9911796707
TMI Blog1980 (5) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... ,000 Was paid as and by way of earnest and the balance was paid by a cheque. Respondent No. 1 served on the petitioner a notice bearing No. AC-5/ 11/Cal/72-73, dated the 30th March, 1973, under s. 269D(1) of the I.T. Act, 1961, that the said respondent had reason to believe that the said property was transferred for an apparent consideration which was less than the fair market value thereof and the fair market value exceeded the apparent consideration by more than 15 per cent. and the consideration agreed to between the transferor and the transferee had not been stated in the instrument of transfer with the object of facilitating reduction or evasion of the liability of the transferor to pay income-tax in respect of the income arising from the transfer and the concealment of income which had not been, but ought to have been disclosed by the transferee for the purposes of the I.T. and W.T. Acts. By the said notice it was stated that the reasons for initiating the proceeding for acquisition of the said property had been recorded by respondent No. 1, and the said proceeding for acquisition of the said property was initiated under s. 269C of the I.T. Act by the issue of the said noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 2,50,000 apart from the building and concluded that the property being transferred at Rs. 1 lakh was less than the fair market value thereof estimated by him at Rs. 3,50,000 and "from this alone he purported to deduce that the consideration had not been truly stated in the conveyance with the object of reduction or evasion of tax liability or concealment of income. Mr. Bajoria referred to s. 269C of the Act, the relevant portion thereof is set out below : " 269C. Immovable property in respect of which proceedings for acquisition may be taken.-(1) Where the competent authority has reason to believe that any immovable property of a fair market value exceeding twenty-five thousand rupees has been transferred by a person (hereafter in this Chapter referred to as the transferor) to another person (hereinafter in this Chapter referred to as the transferee) for an apparent consideration which is less than the fair market value of the property...... " Mr. Bajoria urged that respondent No. 1, before initiating any proceeding for acquisition, was required to find out the fair market value of the very property which was sought to be acquired but this was not done by respondent No. 1. M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Road proper but in a branch road. He valued the land of the property at Rs. 13,000 per cottah and thus valued half of, the land area at Rs. 1,40,000 and the salvaged value of the existing structure including services were valued at Rs. 30,000 for the full share and taking the half share of the said salvaged Value along with the half share of the land value, he valued the property transferred to the petitioner at Rs. 1,55,000. This was entirely an erroneous approach. The fair market value of an undivided half share of a property could not be determined by taking, half of the entire valuation of the entire property particularly when the property was tenanted. In the case of a tenanted property the principle of valuation was not the land and building method as was sought to be done but the yield method. In support of his contention, Mr. Bajoria cited the following decisions which are dealt with chronologically. CIT v. Smt. Ashima Sinha [1979] 119 ITR 26 (Cal). This was a case of acquisition of property under s. 269C of the I.T. Act, 1961. The property was sold by the respondents in equal undivided shares to two ladies by two separate conveyances for Rs. 40,000 each. The property c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l value. To hold otherwise would be to ignore the realities." CIT v. Panchanan Das [1979] 116 ITR 272 (Cal). This was also an appeal to this court in a proceeding for the acquisition of a tenanted property under s. 269C of the I.T. Act, 1961. A Division Bench of this court, to which I was a party, observed (pp. 281, 282): Normally commercial income of the property must be understood in that sense if the prevalent statutes control the return from the property, then normal commercial return must be held within the framework or within the control of such statute and not return unfettered by such statutes ...... In the facts and circumstances of the instant case, it appears to us that the rental method is correct to apply. All other methods applied by the other valuers appear to be misconceived." CIT v. Smt. Vimlaben Bhagwandas Patel [1979] 118 ITR 134 (Guj). This was an appeal to the Gujarat High Court in a proceeding for the acquisition of a property under s. 269C of the I.T. Act, 1961. The High Court observed that in fixing the fair market value of immovable property it was incumbent on the competent authority to apply two or all of the recognised methods of valuation so that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... open for the party to say that the correct value has been stated. This has also been the view taken by Mr. justice R. M. Dutta in the decision in the case of Smt, Bani Roy Chowdhury v. Competent Authority [1978] 112 ITR 111 (Cal). On this aspect of the matter, I respectfully agree with the aforesaid view of the learned judge. If that is the position then there was no material at least no material has been indicated by the IAC to form the belief as required by the Act. In that view of the matter, the conditions precedent for the initiation of the proceedings were not fulfilled and, therefore, in my opinion, the proceedings are without jurisdiction. " An unreported decision of B. C. Basak J. dated 21st June, 1979, in C.R. No. 7696 (W) of 1974, intituled jai Kumar Kankaria v. Competent Authority (since reported in [1981] 130 ITR 593 (Cal)). This was a case of acquisition by the issue of a notice under s. 269D(1) of the I.T. 1961, of 1/9th share of a property purchased by the petitioner. His Lordship held that the expression "conclusive proof " and the presumptions, contemplated existence of the parties or of a lis. At the stage of formation of opinion there is no lis and thus the qu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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