MOHAMMAD MAHBOOB ALI SAHEB Vs. INSPECTING ASSISTANT COMMISSIONER

JUDGEMENT

(1.) THIS appeal preferred under Section 269H of the Income-tux Act is directed against the order of the Income-tax Appellate Tribunal, Hyderabad Bench, dismissing the appeal preferred by the appellants against, the order of the Inspecting Assistant Commissioner of Income-tax, Acquisition Range, Hyderabad (competent authority) dated May 3, 1975.

(2.) THE facts leading to the filing of this appeal are these : One Smt Ashrafunnisa Begum and her two sons sold an open plot of land bearing Municipal No. 16-7-767 near Chaderghat Bridge, Hyderabad to Mohammed Mahboob Ali, his wife and son, who are the appellants before us. THE sale deed was registered on April 30, 1973. THE total area covered by the sale deed is 594 sq. yards (496 sq. metres) and the consideration specified in the instrument of transfer is Rs. 25,000. THE department caused enquiries to be made through one of its inspectors and he submitted a report estimating the value of the property at Rs. 60,000 as against the consideration specified in the sale deed. THE competent authority then initiated proceedings having formed an opinion that the property has been transferred for an apparent consideration, which is less than the fair market value in order that the transferor may evade the liability to pay tax and in order to facilitate the concealment of income by the transferee. THE competent authority initiated proceedings by publishing a notice as required under Section 269D in the Official Gazette. THE competent authority caused a notice to be served only on one of the three transferors and all the three transferees. THEreafter, Mohammed Mahboob Ali, one of the transferees, filed his objections to the notice on December 24, 1973. Smt. Ashrafunnisa Begum, one of the transferors, on whom a notice was served, did not file any objections. THE competent authority recorded the objections raised by the transferee on May 8, 1974, and, thereafter, after giving him an opportunity of being heard, passed an order negativing all the objections raised by the transferee. On the material collected by the department and placed before him by the transferee, he passed the order for acquisition of the property in question after obtaining the approval of the Commissioner of Income-tax. That order was carried in appeal to the Appellate Tribunal and the Appellate Tribunal agreed with the findings recorded by the competent authority and saw no reason to interfere with the order appealed against. Hence the present appeal under Section 269H of the Income-tax Act.

(3.) THE validity or otherwise of the notice required to be served under Sub-section (2) of Section 269D depends upon the construction to be placed upon that sub-section. It is admitted by Mr. Rama Rao that no notices were served upon the two sons of Smt. Ashrafunnisa Begum, who are also the vendors. THE sale deed recites: