M/S. Naveen Grah Nirman Sahakarisamiti House v. Thecompetent Authority, Additionalcommissionerofincometax(Acquisition), Range-I, Jaipur

// 1 // IN THE HIGH COURT OF JUDICATURE FOR RAJASTHANBENCH AT JAIPUR ORDERIN D.B. Income Tax Appeal No.95/2003 M/s. Naveen Grah Nirman SahakariSamiti House No.2, Vijay Vihar,Ummaid Club Road, Jodhpur Vs. TheCompetent Authority, AdditionalCommissionerofIncomeTax(Acquisition), Range-I, Jaipur Date of Order ::: 28.03.2011 Present Hon'ble the Chief Justice Mr. Arun MishraHon'ble Mr. Justice Mohammad Rafiq Shri N.M. Ranka, Senior Advocate withShri J.K. Ranka andShri N.K. Jain, counsel for appellant(s)Shri J.K. Singhi, Standing Counsel with Shri Anuroop Singhi, counsel for respondent(s) Shri Shiv Charan Gupta, counsel for Intervener ## //Reportable// BY THE COURT:- (Per Hon'ble Justice Mohammad Rafiq) This income tax appeal is directed againstjudgment dated 25.04.2003 of Income Tax AppellateTribunal, Jaipur Bench, Jaipur, (for short, 'theITAT'). Appellant M/s. Naveen Grah Nirman SahakariSamiti, Jodhpur, (for short 'the assessee') filedan appeal under Section 269F of the Income Tax Act,1961 (for short, 'the Act of 1961') against theorder dated 16.10.2002 passed by the CompetentAuthority-cum-Additional Commissioner of Income-tax(Acquisition) Range-I, Jaipur (for short, 'thecompetent authority'). The ITAT by aforesaidjudgment dismissed the appeal filed by the assesseeunder Section 269G (1) of the Act of 1961. In the appeal, the assessee challenged the order of theacquisition of land situated at Jodhpur measuring1,81,818 square yards passed by the competentauthority under Section 269F (6) of the Act of1961. 2. Facts giving rise to this appeal are that erstwhile ruler of Jodhpur State Shri GajSingh sold certain lands to M/s. Jodhan Real EstateDevelopment Company Private Limited. Out of saidlands, a piece of land measuring 1,81,818 squareyards was then sold to M/s. Jai Marwar CompanyPrivate Company Limited, Jodhpur at the rate ofRs.5.28 per square yards on 05.11.1971. ThisCompany was assessed to income-tax for assessmentyear 1985-86 in respect of transfer of said land.The assessing officer enhanced the saleconsideration to Rs.25,45,452/- as against thedeclared sale consideration of Rs.24,45,452/-, thusthe increase was to the tune of Rs.1,00,000/- only.The ITAT by its order dated 08.11.2002 disallowedthe said sale consideration as capital gain in theassessment year 1985-86 on the ground that sincesale deed was executed on 01.02.1982, capital gaincan be assessed only in the assessment year 1981-82and not in 1985-86. 3. The appellant is cooperative societyregistered under Rajasthan Cooperative SocietiesAct, 1965. It is claimed that one Shri Naveen RaiDangi of Jaipur was authorized by M/s Jai MarwarCompany Private Limited, Jodhpur, to sell the said 3. The appellant is cooperative societyregistered under Rajasthan Cooperative SocietiesAct, 1965. It is claimed that one Shri Naveen RaiDangi of Jaipur was authorized by M/s Jai MarwarCompany Private Limited, Jodhpur, to sell the said land. The agreement to sell was executed on02.10.1974 for sale of said land by M/s Jai MarwarPrivate Company Limited to appellant. According tothe agreement, land was agreed to be sold at therate of Rs.8/- per square yard. A sum of Rs.10101/-was paid in advance towards sale consideration.Balance sale consideration was agreed to be paidwithin 120 days. A stipulation however was made inthe agreement to sell that in case of non-paymentof rest amount within 120 days, the rate of theland would be increased by Re.1/- per square yardper year. However, on 18.08.1980 a substitutedagreement was executed revising the amount.Eventually the sale-deed was executed and presentedfor registration on 01.02.1982 but it could beregistered only on 27.07.1984. Delay in executionof sale-deed is attributed to restrictions placedby Rajasthan Urban Property (Restriction ofTransfer) Act, 1973. The agreement to sell wasapproved by Urban Ceiling Authority vide orderdated 07.07.1981. The Additional Collector (Stampsand Registration) Jodhpur, however, did not approvethe claim of reduction of Rs.1,00,000/- claimed byappellant-assessee on account of levelling otherexpenses and registered the sale-deed at valuationof Rs.25,42,454/-. 4. An application for a certificate underSection 230A (1) of the Act of 1961 was made by thetransferor-company to the Income Tax Officer,Central Circle Part I, Jodhpur on 14.01.1982 disclosing therein the amount of Rs.24,45,452/- assale-consideration and also name of appellant-assessee as transferee. The assessing officerissued a sale certificate on 22.01.1982 butsimultaneously required the transferor company todeposit tax towards its liability whereas thetransferor company required the appellant-societyto make such payment. A cheque amounting toRs.3,00,000/- was received by appellant-society.For this, the appellant-society issued a Cheque forRs.8,00,000/- dated 01.05.1982. 5. The competent authority howeverinitiated proceedings under Chapter XX-A of the Actof 1961 and issued notice under Section 269D of theAct of 1961 for compulsory acquisition of thesubject land to transferor and transferee. Thecompetent authority passed an acquisition order on16.10.2002. Aggrieved thereby, the appellant-society filed an appeal under Section 269G beforethe ITAT which vide its order dated 25.04.2003dismissed the appeal. 