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TMI Blog2003 (4) TMI 251X X X X Extracts X X X X X X X X Extracts X X X X ..... se. So we dismiss this preliminary objection raised by the Department as was announced on 21st March, 2003 in the open Court. On merits: 4. In the instant case, the assessee has taken 10 main grounds with a number of sub-grounds, but the entire grievance is related to the validity of impugned order as well as the acquisition proceedings started by the Competent Authority pertaining to Khasra No. 421 located between Circuit House and Chhitar Palace (Umaid Bhawan Palace), Jodhpur. 5. From the bulky material and brief history pertaining to this piece of land appears that his highness late Shri Gaj Singhji transferred the land of Khasra No. 421 to M/s Jodhan Real Estate Development Co. (P) Ltd. On 5th Nov., 1971, M/s Jodhan Real Estate Development Co. (P) Ltd. sold this land to four parties and one of them was M/s Jai Marwar Co. (P) Ltd. who purchased a piece of land for a consideration of Rs. 9,60,000 only. Total area of this piece of land was consisting of 1,81,818 sq. yards. M/s Jai Marwar Co. (P) Ltd. (hereinafter known as M/s JMCPL) has again sold this piece of land to the appellant i.e., M/s Navin Grah Nirmam Sahakari Samiti, Jodhpur, in short "appellant Samiti/Society" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id piece of land (Khasra No. 421) located at Jodhpur Municipality, matter also reached to the Supreme Court in the public interest litigation. The Supreme Court vide its order dt. 28th Oct., 2002, allowed the SLP in favour of Shri Paras Chand Khinvsara where it was declared the said piece of land cannot be included in "no construction zone" in exercise of the powers under s. 171 of the Rajasthan Municipal Act. So the Supreme Court set aside the impugned notification of the State Government relating to K-421 as well as the order of the High Court. Finally, the said piece of land (K-421) has become free from all the litigation by the final order of the Supreme Court dt. 28th Oct., 2002. 9. With this background, we heard both the parties for a number of days and gone through the bulky material on record. Both the parties have filed written submissions and their counters along with the list of case laws. The appellant almost raised the similar objections which were already submitted before the acquisition authority. 10. Learned Authorised Representative, Sri N.M. Ranka, senior advocate starts the argument by mentioning the history of the case that M/s Jodhan Real Estate Development ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... housing society duly registered under Rajasthan Co-operative Societies Act, 1965, vide Registration No. 1137/Q, dt. 7th April, 1971. It works under the control and supervision of Registrar of Co-operative Societies in Rajasthan. At the same time, M/s Jai Marwar Co. (P) Ltd. is a private limited company which was incorporated in the asst. yr. 1971-72 under the Indian Companies Act. It has been filing its income regularly. It filed return for the asst. yr. 1985-86. The recorded value was accepted after the appeal as the sale consideration. 13. The learned Authorised Representative objected by mentioning that the appellant submitted the application dt. 10th Nov., 2002, before the respondent for seeking the certified copies of the documents detailed therein. But the said copies/materials were never supplied to the appellant which is in violation of principle of natural justice. 14. The learned Authorised Representative submitted that the appellant has purchased a piece of land from M/s Jai Marwar Co. (P) Ltd. as per the agreement dt. 2nd Oct., 1974 for a sale consideration of Rs. 24,45,452. The sale deed was executed on 1st Feb., 1982. The seller company applied for the income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the following cases: I. Krishna Kumar Rawat vs. Union of India (1995) 123 CTR (Raj) 61 : (1995) 214 ITR 610 (Raj) In this case, it was observed that in respect of land, comparable cases provide the better guidance. The comparable cases could be what are in respect of the land having similar character is in the proximity of the land under agreement having similar advantage and amenities. The proximity in time is also an important factor in such type of cases. The location, frontage, transport facilities and other amenities besides the size of the plot are relevant consideration. II. In the case of Forbes Forbes Campbell vs. Nishan Ahmed, IAC Anr. (1995) 124 CTR (Bom) 91 : (1996) 217 ITR 103 (Bom), Hon ble Bombay High Court observed that the initiation of the proceedings by the Competent Authority was without jurisdiction, because there was no material whatsoever to come to the conclusion that the consideration for transfer in the agreement was not truly stated and, therefore, with the object of facilitating the reduction or evasion of the liability of the transferor in respect of payment of tax. III. In the case of Competent Authority vs. Smt. Lalita Todi (1997) 142 CTR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the original agreement is not available. 