R.N. Misra, J.
1. This is an appeal under Section 269H(1) of the Income-tax Act of 1961 (hereinafter referred to as 'the Act'). The appellant purchased 53.34 cents of land comprised in two contiguous plots situate in Sankarpur area within the Berhampur Municipality in the District of Ganjam from one Subakaran Barariafor a consideration of Rs. 48,500. This property is a part of a larger piece of land measuring 86 cents in all which the vendor had purchased in March, 1969, for a consideration of Rs. 35,000. The Inspecting Assistant Commissioner, Acquisition Range of Bhubaneswar, initiated proceedings under Section 269C of the Act on the footing that he as competent authority had reason to believe that the transfer by the appellant's vendor to the appellant was for an apparent consideration which was less than the fair market value of the property and that the consideration for the transfer as agreed to between the parties had not been truly stated in the sale deed with the object of facilitating the reduction or evasion of the liability of the transferor to pay tax under the Act in respect of any income arising from the transfer or facilitating the concealment of any income or any moneys or other assets which have not been or which ought to be disclosed by the transferee for the purposes of the Act or the Wealth-tax Act. The appellant furnished his objection and placed for consideration of the competent authority a valuation report obtained from an expert. The official valuation officer valued the property at Rs. 94,300 while the registered valuer engaged by the appellant determined the valuation at Rs. 47,000. The competent authority made an order in terms of Section 269F(6) of the Act for acquisition of the property.
2. The appellant preferred an appeal to the Appellate Tribunal under Section 269C(1) of the Act. The Tribunal heard both the parties and came to hold that the fair market value of the property would be Rs. 65,000. Yet, the order of acquisition was sustained as even on that basis the statutory acquisition could be made. This appeal has been carried against the decision of the Appellate Tribunal.
3. Section 269C(1) of the Act provides:
'Where the competent authority has reason to believe that any immovable property of a fair market value exceeding twenty-five thousand rupees has been transferred by a person (hereafter in this Chapter referred to as the transferor) to another person (hereafter in this Chapter referred to as the transferee) for an apparent consideration which is less than the fair market value of the property and that the consideration for such transfer as agreed to between the parties has not been truly stated in the instrument of transfer with the object of--
(a) facilitating the reduction or evasion of the liability of the transferor to pay tax under this Act in respect of any income arising from the transfer; or
(b) facilitating the concealment of any income or any moneys or other assets which have not been or which ought to be disclosed by the transferee for the purposes of the Indian Income-tax Act, 1922 (11 of 1922), or this Act or the Wealth-tax Act, 1957 (27 of 1957), the competent authority may, subject to the provisions of this Chapter, initiate proceedings for the acquisition of such property under this Chapter :...
Provided further that no such proceedings shall be initiated unless the competent authority has reason to believe that the fair market value of the property exceeds the apparent consideration therefor by more than fifteen per cent. of such apparent consideration.'
4. The real question for determination, therefore, is whether the fair market value exceeded the apparent consideration by more than fifteen per cent. This question can be answered only when the fair market value of the property on the date of sale is found out.
5. The evidence available on the record is the following :
(i) Report dated December 17, 1973, furnished by the registered valuer.
(ii) Report dated January 1, 1974, furnished by the departmental valuation officer, and
(iii) The sale statistics.
6. As already indicated, the registered valuer estimated the valuation at Rs. 47,000 while the valuation officer adopted the valuation of Rs. 94,300. The valuation officer inspected the property on December 19, 1973, and found that the property purchased by the appellant appertained to Survey Number 58 (with a total area of 37 cents) and Survey Number 59 (with an area of 16-3/4 cents) and the plot had a frontage of 137 ft. on the Aska-Berhampur Road (locally known as 'Aska Road'). According to the valuation officer, the plot is situated in a fast developing residential-cum-commercial area of high potentiality. It has been found that the situation is about 1 1/2 miles away from the heart of Berhampur lown. He took into consideration features like potentiality, size and frontage and adopted the value of Rs. 4 per square foot. There is no material on the record to hold that the purchases by the appellant's vendor in 1969 was not one in ordinary course of business. As already stated, 86 cents had been purchased for Rs. 35,000. We are concerned with determining the valuation of about 54 cents. The proportionate value of 54 cents in March, 1969, would have worked out at roughly Rs. 22,000. The value fetched for the impugned transaction is Rs. 48,500, i.e., more than twice the amount which would have been paid for the land in 1969. Undoubtedly, there has been a considerable rise in price of land. Judicial notice can also be taken of the fact that with growing industrialization in the outskirts of cities like Berhampur, there is an escalation in the price of land.