6. The appellant approached this courtchallenging notice of acquisition dated 15.03.1985,acquisition order dated 16.10.2002 and order ofITAT dated 25.04.2003. This court vide its orderdated 07.01.2004 admitted the appeal for hearing onfollowing questions of law:- “1. Whether the learned lower authoritieswere right in law and had material tohold that the competent authority hadreason to believe as required underwere right in law and had material tohold that the competent authority hadreason to believe as required under // 5 // Section 269C (1) of the Act toinitiateproceedingsfortheacquisition of the impugned land?initiateproceedingsfortheacquisition of the impugned land? 2. Whether the learned lower authoritieshad material and were right in law inholding that the notices have beenvalidly served under Section 269D(2)of the Act on persons stated inSection 269(2)(a) of the Act?had material and were right in law inholding that the notices have beenvalidly served under Section 269D(2)of the Act on persons stated inSection 269(2)(a) of the Act? // 5 // Section 269C (1) of the Act toinitiateproceedingsfortheacquisition of the impugned land?initiateproceedingsfortheacquisition of the impugned land? 2. Whether the learned lower authoritieshad material and were right in law inholding that the notices have beenvalidly served under Section 269D(2)of the Act on persons stated inSection 269(2)(a) of the Act?had material and were right in law inholding that the notices have beenvalidly served under Section 269D(2)of the Act on persons stated inSection 269(2)(a) of the Act? 3. Whether the learned lower authoritieshad material and were right in law inholding that statutory requirementscontained under Section 269D(2)(b) ofthe Act stand complied with?had material and were right in law inholding that statutory requirementscontained under Section 269D(2)(b) ofthe Act stand complied with? 4. Whether the orders of the learnedlower authorities are not perverse,presumptive and the conclusion andfindings arrived at are not vitiated?lower authorities are not perverse,presumptive and the conclusion andfindings arrived at are not vitiated? 7. We have heard Shri N.M. Ranka, learned senior counsel assisted by Shri J.K. Ranka, forappellant-assessee, Shri J.K. Singhi assisted byShri Anuroop Singhi, for revenue, and Shri ShivCharan Gupta for intervenor. 8. Shri N.M. Ranka, learned senior counselfor assessee, has argued that competent authorityillegally initiated acquisition proceedings underChapter XX-A of the Act of 1961 by issuing noticeunder Section 269D of the Act of 1961. In fact, thenotice was never served on the appellant-assessee.Copy of notice dated 15.03.1985 was served on ShriBhanwar Lal Goyal, a member of the executivecommittee of the appellant-Samiti on 13.06.1986Whereas the same notice was served on thetransferor in March, 1986. The notice was defectivebecause it did not contain description of land withits total area and boundary. Mere mention that land was situated near Ratanada, Circuit House, Jodhpur,was vague, ambiguous and insufficient. It did notcontain full and complete address of transferor andtransferee. The notice is only reproduction oflanguage of provisions contained in Section 269D.The competent authority did not care to strike outeither of two words “and/or” and has lifted thesame from the statute book. This shows total nonapplication of mind inasmuch as vagueness anduncertainty as to which of two reasons shouldprevail. 9. It is argued that copy of reasons dated15.03.1985 and valuation report dated 12.03.1985were not served on appellant and were rather servedon chartered accountant on 14.05.2002. No noticewas served on the person who was in occupation ofthe property in question. The appellant-assesseecarved out plots on the disputed land and madeonward allotment thereof to its members. In fact,Shri Bhanwar Lal Goyal, the executive member ofappellant-society, on first date of hearing itselffurnished names and addresses of members of theappellant-society together with amount received andplot numbers allotted to them and requested thecompetent authority to issue notices to them aswell. However, no such notice was issued. Some ofthe members personally appeared before thecompetent authority, however no hearing was givento them. The acquisition order dated 16.10.2002 wasthus passed in utter violation of principles of natural justice and without considering material onrecord and objections raised. natural justice and without considering material onrecord and objections raised. 10. Shri N.M. Ranka, learned senior counselappearing on behalf of appellant-assessee, arguedthat several members of appellant-society submittedapplication to municipal authorities seekingpermission to construct residential houses. Copy ofone such application submitted by Shri ParasmalKhinvasara was produced before competent authority.The Commissioner, Municipal Corporation, Jodhpurissued a public notice dated 08.03.2002 in respectof 70 allottee applicants. In fact, the ChiefExecutive Officer rejected the application seekingpermission to raise construction by the allottee-members on the objections raised by the Income TaxDepartment about pendency of the proceedings underChapter XX-A of the Act of 1961. Appeals were filedbefore the Divisional Commissioner, Jodhpur, by theallottee-members. Matter even came up before thiscourt. Shri Parasmal Khinvasara then filed SpecialLeave Petition (Civil) No.7085 of 2002 against theorder dated 15.04.2002 of this court passed at itsPrincipal Seat, Jodhpur. The Supreme Court grantedleave in that matter and finally recognized ShriParasmal Khinvasara as owner. 