TaxTMI 
TaxTMI 
2003 (4) TMI 251
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....his Bench has the jurisdiction to decide the case. So we dismiss this preliminary objection raised by the Department as was announced on 21st March, 2003 in the open Court. On merits: 4. In the instant case, the assessee has taken 10 main grounds with a number of sub-grounds, but the entire grievance is related to the validity of impugned order as well as the acquisition proceedings started by the Competent Authority pertaining to Khasra No. 421 located between Circuit House and Chhitar Palace (Umaid Bhawan Palace), Jodhpur. 5. From the bulky material and brief history pertaining to this piece of land appears that his highness late Shri Gaj Singhji transferred the land of Khasra No. 421 to M/s Jodhan Real Estate Development Co. (P) Ltd. On 5th Nov., 1971, M/s Jodhan Real Estate Development Co. (P) Ltd. sold this land to four parties and one of them was M/s Jai Marwar Co. (P) Ltd. who purchased a piece of land for a consideration of Rs. 9,60,000 only. Total area of this piece of land was consisting of 1,81,818 sq. yards. M/s Jai Marwar Co. (P) Ltd. (hereinafter known as M/s JMCPL) has again sold this piece of land to the appellant i.e., M/s Navin Grah Nirmam Sahakari Samiti....
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....m the record, it appears that pertaining to the said piece of land (Khasra No. 421) located at Jodhpur Municipality, matter also reached to the Supreme Court in the public interest litigation. The Supreme Court vide its order dt. 28th Oct., 2002, allowed the SLP in favour of Shri Paras Chand Khinvsara where it was declared the said piece of land cannot be included in "no construction zone" in exercise of the powers under s. 171 of the Rajasthan Municipal Act. So the Supreme Court set aside the impugned notification of the State Government relating to K-421 as well as the order of the High Court. Finally, the said piece of land (K-421) has become free from all the litigation by the final order of the Supreme Court dt. 28th Oct., 2002. 9. With this background, we heard both the parties for a number of days and gone through the bulky material on record. Both the parties have filed written submissions and their counters along with the list of case laws. The appellant almost raised the similar objections which were already submitted before the acquisition authority. 10. Learned Authorised Representative, Sri N.M. Ranka, senior advocate starts the argument by mentioning the history....
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....urther submitted that the appellant is a co-operative group housing society duly registered under Rajasthan Co-operative Societies Act, 1965, vide Registration No. 1137/Q, dt. 7th April, 1971. It works under the control and supervision of Registrar of Co-operative Societies in Rajasthan. At the same time, M/s Jai Marwar Co. (P) Ltd. is a private limited company which was incorporated in the asst. yr. 1971-72 under the Indian Companies Act. It has been filing its income regularly. It filed return for the asst. yr. 1985-86. The recorded value was accepted after the appeal as the sale consideration. 13. The learned Authorised Representative objected by mentioning that the appellant submitted the application dt. 10th Nov., 2002, before the respondent for seeking the certified copies of the documents detailed therein. But the said copies/materials were never supplied to the appellant which is in violation of principle of natural justice. 14. The learned Authorised Representative submitted that the appellant has purchased a piece of land from M/s Jai Marwar Co. (P) Ltd. as per the agreement dt. 2nd Oct., 1974 for a sale consideration of Rs. 24,45,452. The sale deed was executed on ....
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....t of the DVO. For the purpose, he relied on the ratio laid down in the following cases: I. Krishna Kumar Rawat vs. Union of India (1995) 123 CTR (Raj) 61 : (1995) 214 ITR 610 (Raj) In this case, it was observed that in respect of land, comparable cases provide the better guidance. The comparable cases could be what are in respect of the land having similar character is in the proximity of the land under agreement having similar advantage and amenities. The proximity in time is also an important factor in such type of cases. The location, frontage, transport facilities and other amenities besides the size of the plot are relevant consideration. II. In the case of Forbes Forbes Campbell vs. Nishan Ahmed, IAC & Anr. (1995) 124 CTR (Bom) 91 : (1996) 217 ITR 103 (Bom), Hon'ble Bombay High Court observed that the initiation of the proceedings by the Competent Authority was without jurisdiction, because there was no material whatsoever to come to the conclusion that the consideration for transfer in the agreement was not truly stated and, therefore, with the object of facilitating the reduction or evasion of the liability of the transferor in respect of payment of tax. III. In....