7. 'Market value' has no definition under the statute. Therefore, its meaning under other comparable laws can be adopted as guideline for our purpose. Under Section 23 of the Land Acquisition Act of 1894, market value of the land at the date of publication of the notification under Section 4(1) of that Act is the foundation for determining compensation. It has been indicated by the Supreme Court in the case of Raghubam Narain Singh v. Uttar Pradesh Government AIR 1967 SC 465 that 'market value' means the price that a willing purchaser would pay to a willing seller for a property having due regard to its existing condition, with all its existing advantages, and its potential possibilities when laid out in its most advantageous manner, excluding any advantages due to the carrying out of the scheme for the purposes for which the property is compulsorily acquired.
8. In the case of Special Land Acquisition Officer v. T. Adinarayan Setty AIR 1959 SC 429, it has been pointed out that the function of the court in awarding compensation under the Land Acquisition Act is to ascertain the market value of the land at the date of the notification under Section 4(1) and the methods of valuation may be : (i) opinion of experts ; (ii) the price paid within a reasonable time in bona fide transactions of purchase of the lands acquired or the lands adjacent to the lands acquired and possessing similar advantages ; and (iii) a number of years' purchase of the actual or immediately prospective profits of the lands acquired.
9. In this case, the valuation officer divided the area into developed, developing and undeveloped or underdeveloped sections. It appears from a sketch map of the area placed on the record that the plot of land in question is situated on the northern side of the Aska Road which has been put under developing area. The areas on the south of the Aska Road come within the classification of developed area. The valuation officer as also the Appellate Tribunal have mainly relied upon two sale transactions of August, 1973. The first sale deed is dated August 1, 1973, under which out of Survey No. 224 located in the immediate vicinity of the Aska Road to its south opposite the land in question, about half a gunth of land has been sold for a little more than Rs. 3,500, a gunth being 1/25th of an acre. The other is the sale deed, dated August 18, 1973, whereunder from the very said plot a similar area had been sold for Rs. 4,000. On the aforesaid basis, valuation per acre has been taken as Rs. 1,55,000 considering the first sale deed and Rs. 1,90,000 on the basis of the second sale deed. It has been contended before us that these sale deeds offer no guidance because, firstly, the lands on the south and the north of the Aska Road are not similarly situated and are also not with similar advantages. Secondly, it is contended that these sales being in respect of very small areas, the price paid for them would offer no guideline for determining the price of a larger plot.
10. In the case of Collector of Lakhimpur v. Bhuban Chandra Dutta AIR 1971 SC 2015, it has been stated :
'In our opinion the High Court overlooked the fact that the plots which were the subject-matter of the sale deeds, exhibits Nos. 1 to 4, were comparatively of small areas and it is well-known that when a large area like the one which was the subject-matter of acquisition has to be sold it cannot possibly fetch a price at the same rate at which small plots can be sold.'
11. This in fact is a well-known proposition borne out of human experience. On the other hand, several other sale deeds were placed for consideration and some of which as would appear from the sketch map on record are quite adjacent to the land in question. It is true that they do not abut the road and, therefore, must be classified as less valuable than the property in question. Survey No. 56 admittedly is located near about. Two sale deeds of 1974 in respect of about two gunths and 1 1/2 gunths in size have been relied upon on the side of the appellant where the valuation per acre ranges between Rs. 60,000 and Rs. 66,000. These are portions of Survey No. 56. We are alive to the position that Survey No. 56 is behind the disputed plot and, therefore, the valuation per acre on the basis of these transactions must be suitably enhanced to get the valuation of the disputed land. Ordinarily, an enhancement of fifty per cent. would meet the purpose. Therefore, on the basis of the sales made in 1974, that is, about a year after the disputed transaction, valuation per acre of lands as in dispute would have been near about Rs. 90,000 or so. On that footing the consideration of the impugned sale deed is not low. At any rate, there is no positive material to hold that it is a document which would come within the purview of Section 269C(1) of the Act.
12. The valuation officer and the Inspecting Assistant Commissioner (Acquisition) valued the property at Rs. 94,300. The Appellate Tribunal came to accept the valuation of Rs. 65,000, that is, it reduced the valuation by Rs. 29,300 and with reference to the consideration disclosed in the sale deed enhanced the value by Rs. 17,500. Section 269C(1) is attracted where the difference is more than fifteen per cent. between the apparent value and the real value. A proceeding could be validly initiated if the fair market value of the property on the date of sale could have been found to be in excess of Rs. 55,700.
13. There is absolutely no material to hold that the valuation adopted by the appellant in the sale transaction is relatable to one or the other of the reasons indicated in the statutory provision. On the other hand, we are of the opinion, taking a comprehensive view of the matter based upon materials on the record, that in ordinary course of business the transaction in question has been entered into and a fair market value has been adopted. The burden undoubtedly lay on the revenue to prove and establish that the apparent value adopted in the sale deed fell short of the fair market value by more than fifteen per cent. We are of the concluded opinion that the revenue has failed to establish the said fact. In our view, therefore, this is not a case where an order under Section 269F(6) of the Act could have been made.
14. The appeal is allowed and the order for acquisition is vacated. The appellant shall have his costs of the proceeding. Hearing fee is assessed at rupees three hundred.
15. I agree.