NAVIN GRAH NIRMAN SAHAKARI SAM V. ADDITIONAL COMMISIONER OF INCO

ITA/95/2003

AI Insights

The case involves M/s. Naveen Grah Nirman Sahakari Samiti, the appellant, challenging the acquisition of land by the Competent Authority under Chapter XX-A of the Income Tax Act, 1961. The land in question was previously owned by M/s. Jai Marwar Company Private Limited and was sold to the appellant. The acquisition was based on the belief that the sale consideration was understated to evade tax liabilities. The ITAT dismissed the appellant's appeal, leading to this challenge in the High Court. The court examined the procedural validity of the acquisition and the substantive grounds for believing that the transaction was intended to evade tax.

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 735744 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 28-03-2011
• Assessment Year: misc
• Other Referred Cases: Krishna Kumar Rawat and Others Vs. Union of India, CIT Vs. Dunkans Agro Industries Limited, CIT Vs. Shri Manaklal Chiman Lal Shah Trust, CWT Vs. Rajkumari Bhubaneshwari Kumar, Gurbax Singh Vs. Kartar Singh and Others, Maharani Yogeshwari Kumari Vs. CIT, M. Syamala Rao Vs. CIT, CIT Vs. Mor Masji Mancharji Vaid, IAC Vs. National Flag Perfumery Works, K.P. Varghese Vs. Income-tax Officer, Ernakulam and Another, CIT Vs. Shivakami Company Private Limited, CIT Vs. Raja Narendra, Chimanlal Hargovinddas Vs. Special Land Acquisition Officer, Poona, Land Acquisition Officer, Revenue Divisional Officer, Chittoor Vs. Smt. L. Kamalamma, Subh Ram and Others Vs. State of Haryana and Another, I. Devarajan and Others Vs. Tamil Nadu Farmers Service Co-operative Federation and Others, C.I.T. Vs. Vimlaben Bhagwandas Patel, C.I.T. Vs. Norton Motors, Unique Associates Cooperative Housing Society Limited vs. Union of India and Others
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: J K SINGHI; ANUROOP SINGHI
• Assessee Lawyers: N M RANKA; JK RANKA; NK JAIN
• Keywords: Compulsory Acquisition; Fair market value; Income tax appeal; Land Acquisition; Valuation dispute
• Section: 230A; 269F; 269G; 269D