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....e same was filed before jurisdictional High Court in the writ petition and the original agreement is not available. 18. He, further, submitted that the appellant allotted Pattas to its members and gave possession to allottees. A sum of Rs. 27 per sq. yard was collected being cost for the land, development and other expenditure to be incurred. The said allotment is as per the resolution passed by the appellant Samiti and it stands established that the said allottees received the possession prior to the execution of the sale deed. 19. The learned Authorised Representative took another aspect by submitting that the transferor company had a meeting of its board of directors on 1st Aug., 1974, wherein, powers were conferred on the specified directors to negotiate and to enter into sale transactions. The objector Samiti (appellant), was in need of land for its members to achieve its sacred objectives. After passing the resolution, agreement was entered into on 2nd Oct., 1974, which was, of course, a holiday being the birthday of Mahatma Gandhi. A sum of Rs. 10,100 was paid by cash towards sale consideration. The rate was settled on the said date at Rs. 8 per sq. yard. Thus, the inc....
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....to the acquisition authority the full names and complete addresses, registration number and details of the members to whom the land was allotted. But no notice was given by the acquisition authorities to the said allottees. 21. According to learned Authorised Representative, there was no reason to believe as required under s. 269C before issuance of the notice under s. 269D(1) of the IT Act, dt. 15th March, 1985. Thus, entire proceedings are illegal, without jurisdiction and null and void, non-existent in law and deserves to be quashed forthwith. The notice under s. 269D(1) of the Act dt. 15th March, 1985, claimed to have been published in the official gazette is illegal, void and deserves to be quashed for the reason that it was never supplied to the appellant. The notice does not contain complete description of the land in question though the complete details stand recorded in the sale deed. The notice contains the expression "and/or" in respect of the object and it is a serious illegality. For this purpose, he has drawn our attention to the copy of the notice. According to the learned Authorised Representative, in the notice full and complete addresses of the appellant Samiti....
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....2) is put up for signature for sending to the transferor/transferee. (iii) Notice under s. 269D(2) issued 9-12-1985 -- Letter put up for signature of ADI, Jodhpur. 26-2-1986 -- Letter put up for signatures regarding service of notice under s. 269D(2). 26-2-1986 -- Reminder sent and also talked on telephone 26-2-1986 -- Intimated on telephone to Shri K.K. Shukla. 14-3-1986 -- Acknowledgement slip of service of notices under s. 269F(1) received and placed on file. -.3-1986 -- Notices under s. 269D(2) are put up for signatures for sending the transferor/transferee. -- -- Notice for hearing put up for signatures. 13-6-1986 Present Shri B.L. Goyal, Ex. member of Society. Filed adjournment application. Also served with notice under s. 269D(1) along with valuation report today. 16-6-1986 -- Put up notice under s. 269F(1) for signatures. 3-7-1986 -- Intimation of case adjourned is put up for signatures. 18-7-1986 -- Notices under s. 269F(1) dt. 5-8-1986 are put up for signatures. 5-8-1986 Shri G.D. Rathi, CA attended Requested for adjournment and adjo....
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....to file detailed history enumerating the sequence of events. Case adjourned to 17-3-1988. --4-1992 -- CIT, Jaipur's letter vide No. CIT/JPR/8/1992-93/64 dt. 23-3-1992 regarding pendency of acq. cases received. Put up for sending information to CIT. --- -- Note sheet put up for fixing the case for hearing. 28-4-1992 -- Note sheet put up --- -- Directed to inform the earlier position. 29-4-1992 -- Letter put up for signatures for sending to CIT. --- -- Letter put up for signatures for sending to Shri G.G. Mundra CA. 4-8-1992 Attended Shri G.G. Mundra CA Case adjourned to 10-8-1992 at 12.00 a.m. 4-8-1992 -- Letter for sending to CIT is put up for signature. 12-11-1992 -- Letter put up for instructions. 16-11-1992 -- Note sheet put up. --- -- A. Letter issued to (i) Registrar, H.C. Jodhpur. (ii) ITO (HQrs.), Jodhpur. B. Notices under s. 269 issued for hearing on 9-12-1992. 9-12-1992 -- On request of the president of the society, hearing adjourned to 21-12-1992. 21-12-1992 Present Shri K.M. Jain, President of the society and Shri G.G. Mundra, CA Case adjourned to....