11. It is argued that some of the allottees sold the land by registered sale-deed andtransferee persons are in peaceful possession.Proceedings under Chapter XX-A were wholly illegalbecause no notice was served upon any of them. There was total non-compliance of provisionscontained in Section 269D(2)(a) & (b) of the Act of1961. There was also non-compliance of Rule 48E ofthe Income-tax Rules, 1962 because substance ofnotice was not affixed at conspicuous place in saidlocality. Statutory requirement contained inSection 269D(2)(a)&(b) are also absent. When theappellant applied for inspection of record, it wasdenied. The appellant was merely provided with copyof “aam suchna” (public notice) dated 25.10.1985. 12. Shri N.M. Ranka, learned senior counsel for appellant, argued that agreement that wasentered into between parties was bona-fide andgenuine wherein they agreed for increase of rate ofsale consideration by Re.1/- per square yard foreach passing year. There was no material on whichcompetent authority could infer evasion of tax orunderstatement of value of sale consideration. Noassessment of tax has been made in the hands of thetransferor. The value adopted for the purpose ofcapital gain is sufficient evidence for the marketprice. Learned counsel argued that in thisconnection the value recorded and accepted byregistering authority is the correct index. Therevenue failed to prove to the contrary. Heavyburden lay on the competent authority to prove thatapparent sale consideration was lesser than actualmarket price. Such a finding cannot be recorded onthe basis of mere surmises, conjectures, doubts andsuspicions. 13. Land adjacent to the disputed land wassold to M/s Jodhpur Zila Sahakari Sangh videagreement to sell dated 20.02.1976 by sametransferor @ Rs.8.20 per square yard on advancepayment of Rs.10,000/-. Exemption was also grantedunder Ceiling Law on the basis of said agreement.The District Valuation Officer was therefore whollyunjustified in holding that there was no comparablesale instances in immediate neighbourhood ofdisputed land. He also erred in law in relying onsale of plots auctioned by Urban Improvement Trust,Jodhpur, which cannot be said to be comparablebecause those plots were situated in developedcolony and were smaller in size. There was nojustification for competent authority to hold thatfair market value of the property exceeded theapparent sale consideration by more than 15%.Learned counsel relied on judgment of this court in–Krishna Kumar Rawat and Others Vs. Union of India (1995) 214 ITR 610, wherein it has been held thatcomparison can be made only in respect of landhaving similar character and proximity with similaradvantage and amenities. Proximity in time is alsoan important factor in such a case. In thisconnection, learned counsel relied on judgment ofDelhi High Court in CIT Vs. Dunkans Agro Industries–Limited (1991) 192 ITR 310, and judgment ofGujarat High Court in CIT Vs. Shri Manaklal ChimanLal Shah Trust – (1980) 125 ITR 417. Reliance wasalso placed on judgment of this Court in CWT Vs. Rajkumari Bhubaneshwari Kumar – (1994) 210 ITR 711,to argue that the asset, which is subject tocertain hazards having effect of diminishing itsmarket value, are relevant factors to be taken intoconsideration while estimating value of asset inopen market. 14. Shri N.M. Ranka, learned senior counselfurther argued that even though the legislature inits wisdom did not provide for any time limit forcompletion of proceedings under Chapter XX-A of theAct of 1961. Nevertheless, it is well settledproposition of law that since acquisitionproceeding affects property rights of citizens,therefore, even if no time limit is prescribed,they have to be completed expeditiously without anydelay and without negligence and inaction on thepart of competent authority. The legislaturepurposely inserted such proviso in Section 269UDunder Chapter XX-C of the Act of 1961 for providingtwo months. Revenue has not given any satisfactoryexplanation for this enormous delay of 17 years.The acquisition proceedings under Chapter XX-Ashould be informed of expediency. While provisionsof Section 269J provides for payment of apparentsale consideration for transfer + 15% of the saidamount by way of compensation but Section 269J(1)of the Act does not provide for payment of anyinterest or damages on account of delay on the partof competent authority. The plea set up by revenuethat acquisition proceedings could not be finalized earlier because separately proceedings foracquiring this land under ceiling law were pendingis totally irrelevant. It was argued that theSupreme Court in Government of India Vs. Citadel–Fine Pharmaceutical and Others (1990) 184 ITR 467observed that every authority has to exercise itspower within a reasonable period and whenever aquestion regarding inordinate delay is raised, itwould be open to the assessee to contend that it isbad on the ground of delay. Kerala High Court inIswara Bhat Vs. Commissioner of Agricultural Income-Tax (1993) 200 ITR 238, held that statutorypowers must be exercised bona-fide, reasonably,without negligence and for purpose for which theywere conferred. Even in absence of a time limitprescribed by the statue, the authority shouldinitiate the proceedings within a reasonable time;by the same token, even for the completion of theproceedings, the same logic should apply and thefinal order should be passed within a reasonabletime. 