COMMISSIONER OF INCOME-TAX Vs. AMRIT SPORTS INDUSTRIES

JUDGEMENT

(1.) A plot of land measuring approximately 16 marlas (3,360 sq. ft.) was sold by Guru Nanak Public Welfare Trust, Milap Chowk, Jullundur, for a sum of rupees forty thousand to M/s. Amrit Sports Industries, Basti Nau, Jullundur, the respondent-assessee in this case, vide sale deed No. 3809 dated September 8, 1977. Shri Nirmal Singh, Inspector, made his report dated April 20, 1978, to the effect that the plot in dispute was of the market value of Rs. 1,32,000 on the date of the sale. The Competent Authority initiated proceedings under Section 269d of the I. T. Act, 1961 (hereinafter referred to as "the Act"), and the relevant notice was published in the Official Gazette on June 3, 1978. It appears that in the meantime the assessee-respondent had built some shops on this plot of land and had let them out to some tenants. The actual notice of the proceedings was in fact served upon the assessee-respondent, but no such notices were served upon the tenants, who were occupying the shops built on the plot in dispute. The Competent Authority, vide its order dated March 21, 1980, held that the case fell under Section 269f (6) of the Act and passed an order of acquisition of the property in dispute. The assessee-respondent went up in appeal, which was allowed on grounds, inter alia, (i) that Section 269d (2) of the Act had not been complied with inasmuch as the tenants occupying the shops built on the land in dispute had not been served with any notices, and (ii) that the conditions precedent for the initiation of proceedings were wanting in this case because the action had been taken by the Competent Authority merely on the report of an inspector of the Department, who had not, properly assessed the market value of the property in dispute on the date of its transfer. The grounds urged on behalf of the assessee-respondent prevailed with the Income-tax Appellate Tribunal, who reversed the order passed by the Competent Authority and ordered the property to be released forthwith. The Revenue has come up in appeal under Section 269h of the Act.

(2.) ON behalf of the Revenue, Mr. Awasthy has argued that under Section 269d of the Act, the condition precedent for initiation of proceeding is the publication of the notice in the Official Gazette, which admittedly was done in this case. On the second point, it was argued that the report submitted by the income-tax inspector was prima facie good material on the basis of which the Competent Authority could initiate action. In support of his submissions Mr. Awasthy relied upon CIT v. Smt. Vimlaben Bhagwandas Patel, [1979] 118 ITR 134, wherein a Division Bench of the Gujarat High Court has taken the view that the condition regarding the locality notice or the personal notice did not render the determination made by the Competent Authority as void. In coming to that conclusion the Gujarat High Court had relied upon an earlier Full Bench decision of that High Court, Dungarlal Harichand v. State of Gujarat, AIR 1977 Guj 23, wherein also it was laid down that a locality notice was not mandatory in respect of a case which arose out of the Bombay Town Planning Act No. 27 of 1955, We might add at this place that as far as this court is concerned, the law is practically well settled that in a case under Section 4 of the Land Acquisition Act the service of the notice on the land-owner as also the locality notice are conditions precedent for validating the acquisition proceedings. (See in this connection Rattan Singh v. State of Punjab, AIR 1976 Pandh 279 [fb] ). In other words, there is a direct conflict between Full Benches of two courts about the principle of law which has been relied upon by the learned judges, who decided Smt. Vimlaben Bhagwandas Patel's case, [1979] 118 ITR 134. Mr. Gupta, the learned counsel for the assessee-respondent, has asserted that under Section 269d (2), it has been expressly laid down that the Competent Authority shall be under an obligation to issue notices to all persons interested in the property including those who are holding it as tenants. According to him, the issuance of notices to the persons concerned is also a condition precedent for the initiation of the proceedings. The learned counsel has also relied upon some observations made in U. S. Awasthi v. IAC, [1977] 107 ITR 796 (All) and Mohammed Mahboob Ali Saheb v. IAC, [1978] 113 ITR 167 (AP ).

(3.) THE questions of law canvassed at the Bar are not free from difficulty and as indicated earlier, if we were to accept the view expressed by the Gujarat High Court, we might have to doubt the correctness of the decision given in Rattan Singh v. State of Punjab, AIR 1976 P and H 279 [fb], The matter is likely to crop up in a large number of cases. In this situation, we deem it proper that this case should be decided by a larger Bench. Let the papers be placed before Hon'ble the Chief Justice for obtaining suitable orders in that behalf. Sandhawalia, C. J.