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....nded along with Shri Kundan Mal Jain, president of the transferee co-operative society. Filed written submission on 6-11-2000. Matter discussed. 29-4-2002 Present Shri Dinesh Goyal and Shri Chandra Sekhar, CAs Filed a POA. Written submission considered and asked to file further information. 29-4-2002 -- Asked to file further details as per order sheet dt. 29-4-2002 at S. No. 1 to 5. Case adjourned to 14-5-2002. 14-5-2002 Attended Shri C.S. Garg and Shri Dinesh Goyal, CAs. Filed written reply. Case adjourned to 28-5-2002. 28-5-2002 Attended Shri C.S. Garg and Shri Dinesh Goyal, CAs. Filed written submission. Requested for adjournment. Case adjourned to 17-6-2002. 17-6-2002 Attended Shri C.S. Garg and Shri Dinesh Goyal, CAs. Informed that copy of Gazette showing publication of notice is not readily available but the notice was published in Gazette part-3, s. 1 dt. 6-4-1985 at page no. 11360 (Hindi) and 2116 (English). Case adjourned to 24-6-2002. Also given copies of papers at Sl. No. 1 to 4 as per order sheet entry dt. 17-6-2002. Case adjourned to 24-6-2002. 24-6-2002 Shri Dinesh Goyal and Shri C.S. Garg CAs attended Case disc....
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....inst the other three societies who had purchased the land directly from M/s Jodhan Real Estate Dev. Co. (P) Ltd. in the year of 1971. But in the instant case, piece of land was purchased from M/s Jai Marwar Co. (P) Ltd. at a very late stage. So doctrine of equality is not applicable in the present case. Moreover, each case and each year will have to be decided separately. No estoppel is applicable as per the ratio laid down by Kerala High Court in the case of M.K. Mohammed Kunhi vs. CIT (1973) 92 ITR 341 (Ker) as well as by the ratio laid down by Allahabad High Court in the case of J.K. Oil Mills vs. CIT 1976 CTR (All) 133 : (1975) 105 ITR 53 (All). 28. About the validity of the notice under s. 269D, it was submitted by learned Departmental Representative that it was neither illegal nor invalid as there were sufficient reasons to believe. Soon after receiving the information of the transfer of the immovable property from the registering authority under s. 269P (Form No. 37G/H), the Competent Authority under s. 269L(1)(a) (before initiating the proceedings under s. 269C) requested the DVO to determine the fair market value of the property on the date of registration. The DVO by h....
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....A/XX-C, the learned Departmental Representative submitted that these chapters are withdrawn later but at the time of proceedings, these provisions were very much in the book of statute. Sec. 269RR makes it inapplicable to transfers made after 30th Sept., 1987. Order under s. 269F(6) made in respect of transfer by the sale deed dt. 1st Feb., 1982 registered on 27th July, 1984 is legally valid. Further, it was submitted that the appellant was well aware that proceedings under Chapter XX-A were pending for the acquisition under s. 269F(6). So, it cannot be said that the order under s. 269F(6) is passed with bias or that is illegal or invalid. There is no statutory or deemed time-limit for making of order under s. 269F(6). So, proceedings for acquisition cannot be deemed to be barred by limitation. For this purpose, the learned Departmental Representative relied on the ratio laid down by Supreme Court in the case of State Bank of Patiala & Ors. vs. S.K. Sharma. (1996) 3 SCC 364 where it was mentioned: "Justice means justice between the parties. The interest of justice equally demand that the guilty should be punished and that technicalities and irregularities which do not occasion f....
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....uld ordinarily fetch on sale in the open market on the date of execution of the instrument of transfer of such property. In the instant case, instrument of transfer, under s. 269A(f) means the instrument of transfer registered under the Registration Act, i.e., sale deed dt. 1st Feb., 1982 which was registered on 2nd July, 1984. So, the fair market value has to be determined with reference to above date of execution of instrument of transfer and not on so-called fictitious agreement dt. 2nd Oct., 1974. Valuation Officer under s. 269L is a statutory authority. He is not a witness. So he is not liable for cross-examination. For the purpose, the learned Departmental Representative again relied on the ratio laid down in the case of State of Jammu & Kashnir vs. Bakshi Gulam Mohammed where it was observed that cross-examination is not required. The Competent Authority had already provided the DVO's report along with the other relevant documents to the appellant-society. The Competent Authority visited the subject property and also took into consideration the comparable cases cited by the DVO. So the Competent Authority has exhaustively considered and dealt with the objections of the trans....
