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TMI Blog1980 (9) TMI 164X X X X Extracts X X X X X X X X Extracts X X X X ..... h Sept., 1973. The transfer was made by Shri Vijay Kumar, son of late Sri Newas Ram, Smt. Urmila Devi, wife of Shri Vijay Kumar and S/Shri Sanjay Kumar and Vinay Kumar, sons of Shri Vijay Kumar of 91-Elcid Ridge Road Bombay-6. The transferees were Smt. Lalita Todi, st. Jogendra Kaur, Sardar Bahadur Singh, Smt. Hemalata Devi, Smt. Sharda Devi, Shri Narendra Kumar Sinha, Smt. Bhagwant Kaur, Sardar Harbhajan Singh, Shri S.J. Mehta, Shri Kusheshwar Jha, Shri Binod Kumar Mishra, Smt. Malti Sah and Miss. Sumitra Kumari. The addresses and the other details of the transferors and the transferees are given in the order of the Competent Authority. The Competent Authority, after receiving the information, found that the plot transferred was located in one of the best commercial centres at Patna having the flourishing market of machineries, hardware stores, automobile parts and other heavy machineries etc. He also noticed that a single storeyed residential building in a very good condition located at the centres of the plot was also transferred to some of the transferees. He, accordingly, got the plot valued by the Department valuer who valued the same for Rs. 6,58,000. The Competent Authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansferees, in addition to the objection raised by the transferors, stated that all the 13 purchasers undertook the liabilities and responsibilities of eviction of the tenants from the house and the risk of road expansion scheme. Besides the property was involved in litigation by some local persons claiming to be the heirs of the owner s father and the purchasers had jointly undertaken the risk arising therefrom. Considering these factors, the price paid represented the most fair market value of the property. It was further pointed out that a few months after the purchase, the transferees approached the local claimants and made a further payment of Rs. 1,01,000 to them on 22nd Nov., 1973. It was further pointed out that it may take a long period even 10 years to get other maters settled. Therefore, this factor should be taken into consideration in valuing the property. They also cited certain instances of transactions made before the Registrar at Patna in the vicinity of this plot in order to support their contentions about the price paid for the property. A valuation report by Shri A.K. Mitra was filed on behalf of the transferees. It was also contended that the valuation report of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not accept the objection of the transferors and the transferees that the property was greatly affected by the threat of acquisition under Patna Development Scheme. He also did not accept the argument that the property was uneconomic, because it was fetching a monthly rent of Rs. 116. The Competent Authority relying in 95 ITR 197 did not agree with the assessee that the sale quoted by them in the vicinity of the property under dispute was, in any way, relevant. The Competent Authority gave the details of certain transactions done between Jan., 1974 and June, 1974 and also detailed the example given by the assessee for a sale in 1972 and came to the conclusion that the value in the present case was highly understated. He justified the valuation report of the departmental valuer valuing the property at Rs. 6,58,000 and stated that he has only taken the value of the land at the rate of Rs. 17,000 per katha and he has given the marginal relief for road expansion scheme. He, thereafter, criticised the valuation report, submitted by the transferees, of Shri A.K. Mitra and came to the conclusion that the value adopted by Shri Mitra was not reasonable. He did not agree that in the present c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d after the order was passed by the Competent Authority and, therefore, they could not have been produced before the Competent Authority. Accordingly, the Hon ble High Court set aside the matter back to the Tribunal. The High Court in their order and observed that the fair market value arrived at by the Department was not reasonable and the fair market value of the property should be reconsidered. The observation of Hon ble Mr. Justice S.K. Jha is quoted below: "The first point to be decided, therefore, is: what is the immovable property transferred of which the fair market value is to be fixed. In other words, price has to be fixed for the property transferred effectively and not the property purported to be transferred. The property that actually passes under the instrument of transfer is only that which the transferor is entitled to sell and not what he purports to sell. In the instant case, as already noticed above, there were two sets of claimants for this property which was the subject-matter of litigation in civil Courts of competent jurisdiction and ultimately the right, title and interest to a share in the property was actually found in favour of Champa Devi and others w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hapter XXA of the Act is to check under-valuation mentioned in the instrument of transfer. In order to check this, this chapter has been enacted to enable the Competent Authority to acquire the immovable property where the instrument of transfer does not mention the true consideration amount. In such a case, the proceeding will be initiated under Chapter XXA of the Act and wrong doers shall be punished by acquisition of the land mentioned in the deed of transfer. Hence, it is necessary for the Competent Authority to enquire in respect of the extent of share passed on by the transferor to the transferee. If this enquiry is not made, then it will be difficult for the Competent Authority to acquire the property. Suppose if A has transferred 1/3rd share in a house, the Competent Authority shall acquire only 1/3rd share in the house and only such share shall vest in the Central Government. If the Competent Authority does not make any enquiry as to the extent of the share held by the transferee, then an anomalous position will arise and the Competent Authority shall get difficulty in acquiring the property. The Competent Authority will also find difficulty in taking possession of the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted. Therefore, the order passed by the Competent Authority was illegal. 