The mandatory requirement of serving a notice on all interested parties, including minors, in acquisition proceedings under Chapter XX-A of the Income-tax Act, 1961, as per Section 269d(2)(a) of the Act.

( 1 ) THIS appeal under Section 269h has been filed by the Commissioner of Income-tax against the judgment of the Income-tax Appellate Tribunal, Allahabad Bench. The dispute is in respect of house No. D-48/136, Misri Pokhra, Varanasi. This property belonged to Smt. Kumud Kumari, resident of Deleep Nagar, Deoria. She sold it to Smt. Phoolmati Devi, respondent No. 1, and her son, Jagdish Mohan. At the time of the execution of the sale deed, admittedly, Jagdish Mohan was a minor.

( 2 ) AFTER receipt of Form No. 37g in respect of transfer of the aforesaid property, inquiry was made regarding its fair market value through an inspector of the I. T. Dept. The inspector estimated the market value on the relevant date to be Rs. 80,000 which was much higher than the purchase price of Rs. 45,000. On receipt of the report, proceedings for acquisition were initiated by issue of notices and by publication in Official Gazette. The notice was issued on December 5, 1973, and the same was published in the Official Gazette on December 22, 1973. A reply to the notice was filed by Smt. Phoolmati Devi alleging that the purchase price value of the house was correct and that the proceedings of acquisition could not be lawfully initiated against it. On 31st october, 1975, the IAC, Acquisition Range, Lucknow, held that the fair market value of the house on the date of sale was Rs. 73,198 as he found that the difference between apparent consideration of Rs. 45,000 and the fair market value was about 60%. He held that the agreed consideration for transfer had not been truly stated in the instrument of transfer with the following objects :

(a) Facilitating reduction of the liability of the transferor to pay tax under this Act in respect of any income arising from the transfer, or (b) Facilitating the concealment of any income or moneys or other assets which have not been or which ought to be disclosed by the transferor for the purpose of the Indian Income-tax Act, 1922, or this Act or the Wealth-tax Act, 1957.

( 3 ) ON the aforesaid findings, he ordered for the acquisition of the property under Chap. XX-A of the I. T. Act. Being aggrieved by this order Smt. Phoolmati Devi, the respondent, preferred an appeal before the Income-tax Appellate Tribunal, Allahabad.

( 4 ) BEFORE the Tribunal the point urged on behalf of respondent was that as the notice required by sub-section (2) (a) of Section 269d of the I. T. Act, had not been served on Jagdish Mohan, who was a predecessor (owner) of the property along with Smt. Phoolmati Devi, the entire proceedings of acquisition were illegal and that the order passed by the Commissioner was erroneous. The Tribunal accepted the submission of the respondent, Phoolmati Devi and allowed the appeal. It did not consider it necessary to decide the question of valuation of the property in question. Against this order, the Commissioner has filed the present appeal.

( 5 ) BEFORE us the controversy that arises for decision is about the effect of not serving on Jagdish mohan with a notice required by Section 269d, Sub- Section (2) of the I. T. Act. This provision reads as under :

"the Competent Authority shall (a) cause a notice under Sub-section (1) in respect of any immovable property to be served on the transferor, the transferee, the person in occupation of the property, if the transferee is not in occupation thereof, and on every person whom the Competent Authority knows to be interested in the property. . . . . . "

( 6 ) SUB-SECTION (2) imposes a duty on the Competent Authority to issue a notice by using the expression "shall". Upon the receipt of notice that person becomes entitled to file an objection to the proceedings of acquisition. The notice is also required to be published. Since, however, we are not concerned with the publication of the notice, it is not necessary for us to discuss the matter.

( 7 ) IN the instant case, admittedly notice was not sent to Jagdish Mohan. At the time of the execution of the