The Income Tax authorities must have sufficient material to form a belief that the consideration stated in the conveyance is less than the fair market value of the property before initiating acquisition proceedings under Section 269c of the Income Tax Act, 1961.

C. K. BANERJI, J.

( 1 ) PREMISES No. 7/3, Burdwan Road, contains an area of one bigha, one cottah, eight chittaks and forty square-feet of land with a two-storeyed building built on a portion thereof which was leased out in June, 1967, by the then owners, Rabindranath Roy and Sudhindranath Roy, to M/s. W. S. Cresswell and Co. P. Ltd. , at a rent of Rs. 1,000 per month and a further sum of Rs. 500 per month payable by the lessee as hiring charges of fixtures and fittings supplied by the lessors. The said lease was subject to the provisions of the West Bengal Premises Tenancy Act, 1956. The said premises was occupied by Sayeed Jabbar, a director of W. S. Cresswell and Co. P. Ltd. , the husband of the petitioner, and the petitioner with her husband and other members of the family resided therein.

( 2 ) BY a deed of conveyance dated 24th November, 1972, the petitioner purchased an undivided half-share of the said premises from the said Rabindranath Roy at or for the price of Rs. 1 lakh of which Rs. 10,000 was paid as and by way of earnest and the balance was paid by a cheque, Respondent No. 1 served on the petitioner a notice bearing No. AC-5/11/cal/72-73, dated the 30th March, 1973, under Section 269d (1) of the I. T. Act, 1961, that the said respondent had reason to believe that the said, property was transferred for an apparent consideration which was less than the fair market value thereof and the fair market value exceeded the apparent consideration by more than 15 per cent. and the consideration agreed to between the transferor and the transferee had not been stated in the instrument of transfer with the object of facilitating reduction or evasion of the liability of the transferor to pay income-tax in respect of the income arising from the transfer and the concealment of income which had not been, but ought to have been disclosed by the transferee for the purposes of the I. T. and W. T. Acts. By the said notice it was stated that the reasons for initiating the proceeding for acquisition of the said property had been recorded by respondent No. 1, and the said proceeding for acquisition of the said property was initiated under Section 269c of the I. T. Act by the issue of the said notice. By the said notice the petitioner was asked to make her objections to the said acquisition within the period mentioned therein. The said acquisition proceeding related to the undivided half share of the said premises purchased by the petitioner. The petitioner has made this, writ petition under Article 226 of the Constitution challenging the said notice after objecting to the said notice in writing and stating that the said property was purchased by the petitioner at a fair and most reasonable market price.

( 3 ) MR. Bajoria, learned advocate for the petitioner, urged that there was no material before respondent No. 1, for the formation of his belief under Section 269c of the I. T. Act, 1961, and he elaborated his contention that before a proceeding for acquisition could be initiated the competent authority must have the following materials in his possession : (a) the consideration stated in the conveyance was less than the fair market value of the property ; (b) the consideration agreed to between the parties was not truly stated in the document; and (c) that the mis-statement of the consideration in the conveyance was with the object of evasion of tax or the concealment of undisclosed income or wealth.

( 4 ) MR. Bajoria referred to the copy of the recorded reasons dated 30th March, 1973, produced before me at the hearing, and submitted that in making the valuation of the property, respondent No. 1 did not consider any comparable units. The properties which were considered by him were not on Burdwan Road at all and there is nothing in the recorded reasons to show that there could be any reason to believe that the consideration stated in the conveyance was less than the fair market value of the property or the consideration was not truly

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