Judgement Text

"ITA95/2003 // 1 // IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR ORDER IN D.B. Income Tax Appeal No.95/2003 M/s. Naveen Grah Nirman Sahakari Samiti House No.2, Vijay Vihar, Ummaid Club Road, Jodhpur Vs. The Competent Authority, Additional Commissioner of Income Tax (Acquisition), Range-I, Jaipur Date of Order ::: 28.03.2011 Present Hon'ble the Chief Justice Mr. Arun Mishra Hon'ble Mr. Justice Mohammad Rafiq Shri N.M. Ranka, Senior Advocate with Shri J.K. Ranka and Shri N.K. Jain, counsel for appellant(s) Shri J.K. Singhi, Standing Counsel with Shri Anuroop Singhi, counsel for respondent(s) Shri Shiv Charan Gupta, counsel for Intervener #### //Reportable// BY THE COURT:- (Per Hon'ble Justice Mohammad Rafiq) This income tax appeal is directed against judgment dated 25.04.2003 of Income Tax Appellate Tribunal, Jaipur Bench, Jaipur, (for short, 'the ITAT'). Appellant M/s. Naveen Grah Nirman Sahakari Samiti, Jodhpur, (for short 'the assessee') filed an appeal under Section 269F of the Income Tax Act, 1961 (for short, 'the Act of 1961') against the order dated 16.10.2002 passed by the Competent Authority-cum-Additional Commissioner of Income-tax (Acquisition) Range-I, Jaipur (for short, 'the competent authority'). The ITAT by aforesaid judgment dismissed the appeal filed by the assessee under Section 269G (1) of the Act of 1961. In the ITA95/2003 // 2 // appeal, the assessee challenged the order of the acquisition of land situated at Jodhpur measuring 1,81,818 square yards passed by the competent authority under Section 269F (6) of the Act of 1961. 2. Facts giving rise to this appeal are that erstwhile ruler of Jodhpur State Shri Gaj Singh sold certain lands to M/s. Jodhan Real Estate Development Company Private Limited. Out of said lands, a piece of land measuring 1,81,818 square yards was then sold to M/s. Jai Marwar Company Private Company Limited, Jodhpur at the rate of Rs.5.28 per square yards on 05.11.1971. This Company was assessed to income-tax for assessment year 1985-86 in respect of transfer of said land. The assessing officer enhanced the sale consideration to Rs.25,45,452/- as against the declared sale consideration of Rs.24,45,452/-, thus the increase was to the tune of Rs.1,00,000/- only. The ITAT by its order dated 08.11.2002 disallowed the said sale consideration as capital gain in the assessment year 1985-86 on the ground that since sale deed was executed on 01.02.1982, capital gain can be assessed only in the assessment year 1981-82 and not in 1985-86. 3. The appellant is cooperative society registered under Rajasthan Cooperative Societies Act, 1965. It is claimed that one Shri Naveen Rai Dangi of Jaipur was authorized by M/s Jai Marwar Company Private Limited, Jodhpur, to sell the said ITA95/2003 // 3 // land. The agreement to sell was executed on 02.10.1974 for sale of said land by M/s Jai Marwar Private Company Limited to appellant. According to the agreement, land was agreed to be sold at the rate of Rs.8/- per square yard. A sum of Rs.10101/- was paid in advance towards sale consideration. Balance sale consideration was agreed to be paid within 120 days. A stipulation however was made in the agreement to sell that in case of non-payment of rest amount within 120 days, the rate of the land would be increased by Re.1/- per square yard per year. However, on 18.08.1980 a substituted agreement was executed revising the amount. Eventually the sale-deed was executed and presented for registration on 01.02.1982 but it could be registered only on 27.07.1984. Delay in execution of sale-deed is attributed to restrictions placed by Rajasthan Urban Property (Restriction of Transfer) Act, 1973. The agreement to sell was approved by Urban Ceiling Authority vide order dated 07.07.1981. The Additional Collector (Stamps and Registration) Jodhpur, however, did not approve the claim of reduction of Rs.1,00,000/- claimed by appellant-assessee on account of levelling other expenses and registered the sale-deed at valuation of Rs.25,42,454/-. 4. An application for a certificate under Section 230A (1) of the Act of 1961 was made by the transferor-company to the Income Tax Officer, Central Circle Part I, Jodhpur on 14.01.1982 ITA95/2003 // 4 // disclosing therein the amount of Rs.24,45,452/- as sale-consideration and also name of appellant- assessee as transferee. The assessing officer issued a sale certificate on 22.01.1982 but simultaneously required the transferor company to deposit tax towards its liability whereas the transferor company required the appellant-society to make such payment. A cheque amounting to Rs.3,00,000/- was received by appellant-society. For this, the appellant-society issued a Cheque for Rs.8,00,000/- dated 01.05.1982. 5. The competent authority however initiated proceedings under Chapter XX-A of the Act of 1961 and issued notice under Section 269D of the Act of 1961 for compulsory acquisition of the subject land to transferor and transferee. The competent authority passed an acquisition order on 16.10.2002. Aggrieved thereby, the appellant- society filed an appeal under Section 269G before the ITAT which vide its order dated 25.04.2003 dismissed the appeal. 