Himland Exports (Pvt.) Ltd. vs Income-Tax Appellate Tribunal ...
1986 Latest Caselaw 345 Del

JUDGMENT

S. Ranganathan J.

1. These are two appeals under section 269H of the Income-tax Act, 1961, challenges the validity of an acquisition under section 269F(5) of the said Act of a plot of land situated in Greater Kailash. We are of the opinion that no question of law arises out of the order of the Tribunal confirming the order of acquisition and that these appeals have to be dismissed. We shall briefly give our reasons.

2. Plot No. S. 332, Greater Kailash, Part II, measuring 300 sq. yards was agreed to be sold by the original owners Narinder Pal Singh and Inder Kaur, to one Sushil Ratan Gupta at Rs. 4,025 per sq. yard or for Rs. 12,07,500. The original owners executed a receipt dated October 14, 1981, which, however, was a detailed one setting out the terms and conditions under which the property was agreed to be sold. An advance of Rs. 40,000 was received. However, the original owners subsequently entered into a registered agreement in February, 1982, to sell the same property to M/s. Himland Exports P. Ltd. for a consideration stated in the sale deed which was executed on July 30, 1982 at Rs. 7,50,000. It is in these circumstances that the acquisition order has been passed. The order has been confirmed by a very detailed and closely reasoned order of the Income-tax Appellate Tribunal dated May 19, 1986.

3. Counsel for the appellants contended that proceedings cannot be initiated unless the competent authority has reason to believe that the property has been transferred for less than the market value with one of the two objects set out in section 269C(1) of the Act, that the presumptions enacted in section 269C(2) are not available at the stage of initiation of the proceedings for acquisition and that, in the present case, the proceedings had been initiated only on the basis of the above presumptions. Counsel cited in support of his contention the decisions in CIT v. Smt. Vimlaben Bhagwandas Patel [1979] 118 ITR 134 (Guj), Subkaran Choudhary v. IAC [1979] 118 ITR 777 (Cal), CIT v. Amrit Sports Industries [1984] 145 ITR 231 (P & H), Unique Associates Co-operative Housing Society Ltd. v. UOI and CIT v. Arun Mehra [1986] 157 ITR 308 (Delhi). This contention proceeds on a misapprehension. The initiation of the proceedings by the competent authority was on the basis of a notice dated March 8, 1983. A perusal of this notice shows that the competent authority did not base itself on the presumptions enacted in section 269C(2). He had before him the fact that, after having agreed to sell the plot at Rs. 4,025 per sq. yard in October, 1981, the original owners had sold the property actually under an agreement of sale entered into within a period of about four months for a purported price which worked out to Rs. 2,500 per sq. yard. The original proposed transferee had also filed an affidavit before the competent authority complaining of the fact that the original owners had gone back on the agreement with him. It is on the basis of these two items of definite and positive information that the competent authority arrived at a reasonable belief that the property had been sold for a consideration which had not been truly set out in the sale deed and that this was done with one of the two objects set out in section 269C(1). As pointed out by the Tribunal, at this state, the competent authority has only to arrive at a tentative conclusion which may or may not be borne out ultimately. But in this case the conclusion of the Tribunal that the competent authority and reason to believe that the conditions set out in section 269C(1) were fulfillled is a conclusion of fact which does not give rise to any question of law.

4. Counsel for the appellants also contended : (a) that the agreement to sell in favor of Sushil Ratan Gupta was in favor of a friend at a fanciful price which he was not willing to go through subsequently; (b) that the competent authority had referred the matter of valuation of the property to a valuation officer who had estimated the value of the property only at Rs. 7,80,000; (c) that the appellants had furnished before the competent authority comparative instances of sales of properties on the basis of which the market value could be determined; and (d) that no finding has been given by the Tribunal or the competent authority that the original owners had been paid any amount of consideration over and above what has been actually stated in the sale deed. It is contended that the conclusion of the Tribunal is erroneous in view of these circumstances. So far as the first three aspects referred to are concerned, the question involved is only one of fact regarding the market value of the property. We find that the Tribunal has taken into account the circumstances surrounding the two transactions entered into by the two original owners, the oral evidence given by the original owners and Sushil Ratan Gupta, and the details of the proceedings in a suit filed by Sushil Ratan Gupta claiming damages for breach of agreement of sale which went practically undefended. On the strength of these facts, the Tribunal has come to the conclusion that the agreement with Sushil Ratan Gupta was not an agreement for a fanciful price, as alleged, that the said party had been ready and willing to go through with the sale provided the owners complied with their obligations in law before a sale deed could be executed but the owners had not done this, that the explanation given for entering into the second agreement was false and that the original owners had extricated themselves from the agreement at the cost of paying interest and damages lending support to the conclusion that the real consideration for the subsequent transfer must have been equal to, if not more than, the consideration for which the property had been agreed to be sold to Sushil Ratan Gupta. In regard to the valuation report, the Tribunal has rightly pointed out that, unlike the position under the Wealth-tax Act, the Valuation Officer's report is not conclusive but only one piece of evidence to be considered and they have considered it. They have also taken into account other instances of sale referred to before them and arrived at the conclusion that a sum of Rs. 12,07,500 was a fair market value of the property. So far as the last aspect is concerned, reliance was placed on behalf of the appellants on the decision in K. P. Varghese v. ITO . But this argument overlooks that the above decisions does not apply in the context of the provisions of Chapter XX-A where certain presumptions have also been enacted and admittedly these presumptions are available at the stage of the final determination. That apart, on the facts and circumstances of these cases, it is a fair inference from the facts proved on record that the appellants must have received an amount of consideration larger than than stated in the document. That again is a finding of fact.

5. For the reasons discussed above, we think that no questions of law are involved in the decision arrived at by the Tribunal and that these appeals have to be dismissed. We may mention that there are two appeals because the company, Himland Exports P. Ltd., which originally purchased the property from the original owners on July 30, 1982, had subsequently sold the property to the appellants in ITSA 2/86 for an apparent consideration of Rs. 7,75,000 by a sale deed in September, 1984. The principal point for consideration in both the appeals is, however, common, namely, the validity of the acquisition of the property in view of the sale deed dated July 30, 1982, and hence both the appeals are being disposed of by a common order.

6. The appeals are, therefore, dismissed.

7. Appeals dismissed.