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....the following case laws: Devrajan vs. Tamil Nadu Farmers Service Co-operative Federation (1979) 13 CTR (Mad) 280 : (1981) 131 ITR 506 (Mad) Where the omission to score out inapplicable portion in the warrant of authorisation does not result in misleading the person concerned, the search in pursuance thereof, cannot be characterised as an illegal exercise of the power. At the most, that may amount to irregularity and does not in any way affect the exercise of the power by the authorities concerned. Further, s. 292B provides that no proceeding taken in pursuance of any of the provisions of the Act shall be invalid merely by reason of any mistake or defect in the proceedings if it is in effect in conformity with or according to the intent and purposes of the Act. Thus, any defect in such a warrant can be said to be cured by that provision, as the proceeding has been taken according to the intent or purpose of the Act. CIT vs. Premanand Industrial Co-operative Services Society Ltd. (1980) 16 CTR (Guj) 6 : (1980) 124 ITR 772 (Guj). CIT vs. Amrit Sports Industries (1983) 36 CTR (P&H)(FB) 121 : (1983) 144 ITR 113 (P&H)(FB) CIT vs. Des Raj (1996) 133 CTR (P&H) 392 : (1996) 2....
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.... a prima facie opinion only, which is subject to the objections filed by interested persons as the final opinion is to be formed by the Competent Authority under s. 269F, after hearing the objections. Sutlej Chit Fund & Financiers (P) Ltd. vs. CIT The communication of the reasons leading to the formation of the requisite belief by the Competent Authority is not required to be made to the person concerned. Nor such non-communication is fatal. CIT vs. Haripal Singh (1997) 138 CTR (P&H) 60 : (1997) 224 ITR 147 (P&H) There is nothing in the language of s. 269D suggesting that the date of initiation of the proceedings would be the date on which the official gazette is made available for sale to the public. Divi Suryanarayana Murthy vs. Competent Authority (Asstt. CIT) (1979) 117 ITR 278 (AP) Amarchand Jainarain vs. Union of India (1982) 31 CTR (Bom) 122 : (1983) 142 ITR 410 (Bom) The relevant date is the date of execution of the sale deed (1st Feb., 1982) and not the date of registration (27th July, 1984) nor the date of unregistered agreement to sell (2nd Oct., 1974). CIT vs. Jumramal Son (1986) 50 CTR (All) 231 : (1985) 154 ITR 689 (All) The unregistered agr....
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.... and the details of description of the property, we are of the view that the notice under s. 269D(1) clearly mentioned that "the land near Ratanada Circuit House, Jodhpur, and more fully described in the sale deed registered by the sub-registrar, Jodhpur, vide registration dt. 27th July, 1984". When it is so, then the notice will have to be read along with the sale deed which was already in the possession of the appellant-society. So it is not fair on the part of the appellant-society to read the notice in isolation and to condemn that notice by saying that it does not give the full addresses of the transferor and transferee and the description of the property. It will have to be read along with the sale deed in a composite manner. 40. Moreover, the said notice was published in the official gazette. This was published in the locality and was affixed in the office. Public drum was also beaten as appears from the notings in the file maintained by the Competent Authority as well as the discussion made in para 11 of the impugned order. 41. It was claimed by learned Authorised Representative that the notice under s. 269D(1) was served on the appellant-Samittee on 13th June, 1986, ....
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....isition were recorded on 15th March, 1985 and on the same day notice was issued. The earliest date of allotment of the plots to the members was 5th Sept., 1985. In other words, at the time of initiation of the proceedings, the allottees were not entitled to get compensation from the Government. As per s. 269A(g), interested persons include all persons claiming or entitled to claim, an interest in the compensation payable on account of acquisition of that property from the Government. Only appellant-society was entitled to receive the compensation as on 15th March, 1985 and certainly not so-called allottees. Therefore, we are of the view that the members of the society who got the allotment as late as on 5th Sept., 1985 were not covered under the words "interested person" mentioned in s. 269A(g). Moreover, generally in the group housing society, members are substituted by accepting the resignation of the previous member and fresh application from new members with the approval of the Registrar of Co-operative Societies. So it is not possible to serve the notices under s. 269D(1) of the Act to each and every person or to have their latest addresses which are changeable time to time. I....