18. He, further, submitted that the appellant allotted Pattas to its members and gave possession to allottees. A sum of Rs. 27 per sq. yard was collected being cost for the land, development and other expenditure to be incurred. The said allotment is as per the resolution passed by the appellant Samiti and it stands established that the said allottees received the possession prior to the execution of the sale deed. 19. The learned Authorised Representative took another aspect by submitting that the transferor company had a meeting of its board of directors on 1st Aug., 1974, wherein, powers were conferred on the specified directors to negotiate and to enter into sale transactions. The objector Samiti (appellant), was in need of land for its members to achieve its sacred objectives. After passing the resolution, agreement was entered into on 2nd Oct., 1974, which was, of course, a holiday being the birthday of Mahatma Gandhi. A sum of Rs. 10,100 was paid by cash towards sale consideration. The rate was settled on the said date at Rs. 8 per sq. yard. Thus, the increase in rate from 1971 to 1974 was at Re. 1 per sq. yard. The balance co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion number and details of the members to whom the land was allotted. But no notice was given by the acquisition authorities to the said allottees. 21. According to learned Authorised Representative, there was no reason to believe as required under s. 269C before issuance of the notice under s. 269D(1) of the IT Act, dt. 15th March, 1985. Thus, entire proceedings are illegal, without jurisdiction and null and void, non-existent in law and deserves to be quashed forthwith. The notice under s. 269D(1) of the Act dt. 15th March, 1985, claimed to have been published in the official gazette is illegal, void and deserves to be quashed for the reason that it was never supplied to the appellant. The notice does not contain complete description of the land in question though the complete details stand recorded in the sale deed. The notice contains the expression "and/or" in respect of the object and it is a serious illegality. For this purpose, he has drawn our attention to the copy of the notice. According to the learned Authorised Representative, in the notice full and complete addresses of the appellant Samiti was not given though the sale deed contains complete addresses. Such non-men ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture for sending to the transferor/transferee. (iii) Notice under s. 269D(2) issued 9-12-1985 -- Letter put up for signature of ADI, Jodhpur. 26-2-1986 -- Letter put up for signatures regarding service of notice under s. 269D(2). 26-2-1986 -- Reminder sent and also talked on telephone 26-2-1986 -- Intimated on telephone to Shri K.K. Shukla. 14-3-1986 -- Acknowledgement slip of service of notices under s. 269F(1) received and placed on file. -.3-1986 -- Notices under s. 269D(2) are put up for signatures for sending the transferor/transferee. -- -- Notice for hearing put up for signatures. 13-6-1986 Present Shri B.L. Goyal, Ex. member of Society. Filed adjournment application. Also served with notice under s. 269D(1) along with valuation report today. 16-6-1986 -- Put up notice under s. 269F(1) for signatures. 3-7-1986 -- Intimation of case adjourned is put up for signatures. 18-7-1986 -- Notices under s. 269F(1) dt. 5-8-1986 ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sent. Again issued notices under s. 269F for 16-2-1988. 1-3-1988 Attended Shri Bhanwar Lal Goyal, Ex. Member Applied for adjournment. Case adjourned to 11-3-1988. Inquiry report of Registrar Co-op. Societies received and letter issued to party (show cause). 11-3-1988 Attended Shri B.L. Goyal, Ex. Member with Shri G.G. Mundra. Letter dt. 11-3-1988 filed along with enclosures. Asked to file detailed history enumerating the sequence of events. Case adjourned to 17-3-1988. --4-1992 -- CIT, Jaipur s letter vide No. CIT/JPR/8/1992-93/64 dt. 23-3-1992 regarding pendency of acq. cases received. Put up for sending information to CIT. --- -- Note sheet put up for fixing the case for hearing. 28-4-1992 -- Note sheet put up --- -- Directed to inform the earlier position. 29-4-1992 -- Letter put up for signatures for sending to CIT. --- -- Letter put up for signatures for sending to Shri G.G. Mundra CA. 4-8-1992 Attended Shri G.G. Mundra CA Case adjourned to 10-8-1992 at 12.00 a.m. 4-8-1992 -- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 31-8-1998 -- Direction given to issue letter to the Chairman of the Society and Distt. Collector. 