1. This appeal under Section 269H of the I.T. Act, 1961 (hereinafter referred to as 'the Act') is directed against the order of the Income-tax Appellate Tribunal, Chandigarh Bench, dated January 5, 1976, dismissing the appeal of the appellant herein, preferred against the order of the competent authority dated April 1, 1975, acquiring under Chapter XX-A of the Act, a plot bearing Nos. 1004-1005, Sector 22-B, at Chandigarh, which the appellant and one Sudershan Devi had, per registered sale deed, dated May 5, 1973, jointly purchased for an apparent consideration of Rs. 1,25,000.
2. Since as per the report of the registered valuer furnished by the appellant-transferee, the fair market value of the plot in question was Rs. 1,30,000 as against the apparent consideration of Rs. 1,25,000, the presumption contained in Section 269C(2)(b) arose in the case and since there was no material on record to rebut the said presumption it was taken that the condition in Section 269F(6)(c) stood satisfied. In the light of the above, what remained to be examined was the question as to whether the fair market value of the property in question did or did not exceed by more than 15% of the apparent consideration. The Tribunal reckoned that if such market value of the property was over Rs. 1,43,750 then the order of the competent authority would not warrant interfering with.
3. The Tribunal observed that before the competent authority, there was no report of any valuation officer, as defined in the Explanation below Section 269L read with Clause (r) of Section 2 of the W.T. Act, 1957. Similarly, there was no case of a comparable private sale.
4. The Tribunal too did not accept the report, dated January 15, 1974, of the registered valuer made in terms of Clause (ii) of the Explanation below Section 269O of the I.T, Act read with Clause (oaa) of Section 2 of the W.T. Act, 1957, as the valuer had given no basis or reasoning, whatever for adopting Rs. 450 per square yard as the market rate for the given property. The only other piece of evidence on the file before the Tribunal was the details of the two auctions of plots made by the Estate Officer, Chandigarh, one in May, 1971, and the other in September, 1973. At both the times a lot of five plots were sold by auction of the areas ranging from 335.42 square yards to 342.71 square yards. The average rate per square yard of the first auction worked out to be Rs. 595 but of the latter auction it worked out to be Rs. 530 per sq. yard. It ignored the average rate per square yard of 1973 auction as the plots in those auctions were sold on leasehold basis and not on freehold basis, which was the case with the earlier auction sales and adopted the average rate of 1971 auction.
5. The auction sale of plots by. Chandigarh Administration were made in terms of rules known as Chandigarh (Sale of Sites and Buildings) Rules, 1960 (hereinafter referred to as 'the 1960 Rules'). Rules 6 and 10, pertaining to the payment of auction sale price, deserve noticing and are in the following terms:
6. Sale by Auction.--(Sections 3 and 22(2)(b)). In the case of sale by auction, at least twenty-five per cent. of the bid accepted by the auctioning officer shall be paid on the spot by the auction-purchaser, in cash or by means of demand draft drawn in the manner specified in Sub-rule (2) of Rule 5 ; and the balance shall be paid either in lump sum within thirty days from the date of auction or in annual equated instalments provided in Rule 10.
10. Instalments.--(Section 3(2)(1)). Where the transferee (in case of sale by allotment or auction) intends to pay the sale price in instalments, the balance of sale price together with interest thereon at (six per cent.) per annum shall be payable in three equated annual instalments, the first instalment being payable at the expiry of one year from the date of the payment of 25 per cent. under Sub-rule (4) of Rule 5 or 6, as the case may be. Interest on the balance of sale price (viz., 75 per cent.) shall accrue from the date of issue of allotment order but no interest shall be payable if this balance is paid in full by the transferee within 30 days of the date of receipt of allotment order by him....... : Provided that in cases of sale of sites by allotment, the (Central Government) may for reasons of growth and development of Chandigarh, increase the number of instalments for the payment of balance of sale price (other than 25 per cent. received along with the application for allotment) from three to five and the period of their payment from three to five years.'
6. Perusal of the same would show that a purchaser merely had to pay twenty-five per cent. of the sale price at the time of auction and the rest in three equated annual instalments. The balance amount carried interest only at the rate of six per cent. per annum. Proviso to Rule 10 authorises the concerned authority even to increase the number of instalments of the balance sale price.
7. It would thus be seen that in case of auction sales of 1971, which were indisputably in terms of 1960 Rules, the buyer did not have to pay the entire amount in one go, the payment could be spread over a number of years, whereas in the case of a private sale, the buyer has to pay the entire amount at the time when the bargain is finally struck.
8. In case of auction sale by the Chandigarh Administration of the kind, the number of bidders could be very high and a bidder could make avery high bid since he did not have to pay the entire amount in a lump sum. He could after paying twenty-five per cent. of the sale price, invest the balance amount in constructing upon the site and thereafter, the building may enable him to earn and pay the balance amount. Such would not be the case with a private sale for two reasons : (i) there would not be competition between the buyers as in the case at the time of an auction sale, and (ii) the buyers who could pay the sale price in a lump sum could not be many and, therefore, a comparable plot sold in a private sale would fetch much less.
9. For the reasons aforementioned, in our opinion, the price fetched in an auction sale in terms of 1960 Rules, cannot be considered as reflecting the current market value of a comparable plot sold in a private sale. The learned Tribunal, in our opinion, therefore, clearly erred in working out the fair market value of the properties sought to be acquired in terms of Chapter XX-A of the I.T. Act.
10. In view of the above, we allow this appeal and set aside the order of the Tribunal and that of the competent authority with no order as to costs.