15. It was argued that this court by itsorder dated 10.01.1986 stayed proceedings pendingbeforecompetentauthority-cum-AdditionalCommissioner, Urban Land (Ceiling & Registration)Act, but this could not be construed as stay of anyaction under any of the law except ceiling law andthere was no stay of proceedings under Chapter XX-Aof the Act of 1961, which was initiated on15.03.1985. The competent authority erred in law, therefore, in relying on the opinion of AdvocateShri Ashok Gaur without confronting the assesseewith that opinion in acquisition proceedings andwithout permitting cross-examination of thestanding counsel. The ITAT was wrong in acceptingexplanation of delay up-to 2002 observing thatlitigation came to end only in 2002 whereas fact isthat leave to appeal was granted by Supreme Courton 28.10.2002 and impugned order of competentauthority is dated 16.10.2002. 16. Shri N.M. Ranka, learned senior counselfurther argued that valuation file, details workingetc. were not provided. The District ValuationOfficer was also not produced for cross-examinationthough the appellant specifically raised thisdemand before the competent authority. Thecompetent authority erred in law in relying oncomparable sale price of other lands, which werenot referred to and relied upon by DistrictValuation Officer and which were also notcomparable and not similarly situated. It waswholly illegal for competent authority to acceptthe record of District Valuation Officer because herelied on plots auctioned by Urban ImprovementTrust, Jodhpur at Ratnada which is a developedcolony and there was no dispute about nature andtitle of that land or any other hazard and theauction took place on 03.07.1983. They were notsimilar nature of plots. The District ValuationOfficer has made valuation of the property in question on imaginary, unreal and unreasonablebasis. He did not base his valuation on saleinstances of similar land with similar dispute.Those plots were situated at some distance and wereof very small size ad-measuring between 207 to 240square yards. Whereas the land in dispute was a bigchunk of land. 17. It is argued that observations made bycompetent authority are contrary to material onrecord. This court stayed proceedings pendingbefore competent authority under urban ceiling lawby order dated 16.12.1985. There was no stay onacquisition proceedings or any other proceedingsunder any other law or Act except ceiling law.There was then no reason to keep acquisitionproceedings under Section XX-A in abeyance for sucha long period. Observations made by the ITAT onthis aspect in para 38 of the judgment are contraryto the material on record. In para 40 of thejudgment, the ITAT observed about publication ofnotice and requirement under Section 269D(2)(b) ofthe Act of 1861. The ITAT was wholly unjustified indoubting bona-fides of the assessee on the groundthat some paper was produced by Shri Naveen Dangion 21.01.1974. There was nothing unusual. In thiscase, Shri Naveen Dangi was authorized by Board ofDirectors of the transferor-company to negotiatethe transaction. The ITAT also failed to consideraffidavits of Shri Naveen Dangi, Shri KundanmalJain, Shri Manvendra Singh, Shri Bhawani Singh and Shri Mukut Singh. Observation of ITAT that on 2[nd]October, 1974, which was national holiday, theagreement to sell could not be entered into, waswholly uncalled for as there was no prohibitionthat parties could not enter into agreement to sellon that date. Shri Mukut Singh. Observation of ITAT that on 2[nd]October, 1974, which was national holiday, theagreement to sell could not be entered into, waswholly uncalled for as there was no prohibitionthat parties could not enter into agreement to sellon that date. 18. It is argued that observation of ITATabout failure of assessee to produce originalagreement to sell is wholly misconceived. Originalagreement to sell was demanded by ITAT only on02.04.2003 at the time of final hearing of appeal.Reasons for non production of such agreement wasduly explained in para 7 at page 4 of the writtensubmissions that the same was filed in this courtat its Principal Seat, Jodhpur in Writ PetitionNo.101/1986. Certificate dated 02.04.2003 to thiseffect issued by the assessee's Advocate Shri K.N.Joshi, was also produced. No adverse inferencetherefore could be drawn against assessee for merenon-production of agreement to sell. 19. It is argued that though sale deed waspresented for registration before registeringauthority on 01.02.1982 and assessee deposited theregistration charges on that very day, however,registering authority did not register sale deed onthe ground of various litigations and on account ofstay order passed by Division Bench of this Court.An application was made by assessee-Samiti beforeDivision Bench with request to allow it to get thesale-deed registered at its own risk. The Division Bench so permitted. It was therefore that the sale-deed was registered on 27.07.1984. By operation oflaw, it should relate back to date of agreementdated 02.10.1974. 20. In order to substantiate his arguments,learned counsel relied on judgment of Supreme Court–in Gurbax Singh Vs. Kartar Singh and Others (2002) 254 ITR 112 (SC), judgment of this court inMaharani Yogeshwari Kumari Vs. CIT, (1995) 213 ITR541 (Rajasthan), judgment of Andhra Pradesh High–Court in M. Syamala Rao Vs. CIT (1998) 234 ITR140and judgment of Gujarat High Court in CIT Vs.–Mor Masji Mancharji Vaid (2001) 250 ITR 542(Gujarat Full Bench). 