COMMISSIONER OF INCOME TAX Vs. ARUN MEHRA

JUDGEMENT

(1.) THERE are four appeals under S. 269H of the INCOME TAX ACT, 1961 before us relating to the sale of a plot situated at M -1, Road No. 5, Greater Kailash -II, New Delhi measuring 195 sq. yards. The agreement to sell was dt. 21st Dec., 1981 and the consideration was Rs. 5,50,000. The sale deed was executed on 5th Feb., 1982 and the possession delivered shortly after.

(2.) THE Competent Authority under S. 269C of the Act held a preliminary enquiry regarding the valuation of the property. An approved valuer Shri P.D. Sharma furnished a valuation report whereby he estimated the value of the plot at Rs. 5,46,000 on 5th Feb., 1982. The Competent Authority also obtained a valuation report from the Valuation Officer Shri Manohar Lal. By a report dt. 30th July, 1982, Shri Lal worked out the fair market value at Rs. 5,85,000 on the basis that the land was worth Rs. 3,000 per sq. yard. A subsequent report by the same Valuation Officer dt. 6th Sept., 1982 determined the fair market value at Rs. 10,53,000 on the basis that the valuation was Rs. 5,400 per sq. yard. There was then a notice to the transferor and the transferee and eventually the Competent Authority rejected the plea that the acquisition was not initiated in accordance with law and held that the proceedings had been validly initiated under Chapter XX - A of the Act. He also held that the fair market price of the plot was Rs. 8,16,667 and thus the apparent consideration of Rs. 5,50,000 was not only 15% below but also 25% below the true market value. The conditions of the Act being fulfilled, the acquisition of the plot was directed.

(3.) LEARNED counsel for the Department has urged before us that the report of the Valuation Officer showing that the market value was Rs. 10,53,000 enabled the Competent Authority to initiate proceedings under S. 269C and these observations of the Tribunal showed that there had been an error of law.