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....f the assessee will have to succeed. If the agreement was not genuine and its authenticity is doubtful, then the claim of the assessee is not sustainable. It was claimed that this agreement was signed between M/s Jai Marwar Co. (P) Ltd. and the appellant M/s Navin Grah Nirman Sahakari Samittee on 2nd Oct., 1974. It was unregistered document. According to this agreement, a sum of Rs. 10,100 was given by the appellant to the seller in cash. In this case, the following factors are important to decide this issue: 48. The impugned agreement was made on the stamp paper which was purchased in the name of one Shri Navin Dange on 21st Jan., 1974 in his individual capacity. Nowhere it was mentioned that Shri Navin Dange has purchased the stamp paper on behalf of the parties concerned. The stamp paper was purchased at Jaipur and not at Jodhpur where both the parties entered into agreement. No specific explanation was given why the stamp paper could not be purchased in the seller or buyer's name at Jodhpur as appears from the Appropriate Authority's order para 12.4. 49. The parties entered into agreement on the date of national holiday i.e., Mahatma Gandhi's birthday on 2nd Oct., 1974 wh....
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....y remedial measure by filing the criminal complaint for making wrong statement/false evidence or any suit for damages. Impliedly, the statement of the then chairman and secretary was presumed to be correct. 53. In the said order of the High Court, it was mentioned that the audit report of the Registrar of Co-operative Societies in the case of the appellant-society for the year 1978-79 and 1979-80 does not show any land purchase by the appellant-Samittee in the last 10 years. It also gave the presumption that there was no agreement between the parties in 1974 as claimed. These facts also were discussed by the Appropriate Authority in its order at para 12.7. According to the impugned agreement, M/s Jai Marwar Co. (P) Ltd. (the seller) has received the consideration of Rs. 10,100 and delivered the possession immediately to the appellant-society while the deal was for Rs. 24,45,452. 54. Before us, the learned Departmental Representative raised the point that why the seller has awaited for the balance heavy amount till 1981. A prudent businessman cannot leave the amount without any interest for a long period specially when the deal was finalised. But we don't agree with the views ....
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.... was working as president of Naveen Grah Nirman Sahakari Samiti Ltd., Jodhpur, with whom the agreement to sell was made by the assessee-company, had given the statement on oath before the then Asstt. CIT, Circle, Jodhpur on 2nd Dec., 1992. In that statement he has totally maintained that receipt dt. 2nd Oct., 1974 was obtained by him on the same date when the money was given and that the receipt produced by him and impounded by the Department was the same. When the fact of the authentication report received from India Security Press, Nasik, was disclosed to him, he did not give any explanation." 56. In the said assessment order [M/s Jai Marwar Co. (P) Ltd.], the AO clearly observed in his order that there was a collusiveness between the assessee-company and the office-bearers of Naveen Grah Nirman Sahakari Samiti. It is, therefore, amply proved that the sale consideration as disclosed in the agreement of sale and the sale documents was understated. 57. From the above, it is clear that the authenticity of the receipt and stamp fixed thereupon is doubtful and there are different versions of the office-bearers of the seller and the appellant society in this regard which amounted....
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....ed document. 62. To our mind, what might have happened in this case can honestly be presumed that, soon after knowing that land is likely to be acquired under the Ceiling Act sometime in 1980, the seller might have been advised that the only safest way to save the land from the clutches of the Urban Land (Ceiling & Regulations) Act, 1976, is to show that the land was already sold to some registered group housing society. To escape the applicability of the Land Ceiling Act, both the parties entered into backdated agreement dt. 2nd Oct., 1974, and they had chosen the date of the public holiday. The said agreement was signed by Shri K.M. Jain who was holding the office at the relevant time in the year of 1980. But he has forgotten that prior to 1979 he was not holding any effective official position in the appellant-society. He committed this mistake by showing himself in the office on 2nd Oct., 1974. In fact, he was not authorised to do so ex post facto activity. By making this impugned agreement as launching pad, a subsequent agreement was made on 7th July, 1981 which is known as the substituted agreement of the original agreement dt. 2nd Oct., 1974. Later on, various litigations....