No Objection Certificate under property transfer rules can bar later acquisition notice when tax liability is not clearly identified.

A no objection certificate under section 269UL(3) was treated as barring subsequent acquisition proceedings under sections 269C and 269D, because the governing circular had been construed to make such initiation impermissible after the certificate issued. The notice was also held defective because it did not clearly state whose tax liability was said to have been reduced or evaded, whether that of the transferor, the transferee, or both. On that basis, the impugned notice was invalid and could not be acted upon.

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Issues: Whether, after the appropriate authority had granted a no objection certificate under section 269UL(3) of the Income-tax Act, 1961, the Competent Authority could validly initiate acquisition proceedings under sections 269C and 269D of the Income-tax Act, 1961, and whether the notice was vitiated for not clearly stating whose tax liability was alleged to have been reduced or evaded.

Analysis: The proceedings had culminated in a certificate under section 269UL(3), which recorded no objection to the transfer and was stated to be without prejudice to pending or contemplated income-tax proceedings under other provisions of the Act. The governing circular relied upon by the Court had already been construed to mean that, after such a certificate, initiation of acquisition proceedings under sections 269C and 269D was impermissible. The notice was also defective because it did not clearly specify whether the alleged understatement of consideration was intended to facilitate reduction or evasion of the tax liability of the transferor, the transferee, or both.

Conclusion: The impugned notice was invalid and could not be acted upon. The decision was in favour of the assessee.

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