Court dismisses appeal, upholds Tribunal's decision due to premature notice, refuses remand after 23 years.

The court dismissed the appeal and upheld the Tribunal's decision to set aside the acquisition due to premature service of notice, which rendered the proceedings void. The court refused to remand the case for fresh proceedings after a significant time lapse of 23 years, citing potential third-party interests and minor discrepancies in property valuation. The court emphasized the importance of complying with mandatory provisions under the Income-tax Act, 1961, and affirmed that serving notice before publication in the Official Gazette constitutes a jurisdictional defect.

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Issues Involved:
1. Non-compliance with mandatory provisions of section 269D(2) of the Income-tax Act, 1961.
2. Validity of acquisition proceedings due to non-service of notice on the tenant.
3. Sequence of publication and service of notice under section 269D of the Act.
4. Jurisdictional defect due to premature service of notice.
5. Remand of the case for fresh proceedings.

Issue-wise Detailed Analysis:

1. Non-compliance with mandatory provisions of section 269D(2) of the Income-tax Act, 1961:
The Tribunal set aside the acquisition order on the grounds that there was no issue of notice to the person in possession of the property, rendering the initiation of proceedings under section 269D incomplete and the acquisition proceedings void ab initio. Additionally, the Tribunal noted that no order could be passed without complying with the mandatory provisions of section 269D(2), which requires service on the person in possession of the property.

2. Validity of acquisition proceedings due to non-service of notice on the tenant:
The Department contended that the Tribunal erred in setting aside the acquisition order merely because the notice was not served on the tenant. The court agreed with this contention, noting that the procedural irregularity of not serving the tenant did not vitiate the proceedings at the instance of the transferor and the transferee. The court referenced a Full Bench decision in CIT v. Amrit Sports Industries, which held that only the person aggrieved by non-service of notice could make a grievance thereof.

3. Sequence of publication and service of notice under section 269D of the Act:
The Tribunal's view that the sequence of publication and service of notice could be simultaneous or in any order was rejected. The court clarified that under section 269D, the competent authority must first publish the notice in the Official Gazette to validly initiate proceedings, followed by service on the transferor, transferee, and others. In this case, the notice was served on the transferor and transferee before its publication in the Official Gazette, invalidating the proceedings.

4. Jurisdictional defect due to premature service of notice:
The court emphasized that serving notice before the initiation of proceedings by publication in the Official Gazette is a jurisdictional defect, not merely a procedural irregularity. This defect renders the acquisition proceedings and subsequent order void. The court cited the Delhi High Court's decision in Satya Narain Prakash Punj v. Union of India, which held that serving notice before publication in the Official Gazette does not comply with mandatory provisions and invalidates the proceedings.

5. Remand of the case for fresh proceedings:
The Department requested a remand to the competent authority for fresh proceedings, arguing that the proceedings were validly initiated on August 11, 1973. However, the court declined this request, noting the significant time lapse of nearly 23 years, potential third-party interests, and the minor difference between the apparent consideration and the fair market value of the property. The court deemed it inequitable to restart proceedings after such a long period.

Conclusion:
The appeal was dismissed, and the Tribunal's order setting aside the acquisition was upheld. The court found that the premature service of notice invalidated the acquisition proceedings and declined to remand the case for fresh proceedings due to the long lapse of time and potential inequities.

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