Section 269D acquisition proceedings fail when time limits and the statutory object of understatement are not clearly satisfied.

Jurisdiction under section 269D could not be validly assumed where acquisition proceedings were initiated beyond the prescribed time and the record did not show proper publication in the Official Gazette or timely service of notice; the initiation was therefore treated as time-barred. The notice was also defective because it failed to state with sufficient clarity whether the alleged understatement of consideration was intended to avoid tax in the hands of the transferor, the transferee, or both, amounting to non-application of mind and a jurisdictional defect. The acquisition proceedings were held invalid and the writ petition was allowed.

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Issues: (i) Whether proceedings for acquisition initiated under section 269D of the Income-tax Act, 1961 were barred by time in the absence of proper publication and timely service of notice. (ii) Whether the notice was vitiated for non-application of mind because it did not clearly specify the object of the alleged understatement of consideration.

Issue (i): Whether proceedings for acquisition initiated under section 269D of the Income-tax Act, 1961 were barred by time in the absence of proper publication and timely service of notice.

Analysis: The proceedings were challenged on the footing that the notice was received long after the prescribed period and that there was no material to show publication in the Official Gazette. In the absence of an affidavit-in-reply, the court treated the initiation of proceedings as having been made beyond time.

Conclusion: The issue was decided in favour of the assessee and against the revenue.

Issue (ii): Whether the notice was vitiated for non-application of mind because it did not clearly specify the object of the alleged understatement of consideration.

Analysis: The notice did not indicate with precision whether the alleged understatement was with a view to avoiding tax in the hands of the transferor, the transferee, or both. Such lack of clarity in expressing the object of understatement was treated as a jurisdictional defect.

Conclusion: The issue was decided in favour of the assessee and against the revenue.

Final Conclusion: The initiation of acquisition proceedings under section 269D was held to be invalid, and the writ petition was allowed.

Ratio Decidendi: Jurisdiction under section 269D cannot be validly assumed unless the proceedings are commenced within the prescribed time and the notice clearly discloses the statutory object of the alleged understatement of consideration.

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