Law:

Section:

Section 269C of the income-tax act. 1961-Acquisition of property-condition precedent for initiating acquisition proceedings -Property transferred wholly occupied by tenants-Whether should be valued by rental method-Held, yes-Recording of material by IAC that fair market value had not been stated in transfer deed with object to evade tax-Whether necessary for initiating acquisition proceedings-Held, yes Facts On 15-11-1972, the petitioners registered a deed of conveyance in respect of a property for a consideration of Rs. 1,35,000 and obtained possession from the vendors. Earlier, on 8-9-1972, a valuer had valued the said property at Rs. 1,32,000 on the rental method, as the said property was fully tenanted. On 23-4-1973, the competent authority issued a notice under section 269D(1) for the purpose of acquisition of the said property. The IAC had proceeded on the basis that the area of the premises in question was 6 Cottahs, 7 Chittaks and 10 square foot of land situated in a busy business locality. He had noted that it was let out to business houses and had used the expression "partly used for dwelling-house purpose". He had recorded that there was a report to the effect that the cost of the land in Burrabazar area was between Rs. 60,000 and Rs. 80,000 per Cottah. But, since the land in question was situated inside a lane, he estimated the value of the land at the rate of Rs. 30,000 per Cottah. On this basis, he estimated the total value of the land at Rs. 2,00,000. Since the apparent consideration exceeded more than 25 per cent, he had initiated the acquisition proceedings. On reference : Held 1. Before initiation of proceedings under section 269C for acquisition of property on the ground that it has been transferred for an undervalue, the following conditions must be fulfilled: a.The competent authority must record his reasons. b.There must be materials for recording such reasons. c.Such materials must have a nexus for the competent authority believing that the immovable property of a fair market value exceeding Rs. 25,000 has been transferred by the transferor to the transferee for a payment or consideration which is less than the fair market value of the…

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