Property acquisition under income-tax valuation rules turns on admissible evidence, rental method valuation, and rebuttal of understatement presumption.

In valuation-based acquisition proceedings under Chapter XX-A, the rental method was accepted as a legally permissible basis for property under rent control, and the acquisition of Smt. Phoolmati's portion failed because the fair market value did not exceed the apparent consideration by more than 15%. For Asharfi Lal Gupta's portion, the statutory presumption under section 269C(2)(a) arose because the value gap exceeded 25%, and it was not rebutted because the Tribunal relied on irrelevant, inadmissible, and conjectural material rather than evidence directed to the true fetchable price. One part of the acquisition was therefore set aside and the other sustained.

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Issues: (i) Whether the portion of the property purchased by Smt. Phoolmati was liable to acquisition under Chapter XX-A of the Income-tax Act on the basis of the fair market value determined by the Tribunal. (ii) Whether the portion of the property purchased by Asharfi Lal Gupta attracted the statutory presumption under section 269C(2)(a) and whether that presumption was rebutted by admissible evidence.

Issue (i): Whether the portion of the property purchased by Smt. Phoolmati was liable to acquisition under Chapter XX-A of the Income-tax Act on the basis of the fair market value determined by the Tribunal.

Analysis: The Tribunal valued the property on the rental basis, taking the actual rental income and applying the multiplier adopted by the departmental valuer. The fair market value was found not to exceed the apparent consideration by more than fifteen per cent. The rental method was held to be a legally permissible method in the context of controlled rents under the rent restriction law, and the valuation adopted by the Tribunal was not shown to be erroneous in law.

Conclusion: The acquisition order could not be sustained in respect of Smt. Phoolmati's portion, and the Tribunal's decision in her favour was upheld.

Issue (ii): Whether the portion of the property purchased by Asharfi Lal Gupta attracted the statutory presumption under section 269C(2)(a) and whether that presumption was rebutted by admissible evidence.

Analysis: The difference between the fair market value and the apparent consideration exceeded twenty-five per cent, thereby attracting the statutory presumption. Section 269E(3) permitted rebuttal, but the materials relied upon by the Tribunal were held to be irrelevant or inadmissible for that purpose. The Tribunal had reduced value by relying on factors relevant to a different method of valuation and had also acted on conjectures and surmises, which could not constitute a valid factual finding in law.

Conclusion: The presumption under section 269C(2)(a) was not rebutted, and the acquisition order was liable to stand in respect of Asharfi Lal Gupta's portion.

Final Conclusion: The common judgment resulted in one part of the acquisition being set aside and the other part being restored, so the Revenue succeeded in one appeal and failed in the other.

Ratio Decidendi: Where the statutory difference threshold is crossed, the presumption of understatement under section 269C(2)(a) can be rebutted only by relevant and admissible evidence directed to the true fetchable price of the property; a finding resting on irrelevant considerations or conjectures cannot displace that presumption.

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