9911796707
TMI Blog1978 (11) TMI 22X X X X Extracts X X X X X X X X Extracts X X X X ..... years from 1st March, 1962. The lease in question was in respect of a total land of 5 bighas 1 cottah and 14 chataks 32 sq. ft. of land. It has also been stated that although, as a lessee, the name of Jagadish Rai Jain appeared in the aforesaid deed, he held the property for and on behalf of the said company. The term of the lease admittedly is to expire on 21st April, 1982, as the lease in question would be valid for 20 years from the date as mentioned hereinbefore, the same is to continue at a monthly rental of Rs. 2,150. M/s. Juggi Lal Kamlapat published an advertisement in the daily issues of " The Statesman " on 7th June, 1972, to sell the entire land holdings, being approximately 28 bighas at 27, Malipanchghara Street, Bally, Howrah, and in pursuance of such advertisement, although there were offers by various intending purchasers, none of those offers could materialise because a low price was offered in view of the fact that the premises was subject to an existing lease. It has been contended that, thereafter, one Smt. Poonam Devi Jain and Smt. Rashmi Devi Jain expressed their willingness for the purchase of the premises and these lands in question and ultimately for a su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the boundary walls and also constructed new structures on the understanding that, at the time of the expiry of the lease, either the said company would mutually settle the price or they would remove the structures thereon. It has been stated that thereafter, on 9th August, 1974, the said company was served with a notice dated 1st August, 1974, being annex. " C " to the petition and treating the said company as a person interested in the property, having purchased one-half share in the same on 29th September, 1973. From that notice it would appear that acquisition proceedings under Chap. XXA in respect of the property at 57, Malipanchghara Street, as aforesaid, was started, calling in question the registration, bearing registration deed No. 1867 of 1973, which was registered before the Registrar of Assurances, Calcutta, on 31st March, 1973. By the said notice, the hearing of the acquisition proceeding and the petition filed under s. 269A of the said Act was fixed on 21st August, 1974, before the IAC, Acquisition Range III, Calcutta, who has been described as the competent authority within the meaning of Chap. XXA of the said Act. The said notice also disclosed that a valuation was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the matter was away from Calcutta. By the said letter, it was also intimated to the officer concerned that no notice prior to that of 1st August, 1974, was received by the said company. It has also been categorically alleged by the said company that the entire proceedings, so far as they were concerned, was unconstitutional, against the principles of natural justice and as such was invalid. These apart, the correctness of the valuation, as referred to in the notice in question, was also disputed. Thereafter, the matter on being adjourned from time to time, was finally fixed for consideration on 20th August, 1974, when again time was asked for by the said company. The respondent No. 1 as aforesaid refused such prayer and finally fixed the case for disposal on 31st August, 1974. It has been contended by the petitioner that since the Valuation Officer of the department has himself valued the property at Rs. 1,32,140 and the said company has purchased half of the entire 5 bighas 1 cottah 14 chataks and 32 sq. ft. of land at Rs. 60,000 and the other half also was sold by a sale deed at Rs. 60,000, the entire land was ultimately sold to them or acquired by them for Rs. 1,20,000 and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or evasion of the liability of the transferor to pay tax under this Act in respect of any income arising from the transfer ; or (b) facilitating the concealment of any income or any moneys or other assets which have not been or which ought to be disclosed by the transferee for the purposes of the Indian Income-tax Act, 1922 (11 of 1922), or this Act or the Wealth-tax Act, 1957 (27 of 1957), the competent authority may, subject to the provisions of this Chapter initiate proceedings for the acquisition of such property under this Chapter : Provided that before initiating such proceedings, the competent authority shall record his reasons for doing so : Provided further that no such proceedings shall be initiated unless the competent authority has reason to believe that the fair market value of the property exceeds the apparent consideration therefor by more than fifteen per cent. of such apparent consideration. (2) In any proceedings under this Chapter in respect of any immovable property,-- (a) where the fair market value of such property exceeds the apparent consideration therefor by more than twenty-five per cent. of such apparent consideration, it shall be conclusive p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) in respect of any immovable property to be served on the transferor, the transferee, the person in occupation of the property, if the transferee is not in occupation thereof, and on every person whom the competent authority knows to be interested in the property ; (b) cause such notice to be published-- (i) in his office by affixing a copy thereof to a conspicuous place ; (ii) in the locality in which the immovable property to which it relates is situate, by affixing a copy thereof to a conspicuous part of the property and also by making known in such manner as may be prescribed the substance of such notice at convenient places in the said locality " and, more particularly, the necessary power under Chap. XXA of the said Act have been sought to be utilised as a mere cloak or pretence for the purposes as mentioned above, and, as such, the entire action was absolutely unwarranted by law, irregular, improper and unauthorised. These apart, it has been contended that the IAC concerned, respondent No.1, has not recorded any reason before initiation of the connected proceeding and even if reasons have been recorded, they are no reasons at all. The petitioners have also argued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... those ladies effectively represented their case, yet they wanted an adjournment on behalf of the said company on 28th August, 1974. Such prayer was allowed and the case was fixed on 31st August, 1974. It has been alleged by the respondents that after obtaining such time, the present rule has been obtained on 30th August, 1974, and this was certainly not a bona fide act. These