9911796707
TMI Blog1979 (11) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... the contentions urged on behalf of the Commissioner in this group of appeals. The competent authority by his order of November 7, 1974, recorded the reasons for initiation of the acquisition proceedings and issued notices under s. 269D(1) of the I.T. Act, 1961, for publication in the Official Gazette and for service on the parties concerned as well as for publication thereof as required under s. 269D(2)(a) and (b) of the I.T. Act, 1961. The reasons for initiation of the acquisition proceedings in respect of the aforesaid two properties are that the District Valuation Officer, on being required to submit the report of valuation in respect of the said two properties, submitted his report on October 19, 1976, before the competent authority estimating the fair market value of the two properties at Rs. 14,12,800 and Rs. 23,87,200, respectively. The competent authority, relying on that report, found that the estimated fair market value of the said two properties exceeded the apparent consideration stated in the respective instruments of transfer by the prescribed margin and, therefore, the presumption about the ulterior motive of the transaction having arisen the properties were liabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that some correspondence had passed between the transferors on the one hand and the competent authority on the other in the course of the proceedings. The transferors have forwarded the comments of their registered valuers by their memorandum of July 31, 1975, which was submitted on behalf of the transferors and the transferees. The competent authority forwarded the counter-comments of the District Valuation Officer to the transferors and the transferees setting out his comments on the report of the registered valuers of the transferors. It is an admitted position that these counter-comments, found at page 96 of the paper books of First Appeals Nos. 1043 and 1044 of 1976, are the same which were forwarded to the transferors and the transferees. To these counter-comments, the registered valuers of the transferors by their letter of December 17, 1975, offered further remarks on the aforesaid counter-comments of the District Valuation Officer. It appears that a letter was addressed on 10th December, 1975, to the competent authority by the registered valuers of the transferors setting out their additional objections to the two sale instances relied on by the District Valuation Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aterial on his record : " 35. After hearing the objections and after taking into account all the relevant materials on record, I am satisfied that--- (a) the property in question is admittedly of a fair market value exceeding twenty-five thousand rupees; (b) the fair market value of the property in question exceeds the apparent consideration therefor by more than fifteen per cent. of such apparent consideration ; and (c) the consideration for such transfer as agreed to between the parties has not been truly stated in the instrument of transfer with such object as is referred to in clause (a) or clause (b) of sub-section (1) of section 269C. 36. This order has been made after obtaining the approval of the CIT, Gujarat-II, Ahmedabad. " We must record our disapproval of the laconic manner in which the competent authority has conducted these proceedings and the order which was made by him, which surprisingly did not record an effective decision for acquisition of the properties in question. Though no effective order for acquisition appears to have been made by the competent authority, the transferors and the transferees, by way of greater caution, preferred appeals before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tween a willing vendor and a willing purchaser and more so because the situation of the said property was far superior to that of the properties under the present acquisition. In that view of the matter, therefore, the Tribunal did not find any material which justified the opinion of the competent authority that the fair market value of the properties in question exceeded the apparent consideration by the prescribed margin with the result that the acquisition order was set aside. The Tribunal, however, refused to go into the other contentions urged on behalf of the transferee and transferors in their appeals. It is this order of the Tribunal which has been challenged by the Commissioner by this group of appeals. It should be noted that in First Appeals Nos. 1031 to 1042 of 1976 and First Appeals Nos. 1049 to 1052 of 1976 the respondents are the transferees, viz., M/s. Fadia group. In First Appeals Nos. 1043 and 1044 of 1976, the respondents are the transferors, viz., M/s. Manibhai Nagarsheth group, and in First Appeals Nos. 1045 to 1048 of 1976, the respondents are another set of transferors, viz, Sahebsing Nagarsheth group. It should be noted that one of the respondents in First ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prayers of the transferors and the transferees and, therefore, the competent authority had no material whatsoever before it on which the order of acquisition can be legally rested. The slender material which has been produced on the record of the competent authority was rightly rejected by the Tribunal while upsetting the acquisition order of the competent authority, because it suffered from a number of infirmities as pointed out by the Tribunal. It is in the context of these rival contentions that we have to decide as to what should be the proper order in this group of appeals. It must be noted at the outset that the learned Government pleader, appearing on behalf of the revenue, conceded that the alleged sale said to have been made by the Ahmedabad Municipal Corporation in favour of M/s. Mira Company cannot be relied upon, as rightly held by the Tribunal, and he did not propose to rely on that alleged sale instance in support of these appeals before us. It was also not much in dispute between the parties that the only available method for valuation was that of comparable sale instance. It is no doubt true that having regard to the nature of the proceedings and the ultimate or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere was in fact a sale and what has been brought out and established finally on the record was that there was merely an offer by the intending purchaser to the Ahmedabad Municipal Corporation. The sale in favour of M/s. Mira Company has been given the go-by by the competent authority. None the less, when he initiated the acquisition proceedings, there was some material before him in the nature of the report containing the opinion of the District Valuation Officer that the fair market value of the properties in question was far in excess of the apparent consideration. It should be noted at this stage that the apparent consideration in the objected instruments of transfer was to the tune of Rs. 412 per sq. yard including that of the building standing on the land. The competent authority, therefore, cannot be blamed for initiation of the acquisition proceedings because ultimately the material on which the District Valuation Officer opined did not substantiate, in the opinion of the Tribunal, the decision of acquisition of the properties. The competent authority, when he decides to initiate acquisition proceedings, decides on the prima facie material before him, which in the course