Acquisition proceedings under Chapter XXA need real material for belief; presumptions under section 269C(2) do not arise at initiation.

Initiation of acquisition proceedings under Chapter XXA requires the competent authority to have relevant material showing understatement of sale consideration with the specified tax-evasion object under section 269C(1). The text notes that, where the property was agricultural land in a village and both parties were agriculturists with no material indicating income-tax or wealth-tax liability, mere understatement in an inspector's report was insufficient. It further states that the presumptions in section 269C(2) do not apply at the stage of forming the initial belief under section 269C(1). On that basis, the acquisition proceedings were treated as not validly initiated and the acquisition order as unsustainable.

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Issues: Whether the acquisition proceedings under Chapter XXA were validly initiated on the basis of material showing understatement of consideration and the existence of the objects specified in section 269C(1) of the Income-tax Act, 1961.

Analysis: The property sold was agricultural land situated in a village and did not fall within the capital asset exception under section 2(14)(iii). The reasons recorded by the competent authority and the Inspector's report only indicated an apparent understatement of consideration, but did not show any material suggesting that either transferor or transferee was liable to income-tax or wealth-tax, or that the understatement was for evasion or reduction of such liability. The belief required under section 269C(1) had therefore to rest on relevant and material facts existing at the stage of initiation. The presumption in section 269C(2) could not be used to supply the missing foundation for forming that belief at the threshold stage.

Conclusion: The initiation of acquisition proceedings was invalid and the acquisition order was unsustainable.

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