14-9-1998 Present Shri S.R. Sharma, CA/AR Submitted written submission. Case adjourned to 25-9-1998 -11-1999 -- Letter received from Sh. K.M. Mehta, freedom fighter of Jodhpur through the CIT, Jodhpur addressed to the CCIT, Raj. Jaipur. 30-11-1999 -- Letter received from Addl. CIT R-2, Jaipur in regard to notice in news papers about warning of any encroachment or construction on the land for which acquisition proceedings under s. 269D is pending. 2-11-2000 -- Notice of hearing under s. 269F(1) issued and served on Shri N.C. Jain, advocate. Date of hearing fixed on 6-11-2000 6-11-2000 Shri N.C. Jain, advocate attended along with Shri Kundan Mal Jain, president of the transferee co-operative society. Filed written submission on 6-11-2000. Matter discussed. 29-4-2002 Present Shri Dinesh Goyal and Shri Chandra Sekhar, CAs Filed a POA. Written submission considered and asked to file further information. 29-4-2002 -- Asked t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... On 24th April, 2002, it was mentioned that "From 1982 and that the amount of Rs. 10,100 allegedly received in cash by M/s Jai Marwar Co. (P) Ltd. from NGNSS in 1974 does not appear in the balance sheet of Jai Marwar Co. (P) Ltd. in the relevant years. Asked to file whatever written submission and/or evidence that the assessee wants, on the next date of hearing". 26. From the noting dt. 14th May, 2002, it appears that the following documents were supplied to the appellant: (1) Copy of reasons recorded for intention of the acquisition proceedings. (2) Copy of the discussion in the case of... (3) Copy of DVO s valuation report for final reply on 28th May, 2002. 27. After drawing the attention to the "noting" and its explanation, the learned Departmental Representative mentioned that it is for the Department to start the proceedings against the appellant group housing society alone. It is for the Department not to take the proceedings against the other three societies who had purchased the land directly from M/s Jodhan Real Estate Dev. Co. (P) Ltd. in the year of 1971. But in the instant case, piece of land was purchased from M/s Jai Marwar Co. (P) Ltd. at a very late stag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly the transferee appellant is entitled to claim the compensation from the Central Government and not its members. So only the appellant-society is the "interested person" as per s. 269A(g). The members of the appellant-society are not interested persons. Therefore, it was not necessary to issue the summons notices to them in their individual capacity. 30. About the time-limit under s. 269D(1) for initiating the proceedings, it was submitted by learned Departmental Representative that the time-limit is 9 months from the end of the month in which the instrument of transfer was registered i.e., 27th July, 1984. In the instant case notice under s. 269D(1) was issued on 15th March, 1985 and it was published in the official Gazette well in time on 6th April, 1985. After publishing the notice in the Gazette, it is expected that having the nature "in rem" no individual ("in personam") service is required. 31. About the existence of Chapter XX-A/XX-C, the learned Departmental Representative submitted that these chapters are withdrawn later but at the time of proceedings, these provisions were very much in the book of statute. Sec. 269RR makes it inapplicable to transfers made after 30 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or some theft from the said land. On enquiry from the Bench, it was later clarified that it was not related with the property in question. However, the learned Departmental Representative continued to argue that the reply to question given in Rajasthan Vidhan Sabha on 28th Oct., 1986, it was stated that there was no purchase or sale of the land by the transferee till 1980-82. Learned Departmental Representative further submitted that the conduct of the parties is not commensurate with the alleged agreement dt. 2nd Oct., 1974. The said agreement of course, was not registered and it cannot be relied upon. He made a request that the Bench may kindly ignore the said agreement. 