apart, it has been contended that the notice under s. 269D(1) was duly served on all concerned. The proceeding has been stated to have been initiated on account of sale effected on 31st March,1973, by Shri Juggi Lal Kamlapat to the ladies as mentioned above. It has also been stated that the property was subsequently sold to the petitioners on 29th September, 1973, and the proceedings for acquisition of the said property had already been started by the issue of the notice dated 20th September, 1973. The respondents have stated that since the notices sent to the correct and last known address of the petitioners were sent by registered post and they have been returned with the postal endorsement " not known ", which was very difficult to believe, such service should be deemed to be good service. The responde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tances do not at all exist. It was also contended that such exercise of power in the instant case was not bona fide and was a colourable use of the same and in fact, the conditions precedent for the assumption of jurisdiction under s. 269C read with s. 269D of the said Act have not been satisfied and such shortfall has made the entire initiation void, illegal, bad and inoperative. In fact, it was categorically submitted by Mr. Bhattacharjee that since the notice in question did not disclose any material on which the IAC concerned, respondent No. 1, had reasons to believe as alleged, the same was inoperative and bad because that was issued mechanically and without application of the mind. On the construction of s. 269C, Mr. Bhattacharjee contended that the competent authority was required to form the opinion, which would again be his reasons to believe that, (1) immovable property of a fair market value exceeding Rupees twenty-five thousand has been transferred, (2) such transfer must be by the transferee for an apparent consideration which is less than the fair market value of the property, and (3) that too without stating truly in the instrument of transfer with the object of--(a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 961, whereby proceedings were initiated for acquisition of this property from the petitioner. On the petition for a writ to set aside the notice it had been observed that the reasons recorded by the competent authority showed that it had failed to appreciate the fact that the transfer had been made by a statutory body and one of the confirming parties had been shown as one of the transferors. The competent authority had taken into account transfers in areas situated in more central places in the city and in accounting years subsequent to the relevant accounting year and had applied both clauses (a) and (b) of sub-s. (1) of s. 269C. The petitioner is entitled to succeed as the acquisition proceedings had not been validly initiated and were liable to be set aside. In that case, it has also been laid down, on the arguments as advanced, that proceedings can be initiated for the acquisition of immovable property under s. 269C of the I.T. Act, 1961, only if the competent authority has reason to believe that, (i) the property concerned which is sought to be transferred has a fair market value exceeding Rs. 25,000 ; (ii) it has been transferred for an apparent consideration which is less ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the competent authority under section 269B of the Income-tax Act, 1961 (43 of 1961), have reason to believe that the immovable property, having a fair market value exceeding Rs. 25,000 and bearing No. 57, situated at Malipanchghara Street, Bally, Howrah, and more fully described in the Schedule annexed hereto has been transferred as per deed registered under the Indian Registration Act, 1908 (16 of 1908), in the office of the registering officer at Calcutta on April 2, 1972, for an apparent consideration which is less than the fair market value of the aforesaid property and I have reason to believe that the fair market value of the property as aforesaid exceeds the apparent consideration therefor by more than fifteen per cent. of such apparent consideration and that the consideration for such transfer as agreed to between the transferor(s) and the transferee(s) has not been truly stated in the said instrument of transfer with the object of-- (a) facilitating the reduction or evasion of the liability of the transferor to pay tax under the Income-tax Act, 1961 (43 of 1961), in respect of any income arising from the transfer ; and/or (b) facilitating the concealment of any inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... months from the end of the month in which the instrument of transfer in respect of such property is registered under the Registration Act, 1908, as substituted in s. 269D by I.T. (Amend.) Act, 1973, and with effect from 15th November, 1972, was void and inoperative and thus the retrospective effect, as was sought to be given to transfers from the end of the month of registration of the document in question, was also inoperative. Such points, as pointed out by Mr. Pal, have not been specifically and categorically made out in the pleadings and, as such, he was justified in contending that the respondents have been deprived of producing or furnishing the necessary particulars in their defence. Even then, in view of the determinations in the case of Basudev Sahu v. Union of India [1976] 102 ITR 572 (Orissa), to which reference was made by Mr. Pal, I think the arguments of Mr. Bhattacharjee are of no substance. In that case, the validity of Chap. XXA, incorporating ss. 269A to 269S of the said Act, came up for consideration before the Orissa High Court and, on the facts of that case and on the arguments as advanced, it has been observed thus (p. 573) : " While the right to hold propert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the entry and, therefore, Parliament had no legislative competence to enact the Amending Act of 1972 which introduced Chapter XXA. The ambit of each entry is of the widest amplitude and law is settled beyond doubt that, if by the pith and substance test, the legislative entry supports legislation, a statute is not open to attack on the ground of want of competence. Undoubtedly, the Income-tax Act is a legislation in exercise of legislative powers under entry 82. So is the provision now impugned. The impugned Chapter makes provision for imposition of penalty and for checking evasion of law, because such a position is concomitant to the power to raise taxes. Such supplementary provisions are necessary for administering the statute effectively and for meeting the purpose for which the law is made. The scheme under the impugned