TaxTMI 
TaxTMI 
2007 (9) TMI 539
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....This included giving the intending purchaser and the intending seller a reasonable opportunity of showing cause against an order for compulsory purchase being made by the appropriate authority. In the instant case, the members of respondent No. 1 are the appropriate authority. The Supreme Court further made it clear that the provisions of Chapter XX-C can be resorted to only where there is a significant undervaluation of the property to the extent of 15% or more in the agreement of sale as evidenced by the apparent consideration being lower than the fair market value by 15% or more. The court noted that although a presumption of an attempt to evade tax may be raised by the appropriate authority concerned in a case where the aforesaid circumstances are established, such a presumption is rebuttable and this would necessarily imply that the concerned parties must have an opportunity to show cause as to why such a presumption should not be drawn. It is not necessary to refer to various other directions issued in the said judgment. Pursuant to this judgment, by an order dated February 16, 1992, this court set aside the order and remanded the matter to the appropriate authority to be dec....
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....etitioners contended that respondent No. 3-transferor has herself purchased the flat by an agreement dated January 7, 1986, and had filed Form 37EE in respect of the said transaction. The price in January, 1986, was Rs. 9,75,000. This transaction was cleared by the authority by their order under section 269F. It was pointed out that the price in January, 1986, was Rs. 9,75,000 and in August, 1987, it was Rs. 14,25,000, i.e., an appreciation of 60% in just 19 months. It was then pointed out that in the reasons recorded the construction of the building was shown as rich in quality. It was submitted that it was not so. It was also contended that the building is long and narrow and the front portion is used by the Ruia family and they have their own private garden. The subject flat is on the back side of the building and even the entrance is towards the end of the building and for reaching the entrance one has to pass by the kitchen of the Ruia family and there is often noise and smoke from there. There was also leakage in the building. Similarly, the flat had negligible sea view and was not at all like other flats in the locality. There was no reserve parking space in the building. Si....
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....transfer and as such, it is presumed that there is an attempt to evade tax and significant undervaluation. As no fair market value had been determined by respondent No. 1, no such presumption can be raised and, consequently, the order is liable to be set aside. Thirdly, it is contended that the petitioners have raised various objections to the sale instance and also relied on the sale instances. It is not disclosed on what basis the sale instance or sale was taken as the basis for holding that the price paid by the petitioners was undervalued with a view to evade tax. It is further submitted that so far as the sale instances relied upon by the petitioners though in the said locality was rejected merely by observing that it is not sea face building and cannot be compared. Admittedly, it was submitted that in January, 1986, the application was granted under section 269F for sale of the said flat at Rs. 9,75,000. It is also contended that while issuing a show-cause notice, respondent No. 1 annexed thereto a copy of its earlier order. It is submitted that this would show respondent No. 1 had already arrived at a decision and the issuing of a show-cause notice was merely a formality ....
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....aterial and documents, and, if the committee feels that there exists a prima facie case to suspect that the undervaluation exceeds 15 per cent. if not more, in that event, only a show-cause notice is issued to the persons concerned." The contention that the principles of natural justice were violated in not making available the valuation report and also the notings have not been dealt with generally or specifically, except to contend that there was no case made out to vitiate the impugned order on the ground of violation of the principles of natural justice. Dealing with the sale instances, it is pointed out that the valuation of the comparable flats sold in the same locality as subject flat would show that they are higher by almost 50% considering the price per square feet of the flats relied upon respondent No. 1. It is contended that the appropriate authority has considered the fact that the building is located on the rear side so as to given some deduction to arrive at its marketable value. Dealing with the contention that in January, 1986, the flat was purchased for Rs. 9.75 lakhs and no objection was granted by the Department, it is submitted that the same is not relevant.....
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....er which will indicate as to the fair market value which was arrived at by respondent No. 1 though four sale instances were set out. The contention urged on behalf of the respondents is that it is only after the judgment of this court in Vimal Agarwal v. Appropriate Authority reported in [1994] 210 ITR 16, that fair market value was determined and before that such procedure was not being followed. We may only point out that the show-cause notice is dated December 30, 1992. The Supreme Court in C. B. Gautam [1993] 199 ITR 530 had noted that the fair market value has to be determined. The valuation report and the notes of the inspection would be aids for the purpose of deciding the fair market value. Apart from that, we have also reproduced paragraph 7 of the affidavit dated April 7, 1993, filed by Mr. Sampat Kumar in which the procedure before issuing show-cause notice has been set out. It would thus be clear that the respondents for the purpose of issuing the show-cause notice relied on the report prepared and subsequent thereto whilst passing the order the valuation report and the notes of inspection. Even after bringing to the notice of respondent No. 1, that the later two docume....
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....nothing before us as to why the appropriate authority arrived at a conclusion that the sale instances relied upon were not comparable to the sale instance relied upon by the petitioners except that it is not a Worli Sea-face property and what were the relevant factors and reasons which they addressed themselves to. As noted by this court in the case of Shrichand Raheja [1995] 213 ITR 33, the most comparable instances or genuine instances have to be identified on the consideration of the proximity from the time angle and the proximity from the situation angle. After identifying instances which provide the index of market value, the price reflected therein may be taken as a norm and the value of the land in question may be deduced by making suitable adjustment for the plus and minus factors. We find that the appropriate authority has not addressed itself to these aspects. Similarly, there is nothing to show which sale instance was considered as the bench mark to vis-a-vis the subject property. There is only a general observation that the sale instance cited by the appropriate authority are much less one of the tests to be followed in determining the fair market value is the test w....