Chapter XXA acquisition requires reliable comparables; unsupportable undervaluation findings cannot sustain transfer acquisition.

Initiation of acquisition proceedings under Chapter XXA was upheld where the Competent Authority relied on valuation material, recorded reasons and issued the preliminary notice on that basis; the printed form of notice did not by itself show non-application of mind, and the presumption under section 269C(2) was treated as available at the initiation stage. However, acquisition ultimately failed because the Department's comparable sales were not sufficiently similar to the property's interior location and different locational advantages, while the assessee's comparables undermined any reliable finding that fair market value exceeded apparent consideration by the statutory margin. The acquisition order was therefore unsustainable.

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Issues: (i) Whether the initiation of acquisition proceedings under section 269D(1) of the Income-tax Act, 1961, and the presumptions under section 269C(2) were validly invoked. (ii) Whether the fair market value of the property exceeded the apparent consideration by more than 15 per cent so as to justify acquisition under Chapter XXA.

Issue (i): Whether the initiation of acquisition proceedings under section 269D(1) of the Income-tax Act, 1961, and the presumptions under section 269C(2) were validly invoked.

Analysis: The Competent Authority relied on the valuation report, recorded reasons, and issued the preliminary notice on that basis. The material was held sufficient to show application of mind, and the printed form of notice did not by itself establish non-application of mind. The presumption under section 269C(2) was treated as available even at the initiation stage, subject to the existence of material suggesting understatement of consideration for the statutory objects.

Conclusion: The initiation of proceedings and invocation of the statutory presumption were upheld, and this issue was decided against the assessee.

Issue (ii): Whether the fair market value of the property exceeded the apparent consideration by more than 15 per cent so as to justify acquisition under Chapter XXA.

Analysis: The comparable sales relied upon by the Department were not treated as fully apt comparables because the property in question lay in the interior and had materially different locational advantages from the better-situated developed colonies. The reduced valuation adopted by the Competent Authority was found to lack an understandable basis, and the more comparable instances relied upon by the assessee showed that the apparent consideration could not be displaced by a reliable finding of statutory undervaluation. On that footing, the satisfaction required for acquisition was held unsustainable.

Conclusion: The statutory condition for acquisition was not satisfied, and this issue was decided in favour of the assessee.

Final Conclusion: The acquisition order could not stand, and the transferor's challenge succeeded because the finding of statutory undervaluation was not supportable on the evidence and comparables.

Ratio Decidendi: In acquisition proceedings under Chapter XXA, the Revenue must establish on reliable material that the fair market value exceeded the apparent consideration by the prescribed margin, and where the comparable instances do not support that finding, the acquisition cannot be sustained.

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