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Issues: Whether the Tribunal was right in treating the relied-upon sale instances as stale or otherwise incomparable and in setting aside the acquisition order, or whether the matter should be remanded for fresh inquiry and evidence on the question of fair market value.
Analysis: In proceedings under Chapter XX-A of the Income-tax Act, 1961, the competent authority must reach a prima facie view on fair market value on the material available at the stage of initiation, while the ultimate acquisition decision must rest on tested and reliable material. Remote sale instances are not to be discarded merely because they are separated in point of time from the proposed acquisition date, especially where no better comparable evidence is available. The Tribunal was right in rejecting the alleged transaction in favour of Hari Om Enterprises because the material showed only an unverified offer on undisclosed conditions. However, the Tribunal erred in rejecting the March 1967 sales in favour of the Life Insurance Corporation solely as stale and in drawing conjectural conclusions without allowing proper evidence to be recorded. Since the parties had sought an opportunity to meet that material and the competent authority had not examined the relevant witnesses, the inquiry required fresh evidence on comparability, price trends in the locality, and the nature of those transactions.
Conclusion: The Tribunal was not justified in finally setting aside the acquisition order on the existing record alone. The matter had to be remanded to the competent authority for recording evidence and for a fresh decision on the relevant comparable sales and market value.
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