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PUNJAB & HARYANA HIGH COURT
S.S.Sandhawalia, Prem Chand Jain and M.R.Sharma JJ.
Commissioner Of Income-tax
Versus
Amrit Sports Industries
Income Tax Appeal No. 12 of 1980,
Decided On : MAY 30, 1983
INCOME TAX - Acquisition of immovable property - Initiation of proceedings - Publication of notice in Official Gazette - Condition precedent - Service of notices on transferor, transferee, occupants and other interested persons - Not a condition precedent - Non-service of notices on tenants - Does not vitiate proceedings - Transferee cannot assail acquisition proceedings on ground of non-service on tenants.
Fact of the Case:
The assessee-respondent sold a plot of land for a sum of rupees forty thousand to M/s. Amrit Sports Industries, Basti Nau, Jullundur. The Competent Authority initiated proceedings under Section 269D of the I.T. Act, 1961 (hereinafter referred to as "the Act"), and the relevant notice was published in the Official Gazette on June 3, 1978. The assessee-respondent went up in appeal, which was allowed on grounds, inter alia, (i) that Section 269D(2) of the Act had not been complied with inasmuch as the tenants occupying the shops built on the land in dispute had not been served with any notices, and (ii) that the conditions precedent for the initiation of proceedings were wanting in this case because the action had been taken by the Competent Authority merely on the report of an inspector of the Department, who had not, properly assessed the market value of the property in dispute on the date of its transfer.
Finding of the Court:
The initiation of proceedings for the acquisition of immovable property in certain cases of transfers to counteract evasion of tax Under Chapter XX-A of the Income-tax Act, 1961, is complete by the publication of the notice in the Official Gazette under Section 269D(1) of the said Act. The transferee, though himself personally served with an individual notice under Section 269D(2)(a) of the Income-tax Act, 1961, cannot assail the said acquisition proceedings on the alleged non-service on any other person or persons interested in the said property.
Issues: 1. Whether the initiation of proceedings for the acquisition of immovable property in certain cases of transfers to counteract evasion of tax Under Chapter XX-A of the Income-tax Act, 1961, is complete by the publication of the notice in the Official Gazette under Section 269D(1) of the said Act? 2. Whether the transferee, though himself personally served with an individual notice under Section 269D(2)(a) of the Income-tax Act, 1961, can assail the said acquisition proceedings on the alleged non-service on any other person or persons interested in the said property?
Ratio Decidendi: 1. The language of Section 269D(1) of the Act itself declares when and how initiation of the acquisition proceedings is to be done. It lays down that the Competent Authority shall initiate the proceedings by notice to that effect published in the Official Gazette. Therefore, the conclusive step which, in essence, amounts to the assumption of jurisdiction for acquisition, is in these terms spelt out by the law itself. 2. Sub-section (2) of Section 269D of the Act is in a way a subsidiary and a supplementary provision to the aforesaid basic one. The notices prescribed under Sub-section (2) are merely reflections and copies of the notice originally published in the Official Gazette under Sub-section (1). Apart from publication in the Gazette, the law also provides a publication in the locality where the property is situated as also affixing a copy thereof in the office of the Competent Authority. These are in the nature of public notices supplemental to the publication in the Official Gazette which plants presumptive knowledge of the same to everyone concerned. 3. The view that the initiation of proceedings is complete with the publication in the Official Gazette is buttressed by the exhaustive Division Bench judgment in CIT v. Smt. Vimlaben Bhagwandas Patel, [1979] 118 ITR 134 (Guj).
Final Decision: The case was directed to be placed before a Division Bench for a decision on the merits in accordance with the answers rendered to the legal questions.
S.S.Sandhawalia, Prem Chand Jain and M.R.Sharma JJ.
1. A plot of land measuring approximately 16 marlas (3,360 sq. ft.) was sold by Guru Nanak Public Welfare Trust, Milap Chowk, Jullundur, for a sum of rupees forty thousand to M/s. Amrit Sports Industries, Basti Nau, Jullundur, the respondent-assessee in this case, vide sale deed No. 3809 dated September 8, 1977. Shri Nirmal Singh, Inspector, made his report dated April 20, 1978, to the effect that the plot in dispute was of the market value of Rs. 1,32,000 on the date of the sale. The Competent Authority initiated proceedings under Section 269D of the I.T. Act, 1961 (hereinafter referred to as "the Act"), and the relevant notice was published in the Official Gazette on June 3, 1978. It appears that in the meantime the assessee-respondent had built some shops on this plot of land and had let them out to some tenants. The actual notice of the proceedings was in fact served upon the assessee-respondent, but no such notices were served upon the tenants, who were occupying the shops built on the plot in dispute. The Competent Authority, vide its order dated March 21, 1980, held that the case fell under Section 269F(6) of the Act and passed an order of acquisition of the property in dispute. The assessee-respondent went up in appeal, which was allowed on grounds, inter alia, (i) that Section 269D(2) of the Act had not been complied with inasmuch as the tenants occupying the shops built on the land in dispute had not been served with any notices, and (ii) that the conditions precedent for the initiation of proceedings were wanting in this case because the action had been taken by the Competent Authority merely on the report of an inspector of the Department, who had not, properly assessed the market value of the property in dispute on the date of its transfer. The grounds urged on behalf of the assessee-respondent prevailed with the Income-tax Appellate Tribunal, who reversed the order passed by the Competent Authority and ordered the property to be released forthwith. The Revenue has come up in appeal under Section 269H of the Act.
2. On behalf of the Revenue, Mr. Awasthy has argued that under Section 269D of the Act, the condition precedent for initiation of proceeding is the publication of the notice in the Official Gazette, which admittedly was done in this case. On the second point, it was argued that the report submitted by the income-tax inspector was prima facie good material on the basis of which the Competent Authority could initiate action. In support of his submissions Mr. Awasthy relied upon CIT v. Smt. Vimlaben Bhagwandas Patel, [1979] 118 ITR 134, wherein a Division Bench of the Gujarat High Court has taken the view that the condition regarding the locality notice or the personal notice did not render the determination made by the Competent Authority as void. In coming to that conclusion the Gujarat High Court had relied upon an earlier Full Bench decision of that High Court, Dungarlal Harichand v. State of Gujarat, AIR 1977 Guj 23, wherein also it was laid down that a locality notice was not mandatory in respect of a case which arose out of the Bombay Town Planning Act No. 27 of 1955, We might add at this place that as far as this court is concerned, the law is practically well settled that in a case under Section 4 of the Land Acquisition Act the service of the notice on the land-owner as also the locality notice are conditions precedent for validating the acquisition proceedings. (See in this connection Rattan Singh v. State of Punjab, AIR 1976 P&H 279 [FB]). In other words, there is a direct conflict between Full Benches of two courts about the principle of law which has been relied upon by the learned judges, who decided Smt. Vimlaben Bhagwandas Patels case, [1979] 118 ITR 134. Mr. Gupta, the learned counsel for the assessee-respondent, has asserted that under Section 269D(2), it has been expressly laid down that the Competent Authority shall be under an
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