21. It was argued that Sub Registraraccepted the sale consideration indicated in thesale-deed as just, correct and reasonable. Therewas therefore no occasion for the competentauthority to doubt correctness of the saleconsideration. Learned counsel relied on judgmentof Madras High Court in CIT Vs. Dr. V.K. Bhaskaran–Nair and Others (1979) 116 ITR 873 (Mad), whereinit was held that the value adopted by SubRegistrar, who had a right to independently valuethe property not only for assessment to stamp dutybut also for purposes of charging appropriateregistration fee, is a proper guide and has to betaken note of. Karnataka High Court in IAC Vs.–National Flag Perfumery Works (1986) 159 ITR 737(Kar), held that power of acquisition has to be exercised with full responsibility and onus ofproving the market value was on competentauthority. 22. Shri N.M. Ranka, learned Senior Counselappearing on behalf of assessee, argued thatcompetent authority has on extraneous, irrelevantand arbitrary considerations, came to conclusionabout evasion of tax by transferor or transferee.Admittedly, in present case, the assessment oftransferor has been completed accepting theapparent sale consideration and the appellant-society was not shown to have any taxable income,and was not assessed to income tax or wealth tax.The valuation made by District Valuation Officer atRs.1,20,91,000/- is wholly arbitrary, whimsical,capricious and without material and not based oncomparable sales of similarly situated land and isagainst principles of law. 22. Shri N.M. Ranka, learned Senior Counselappearing on behalf of assessee, argued thatcompetent authority has on extraneous, irrelevantand arbitrary considerations, came to conclusionabout evasion of tax by transferor or transferee.Admittedly, in present case, the assessment oftransferor has been completed accepting theapparent sale consideration and the appellant-society was not shown to have any taxable income,and was not assessed to income tax or wealth tax.The valuation made by District Valuation Officer atRs.1,20,91,000/- is wholly arbitrary, whimsical,capricious and without material and not based oncomparable sales of similarly situated land and isagainst principles of law. 23. The Income Tax Officer, Central CircleWard, Jodhpur, issued a notice under Section 230A(1) of the Act of 1961 on 22.01.1982 finding valuerecorded at Rs.24,45,452/- as just, fair andreasonable and this was done after due verificationand complete satisfaction. Only addition ofRs.1,00,000/- by registering authority was for thepurpose of computing fair market value because hedid not allow deduction of that amount on accountof development done by appellant-society. In fact,this valuation was accepted as correct in theassessment of transferor-company by the ITAT in its order dated 08.11.2002. 24. Learned counsel argued that competentauthority is required to record his reasons beforeinitiating proceedings under Chapter XX-A of theAct of 1961. Competent authority has, in show causenotice, while initiating proceedings, used bothexpressions “and/or” with reference to Section 269Cof the Act of 1961 and was uncertain as to whichwas of the two clauses would be attracted andgermane for initiation of proceedings. Thesatisfaction arrived in initiation of proceedingsby competent authority was thus vitiated by non-application of mind. In this connection, learnedcounsel relied on the judgments of Bombay HighCourt in All India Reporter Limited Vs. Competent–Authority, Inspecting Assistant Commissioner (1986) 162 ITR 697 (Bom.), Apeejay Premises Co-operative Society Ltd. Vs. Nishar Ahmed and Another- (1990) 185 ITR 487 (Bom.), Udharam Aildas Thadani--and Others Vs. I.A.C. of Incometax 184 ITR 439(Bom.), Carmichael Shikarkunj Co-operative Housing–Society Ltd. Vs. Union of India and Others (1991)189 ITR 441 (Bom.) and judgment of Punjab andHaryana High Court in CIT Vs. Khetan ElectricalsLimited – (2004) 134 Taxman 797 (P&H). 25. Shri Shiv Charan Gupta, learned counselappearing as intervener for one of the allottees,argued that main object of Chapter XX-A of the Actof 1961 was to prevent evasion of tax liability,therefore it was incumbent upon the competent 25. Shri Shiv Charan Gupta, learned counselappearing as intervener for one of the allottees,argued that main object of Chapter XX-A of the Actof 1961 was to prevent evasion of tax liability,therefore it was incumbent upon the competent authority to arrive at satisfaction about primafacie foundation that (i) the apparent saleconsideration was less than fair market value by15%, (ii) the consideration stated in instrumentwas at a lesser figure than that actually receivedby assessee, (iii) it was to facilitate evasion oftax liability by transferor, or (iv) to facilitateconcealment of income by transferee for Income-taxAct or Wealth-tax Act. In present case, none ofthese ingredients were proved inasmuch as it wasalso not proved as to what amount was actuallyreceived by transferor, which was more than fairmarket price nor the department has made out a caseof concealment of income as against transferee,rather in assessment of transferor, it was heldthat department has not been able to dischargeburden of evidence cast upon it to show thatassessee had understated sale consideration.Learned counsel in this connection relied onjudgment of Supreme Court in K.P. Varghese's casereported in 1981 (4) SCC 173. It was argued thatDistrict Valuation Officer has illegally madevaluation of land on the basis of plots of smallersize about 200 square yards, which is whollyillegal. Learned counsel in this connection reliedon the judgment of Supreme Court in Rishi Pal Singh-Vs. Meerut Development Authority 2006 (3) SCC205. In the case of transferor, valuation ofRs.24,45,452/- as stated in subject agreement wastaken as correct. Besides, the District Valuation Officer computed the value as on 27.07.1984 whereasagreement to sell was executed on 02.10.1974 andthe sale deed is dated 01.02.1982. The ITAT hascomputed the value of the property as on the dateof execution of sale deed i.e. 01.02.1982. 