Law:

Section:

Section 269C(2)(b), read with section 269D, of the Income-tax Act, 1961-Acquisition of immovable properties-Whether, for forming belief under section 269c(1), competent authority can rely on presumption under clause (b) of section 269(2)-Held, no-Whether the stage when competent authority considers question of issuing notice under section 269D(1) can be considered "any proceedings" within the meaning of section 269C(2)-Held, no Facts By a registered conveyance, the assessee had purchased from the Life Insurance Corporation (LIC) two plots of land, measuring 7 cottas, at Rs. 5,000 per cotta. In the conveyance, HB Society Ltd. was a confirming party. In respect of the said purchase, the competent authority decided to initiate acquisition proceedings under section 269C and issued notices under section 269D(1) to the LIC, HB Society Ltd. and to the assessee. In the said notices, both the LIC, and the HB Society Ltd. were described as transferors. The competent authority further overruled the assessee's objections made under section 269E. In recording his reason to believe as per section 269C(1), the competent authority relied on the presumption under clause (b) of section 269C(2). As nothing in favour of the assessee resulted from her plea before the authorities, she filed a writ petition for grant of the rule nisi. The High Court held that the presumption under section 269C(2)(b) did not apply and, therefore, there was no material before the competent authority for the foundation of the belief that the consideration as agreed to between the transferor and the transferee was not truly stated in the instrument of transfer. The court, accordingly, quashed the impugned notices and made the rule nisi absolute. On appeal, the revenue contended that when the competent authority considered the question of issuing the notice, it was a "proceeding" as contemplated by section 269C(2) and, as such, the competent authority was entitled to rely on the presumption under clause (b) of section 269C(2). On the other hand, the assessee contended that the competent authority was not so entitled, for there was no "proceeding" as such before the notice was served on the parties. Held 1…

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