Notice irregularity under section 269D is procedural, while fair market value must be fixed using the proper valuation method.

Service of notices under section 269D(2)(a) before publication of the Gazette notice under section 269D(1) was treated as a procedural irregularity, not a jurisdictional defect, so the acquisition proceedings were not void on that ground. The challenge to jurisdiction therefore failed. Fair market value under Chapter XX-A had to be fixed as on the date of transfer using the legally appropriate valuation method, with comparable sales as the primary approach and the rental method only where comparable sales data were unavailable. Because the valuation below did not apply the correct principles on the evidence available, the valuation finding was set aside and the matter remitted for fresh determination.

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Issues: (i) Whether service of notices under section 269D(2)(a) of the Income-tax Act, 1961 before publication of the Gazette notice under section 269D(1) vitiated the jurisdiction of the competent authority and the acquisition proceedings; (ii) Whether the determination of fair market value of the property by the competent authority and the Tribunal was legally sustainable.

Issue (i): Whether service of notices under section 269D(2)(a) of the Income-tax Act, 1961 before publication of the Gazette notice under section 269D(1) vitiated the jurisdiction of the competent authority and the acquisition proceedings.

Analysis: The power to initiate proceedings under Chapter XX-A flowed from the statutory scheme and the appointment of the competent authority, while section 269D regulated the mode and timing of notice. The prior service of individual and locality notices was treated as, at the highest, an irregularity in procedure and not a defect going to the existence of jurisdiction. The statutory safeguards in section 269D were held not to be jurisdictional in nature, and non-compliance with the sequence of notice did not nullify the proceedings.

Conclusion: The objection failed. The proceedings were not void for want of jurisdiction, and the assessee's challenge on this ground was rejected.

Issue (ii): Whether the determination of fair market value of the property by the competent authority and the Tribunal was legally sustainable.

Analysis: Fair market value had to be determined as on the date of the transfer by applying the proper valuation method. The comparable sales method was treated as the primary approach, and the rental method could be used only when comparable sales data were unavailable. The valuation exercise below proceeded without adequate consideration of the correct legal principles and without full evidence on the available methods of valuation. The material on record was insufficient for a final determination by the High Court, making a fresh inquiry necessary.

Conclusion: The valuation finding was set aside and the matter was remitted for fresh determination in accordance with law.

Final Conclusion: The jurisdictional challenge was rejected, but the valuation question required reconsideration; accordingly, the acquisition orders were set aside and the matter was sent back for a fresh decision on fair market value.

Ratio Decidendi: A defect in the service or sequence of notices under section 269D is procedural and does not by itself destroy jurisdiction, and fair market value under Chapter XX-A must be determined by the legally appropriate valuation method on the basis of relevant evidence.

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