COMMISSIONER OF INCOME TAX Vs. INDIRABEN JAISUKHLAL DESAI

JUDGEMENT

(1.) THESE appeals arise out of an order of the ITAT, Ahmedabad, setting aside the order of acquisition of the property comprising of a commercial building known as "Motisagar" bearing S.No. 896 situate at Dhebar Road within the city of Rajkot. There were shops and offices in the said building which were let out at a gross monthly rent of Rs. 1,551 to different tenants. It appears that on the Sub Registrar of Rajkot reporting to the IAC, Acquisition Range I, Ahmedabad, who is the Competent Authority in these matters, that the commercial building known as "Motisagar" consisting of shops and offices, was transferred by Shri Kanubhai Chhaganlal Pandya and others by a registered deed of conveyance of 10th May, 1973, to Smt. Induben Jaisukhbhai Desai, who is the respondent before us, for an apparent consideration of Rs. 92,000 the Competent Authority required the Valuation Officer concerned to determine the fair market value of the property in question and he submitted his valuation report on 23rd Oct., 1973, determining the fair market value at Rs. 1,99,200 as against the apparent consideration of Rs. 92,000. It appears further that the Competent Authority had directed his Inspector to make inquiry and submit his report in connection with the fair market value of the property which he did. The Competent Authority, therefore, initiated acquisition proceedings by publishing a notice in the Official Gazette on 10th Nov., 1973, and served individual notices to the transferors and the transferee on 7th Nov., and 9th Nov., 1973, respectively, and the locality notice was proclaimed on 21st March, 1974.

(2.) PURSUANT to these individual notices, the transferors as well as the transferee filed their objections. However, the occupants of the different business premises did not file their objections, though they were served with notices on different dates. The Competent Authority, on consideration of the material on record before him, concluded that the property in question was situated in the best commercial locality of Rajkot where a number of buildings put to commercial use were situate. He also concluded that the fair market value of the property in question was Rs. 1,99,200, after applying the yield method for purposes of valuation. For purposes of reaching the said conclusion, he considered the detailed break up of the receipts and outgoings of the property in question as per the report of the Valuation Officer, as per the report of the transferee's valuer and as per the submissions of the transferee's counsel. The Valuation Officer has estimated the net return from the property at Rs. 14,940 while according to the valuer of the transferee it was Rs. 14,398 as against the estimate of the transferee's counsel of Rs. 11,630. The District Valuation Officer has capitalised the net return at 7 1/2% as against the claim of the registered valuer at 15% and that of the transferee's counsel at 12%. After considering these details, the Competent Authority reached the conclusion that the fair market value of the property in question far exceeded the apparent consideration which justified the acquisition. The Competent Authority recorded his findings in the following terms :

(3.) BEING aggrieved by this order of acquisition, the transferee went in appeal before the ITAT, Ahmedabad. A number of contentions were urged on behalf of the appellant about the invalidity of initiation of the acquisition proceedings, inter alia, on the ground that there was inordinate delay in the proclamation of the locality notice which deprived the affected persons of their right to file objections. The transferee also assailed the initiation of acquisition proceedings as in her submission the reasons recorded by the Competent Authority did not warrant the initiation. A grievance was also made that the Competent Authority did not summon and examine the registered valuer, Shri Dilipkumar Mehta, representing the transferee. It was also urged that the District Valuation Officer has estimated the fair market value only on the basis of the application of the yield method and the alternative method of comparable sale instances was not pressed into service. All these contentions were rejected by the Tribunal. However, on one short ground, the Tribunal upset the order of acquisition since the Tribunal found that the said infirmity in the case was sufficient to rebut the presumption about the object underlying the untrue statement of apparent consideration in the instrument of transfer in the present case that the parties were motivated for evasion of tax and/or concealment of income. This is what the Tribunal has found in its order in this behalf in paras 44 to 46 for upsetting the order of acquisition :