Law:

Section:

Section 269C of the income-tax act, 1961-Acquisition of immovable property-assessee-company purchased property, situated in centre of commercial area, for Rs. 2,22,000 on basis of its valuer's report-Eviction proceedings pending against tenants of property-Departmental evaluation officer determined its value at Rs. 11,41,900 following develop-mental method-Competent authority commenced acquisition proceedings which were quashed by tribunal-Whether tribunal's action justified-Held, on facts, yes Facts The assessee-company (hereinafter referred to as "the transferee") purchased from A on 12-2 1975 a property, situated in Connaught Circus, New Delhi, at Rs. 2,22,000. The eviction proceedings were pending against its tenants. After this sale, the transferee succeeded in obtaining, in October 1975, the vacant possession from the tenants under a settlement in which each of them was paid Rs. 35,000. The transferee further expended Rs. 75,000 as Government fees for its conversion into commercial premises, Rs. 17,600 as registration and stamp charges, and Rs. 2,75,000 towards its renovation and conversion into commercial premises. Thereafter, it was sold at Rs. 9,16,980 and resultant profits were assessed to income-tax. In the meantime, on reference from competent authority, the Evaluation Officer determined the value of the said property at Rs. 11,41,900 by following developmental method. The IAC then concluded that there was sufficient reason to believe that the property had been transferred for an apparent agreed consideration which was far less than its fair value and that the same had not been truly stated in the sale deed with the object of (a) facilitating reduction or evasion of the liability of the transferor to pay tax qua any income arising therefrom, or (b) facilitating the concealment of any income or any moneys or other assets which have not been or which ought to be disclosed by the transferee for purposes of income-tax/wealth-tax liability. In the circumstances, proceedings under section 269C(1) were commenced which were contested both by the transferor and transferee on the grounds, inter alia, (i) that the transferee had incurred a great risk in…

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