Chapter XXA acquisition needs relevant material and proper valuation of tenanted property before statutory threshold is met.

Chapter XXA acquisition proceedings require relevant material with a direct nexus to the statutory belief that apparent consideration was understated with the prohibited object; an inspector's report not available for scrutiny, a blank fair market value note, and no valuation report at the time of initiation were insufficient. The Tribunal also noted that tenanted, rent-controlled property with restrictive lease conditions should be valued by the rent-yield approach, with tenant liabilities and reversionary factors reflected in the valuation. On the material accepted, the statutory margin above apparent consideration was not established, so acquisition could not be sustained.

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Issues: (i) Whether the initiation of acquisition proceedings under Chapter XXA was valid in the absence of relevant material establishing a proper basis for the requisite belief under the statute; (ii) whether the property's fair market value exceeded the apparent consideration by more than the statutory margin so as to justify acquisition.

Issue (i): Whether the initiation of acquisition proceedings under Chapter XXA was valid in the absence of relevant material establishing a proper basis for the requisite belief under the statute.

Analysis: The statutory precondition for action under section 269C(1) required relevant material having a direct nexus with the belief that the apparent consideration was understated with the prohibited object. The recorded reasons relied on an inspector's report but the report itself was not available for scrutiny and the fair market value was left blank in the reasons. At the stage when the belief was formed, no valuation report had been made and the available circumstances, including tenancy restrictions, lease limitations, and the permission under section 20 of the Urban Land (Ceiling and Regulation) Act, 1976, did not supply a sufficient factual basis for the initiation.

Conclusion: The initiation of proceedings was jurisdiction and void ab initio, and was therefore against the Revenue and in favour of the assessee.

Issue (ii): Whether the property's fair market value exceeded the apparent consideration by more than the statutory margin so as to justify acquisition.

Analysis: In valuing tenanted property, the rent-yield method was the appropriate approach where rents could not be enhanced and tenants could not be evicted. The property was heavily burdened by rent control, short lease residue, occupancy by sitting tenants, and liabilities for tenant settlements and improvements. On the appellants' rental basis, the value was far below the apparent consideration; even on the departmental valuation, proper deductions for tenant-related liabilities and reversionary value materially reduced the figure. On the material accepted by the Tribunal, the statutory difference of more than fifteen per cent over the apparent consideration was not established.

Conclusion: The valuation did not support acquisition under section 269F(6), and this issue was decided in favour of the assessee.

Final Conclusion: The acquisition order could not be sustained on either the initiation ground or the valuation ground, and the order was liable to be set aside.

Ratio Decidendi: Acquisition under Chapter XXA can be initiated only on the basis of relevant material showing a live nexus between the facts known to the authority and the statutory belief, and tenanted, rent-controlled property with restrictive lease and transfer conditions must be valued by an approach that reflects those encumbrances before the statutory threshold for acquisition can be treated as satisfied.

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