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High Court Of Calcutta
Ramendra Mohan Datta
SMT.BANI ROY CHOWDHURY - Appellant
Versus
COMPETENT AUTHORITY, INSPECTING ASSISTANT COMMISSIONER OF INCOME-TAX, ACQUISITION RANGE II - Respondent
Matter 275 Of 1975
Decided On : 06/18/1976
INCOME TAX - Acquisition of property - Initiation of proceedings - Competent authority forming reason to believe that property transferred for apparent consideration less than fair market value - Presumption under Section 269c(2) - Whether applicable at stage of formation of belief - Held, no.
Fact of the Case:
The petitioner challenged the notice issued by the competent authority under Section 269d(1) of the Income-tax Act, 1961, seeking to initiate proceedings for the acquisition of her property on the ground that it was transferred for an apparent consideration less than the fair market value. The petitioner contended that the competent authority had erred in applying the presumption under Section 269c(2) at the stage of formation of belief, and that the conditions precedent for initiation of proceedings under Section 269c(1) were not satisfied.
Finding of the Court:
The court held that the presumption under Section 269c(2) was not applicable at the stage of formation of belief by the competent authority. The court found that the competent authority had erred in applying the presumption and in relying on both Clauses (a) and (b) of Section 269c(1) in arriving at its belief. The court also found that the competent authority had not properly applied its mind in arriving at the fair market value of the property and had relied on irrelevant material.
Issues: 1. Whether the presumption under Section 269c(2) of the Income-tax Act, 1961, is applicable at the stage of formation of belief by the competent authority? 2. Whether the competent authority had erred in applying the presumption under Section 269c(2) and in relying on both Clauses (a) and (b) of Section 269c(1) in arriving at its belief? 3. Whether the competent authority had properly applied its mind in arriving at the fair market value of the property?
Ratio Decidendi: 1. The presumption under Section 269c(2) of the Income-tax Act, 1961, is not applicable at the stage of formation of belief by the competent authority. The presumption is a matter of proof and is intended to simplify the law of evidence in proceedings under Chapter XXA of the Act. 2. The competent authority erred in applying the presumption under Section 269c(2) and in relying on both Clauses (a) and (b) of Section 269c(1) in arriving at its belief. The competent authority is required to apply only one of the two clauses and must have a rational basis for its belief. 3. The competent authority did not properly apply its mind in arriving at the fair market value of the property. The competent authority relied on irrelevant material and did not consider the correct nexus between the material before it and the belief which it was to form.
Final Decision: The court made the rule absolute and quashed the notice issued by the competent authority under Section 269d(1) of the Income-tax Act, 1961. The petitioner was awarded costs from the respondents.
( 1 ) THE subject-matter of this writ petition relates to a notice dated the 18th June, 1973, published in the Official Gazette under Section 269d (1) of the Income-tax Act, whereby proceedings were sought to be initiated by way of acquisition of the property of the petitioner being a premises in Block B in New Alipore in Calcutta. The said notice reads as follows :
FORM ints------------------------
NOTICE UNDER SECTION 269d ( 1) OF THE INCOME-TAX ACT, 1961 (43 of 1961)
SEAL OF the Ref. No. Ac-8/r-II/cal/73-74
Office of the
Inspecting asst. Government of India
Commissioner of Office of the. . . . . .
Income-tax, Acquisition Dated 18-6-73
Range-II, Calcutta .
( 2 ) WHEREAS, I, M. N. Tiwary, being the competent authority under Section 269b of the Income-tax Act, 1961 (43 of 1961), have reason to believe that the immovable property, having a fair market value exceeding Rs. 25,000 and bearing No. 29/na (E. P. and W. P.) situated at Block ' B', New Alipur (and more fully described in the Schedule annexed hereto), has been transferred as per deed registered under the Indian Registration Act, 1908 (16 of 1908), in the office of the registering officer at Dist. Registrar, 24-Parganas, Alipur, on 12-12-72 for an apparent consideration which is less than the fair market value of the aforesaid property and I have reason to believe that the fair market value of the property as aforesaid exceeds the apparent consideration therefor by more than fifteen per cent. of such apparent consideration and that the consideration for such transfer as agreed to between the transferor (s) has not been truly stated in the said instrument of transfer with the object of- (a) facilitating the reduction or evasion of the liability of the transferor to pay tax under the Income-tax Act, 1961 (43 of 1961), in respect of any income arising from the transfer; and/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 the Income-tax Act, 1961 (43 of 1961), or the Wealth-tax Act, 1957 (27 of 1957);and whereas the reasons for initiating proceedings for the acquisition of the aforesaid property in terms of Chapter XXA of the Income-tax Act, 1961 (43 of 1961), have been recorded by me; now, therefore, in pursuance of Section 269c, I hereby initiate proceedings for the acquisition of the aforesaid property by the issue of this notice under Sub-section (1) of Section 269d of the Income-tax Act, 1961 (43 of 1961), to the following persons, namely- (i) M/s. Life Insurance Corporation of India, (ii) M/s. Hindusthan Building Society Ltd. (Confirming party) (Transferor) (2) Shrimati feani Roy Chowdhury (Transferee) (3) Shri/shrimati/kumari (Person in occupation of the property) (4) Shri/shrimati/kumari (Person whom the undersigned knows to be interested in the property ). (5) Shri/shrimati/kumari (6) Shri/shrimati/kumari Objections, if any, to the acquisition of the said property may be made in writing to the undersigned- (a) by any of the aforesaid persons within a period of 45 days from the date of publication of this notice in the Official Gazette or a period of 30 days from the service of notice on the respective persons, whichever period expires later; (b) by any other person interested in the said immovable property within 45 days from the date of the publication of this notice in the Official Gazette. It is hereby notified that a date and place for hearing the objections, if any, made in response to this notice against the acquisition of the immovable property will be fixed, and notice thereof shall be given to every person who has made such objection, and the 'transferee of the property. It is hereby further notified that every person to whom notice is given under the preceding paragraph shall have a right to be heard at the hearing of the objections. Explanation : The ter
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