Law:

Section:

Section 269C of the income-tax act, 1961-Acquisition of immovable property-Conditions precedent for initiation of-Whether initiation of proceedings under section 269c would be without jurisdiction if competent authority relied on report of valuation officer, which was based on factually erroneous presumption, to form belief that fair market value of property exceeded apparent consideration by more than 15 per cent. and if competent authority had even otherwise no material whatsoever to hold that stated consideration was untrue or property had been undervalued in instrument of transfer with the object of tax evasion-Held, yes-Whether presumption under section 269c(2) regarding tax evasion being object of untrue statement of consideration is available not at the stage of initiation of acquisition proceeding but only at later stage when inquiry is to be conducted-Held, yes Interpretation of statutes-Principle of strict interpretation of taxing statutes Facts The petitioner-society was formed by tenants of flats in a building, with a view to enable the tenants to acquire ownership over the flats. There were other flats in the same building which were in the occupation of the owner. Under the deed of conveyance executed between the seller and the petitioner, the consideration for transfer was fixed at Rs. 3.55 lakhs. The Valuation Officer, however, estimated the market value of the transferred property at above Rs. 7 lakhs, on the presumption that a portion of the property was vacant and was available to the petitioner for sale. On this basis, the competent authority formed the belief that the fair market value exceeded the apparent consideration by more than 15 per cent and initiated acquisition proceedings under section 269C. On writ challenging the initiation of acquisition proceedings : Held The petitioner had correctly contended that while arriving at the fair market value of the property, the Valuation Officer had wrongly assumed that a certain vacant portion of the property was at the disposal of the petitioner. From the deed of conveyance, it was clear that the petitioner had agreed that the seller was at liberty to sell, assign or otherwise deal with and/or…

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