26. Learned counsel argued that detailswhich were worked out in the valuation report werenot supplied to either appellant-society or any ofits members. It was an ex-parte valuation done byIncome Tax department. The District ValuationOfficer has wrongly mentioned that there was noother instances of comparable sale in neighborhoodof the land whereas the instances were there; forexample-sale agreement dated 20.02.1976 executed bysame transferor, namely, Jai Marwar Company infavour of another purchaser Jodhpur Zila SahakariSangh from the same chunk of land at the rate ofRs.8.20 per square yard. The land in questionremained entangled in litigation and proceedingswere started under the Rajasthan Land Reform andAcquisition of Land Owners Estate Act, 1964, andUrban Land Ceiling and Regulation Act, 1976, andtherefore also its valuation could not be same asof any other land, which was free fromencumbrances. In fact, this land was declared asconstruction zone by this court in Writ Petition(PIL) No.6073/1993 filed by one Mahendra Mal Lodha.The judgment of this court dated 15.04.2002 waschallenged before Supreme Court in Special LeavePetition. The Supreme Court set aside the same by ITA95/2003 its judgment dated 08.05.2002. Income Tax Department gave clearance certificate forregistration of sale-deed wherein it accepted thesale-consideration of Rs.24,45,452/- as valid. Itis argued that ITAT had no legal jurisdiction toquestion genuineness and validity of agreement tosell/sale-deed, which jurisdiction was availableonly to a civil court in a regular civil suit. TheITAT has wrongly relied on order of District Judge,Jodhpur, with regard to award of compensation inlieu of acquired plots of smaller size under theLand Acquisition Act. It has further erred in lawin increasing value of the land without givingreasonable deductions for developing residentialcolony, including the colony roads, gardens, parks,play grounds, community center, schools, dispensaryetc., which are basic amenities. Department gave clearance certificate forregistration of sale-deed wherein it accepted thesale-consideration of Rs.24,45,452/- as valid. Itis argued that ITAT had no legal jurisdiction toquestion genuineness and validity of agreement tosell/sale-deed, which jurisdiction was availableonly to a civil court in a regular civil suit. TheITAT has wrongly relied on order of District Judge,Jodhpur, with regard to award of compensation inlieu of acquired plots of smaller size under theLand Acquisition Act. It has further erred in lawin increasing value of the land without givingreasonable deductions for developing residentialcolony, including the colony roads, gardens, parks,play grounds, community center, schools, dispensaryetc., which are basic amenities. 27. Shri S.C. Gupta, learned counsel further argued that the Chapter XX-A of the Act of1961 stood already repealed with effect from01.10.1986 and further that proceedings pendingthereafter were ordered to be dropped in view ofCircular No.455 dated 16.09.1986 where value of theproperty was upto Rs.5,00,000/-. The main objectbehind all these enactments was to prevent evasionof tax liability but when it was realized that theprovisions were being misused, the same wasrepealed. It is further argued that observations ofthe competent authority that agreement was viciousand was prepared with oblique motive to escape from the proceedings of Rajasthan Urban Property(Restriction on Transfer) Act, 1973 and that theagreement was not genuine, were not only extraneousbut had influenced the decision making process ofthe competent authority as well as of the ITAT andas such same suffers from malice in law. 28. Per contra, Shri J.K. Singhi, learned counsel for revenue, argued that on receipt ofinformation regarding transfer of immovableproperty under Section 269P, competent authorityrequested valuation officer to determine fairmarket value of the property as on the date ofregistration of transfer-deed. Valuation of theproperty for the purpose of Section 269C of the Actof 1961 has to be made as on the date ofregistration of transfer-deed and not on the datethere-before. Since, in present case, sale-deed wasexecuted on 06.07.1984, the valuation officer onthat basis determined fair market value atRs.1,20,91,000/- as against declared sale-consideration of Rs.24,45,452/-. It is argued thatreport of District Valuation Officer is statutoryevidence under Section 269L(1)(a) of the Act of1961. Since there was a very substantial differencebetween fair market value of the property anddeclared sale consideration in instrument oftransfer coupled with the fact that agreement tosell remained unregistered and unsubstantiated forseven years, the competent authority had reason tobelieve that consideration in instrument of transfer was not truly stated and that prima faciethiswaswithobjectoffacilitatingreduction/evasion of liability of transferor/transferee to pay tax. On given material, thissatisfaction of competent authority was rationaland justified. Learned counsel argued thatsufficiency of reasons is not required to be goneinto details. In support of this contention,learned counsel relied on judgments of Supreme–Court in I.T.O. Vs. Lakhmani Mewal Das (1976) 103ITR 437(SC), Ganga Saran & Sons Private Limited-Vs. Incometax Officer and Others (1981) 130 ITR 1-(SC), Raymond Woollen Mills Limited Vs. Incometax–Officer and Others (1997) 236 ITR 34(SC),-Assistant Commissioner of Incometax Vs. RajeshJhaveri Stock Brokers P. Limited (2007) 291 ITR 500(SC) and judgment of Gujarat High Court in C.I.T.