Chapter XXA acquisition needs independent material and a valid valuation gap beyond the statutory threshold before proceedings can stand.

Chapter XXA acquisition proceedings require an independent threshold satisfaction based on relevant material showing the statutory belief under section 269C(1); the presumptions in section 269C(2) cannot substitute for that finding, and a mere recitation of tax-evasion language is insufficient. The commentary also notes that acquisition can stand only if the fair market value exceeds the apparent consideration by more than 15 per cent. On the stated facts, comparable sales and property-specific disadvantages were not properly considered, so the valuation was treated as unsupported and the statutory preconditions for acquisition were not met.

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Issues: (i) Whether the presumptions under section 269C(2) of the Income-tax Act, 1961 could be invoked at the stage of initiation of acquisition proceedings under Chapter XXA; (ii) Whether the fair market value of the property exceeded the apparent consideration by more than 15 per cent so as to sustain the acquisition order.

Issue (i): Whether the presumptions under section 269C(2) of the Income-tax Act, 1961 could be invoked at the stage of initiation of acquisition proceedings under Chapter XXA.

Analysis: The satisfaction for initiating acquisition proceedings must rest on relevant material giving rise to a rational and direct nexus with the statutory belief required by section 269C(1). The presumptions in section 269C(2) are not a substitute for an independent finding at the threshold stage. A mere reproduction of the statutory objects of tax evasion or concealment does not amount to a finding. The initiation of proceedings therefore cannot be sustained by resorting to section 269C(2) without an independent basis in material.

Conclusion: The presumptions under section 269C(2) were not available to justify initiation of the acquisition proceedings, and the finding on understatement was unsustainable.

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

Analysis: The valuation adopted by the Departmental Valuation Officer was found to be unjustified because relevant comparable instances were not fairly considered and the property-specific disadvantages were overlooked. Sales of comparable plots, including instances where acquisition proceedings had been dropped, indicated that the apparent consideration was broadly aligned with market value and in any event the differential did not cross the statutory threshold. Once the fair market value was not shown to exceed the apparent consideration by more than 15 per cent, the statutory preconditions for acquisition were not satisfied.

Conclusion: The fair market value did not exceed the apparent consideration by more than 15 per cent, and the acquisition order could not be sustained.

Final Conclusion: The acquisition under Chapter XXA failed for want of the statutory preconditions, and the impugned order was set aside.

Ratio Decidendi: Acquisition under Chapter XXA can be sustained only on an independent finding based on relevant material that the statutory conditions for belief and understatement are satisfied, and not merely on presumptions or an inflated valuation unsupported by fair and comparable evidence.

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