10. Shri B.P. Rajgarhia, the standing counsel, on the other hand, urged that the compromise degree was a collusive transaction and Smt. Champa Devi did not claim any share in the property under dispute. The dispute about her interest was settled only when the Competent Authority took action under s. 269C of the Act. He, therefore, urged that the compromise degree should not be taken into consideration. He wanted time to collect materials to prove that compromise degree was a collusive one. 11. The Hon ble High Court has discussed much on this issue and had observed that "ordinarily, the Tribunal should respect the decree passed by the Civil Courts unless it comes to conclusion that the decree obtained was a collusive one." Having in mind the above observation of the High Court, the prayer of Shri B.P. Rajgarhia, the standing counsel, was accepted that he should be allowed time for collecting materials to prove the compromise decree as collusive one. 12. The case was fixed for hearing on 27th July, 1980 and the time was granted upto 21st Aug., 1980. The standing counsel on this date again prayed for some ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that no action under s. 269C had been taken against S/Shri Binod Kumar Mishra, Narendra Kumar Sinha and Smt. Sharda Devi. 15. The consideration paid by 12 persons was below Rs. 25,000, except Shri Kusheshwar Jha. However, the Competent Authority had reason to believe under s. 269C that the property transferred by Shri Vijay Kumar and others exceeded the fair market value of Rs. 25,000 and the apparent consideration was less by 15 per cent or more than the fair market value of the property and the fair market value was not correctly stated in the instrument of transfer to facilitate the reduction or evasion of the liability to pay tax in respect of any income arising from the transfer or to facilitate the concealment of any income or any money or other assets which have not been or which ought to be disclosed by the transferees for the purposes on IT or WT. Further under s. 269C(2), it would be conclusive proof if the fair market value of the property exceeded the apparent consideration by more than 25 per cent of such consideration and if the apparent consideration is less than its fair market value, it would further be presumed, that the consideration has not been stated truly i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... larly referred to page 62 of the paper book where cl. 8(f) reads as follows: "(f) that it may be declared that the Defendants, or any of them have no share, right, title or interest in the properties, either inherited, acquired or otherwise, of the deceased and that the plaintiffs are the only heirs of the deceased entitled to all his properties." 17. Shri Srinewas Ram was fighting a suit for partition in suit No. 36 of 1932. Shri Srinewas Ram died on 24th Oct., 1960. Smt. Champa Devi and others made application for substitution. That application was objected to by Shri Vijay Kumar. The objection was over-ruled and Smt. Champa Devi and her branch were substituted. On 9th May, 1962, Shri Vijay Kumar instituted Title Suit No. 54 of 1962 to establish his absolute title to the exclusion of Smt. Champa Devi and others. This suit ultimately culminated in a compromise decree dt. 10th June, 1975 on the basis of the compromise petition dt.10th April, 1975. Therefore, in the absence of nay material, it is clear that Shri Vijay Kumar and others only transferred their interest by the deed dt. 30th Aug., 1973. But the interest of Smt. Champa Devi and others was unaffected by the deed dt. 30 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been attacked and Hon ble Mr. Justice S.K. Jha in his decision at the end of paragraph 10 has observed as follows: "The price of Rs. 1,85,000 paid to the transferors was, therefore, not in respect of the actual transfer effected of the entire property but involved an imminent likelihood one litigation between the appellants on the one hand and Champa Devi and others on the other. Although the transferors, namely, Vijay Kumar and others had purported to sell the entire property, what was actually effectively transferred was their own interest in the property only. The Competent Authority and the Tribunal were, therefore, in my view, not right in taking the market value of the entire property, if at all that could be, to be Rs. 6,58,000." 19. Similar observation had also been made by Hon ble Mr. Justice B.P. Jha in his separate judgment. Under the above circumstances, the assessee was not entitled only for concessions on these grounds, but the assessee was also entitled for concession on the ground that there were several co-owners in the property and, therefore, there was a clong on the marketability of the property which would reduce the value and it could not be sold in the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y under s. 269F of the Act. Hence, his order is held to be legal. 23. The matter could be considered on the alternative argument of the counsel of the transferees. Presuming that the value adopted by the departmental valuer at Rs. 6,58,000 was the fair market value of the property, the interest of Shri Vijay Kumar and others was limited to 30 per cent. The 30 per cent of the total value of Rs. 6,58,000 would come down to Rs. 1,97,400. Rs. 1,97,400 would be the fair market value of the interest of Shri Vijay Kumar and others which was transferred by the deed dt. 30th Aug., 1973. The apparent consideration is Rs. 1,85,000. The fair market value did not exceed the apparent consideration more by 15 per cent and, therefore, the condition precedent under s. 269C was not attracted. Consequently even on this score, the order of the Complete Authority is illegal. We, therefore, set aside the order passed by the Competent Authority under s. 269F of the Act. 24. In the result, the appeals are allowed. ANNEXURE-A IT (Acquisition) Appeal No.3 (Pat) of 1974-75. Smt. Jogendra Kaur, Patna vs. The Competent Authority, Acquisition, Bihar, Patna IT (Acquisition) Appeal No. 4 (Pat) of 1974 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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