–Vs. Vimlaben Bhagwandas Patel (1979) 118 ITR 134(Guj.). 29. Shri J.K. Singhi, learned counsel forrevenue, argued that time limit for initiation ofproceedings under Section 269D(1) of the Act of1961 is nine months from end of the month in whichinstrument of transfer was registered. In presentcase, sale-deed was registered on 27.07.1984 andnotice of initiation of proceedings under Section269D(1) of the Act was issued on 15.03.1985, whichwas published in official gazette on 06.04.1985.The notice was thus published within permissibletime limit which time limit expired on 30.04.1985. It was argued that assessee is a society registeredas cooperative society. It represents interests ofits members. Membership keeps changing withapproval of the society at different points oftime. The society was always in effectiveoccupation and control and use of said land.Service of notice on the society has to be taken asservice affected also on its members for purposesof Section 269D(2). In any case, it is the societywhich purchased the disputed land against saleconsideration and in whose favour the agreement tosell was executed and ultimately sale deed wasregistered and instrument of transfer was executed.Members of assessee-society have been allottedplots subsequently. None of its members has filedappeal against the impugned order under Section269F of the Act of 1961 raising objection regardingnon-service of notice under Section 269D(2). Thisobjection about non-service of notice on itsmembers was not available to assessee-society. Thenotice was in any case published in officialgazette and also affixed in the locality and wasaffixed in office of competent authority. Learnedcounsel in this connection relied on judgment ofGujarat High Court in C.I.T. v. Premanand–Industrial Cooperative Society Limited (1980) 124ITR 772, to argue that objections as to non-serviceof notice can only be taken by the person on whomnotice is not served. As regards mention of words“and/or” between sub-para 'Ka' and sub-para “Kha' of Para B of reasons recorded in show cause noticedated 15.03.1985, learned counsel argued thatmention of both words did not and could not vitiateproceedings because sub-clause (a) of Section 269Cof the Act is separated from sub-clause (b) only byword “or”, and Section 292B of the Act providesthat no proceedings shall be invalid on account ofsuch mistakes, defect or omission. In support ofthis argument, learned counsel relied on judgmentof Madras High Court in I. Devarajan and Others Vs.-Tamil Nadu Farmers Service Cooperative Federationand Others – 131 ITR 506. 30. It was argued that issuance ofcertificate under Section 230A of the Act of 1961cannot be a reason to hold present proceedingsillegal. Initiation of proceedings on that basiscannot be said to be illegal because that provisionsimply considers as to if any demand of tax ispending against assessee or not and if it is so,whether satisfactory arrangement has been made forits payment. This certificate does not in any waylegitimize the valuation done in the sale-deed. 31. Shri J.K. Singh, learned counselfurther argued that order under Section 269F(6) ofthe Act of 1961 was passed by competent authorityon 16.10.2002 because so many cases were pendingregarding this land and this was yet to be decidedwhether land in question would be otherwiseacquired by State Government under ceiling law.Thus, only in the event of other proceedings being 31. Shri J.K. Singh, learned counselfurther argued that order under Section 269F(6) ofthe Act of 1961 was passed by competent authorityon 16.10.2002 because so many cases were pendingregarding this land and this was yet to be decidedwhether land in question would be otherwiseacquired by State Government under ceiling law.Thus, only in the event of other proceedings being dropped it would be free land available for sale.There was an order by this Court at its PrincipalSeat, Jodhpur in S.B. Civil Writ PetitionNo.101/1986, in which interim order was passed bythis court on 10.01.1986, whereby proceedings underUrban Land (Ceiling and Regulation) Act, 1976, werestayed and ultimately that interim stay order wasvacated on 19.11.1999. The land came out of purviewof ceiling law when the ceiling proceedings weredropped on 19.11.1999 with the repeal of ULCAR Act.The delay in completion of proceedings wastherefore owing to valid and justified reasons anddoes not affect the validity of the impugnedorder. 32. Shri J.K. Singhi, learned counsel forrevenue, argued that mere non-providing opportunityto cross-examine the District Valuation Officerdoes not have any effect of violating theprinciples of natural justice as per the ratio ofjudgment of Supreme Court in State of Jammu &–Kashmir Vs. Bakshi Gulam Mohammad AIR 1967 SC122. Even otherwise, the appellant-society failedto show as to what prejudice was caused to it bymere non-providing opportunity to cross-examine theDistrict Valuation Officer. On the question ofprejudice, the learned counsel has relied onjudgments of Supreme Court in Union of India & Ors.