Fair market value under Chapter XXA cannot rest on undisclosed material or arbitrary comparables; fresh valuation was required.

In proceedings under Chapter XXA, fair market value of transferred plots must be determined on the basis of material communicated to the parties and on relevant, rational valuation criteria. Where the Tribunal relies on undisclosed auction information and then fixes value by selectively choosing comparable rates without a sound factual foundation, the valuation suffers from breach of natural justice and irrelevant consideration. The order sustaining acquisition could not stand, and the matter required fresh determination of fair market value in accordance with law by the competent authority.

---

---

Issues: Whether the Tribunal was justified in determining the fair market value of the transferred plots on the basis of material not communicated to the parties and on considerations found to be irrelevant, and whether its order sustaining acquisition under Chapter XXA could stand.

Analysis: The competent authority had proceeded under Chapter XXA after issuing notices under section 269D and making enquiries under section 269F(4) of the Income-tax Act, 1961. In appeal, the Tribunal found that reliance had been placed on auction information from the Estate Officer which had not been communicated, thereby attracting breach of natural justice. Instead of remitting the matter, however, it itself fixed the fair market value by selecting one rate from comparable plots and rejecting another without rational basis. The High Court held that the Tribunal relied on irrelevant considerations, ignored material bearing on valuation, and reached a conclusion without a sound factual foundation.

Conclusion: The Tribunal's valuation order could not be sustained and the matter had to go back to the competent authority for fresh determination of fair market value in accordance with law.

---