Chapter XX-A acquisition proceedings failed for limitation and lack of jurisdictional material to prove understatement and tax evasion.

Chapter XX-A acquisition proceedings were held invalid because the Gazette publication under the first proviso to section 269D(1) was made after the mandatory nine-month period, so initiation was time-barred. The Competent Authority also lacked jurisdiction under section 269C(1) because, at the stage of initiation, independent material was required to show understatement of consideration with the object of tax evasion or concealment; an estimated excess of fair market value over apparent consideration was insufficient. On the evidence, the comparable sales relied upon were dissimilar, the valuation adopted was not sustained, and the statutory presumption under section 269C(2) stood rebutted.

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Issues: (i) Whether initiation of acquisition proceedings under Chapter XX-A was barred by limitation under section 269D(1). (ii) Whether the Competent Authority had valid jurisdiction to initiate proceedings under section 269C(1) in the absence of material showing understatement of consideration and tax evasion. (iii) Whether the fair market value was correctly determined and the statutory presumption under section 269C(2) stood rebutted.

Issue (i): Whether initiation of acquisition proceedings under Chapter XX-A was barred by limitation under section 269D(1).

Analysis: The notice of acquisition was published in the Official Gazette after the expiry of nine months from the end of the month in which the agreement of transfer was registered. The statutory period prescribed by the first proviso to section 269D(1) is mandatory, and publication within that period is a condition for valid initiation.

Conclusion: The initiation of acquisition proceedings was barred by limitation and was invalid.

Issue (ii): Whether the Competent Authority had valid jurisdiction to initiate proceedings under section 269C(1) in the absence of material showing understatement of consideration and tax evasion.

Analysis: The statutory presumptions in section 269C(2) do not operate at the stage of initiation. Before jurisdiction can be assumed, there must be material from which a reasonable belief can be formed that the apparent consideration was not truly stated with the object of tax evasion or concealment of income. Mere reliance on an estimated excess of fair market value over apparent consideration was held insufficient without independent material showing understatement and the requisite object.

Conclusion: The preconditions for valid initiation under section 269C(1) were not satisfied, and the notice and acquisition order were without jurisdiction.

Issue (iii): Whether the fair market value was correctly determined and the statutory presumption under section 269C(2) stood rebutted.

Analysis: The comparable instances relied upon by the Competent Authority were found to be dissimilar, as they related mainly to better-located ground-floor shops or properties in different buildings and locations. The appellants relied on sales in the same building and nearby buildings, along with a registered valuer's report and surrounding circumstances affecting marketability. On the evidence, the alleged excess over apparent consideration was not established to the extent required, and the presumption stood rebutted.

Conclusion: The fair market value adopted by the Competent Authority was not sustained, and the presumption under section 269C(2) was rebutted in favour of the appellants.

Final Conclusion: The acquisition proceedings were held to be void both for limitation and for want of valid jurisdictional foundation, and the appellants succeeded in getting the acquisition annulled.

Ratio Decidendi: For valid initiation of acquisition proceedings under section 269C, the Competent Authority must have independent material to believe that consideration was understated with the object of tax evasion or concealment; the statutory presumptions under section 269C(2) cannot by themselves furnish jurisdiction at the stage of initiation.

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