provision for compulsory buying of the property at the stated consideration together with fifteen per cent. thereof in the event of a clandestine deal to evade tax is not foreign to the law of income-tax. Parliament was initially satisfied with the levy of penalty. By experience it appeared that that was not sufficient to meet the growing evil. Consequently, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made-- (a) by the transferor or the transferee or any other person referred to in clause (a) of sub-section (2) of that section, within a period of forty-five days from the date of such publication or a period of thirty days from the date of service of notice on such person under the said clause, whichever period expires later ; (b) by any other person interested in such immovable property, within forty-five days from the date of such publication. (2) Every objection under sub-section (1) shall be made to the competent authority in writing. (3) For the removal of doubts, it is hereby declared that objection may be made under sub-section (1) that the provisions of clause (a) of sub-section (2) of section 269C do not apply in relation to any immovable pro-perty on the ground that the fair market value of such property does not exceed the apparent consideration therefor by more than twenty-five per cent. of such apparent consideration " contended, that since notice to object under the section has been given and no objection has admittedly been filed, the present proceedings are premature, as till now, there is no present or existing grievance of the petitioners and in fact t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se ladies and the petitioners herein, but also establish an unholy alliance between them to thwart the recovery of revenue, apart from mala fide because those ladies on the one hand obtained time to have themselves or their cases duly and properly represented in the connected proceedings, while on the other hand the petitioners have obtained this rule with the corresponding interim order and have frustrated the proceedings. In reply to the arguments of Mr. Pal on the Gazette as produced, Mr. Bhattacharjee referred to the date of transfer which has been mentioned to have been completed by a registered deed of 2nd April, 1973, whereas the deed in question, it was submitted by him, on production of the same, to be of 31st March, 1973, and as such contended that the Gazette notification was also not in accordance with law or in terms of the requirements of the same. In fact, it was contended by Mr. Bhattacharjee that this wrong or mis-quotation of the date has made the entire notification, so far as the present initiation is concerned, invalid, inoperative, void and bad and has also established a non-application of the mind, He contended that, as such, the notification in question was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the ITO that it is a fit case for the issue of such notice. The duty which is cast upon the assessee is to make a true and full disclosure of the primary facts at the time of the original assessment. Production before the ITO of the account books or other evidence from which material evidence could with due diligence have been discovered by the ITO will not necessarily amount to disclosure as contemplated by law. The duty of the assessee in any case does not extend beyond making a true and full disclosure of primary facts. Once he has done that, his duty ends. It is for the ITO to draw the correct inference from the primary facts. It is no responsibility of the assessee to advise the ITO with regard to the inference which he should draw from the primary facts. If an ITO draws an inference which appears subsequently to be erroneous, mere change of opinion with regard to that inference would not justify initiation of action for reopening the assessment. The grounds or reasons which lead to the formation of the belief, contemplated by s. 147(a) of the Act, must have a material bearing on the question of escapement of income of the assessee from assessment because of his failure or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further been observed that publication contemplated by s. 269D(1) is that the notification not only must be printed in the Gazette but the Gazette containing the notification must also be available to the public within the statutory period. The fact that the ladies as mentioned above took all steps to have their cases effectively represented, thereafter got adjournment and then the said company moved and obtained this rule with the corresponding interim order, do give rise to some suspicion and I am of the view that perhaps such steps were taken by them in collusion with the said company and that too for helping their cause. I find from the records (Ex. 2) and the evidence as disclosed that the conditions precedent for the issue of a notification and the publication of the same, as required under s. 269D of the said Act, have been duly satisfied and complied with and the explanation as given by the respondents regarding the discrepancy in the date and the deed in question and the notification is reasonable and can be accepted. These apart, in respectful agreement with the views and reasons in the case of Basudev Sahu v. Union of India [1976] 102 ITR 572 (Orissa), I find that ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the instant case were specifically in issue in the determination in the case of Smt. Bani Roy Chowdhury v. Competent Authority [1978] 112 ITR 111 (Cal) and as such if Mr. Pal fails in his submissions to prove the conditions necessary and precedent for the initiation of proceedings in the instant case under s. 269C read with s. 269D of the said Act to be followed, then following the determination in the Calcutta decision as referred to above, this rule will have to be made absolute as I feel that as a judge of the co-ordinate jurisdiction, the said decision should be followed by me. It is true, and as submitted by Mr. Bhattacharjee, a wrong date of transfer has been mentioned in the Gazette and more particularly in the Gazette it has been mentioned that the transfer was completed on 2nd April, 1973, whereas the deed as produced showed such date to be 31st March, 1973. But this, in my view, would not establish the alleged non-application of mind, in view of the explanation as given. On the question of entering the satisfaction and reasons to believe or the basis and the background for such formation, the notice in Ex. 1, which has been quoted hereinbefore, will have to be scruti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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