-vs. Alok Kumar 2010 (5) SCC 349, Sarva U.P.Gramin Bank v. Manoj Kumar Sinha 2010 (3) SCC 556,Om Prakash Mann Vs. Director of Education (basic) -and Others 2006 (7) SCC 558and Aligarh MuslimUniversity Vs. Mansoor Ali Khan - AIR 2000 SC 2783.33. Shri J.K. Singhi, learned counsel forrevenue, further argued that competent authoritywas fully justified in arriving at valuation ofproperty on the basis of sale-deed and in doing sohe rightly accepted the sale-consideration declaredby the society at Rs.25,45,452/- on on 02.10.1974as per agreement to sell and accordingly the fairmarket value was arrived as on 01.02.1982 when thesale-deed was executed. The competent authority inPara no.4.3 at Page 13 of his order has givenreasons for his observation that the agreement tosell dated 01.10.1974 was superseded on 18.08.1980and has further referred to pages 16/17 of thesale-deed according to which fresh agreement wasarrived at on 18.08.1980. Consideration shown inthe alleged agreement to sell is Rs.25,45,452/- andin the sale-deed it is only Rs.24,54,452/-. It wasargued that fair market value under Section 269A(d)(i) means the price that the immovable propertywould ordinarily fetch on sale in the open marketon the date of execution of the instrument oftransfer of such property. Instrument of transferunder Section 269A(f) of the Act means theinstrument of transfer registered under theRegistration Act. So in this case though the sale-deed is dated 01.02.1982 but it was registered on02.07.1984. The fair market value has to betherefore determined with reference to the date of execution of instrument of transfer. The date ofagreement to sell is thus not relevant in arrivingat fair market value. It was further argued thatDistrict Valuation Officer under Section 269L ofthe Act is statutory authority with statutory roleto determine fair market value and also torepresent before the ITAT, if so required by thecompetent authority. The report submitted by theDistrict Valuation Officer is statutory evidence.He cannot therefore be taken to be a witness. Hewas thus not liable to be cross-examined. TheDistrict Valuation Officer prepared the valuationreport in due discharge of his duties. There beingno allegation of mala-fide against him, he need notbe subjected to cross-examine in respect of hisreport. It was argued that competent authority hadprovided to the appellant-assessee copy of thereport of District Valuation Officer and otherrelevant documents. The appellant filed itsobjections to the report. The competent authorityvisited disputed property and also the comparablecases cited by the District Valuation Officer. Thecompetent authority has exhaustively considered anddealt with the objections of the transferee to thereport of District Valuation Officer in order ofacquisition under Section 269F(6) of the Act. Inthis connection, learned counsel referred to Para14 to 23 of the impugned order. 34. It is also argued that the competentauthority has discussed the report of the registered valuer filed on behalf of the transfereeand given valid reasons in Para 17.5 of the orderas to why it cannot be accepted. After consideringthe objections and relevant legal provisions, thecompetent authority has concluded that the fairmarket value of the disputed property should bedetermined as on the date of sale-deed i.e.01.02.1982. The competent authority has found thatthe agreement to sell dated 01.10.1974 cannot berelied on for that purpose. He has agreed that thedate of execution of instrument of transfer, thedate of sale deed i.e. 01.02.1982 should be thedate for determining fair market value and not thedate of its registration i.e. 27.07.1984. It is onthat basis that competent authority has determinedthe value of Rs.61,31,630/- as fair market valueas on 01.02.1982 as against Rs.24,45,452/-, asstated in the said deed. The competent authorityhas further relied on the judgment of the learnedDistrict Judge, Jodhpur, in the case of a similarlysituated land across the road measuring 35,553square yards at Rs.49.50 per square yard as on10.10.1974 and has thus arrived at the rate ofRs.154.67 per square yard as on 01.02.1982, andthus was awarded compensation in a land acquisitioncase. Thus, in all situations, the fair marketvalue of the land was much higher than 15% of theapparent sale consideration. Learned counselfurther argued that competent authority has givenvalid and convincing reasons for valuation of fair market value and for the conclusion that it exceedsthe apparent consideration by more than 15% andthat there is understatement of consideration inthe instrument of transfer with a view tofacilitating evasion of tax. The competentauthority has rightly considered the commercialpotential of the property, which has not beenconsidered by the registered valuer, who has reliedon sale consideration of the property, which cannotbe said to be comparable sale instances ofconstructed property. Besides, he was alsoinfluenced by the sale-deed dated 01.02.1982, whichwas not found to be genuine. market value and for the conclusion that it exceedsthe apparent consideration by more than 15% andthat there is understatement of consideration inthe instrument of transfer with a view tofacilitating evasion of tax. The competentauthority has rightly considered the commercialp