1. This appeal is by the Inspecting Assistant Commissioner of Income-tax, Acquisition Range, Bangalore, and is directed against an order made by the Income-tax Appellate Tribunal, Bangalore Bench, Bangalore ('Tribunal') on March 15, 1976 in I.T.A. (Acq.) 21/74-75 reversing his order No. CR 62/1295/73-74/Acq. B., made on November 29, 1974, under Chapter XX-A of the Income-tax Act, 1961 ('the Act').
2. An immovable property bearing No. 354 situated at I Block, Jayanagar Extension of Bangalore City, measuring 75'+74' -------- X 120/2 or about 8,940 sq. fit. was owned by a partnership firm called M/s. B. Lakshmi narayanaiah Setty & Sons, Bangalore City ('transferor'). On May 31, 1973, the transferor sold the said property to another partnership firm called M/s. National Flag Perfumery Works, Bangalore City ('transferee') for a consideration of Rs. 65,000. On an examination of the said transfer, the Inspecting Assistant Commissioner on November 14, 1973, recorded his opinion under section 269C of the Act to the effect that the fair market value of the property exceeded the apparent consideration by 15% and directed the issue of notices thereto under section 269D of the Act which were duly effected in the Official Gazette, and on the transferor, transferee and others.
3. On receipt of the notice under section 269D(2)(a) of the Act, the transferor did not file its objections. But notwithstanding the same, the transferee filed its objection, inter alia, contending that it had paid only the amount specified in the instrument of transfer as consideration and the same represented the fair market value of the property and, therefore, the proceedings under the Act be dropped. At the inquiry before the Inspecting Assistant Commissioner, the transferee also placed evidence in support of its case. On an examination of the evidence in the case, on November 29, 1974, the Inspecting Assistant Commissioner held that the fair market value of the property was Rs. 89,000 and the same exceeded the apparent consideration by more than 25% and with the approval of the Commissioner, directed the acquisition of the property under section 269F(6) of the Act.
4. Against the said order of the Inspecting Assistant Commissioner, the transferee filed an appeal under section 269G of the Act before the Tribunal in Appeal No. I.T.A. (Acq.) No. 21/Bang/74-75, inter alia, contending that the conclusion reached by the Inspecting Assistant Commissioner on the evidence was erroneous and was wholly unjustified. On an examination of the same, the Tribunal on March 15, 1975, accepted the same and allowed the said appeal of the transferee. Hence, this appeal by the Inspecting Assistant Commissioner under section 269H of the Act.
5. On the contentions urged before us, only one point arises for our determination and that is this :
'Whether, the Tribunal committed an error of law in cancelling the order made by the Inspecting Assistant Commissioner on the ground that the evidence did not support the same ?'
We will now proceed to examine this point.
6. Sri G. Sarangan, learned counsel for the appellant, contends that the Tribunal, in interfering with the order of the Inspecting Assistant Commissioner, had either ignored or rejected material evidence on illegal and improper grounds and its conclusion was illegal and unjustified.
7. Sri S. P. Bhat, learned counsel for the respondent, refuting the contention of Sri Sarangan, sought to justify the order of the Tribunal.
8. An appeal under section 269G of the Act lies to the Tribunal both on questions of fact and law. In the absence of any limitation placed by the Act on the exercise of its powers, the jurisdiction of the Tribunal is co-extensive with that of the Inspecting Assistant Commissioner and, therefore, it is open to the Tribunal to examine the facts and the evidence on record and come to a conclusion different from the one reached by the Inspecting Assistant Commissioner.
9. On the question of burden arising in a proceeding under Chapter XX-A of the Act, the Tribunal observed thus :
'Before closing this order, we would like to emphasise one aspect of these matters of acquisition which seems to be overlooked. While, no doubt, the very fact that Parliament in its wisdom found it necessary to enact Chapter XX-A relating to acquisition of immovable properties to counter evasion of tax is a clear indication of the existence of tactics of understating of the consideration in instruments of transfer of properties, when the competent authority passes an order of acquisition under section 269F(6), the onus of proving the market value is squarely on him since even under the Evidence Act, the onus of proof is on the person who alleges that the apparent state of things is not the real state of things. It is, therefore, always necessary for the competent authority to collect and marshal cogent evidence in support of the fair market value to be adopted by him when he passes an order under section 269F(6).'
10. We need hardly say this is the correct legal position under the Act. We have no doubt, the Tribunal examined the evidence and reached its conclusion in the case really bearing this principle, though it somewhat inaptly adverted to the same while discussing the evidence and reaching its conclusion on the fair market value of the property instead of stating the same first and then discussing the evidence, which is the correct and proper way to do. But this error by itself is not a ground for us to frown on the Tribunal and undo its order, if it is otherwise legal and valid.
11. For holding that the fair market value of the property exceeded the apparent consideration by more than 25%, the Inspecting Assistant Commissioner relied on certain transactions in the outlying areas of Bangalore City like Gangenahalli, Rajajinagar and Hebbal Extensions and a valuation report furnished by the departmental valuer. In the appeal, the Tribunal examined every one of the circumstances and the material evidence on record and came to a different conclusion, which it was entitled to do, giving reasons for the same. We have been taken through the order of the Tribunal on this aspect and we do not find any error of law in the Tribunal rejecting the circumstances or the evidence on record at all. What emerges from this discussion is that this is not a case in which we can legitimately say that the Tribunal had ignored or had not considered material evidence in reaching, its conclusion as strenously contended by Sri Sarangan.
12. On reaching the above conclusion, the Tribunal also holds that there was no evidence on which the Inspecting Assistant Commissioner could have ordered the acquisition and, therefore, set aside the same. In other words, the Tribunal holds that for want of evidence collected by the Inspecting Assistant Commissioner, the proceeding under the Act must fail without giving one more opportunity to the Inspecting Assistant Commissioner to collect evidence, rectify the defect and complete the proceedings under the Act. Sri Sarangan passionately pleads that this being one of the earliest cases decided by the Inspecting Assistant Commissioner when the law was not clear and there was no guidance and, therefore, it is proper to remit the matter to the Inspecting Assistant Commissioner to collect necessary evidence and redetermine the matter in accordance with law.
13. An acquisition under the Act can be made by the Inspecting Assistant Commissioner which results in very serious consequences on evidence that can stand the test of scrutiny by the appellate authority under the Act and not on assumptions and presumptions. The power has to be exercised with full responsibility, circumspection, earnestness and not casually. When the Inspecting Assistant Commissioner fails to collect evidence and decides the matter or on the evidence collected is found to be unworthy of credence, it would not be a sound and proper exercise of power for an appellate authority under the Act to remit the matter to the Inspecting Assistant Commissioner with liberty to restart the whole process and keep the Damoclean sword hanging on the transferor and the transferee property till the end of their life or even thereafter. We are of the view that what was done by the Tribunal was correct and there are no grounds to interfere with the same and unnecessarily remit the case to the Inspecting, Assistant : Commissioner. We, therefore, decline to accede to this prayer of Sri Sarangan.
14. As all the contentions urged for the appellant fail, this appeal is liable to be dismissed. We, therefore, dismiss this appeal. But, in the circumstances of the case, we direct the parties to hear their own costs.