the enquiry and the findings arrived at by the learned competent authority and not the initiation of proceedings. Therefore, in our view, if the appellants do not succeed on other grounds, the only relief that can be allowed to them will be to set aside the order under appeal and to direct the competent authority to continue the proceedings after duly serving the transferors with notices as required under the law. We also rule that in view of the Full Bench decision of the Hon'ble Punjab and Haryana High Court referred to abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We may mention that no such plea was raised by the transferee-appellants before the competent authority. We, therefore, hold that it is not established that the Gazette dated 1-9-1979 was not published till 30-9-1979 and this plea must, therefore, fail. 14. The third contention raised on behalf of the appellants was that the initiation of the proceedings was invalid for two reasons : (i) that there was no ground for the competent authority to believe that the fair market value of the property in question exceeded the apparent consideration by more than 15 per cent, and (ii) that there was no material before the competent authority to believe that the consideration was understated with the objects mentioned in section 269C. 15. Section 269C(1) reads as under : "(1) Where the competent authority has reason to believe that any immovable property of a fair market value exceeding one hundred thousand rupees has been transferred by a person (hereafter in this Chapter referred to as the transferor) to another person (hereafter in this Chapter referred to as the transferee) for an apparent consideration which is less than the fair market value of the property and that the considerati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty for sale. That was thus a case in which the Valuation Officer's report suffered from an error which was shown to be apparent. In the case, before us, however, no such error has been pointed out. There was an inspector's report, who described the location of the property and also mentioned that another property in the neighbourhood had been valued at a higher rate. He also mentioned a circular of the Central Government under which land rates for the neighbouring areas had been fixed at Rs. 400 per sq. yd. The Valuation Officer, on the other hand, valued the property at Rs. 26,37,000 and for doing so he sub-divided the land into 20 plots measuring 537 sq. yds. each and valued them at the rate of Rs. 170 per sq. yd. as in February 1975. This brought the value of the land to Rs. 18,25,800 to which the scrap value of the existing structures was added at Rs. 25,000. A sum of Rs. 50,000 was deducted on account of filling of the compound and the net value as in February 1975 (the date of the agreement) was determined at Rs. 17,97,000. The Valuation Officer also calculated the value of this property as in December 1978 at Rs. 26,27,000. To the valuation report he appended an annexure giv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd Rs. 25,000, respectively, and the vendors gave due intimation to the ITO assessing them and obtained tax clearance certificates from the ITO before the execution of the sale deed. He drew our attention to page 36 of the paper book which is a copy of a letter from the ITO which shows that even a copy of the sale deed had been furnished to the ITO somewhere before 26-9-1975. The letter dated 6-11-1975 (copy at page 37 of the paper book) shows that the ITO deputed his inspector to receive a demand draft of Rs. 4,50,000 from the vendees as the vendors had outstanding tax liabilities. It was also pointed out that the purchasers were 44 in number and it was quite difficult for them to so unite as to be able to pay some extra money under the table. It was also contended that so far as the vendors are concerned, they avoided payment of capital gains tax by investing the moneys in specified securities and if the sale consideration was more, they could have invested the same as well in such securities and, there was no reason for them to take any money under the table. The ruling in the case of Unique Associates Co-operative Housing Society Ltd. clearly shows that the competent authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been adduced by the assessee at all to rebut the report of the Valuation Officer : Smt. Pushpalata v. IAC : SLP (Civil) No. 15119 of 1983." We have gone through the ruling in the case of Pushpalata v. IAC [1984] 150 ITR 42 (All.) and find that the question of the existence of any reasons for the relevant belief about the object of understatement was not raised at all in that case with reference to the initiation of proceedings under section 269C(1). Therefore, the aforesaid note cannot be of any help to the revenue. 17. Having disposed of the above points, we now come to the last point about the determination of the fair market value of the property in question. The term has been defined in section 269A(d) of the Act to mean the price that the immovable property would ordinarily fetch on sale in the open market on the date of execution of the instrument of transfer of such property. The date of execution of the instrument in the case before us is 1-11-1975 and the record shows that the document was actually presented for registration on 14-11-1975. Though the document was registered on 15-12-1978 after a lot of formalities, like clearance from the Land Acquisition Department an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ller plots of about 400 sq. yds. which were sold at prices about Rs. 200 per sq. yd. The learned competent authority has itself observed that such transactions cannot be accepted in view of the decision of the Hon'ble Orissa High Court in the case of Joseph Vallooran v. CIT [1977] 108 ITR 544. The assessee had also cited some sale instances of smaller plots which have rightly been ignored by the competent authority. A perusal of the last valuation report relied upon by the learned competent authority would show that the Valuation Officer acted solely on the basis of the Government Circulars dated 7-5-1974 and 21-6-1979 issued by the Ministry of Works and Housing by which land rates for the Rajpur Road area were fixed at Rs. 150 and Rs. 400 per sq. yd. respectively. Both sides agreed that these circulars were not issued under any statutory authority and they were intended to be applied in cases where the Government land leased out to others was sought to be transferred by the lessees and for recovery of a portion of the unearned increase in terms of the lease deeds. The learned counsel for the appellants contended that these circulars could not be a basis or at least a sound one for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... denciary value at all. As is evident, the learned competent authority did not make any attempt to investigate into the more important part of the proceedings, i.e., whether there was an attempt to avoid taxes and he did not establish any rapport with the officers assessing the vendors or the vendees nor did he direct the inspector to make enquiries on this important aspect of the matter. In such circumstances and in the absence of any sale transaction mere arithmetical calculations based on certain Government circulars cannot determine the fair market value of a property. We do not know what were sizes of the plots leased out by the Government, what were their development conditions and what were the terms of the leases. Without such details and without evidence of actual transactions, in our view, the fair market value of the property in question could not be determined. We, therefore, hold that from the material on record it was not proved that the fair market value of the property in question as on the date of transfer was more than 15 per cent of the consideration shown in the instrument of transfer. The property in question, therefore, could not be acquired under section 269F. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