34. About the fair market value of the property, the learned Departmental Representative submitted that the issue has already been dealt by the Competent Authority in para 4.3 of the impugned order. The fair market value means 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. In the instant case, instrument of transfer, under s. 269A(f) means the instrument of transfer registered under the Registration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es it with registering officer along with statement in Form No. 37G s. 269P(1) Registering officer forwards it to Competent Authority s. 269P(2) Competent Authority requires valuation report for initiating proceedings s. 269L(1)(a) Competent Authority records reasons to initiate proceedings by issue of notice under s. 269D s. 269C Competent Authority calls for objections s. 269D Transferor/transferee and persons interested in the objections before Competent Authority s. 269E Competent Authority hears objections and makes inquiries s. 269F(1), (2), (3), (4) s. 269M Competent Authority makes order of acquisition or declaration of non-acquisition s. 269F(6), (7) Service of order of acquisition/non-acquisition s. 269F(8) 36. Learned Departmental Representative submitted that abovementioned scheme was truly followed in the instant case. To sum up, the learned Departmental Representative relied on the following case laws: Devrajan vs. Tamil Nadu Farmers Service Co-operative Federation (1979) 13 CTR (Mad) 280 : (1981) 131 ITR 506 (Mad) Where the omis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax in the hands of the transferor is not sufficient proof for rebutting presumption under s. 269C(2)(b). IAC vs. Laxmichand (1986) 56 CTR (Kar) 156 : (1986) 159 ITR 730 (Kar) Failure to initiate acquisition proceedings in respect of other properties in the same area cannot be the basis for determining the fair market value of the property in dispute. Smt. Sabita Mohan Nagpal vs. CWT (1986) 53 CTR (Raj) 332 : (1986) 160 ITR 751 (Raj) The actual cost of construction of a property is not conclusive in the matter of determination of the fair market value of that property. CIT vs. Jumramal Son (1986) 50 CTR (All) 231 : (1985) 154 ITR 689 (All) Also Abdur Samat Haji Adam Kantharia Ors. vs. Union of India Ors. (1982) 26 CTR (Bom) 249 : (1982) 135 ITR 177 (Bom) The auction sale of property should be taken into consideration while fixing the fair market value of the property sold in the same locality. CIT vs. Export India Corporation (P) Ltd. Under s. 269C, the Competent Authority has to form a prima facie opinion only, which is subject to the objections filed by interested persons as the final opinion is to be formed by the Competent Authority under s. 269F, after hear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tment vide his letter dt. 23rd Feb., 1999 that the Department cannot proceed under Chapter XX-A for the acquisition proceedings because of the stay so granted by the Hon ble Rajasthan High Court. The litigation came to an end only in 2002 when the Supreme Court has granted the SLP as already mentioned. Further, by looking to the chronology from the note-sheets of the Department, it appears that the proceedings were moving for the acquisition of the said piece of land, of course, with the tortoise speed, as usually happens in the Government Departments. Nonetheless, we are satisfied that the long delay of so-called 16 years in completing the proceedings was bona fide specially when the Supreme Court decision dt. 28th Aug., 2001 in the case of Kundan Mal as well as another decision dt. 28th Oct., 2002 in the case of Paras Chand Khinvsara brought the litigation to an end. 39. About the technical defect in the notice, i.e., it does not contain the full addresses of the transferor and transferee and the details of description of the property, we are of the view that the notice under s. 269D(1) clearly mentioned that "the land near Ratanada Circuit House, Jodhpur, and more fully descri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 43. It is after the service of notice, the appellant-society/Samittee becomes a party to the proceedings. It may be mentioned that the appellant was not entitled to get a copy of the same at the stage of issuance of notice as per the ratio laid down by the Orissa High Court in the case of Visnu Borewell vs. ITO (2002) 178 CTR (Ori) 409 : (2002) 257 ITR 512 (Ori). 44. About confrontation of the DVO s report, it may be mentioned that there was no violation of the principles of natural justice as per ratio laid down by Supreme Court in the case of State of JK vs. Bakshi Gulam Mohammed where it was observed that the right of hearing does not include right to cross-examination. In the instant case, the DVO under the Act was a fact-finding authority to determine the fair market value. Acceptance of this report has no impropriety. 45. About the "interested persons", it was claimed that no notice was served on the allottees of the plot. In this context, it appears that the reasons of acquisition were recorded on 15th March, 1985 and on the same day notice was issued. The earliest date of allotment of the plots to the members was 5th Sept., 1985. In other words, at the time of initiat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t value. In this context the appropriate authority has already discussed a number of case laws in its impugned order at para 12. 