Back
1981 Supreme(Cal) 156
High Court Of Calcutta
Sabyasachi Mukherji, Sudhindra Mohan Guha, JJ.
Prodyut Kumar Dutta – Appellant
Versus
Competent Authority, Inspecting Assistant Commissioner Of Income-Tax, Acquisition Range-I – Respondent
Income-Tax Appeal 1 Of 1976
Decided On: May 05, 1981
Advocate Appeared:
R.C.De, Tapas Banerjee, D.K.Sen Gupta, Sunil Mukherji
The initiation of acquisition proceedings under Chapter XX-A of the I.T. Act, 1961, requires sufficient materials to support the belief that the conditions for acquisition are fulfilled. The valuation methods used to determine the fair market value of the property should be appropriate for the specific facts and circumstances of the case. The presumption under Section 269C(2) of the Act, which allows for certain presumptions to be drawn in acquisition proceedings, is not applicable at the stage of initiation of the proceedings.
Headnote:
Acquisition of Property - Fair Market Value - Undivided Share - Valuation Methods - Initiation of Proceedings - Presumption under Section 269C(2) - I.T. Act, 1961.
Fact of the Case:
The case involved the acquisition of a property under Chapter XX-A of the I.T. Act, 1961, due to alleged undervaluation in the sale transaction. The property was a house property with 1/3rd undivided shares sold to three different persons. The revenue department initiated the acquisition proceedings based on a valuation report that estimated the fair market value of the property to be higher than the consideration stated in the sale deeds.
Finding of the Court:
The court held that the initiation of the acquisition proceedings was bad as there were no sufficient materials to support the belief that the conditions for acquisition under Section 269C of the I.T. Act were fulfilled. The valuation report relied upon by the revenue department contained arithmetical errors and did not take into account the undivided share of each purchaser. The court also held that the presumption under Section 269C(2) of the Act, which allows for certain presumptions to be drawn in acquisition proceedings, was not applicable at the stage of initiation of the proceedings.
Issues: 1. Whether the initiation of acquisition proceedings under Section 269C of the I.T. Act was valid. 2. Whether the valuation methods used by the revenue department were appropriate in determining the fair market value of the property. 3. Whether the presumption under Section 269C(2) of the Act could be drawn at the stage of initiation of the proceedings.
Ratio Decidendi: 1. The court held that the initiation of acquisition proceedings was bad due to lack of sufficient materials to support the belief that the conditions for acquisition under Section 269C of the I.T. Act were fulfilled. The valuation report relied upon by the revenue department contained arithmetical errors and did not take into account the undivided share of each purchaser. 2. The court recognized that different valuation methods may be appropriate depending on the specific facts and circumstances of a case. In this case, the court found that a combination of the rental method and the land and building method would be suitable for determining the fair market value of the property. 3. The court held that the presumption under Section 269C(2) of the Act, which allows for certain presumptions to be drawn in acquisition proceedings, was not applicable at the stage of initiation of the proceedings.
Final Decision: The court quashed and set aside the order passed under Section 269F(6) by the Tribunal and the interim order of injunction of stay passed by the court. The parties were directed to pay and bear their own costs.
Sabyasachi Mukharji, J.
1. THIS is an appeal under Section 269J of the I.T. Act, 1961, against the order of the I.T- Appellate Tribunal, "B" Bench, in respect of an acquisition order under Section 269F(6) of the I.T. Act,-1961, by the Competent Authority, namely, the IAC, Acquisition, Range-I, regarding premises No. 105/7B, Surendra Nath Banerjee Road, Calcutta. There is a house property at No. 105/7B, Surendra Nath Banerjee Road, Calcutta, consisting of one-storeyed brick-building housing a few shops mainly with land on part whereof the same is built covering an area of 4.7 kottahs, belonging to one Sri Amar Nath Seal of 308, Chittaranjan Avenue, which was sold to three different persons under three different conveyances registered with the Registrar of Assurances, Calcutta. The names of the purchasers are (1) Sri Provat Kumar Dutta, (2) Sri Prasanta Kumar Dutta, and (3) Sri Prodyut Kumar Dutta. Each of them was the purchaser of an 1/3rd undivided share for a consideration of Rs. 34,000. The transaction under consideration, according to the revenue in the present case, is of the 1/3rd share in the said property purchased by each of the three persons. On receipt of information from the Registrar of Assurances, Calcutta, the above transaction, according to the revenue, was sent up for valuation to the Valuation Officer, Unit-II. The Valuation Officer valued the entire property at Rs. 1,29,501 and the individual 1/3rd share in the present transaction at Rs. 43,167 against the admitted consideration of Rs. 34,000.
2. IT would be relevant at this stage to refer to the valuation made by the Valuation Officer. The Valuation Officer of the department has stated that the property was inspected by him on November 13, 1973, and the property comprised of a single storeyed shop housed in a very old structure previously used as stables. The building is nearly 100 years old. Shopkeepers have maintained and renovated the building from time to time. The building has no electrical and sanitary arrangements, except one common latrine at the back. The Valuation Officer goes on to say that the total area of the plot as per Corporation plan is 4.7 kottahs. The Valuation Officer further notes that the sellers initiated a case in the High Court for the eviction of the tenants. The High Court's decision was that the eviction was not possible, but while building a new structure by dismantling the old one, the same shopkeepers have to be given their corresponding accommodation at a slightly higher rate of rent and no other compensation for the period of construction during which the shopkeepers would have to suspend their business, which was estimated to be only 9 months. The present owners produced a sanctioned plan for the development of the area before the Valuation Officer. The plan contemplated a four-storeyed construction on a slightly larger plinth area by increasing the width of the building from 15'-9 " to 21'-3 " by excluding cantilever verandahs. As recent land price in the area, the Valuation Officer went on to observe, could not be ascertained for want of sale instances, the land price had been computed on the basis of development method, according to him, based on the sanctioned plan and the market rental except for the ground floor where the rental increase would be only Rs. 10 per shop from Rs. 40 to Rs. 50 per month. According to the Valuation Officer of the department there are only 7 shops and in the new construction there will also be seven shops. None of the tenants pay any taxes. The sale price of the land was thus worked out by him at Rs. 27,000 per kottah which was considered by him to be fair and reasonable for this area. As the building was more than 100 years old, while calculating the valuation by land and building method, only the salvage value had been considered, that is to say, salvage value plus price of the land, had been considered by him. The Valuation Officer went on to observe that the land was in a develop
