Fair market value comparison in Chapter XX-A failed where relied-on sales were not true comparables and declared price was supported.

In acquisition proceedings under Chapter XX-A of the Income-tax Act, the authority must prove with cogent and reliable evidence that the fair market value exceeded the declared consideration by the statutory margin and that the transfer was intended to reduce or evade tax. Auction sales of smaller plots in a better locality, on the main road, and without the same locational disadvantages were not accepted as proper comparables. The assessee's own sale instances from the same locality, together with the agreement to sell, prior payment, possession, conversion charges, and the property's physical disadvantages, supported the declared price. The acquisition order was therefore unsustainable and the transfer was treated as genuine.

---

---

Issues: Whether the acquisition of the property under Chapter XX-A of the Income-tax Act, 1961 was valid, having regard to the fair market value of the property, the comparability of the relied-upon sale instances, and the alleged object of reducing or evading tax liability.

Analysis: Proceedings under Chapter XX-A were treated as quasi-criminal in nature, requiring cogent, reliable and relevant evidence before a citizen's property could be acquired. The material relied upon by the Competent Authority consisted mainly of auction sales of smaller plots in Geejgarh House, which were in a better locality, on the main road, and without the nuisance and locational disadvantages attached to the assessee's plot. Those instances were not accepted as proper comparables. The assessee's own sale instances from the same locality, including a later sale of a nearby plot by the same transferor, were treated as more comparable and supported the declared consideration. The agreement to sell, prior payment, delivery of possession, conversion charges, and the physical and locational disadvantages of the property were all relevant circumstances showing that the declared price was realistic and that the valuation adopted by the Department was not properly supported.

Conclusion: The acquisition order was unsustainable, as the Revenue failed to establish that the fair market value exceeded the apparent consideration by the required margin or that the transfer was executed with the object of tax evasion. The decision was in favour of the assessee.

Final Conclusion: The property could not be validly acquired under Chapter XX-A on the material placed, and the transfer remained genuine and bona fide on the evidence accepted by the Tribunal.

Ratio Decidendi: In acquisition proceedings under Chapter XX-A of the Income-tax Act, the authority must establish by cogent and reliable evidence that the fair market value exceeded the declared consideration by the statutory margin and must assess comparable sales with due regard to local and physical differences affecting value.

---