1. This second appeal has been filed by the Commissioner of Income-tax, under Section 269H of the I.T. Act, 1961, against the judgment of the Income-tax Appellate Tribunal, 'A' Bench, Allahabad, dated April 29, 1975.
2. Asuda Singh sold half of his house No. 122/722, Hariharnath Shastry Nagar, Kanpur, to Jumramal and 1/4 each of the same house to his two sons Ghanshyam Das and Dwarka Das, sale consideration being Rs. 60,000.
3. The information in Form No. 37-G bearing No. 2456 was received in respect of this property from the Sub-Registrar, Kanpur, on September 22, 1974. Upon receiving this information, the Competent Authority referred under Section 269L to the Valuation Officer for determining the fair market value of the property in question as on the date of execution of the sale deed, i.e., September 5, 1973, registered on September 17, 1973. The Valuation Officer found that the fair market value of the house in question was Rs. 92,600 as against the apparent consideration of Rs. 60,000. Thus, according to him, there was a difference of Rs. 32,600 between the fair market value and the apparent consideration. This difference was more than 15% as was required by Section 269C of the Act for issuing a notice under s, 269D.
4. The Competent Authority through the valuation report submitted by the Valuation Officer at Rs. 92,600 had reasons to believe :
(i) that the said immovable property could be valued at Rs. 92,600 ;
(ii) that the difference between the two was 54.33% ; and
(iii) that the consideration agreed to between the parties was nottruly stated in the sale deed with the object of facilitating concealment ofincome by the transferee for the purpose of income-tax.
5. After recording of reasons by the Competent Authority for initiating acquisition proceedings under Section 269C(1) on February 5, 1974, the proceedings were started by means of a notice dated February 5, 1974, issued under Section 269D(1).
6. Pursuant to the notice aforesaid, the transferee filed objections stating, inter alia :
(i) that the valuation for which the property was sold to Jumramal, Ghanshyam Das and Dwarka Das represents the fair market value and that there was no concealment of the amount paid.
(ii) That there were three transactions in favour of three different persons regarding the property sold by the sale deed dated September 5, 1973.
These transactions were-
(iii) that the mutation in Nagar Mahapalika had been applied individually for entry of three names, viz., Jumramal, Ghanshyam Das and Dwarka Das.
(iv) Notice under Section 269D(1) had been issued on the basis of the market value of the house on September 5, 1973, whereas the sale consideration of Rs. 60,000 had been agreed to between the parties on the basis of the agreement dated September 19, 1972.
7. In response to the notice under Section 269D(1), the transferor, Asuda Singh, had not filed any objections.
8. After hearing the objections, the Competent Authority found that the three conditions mentioned in subs. (6) of Section 269F were satisfied. Hence, on that basis, he after obtaining the approval of the Commissioner, made an order for the acquisition of the property bearing No. 122/722 under Chapter XXA of the I.T. Act.
9. Aggrieved by the judgment of the Competent Authority, Jumramal filed I.T. (Acq.) Appeal No. 13 of 1974-75 before the Income-tax Appellate Tribunal. The appeal was allowed by the Tribunal by the judgment dated April 29, 1975. Against this judgment, the present second appeal has been filed by the Commissioner of Income-tax under Section 269H.
10. Learned counsel appearing for the Revenue urged that the Tribunal was in error in splitting up the single transfer of a single house No. 122/722, Hariharnath Shastri Nagar, Kanpur, into three transfers of immovable property for the purpose of applying Section 269C of the I.T. Act. He further urged that the Tribunal erred in taking the fair market value of the land at Rs. 80 per square yard as against Rs. 120 per square yard determined by the Official Valuer. Counsel contended that the Tribunal illegally omitted to consider the public auctions in which the land and property situated in the neighbourhood of the disputed house were sold at a higher rate than Rs. 80 per square yard. These auctions were of the properties situated in the same locality or neighbouring locality. The details of these auctions are :
Auctionheld on 25-6-68Descriptionof localityPlot No.areaRate ofland sold sq. yard
NirmalKumar AroraBenajhabar7327 sq. yds. @Rs. 151Smt.KailashwatiLabourcolonya316 ' 'Rs. 157SurendraSinghdo.9295 '' 'Rs. 159Auctionheld on 6-10-1974 OmPrakashdo.10496 ' 'Rs. 223Smt.Maya Agrawaldo.15477 ' 'Rs. 281
11. Similarly in Motimahal rate fixed by the Nagar Mahapalika was Rs. 100 per sq. yard whereas at the time of actual auction in March, 1974, the rates arrived at were much higher as under :
Name ofpurchaserPlot No.AreaRate persq. yard
Mis. Ajodya Pd.Balimikund3168 sq. yds @Rs. 310Smt.Sarjoo Devi and Sukh Devi4173 ' 'Rs. 305Smt. BimlaDevi6177' 'Rs. 300
12. The first question is about the fair market value of the property in dispute in the instant case. On its face, this is a question of fact. But the learned counsel for the Revenue urged that as while setting aside the order of the Competent Authority, the Tribunal ignored the relevant documents, the judgment of the Tribunal is erroneous in law and that calls for interference by the High Court in the second appeal under Section 269H. We have pointed out above that apart from the report of the Valuation Officer, the Competent Authority referred to the auctions of the properties situated in the neighbourhood for showing the value of the property involved in the present case. The Tribunal, however, did not consider the auction sales by observing :
'The Competent Authority has quoted certain auction sale rate in his order. But the same has not been adopted by the departmental valuer. Hence, we do not record our finding on that.'