o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tance of a small plot as one that is not a comparable sale instance only on the ground of difference in size, and a large plot of land may, in a given case, justly be valued on the basis of the sale instance of a small plot of land after making suitable deductions and allowances from the sale price of the small plot of land on account of the largeness of the size of the land sought to be evaluated : and that it is permissible, in the facts and circumstances of a given case, to evaluate large tracks of land by reference to the sale instance of a small plot of land. This court in Fabrics P. Ltd.'s case [1971] 12 GLR 319 in holding as above, followed the decision of the Supreme Court in L. Ramaswami Naidu v. Dist. Welfare Officer, Coimbatore (Civil Appeal No. 617 of 1966 decided on April 21, 1969). On the same parity of reasoning, it cannot be accepted as a correct position in law that if a sale instance sought to be relied upon is remote in point of time to the date of acquisition, and if that is the only evidence for purposes of estimating the fair market value, even then, it can be totally ignored or rejected. The Tribunal, in our opinion, therefore, committed an error of law in ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t value of the properties in question. We have, therefore, to examine whether the Tribunal was right in rejecting the evidence regarding LIC on merits. The Tribunal has opined that the sale instances in favour of the LIC cannot be relied upon because they did not furnish the evidence of transactions being between a willing vendor and a willing purchaser. The Tribunal has considered this evidence on the assumption that it was not stale. The Tribunal thereafter proceeded to observe : "...Now, it is an admitted position that when the Life Insurance Corporation of India purchased the said land it owned a property which was very near the said land and in the corner of the Relief Road and ABC road (on the map). It, therefore, stands to reason that the Life Insurance Corporation of India would be interested in acquiring the said land even by paying a price higher than the market value. But apart from that, the land purchased by the Life Insurance Corporation of India has two frontages one on 35 feet road of the Relief Road leading to the old civil hospital and the other on the ABC road. Thus, this land was more advantageous and better situated than the property in question. Again, fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to that value worked out in the sale transactions in favour of the LIC for purposes of estimating the fair market value of the properties in question is not correct. It does not require much of evidence or imagination to find out that there is considerable appreciation in value of the properties in the recent years. In Dollar Company v. Collector of Madras, AIR 1975 SC 1670, a contention was advanced on behalf of the claimant that the High Court was in error in awarding compensation on the basis of the price worked out under sale instances of 1949-50. Rejecting this contention about the consideration of sale instances at low prices in the year 1949-50, for estimating compensation for acquisition proposed by s. 4-Notification of August 12, 1959, Krishna Iyer J. observed as under : " Nevertheless, Sri Natesan contended strenuously that the sales showing low prices were not reliable for two reasons.They were 'distress' sales and prices had gone up from the dates of those deeds which were of 1949-50. Neither argument is conclusive. True, a few of the sales suggest some pressure inducing the vendors to dispose of their land. But there are other deeds which are unblemished by any suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a matter of fact, the registered valuers of the transferors and transferees had stated in their comments as regards the sales in favour of the LIC that they had learnt from knowledgeable sources in the locality that they were not the instances of prudent sales. The competent authority has not only refused to grant the prayer of the transferors and the transferees for examining the witnesses in connection with the sales in favour of the LIC, but has also failed to record the evidence of the registered valuers of the transferors and transferees. The learned advocates for the transferors and transferees attempted to persuade us that if the competent authority decided not to grant the prayer made by the transferors and transferees for examination of the vendors of the properties sold to the LIC, he must thank himself for the lacuna which we find on the material on his record. That was a valid ground for the Tibunal to reject the evidence of the sales in favour of the LIC as not comparable. We do see some force in this contention. However, we must also note that so far as the revenue was concerned, the prevalent opinion and advice was that the proceedings before the competent authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o substantiate the ultimate view of the competent authority was not there on the record. The Tribunal ought to have appreciated that the competent authority acted according to the opinion and advice then prevalent and, therefore, ought to have given an opportunity to the competent authority to record evidence as prayed for by the parties, or as may be necessary in the circumstances of the case. The view of the Tribunal, as we have stated above, that the sales in favour of the LIC were not sales between willing vendors and willing purchasers, inasmuch as it was reasonable to infer from the situation of the office of the LIC which is adjoining to the lands, which they had purchased in March, 1967, that they had paid more price than that prevalent in the market is not correct since there was no material whatsoever to warrant that conclusion. The Tribunal ought to have permitted the competent authority to collect materials and for that purpose remanded the matter to him so as to enable him to collect the material which may indicate one way or the other as to whether the sales in favour of the LIC were prudent sales or not. This court, in Vimlaben's case [1979] l18 ITR 134 held that hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the best interest of justice having regard to the position of law which was prevalent to the knowledge of the authorities in the revenue, and also having regard to the subsequent exposition of law by this court in Vimlaben's case [1979] 118 ITR 134. In that view of the matter, therefore, we set aside the orders of the Tribunal as well as of the competent authority, and remand the matter to the competent authority for recording evidence of the necessary witnesses in connection with the two sale instances of 15th March,1967, in favour of the LIC including the parties to the said transactions as may be prayed for by the transferors and/or transferees, and for summoning them for recording their evidence as witnesses for the revenue, and permitting the transferors and/or transferees and other interested or affected persons, if there are any, before the competent authority to cross-examine the said witnesses and also to permit them to lead necessary evidence in rebuttal thereof. The competent authority shall be at liberty also to record evidence about the rise, if any, in prices of the immovable properties in this locality in which the properties under acquisition are situate in th ..... 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