Acquisition under Chapter XXA requires prima facie material before initiation; presumptions under section 269C(2) cannot replace initial belief.

The Competent Authority's power to initiate acquisition proceedings under Chapter XXA depends on subjective satisfaction formed from relevant objective material showing the statutory conditions in section 269C(1) prima facie. The presumptions and evidentiary rules in section 269C(2) apply only after initiation and cannot be used to justify the initial belief. Section 269E(3) also indicates that proof and contest arise during the proceeding, not before it begins. On the facts, there was no material to show that the stated consideration had not been truly recorded with the requisite object, so the initiation was without jurisdiction and not sustainable.

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Issues: Whether the Competent Authority could validly initiate acquisition proceedings under Chapter XXA of the Income-tax Act, 1961 by relying on the presumptions in section 269C(2), and whether there was material to form the belief required under section 269C(1).

Analysis: The power to initiate proceedings under section 269C(1) is administrative and depends on the Competent Authority's subjective satisfaction based on relevant objective material. At the initiation stage, the authority is required to see only whether the statutory conditions precedent exist prima facie; it is not making a final adjudication. The evidentiary rules contained in section 269C(2), including the rule of conclusive proof and rebuttable presumption, operate in the proceeding after initiation and not at the stage of forming the initial belief. Section 269E(3) supports that view because it contemplates proof and contest in the course of the acquisition proceeding, not the pre-initiation stage. On the facts, there was no material to show that the consideration stated by the transferor had not been truly stated with the object required by section 269C(1).

Conclusion: The initiation of acquisition proceedings was without jurisdiction and is not sustainable; the challenge succeeds in favour of the petitioners.

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