Law:

Section:

Section 269C of the Income-tax Act, 1961 - Acquisition of immovable properties - Initiation of proceedings for - Whether till proper notice in Official Gazette is published, proceedings for acquisition are not initiated and presumption prescribed in clauses (a) and (b) of section 269C would not be available to competent authority prior to decision of competent authority for initiation of proceedings - Held, yes - Whether though report of Inspector had some evidentiary value regarding market value of property, it would not constitute material for formation of reason to believe that apparent consideration was not truly stated in instrument of transfer with object of facilitating reduction or evasion of tax liability of transferor or transferee or concealment of income by anyone of them - Held, yes FACTS The respondent was one of the transferees of a property. The transfer of the said property was effected by an instrument of transfer dated 24-4-1985 in favour of five transferees. The competent authority, notified by the Central Government under the provisions of the Chapter XX-A, initiated proceedings for acquisition of the property on the ground that the value of the property was understated. The publication of notice in the Official Gazette was made under section 269D(1), dated 4-1-1996. Subsequently, the competent authority passed separate orders acquiring the properties covered in the instrument of transfer. On appeal, the Tribunal found that the competent authority had no material to form a reasonable belief that the consideration for transfer was not truly stated with the object of facilitating the reduction or evasion of the liability of the transferor to pay tax as contemplated under section 269C(1)(a). Therefore, the Tribunal quashed the acquisition proceedings. On appeal : HELD The conditions precedent for the exercise of the jurisdiction by the competent authority under section 269C are : (1) There must be a transfer of immovable property worth more than Rs. 25,000 in value; (2) The fair market value of the transferred property should exceed the apparent consideration by 15 per cent thereof; (3) There should be an ulterior motive for tax evasion by…

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