47. Let us come to the crucial fact, i.e., agreement dt. 2nd Oct., 1974. About its validity, authenticity, veracity, etc., we heard rival submissions at length. On specific query from the Bench, the learned Authorised Representative, Shri N.M. Ranka, the senior counsel, has admitted that in the litigation before the High Court or the Supreme Court the authenticity of the said agreement was not expressly admitted by any Court. He has not mentioned any observation made by any Court about the genuineness of this agreement which was never a subject-matter before any Court. The litigation was pertaining to the Ceiling Act, ownership of the land for the ex-ruler, construction zone, etc. But now, the said agreement dt. 2nd Oct., 1974 has become a launching pad for the assessee in the instant case for the reason that if the agreement was genuine, then, the claim of the assessee will have to succeed. If the agreement was not genuine and its authenticity is doubtful, then the claim of the assessee is not sustainable. It was claimed that this agreement was signed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Misc. Petition No. 592/96) it was stated that Shri Kundan Mal was the president of the appellant-society at the relevant time who had signed the impugned agreement dt. 2nd Oct., 1974. But in the said order, the Hon ble High Court dt. 22nd Dec., 2000 has mentioned that secretary of the appellant society was Shri Ram Dass who in his statement recorded under s. 161 CrPC stated that no such deal was ever authorised by the appellant-Samittee or undertaken by it during his tenure as the secretary which lasted till 1979. The chairman of the appellant-society Shri Madan Singh, who held the office till 1979 deposed similar facts before the lower Court. In other words, the chairman and the secretary of the appellant-society who were holding the office till 1979 have expressly mentioned that no such deal of the purchase of land between M/s Jai Marwar Co. (P) Ltd. and the appellant-society was made till 1979. Against the said statement, if it was false, the appellant-society has not taken any remedial measure by filing the criminal complaint for making wrong statement/false evidence or any suit for damages. Impliedly, the statement of the then chairman and secretary was presumed to be correct. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any. From para 5 p. 147 of the paper book it appears that by showing the sale of the said land a receipt of Rs. 10,100 was made out. On the said receipt a revenue stamp was affixed which was signed by the managing director. The said stamp was sent to the Indian security press, Nasik, who have confirmed that the said stamp receipt was not made on 2nd Oct., 1974. It was made sometime later. According to the assessee, the receipt was issued after the gap of sometime but it does not change the character of the agreement to sell, which was duly reduced in writing on stamp paper. This version of the assessee has on the one hand accepted the falsity of receipt because in case the receipt was issued somewhere in April, 1975, the signatory could have mentioned that a sum of Rs. 10,100 was received on 2nd Oct., 1974 and could have put the date on the receipt on which it was actually signed and given to the person. On the other hand, Shri Kundan Mal Jain s/o Shri Rikhabchand Jain, who was working as president of Naveen Grah Nirman Sahakari Samiti Ltd., Jodhpur, with whom the agreement to sell was made by the assessee-company, had given the statement on oath before the then Asstt. CIT, Circl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted to the valuable asset of the company. 60. The accounts of M/s Jai Marwar Co. (P) Ltd. were presented belatedly to the statutory authority, like the Registrar of Companies for the relevant year 1974 and onwards but the receipt of amount of Rs. 10,100 was never reflected in the said accounts. However, the learned Authorised Representative submitted that as far as appellant-society is concerned, the said amount stands reflected in their account but the learned Departmental Representative countered it by submitting that prior to 1980, the accounts of the appellant-Samittee were not properly maintained or poorly maintained and certainly were not audited. So the authenticity of the stand taken by the appellant-society is not proved and submission made by learned Authorised Representative is not sustainable. 61. In the facts and circumstances of the case, as discussed above, it appears that the said impugned agreement dt. 2nd Oct., 1974 was not genuine and is a backdated document. 62. To our mind, what might have happened in this case can honestly be presumed that, soon after knowing that land is likely to be acquired under the Ceiling Act sometime in 1980, the seller might have ..... X X X X Extracts X X X X X X X X Extracts X X X X
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