Official Gazette notice and valuation method in tax acquisition proceedings upheld where prior service and land-and-building valuation were valid.

In acquisition proceedings under the Income-tax Act, publication of notice in the Official Gazette is mandatory, but service of notice on the transferor and transferee before that publication does not, by itself, invalidate the proceedings. The Competent Authority's initiation was sustained because inspection and valuation material provided a reasonable basis to believe that the apparent consideration was below fair market value. The fair market value was also properly assessed by the land and building method, as that was a recognised valuation approach and no reliable rental instances were shown to make the rental method obligatory. The acquisition order was therefore upheld and no question of law warranting interference was made out.

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Issues: (i) Whether the acquisition proceedings were void because service of notice on the transferor and transferee preceded publication of the notice in the Official Gazette; (ii) Whether the Competent Authority had material to form a reasonable belief that the apparent consideration was less than the fair market value; (iii) Whether the fair market value ought to have been determined by the rental method instead of the land and building method.

Issue (i): Whether the acquisition proceedings were void because service of notice on the transferor and transferee preceded publication of the notice in the Official Gazette.

Analysis: Section 269D required publication of notice in the Official Gazette, and that requirement was mandatory. The provision did not, however, make prior publication a condition for service of notice under the other sub-section. The sequence of service before gazette publication did not, by itself, vitiate the proceedings.

Conclusion: The objection failed and the proceedings were not void on that ground.

Issue (ii): Whether the Competent Authority had material to form a reasonable belief that the apparent consideration was less than the fair market value.

Analysis: The Competent Authority relied on material obtained through inspection and valuation, including reports indicating that the property was worth more than the stated consideration. That material was sufficient to support the formation of belief required for initiation of acquisition proceedings.

Conclusion: The challenge to the initiation of proceedings was rejected.

Issue (iii): Whether the fair market value ought to have been determined by the rental method instead of the land and building method.

Analysis: The land and building method was a recognised method of valuation and was appropriate on the facts. The property was in the occupation of the transferor, and there was no evidence of comparable rental instances in the locality. The rental method was therefore not obligatory and its non-adoption did not invalidate the valuation.

Conclusion: The valuation based on the land and building method was upheld and the rental method contention was rejected.

Final Conclusion: The order of acquisition was sustained, and the appeal under section 269H was rejected because no question of law warranting interference was made out.

Ratio Decidendi: In acquisition proceedings under the Income-tax Act, publication of notice in the Official Gazette is mandatory, but service before publication does not invalidate the proceedings absent a statutory prohibition; valuation may properly be made by the land and building method where rental evidence is unavailable or unsuitable.

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