14. We find the ground given by the Tribunal for not considering the rates of the auction sales to be untenable. Auction signifies public sale of property usually conducted by bidding one after the other whichaugment the price. On the approval of the bid, a contract comes into existence. Certain auction rates have been quoted above by us which are higher than the rates at which the property in question had been sold.
15. Under Section 269L(1)(a), the Competent Authority may require a Valuation Officer to determine the market value of the property under consideration and report the fair market value to the Competent Authority under two sets of circumstances :
(a) For the purpose of initiating proceedings for the acquisition of any immovable property, and
(b) for the purpose of making an order under Section 269F for acquisition of any immovable property.
16. The Valuation Officer who is called upon as an expert or an authority and adviser to the Competent Authority for the purpose of enabling the Competent Authority to determine the market value, either prima facie, at the stage of initiation or finally at the time he had to decide the question of acquisition. As an adviser to the Competent Authority, the Valuation Officer has to collect materials which could enable him to evaluate and determine the market value and to submit his report together with the materials gathered by him. Thereafter, the Competent Authority has to exercise his own judgment at each stage and come to his own conclusion. In the instant case, the Competent Authority had been reported the rates fixed by the Nagar Mahapalika at the rate of Rs. 120 per square yard. It appears that the Nagar Mahapalika had earlier fixed the rate at Rs. 80 per square yard, but subsequently revised the same from July 21, 1973, according to which the rate in that locality was Rs. 120 per square yard. The rate fixed by the Nagar Mahapalika was not found to be arbitrary as it was supported by the auction sales. The auction sales were, therefore, wrongly excluded by the Tribunal. It should have been considered and taken into account while deciding the controversy whether the Nagar Mahapalika had correctly fixed the room bounded rate in that locality at Rs. 120 per square yard. As, in our opinion, the Tribunal committed an error in ignoring the material evidence, the present would be a fit case for setting aside its judgment.
17. Another aspect of the matter on which much emphasis was laid by the Tribunal for holding that the fair market value of the property did not exceed by 15 per cent, so as to attract Section 269C was the sale deed executed between Bagla and others and the Union of India through the Commissioner of Income-tax, Kanpur. The Tribunal had found that as the property had since been sold to the Union of India at Rs. 45 per square yard, and so the price taken at Rs. 80 per square yard by the valuer, Sri Murtaza Husain, produced by the respondent could not be considered to be low. According toits view, the aforesaid sale deed represented the fair market price and if this fact is taken into consideration, it would prove that the schedule of the Nagar Mahapalika stating that the rate was Rs. 120 per square yard was not correct. In our opinion, the mere fact that the Union of India obtained a sale deed, could not disentitle it to get the fair market value of the land determined at the higher rate. The Union of India could in law contend that it bought the property at less than its market value from Bagla and others and that there has been a general rise in the rate of the property on the date on which the sale deed in question was executed. In the proceedings under Section 269, the question for enquiry was whether the price paid for the property represented the fair market value or not. The Tribunal erroneously attached importance to this transaction.
18. The Tribunal has also acted illegally in considering the agreement dated September 19, 1972, and in finding on its basis as well that the fair market value of the property in question did not exceed the apparent consideration by more than 25 per cent. In this connection, reference may be made to Section 269F(9). It provides that in the course of hearing of objections against the proposed acquisition, which necessarily postulates the untruthfulness of the consideration and the ulterior motive of evasion of tax, an assessee would not be entitled to explain the difference between the apparent consideration and the fair market value by relying on an agreement of sale unless the agreement is registered. It is as a part of the entire procedure of hearing of objections that the Legislature has provided about the quality of evidence, by shutting out any evidence of unregistered agreement to sell. Hence, the agreement in the present case, being unregistered, was liable to be ignored.
19. In the instant case, one of the questions which arose before the Tribunal was whether there were three transfers or one. The Tribunal observed:
'In the present case, the interest of the joint transferees are determined in the sale deed itself. The three transferees are entitled to 1/2, l/4th and 1/4th share in the property, and, therefore, if Section 269C(1) is read with sec. 269A(e) and sec. 45 of the Transfer of Property Act, it appears to be correct that the transfer in the present case was not from Shri Asuda Singh to Shri Jumramal and others, as a single transfer but there were three transfers from Sri Asuda Singh by a common deed. The consideration in the case of S/Shri Dwarka Das and Ghanshyam Das was only Rs. 15,000 each and, therefore, so far as Shri Dwarka Das and Ghanshyam Das are concerned, the provisions of sec. 269C are not attracted. The transferee took this objection before the Competent Authority and the Competent Authority did not accept the explanation on the ground that a single deed was executed for the, transfer of the properly in three names, and From No. 37-G discloses only one transfer and not three as claimed by the transferee. So far as the deed is concerned, there is nothing wrong if a common deed is drawn up between the transferor and several transferees.'
20. On the evidence led before the Competent Authority, he found that since the consideration for the shares of Ghanshyam Das and Dwarka Das was also given by Jumramal, there was one sale deed and, therefore, the sale deed having been executed for a price less than the fair market value, was liable to be cancelled. This aspect of the matter was not touched by the Tribunal. Consideration of this question requires reappraisal of evidence led by the parties. We, accordingly, think it appropriate to remand this controversy as well.
21. In the result, the appeal succeeds and is allowed. The judgment of the Tribunal is set aside. The appeal is sent back to it for a fresh decision in accordance with law. There shall be no order as to costs.