6. The appellant approached this court challenging notice of acquisition dated 15.03.1985, acquisition order dated 16.10.2002 and order of ITAT dated 25.04.2003. This court vide its order dated 07.01.2004 admitted the appeal for hearing on following questions of law:- “1. Whether the learned lower authorities were right in law and had material to hold that the competent authority had reason to believe as required under ITA95/2003 // 5 // Section 269C (1) of the Act to initiate proceedings for the acquisition of the impugned land? 2. Whether the learned lower authorities had material and were right in law in holding that the notices have been validly served under Section 269D(2) of the Act on persons stated in Section 269(2)(a) of the Act? 3. Whether the learned lower authorities had material and were right in law in holding that statutory requirements contained under Section 269D(2)(b) of the Act stand complied with? 4. Whether the orders of the learned lower authorities are not perverse, presumptive and the conclusion and findings arrived at are not vitiated? 7. We have heard Shri N.M. Ranka, learned senior counsel assisted by Shri J.K. Ranka, for appellant-assessee, Shri J.K. Singhi assisted by Shri Anuroop Singhi, for revenue, and Shri Shiv Charan Gupta for intervenor. 8. Shri N.M. Ranka, learned senior counsel for assessee, has argued that competent authority illegally initiated acquisition proceedings under Chapter XX-A of the Act of 1961 by issuing notice under Section 269D of the Act of 1961. In fact, the notice was never served on the appellant-assessee. Copy of notice dated 15.03.1985 was served on Shri Bhanwar Lal Goyal, a member of the executive committee of the appellant-Samiti on 13.06.1986 Whereas the same notice was served on the transferor in March, 1986. The notice was defective because it did not contain description of land with its total area and boundary. Mere mention that land ITA95/2003 // 6 // was situated near Ratanada, Circuit House, Jodhpur, was vague, ambiguous and insufficient. It did not contain full and complete address of transferor and transferee. The notice is only reproduction of language of provisions contained in Section 269D. The competent authority did not care to strike out either of two words “and/or” and has lifted the same from the statute book. This shows total non application of mind inasmuch as vagueness and uncertainty as to which of two reasons should prevail. 9. It is argued that copy of reasons dated 15.03.1985 and valuation report dated 12.03.1985 were not served on appellant and were rather served on chartered accountant on 14.05.2002. No notice was served on the person who was in occupation of the property in question. The appellant-assessee carved out plots on the disputed land and made onward allotment thereof to its members. In fact, Shri Bhanwar Lal Goyal, the executive member of appellant-society, on first date of hearing itself furnished names and addresses of members of the appellant-society together with amount received and plot numbers allotted to them and requested the competent authority to issue notices to them as well. However, no such notice was issued. Some of the members personally appeared before the competent authority, however no hearing was given to them. The acquisition order dated 16.10.2002 was thus passed in utter violation of principles of ITA95/2003 // 7 // natural justice and without considering material on record and objections raised. 10. Shri N.M. Ranka, learned senior counsel appearing on behalf of appellant-assessee, argued that several members of appellant-society submitted application to municipal authorities seeking permission to construct residential houses. Copy of one such application submitted by Shri Parasmal Khinvasara was produced before competent authority. The Commissioner, Municipal Corporation, Jodhpur issued a public notice dated 08.03.2002 in respect of 70 allottee applicants. In fact, the Chief Executive Officer rejected the application seeking permission to raise construction by the allottee- members on the objections raised by the Income Tax Department about pendency of the proceedings under Chapter XX-A of the Act of 1961. Appeals were filed before the Divisional Commissioner, Jodhpur, by the allottee-members. Matter even came up before this court. Shri Parasmal Khinvasara then filed Special Leave Petition (Civil) No.7085 of 2002 against the order dated 15.04.2002 of this court passed at its Principal Seat, Jodhpur. The Supreme Court granted leave in that matter and finally recognized Shri Parasmal Khinvasara as owner. 11. It is argued that some of the allottees sold the land by registered sale-deed and transferee persons are in peaceful possession. Proceedings under Chapter XX-A were wholly illegal because no notice was served upon any of them. ITA95/2003 // 8 // There was total non-compliance of provisions contained in Section 269D(2)(a) & (b) of the Act of 1961. There was also non-compliance of Rule 48E of the Income-tax Rules, 1962 because substance of notice was not affixed at conspicuous place in said locality. Statutory requirement contained in Section 269D(2)(a)&(b) are also absent. When the appellant applied for inspection of record, it was denied. The appellant was merely provided with copy of “aam suchna” (public notice) dated 25.10.1985. 12. Shri N.M. Ranka, learned senior counsel for appellant, argued that agreement that was entered into between parties was bona-fide and genuine wherein they agreed for increase of rate of sale consideration by Re.1/- per square yard for each passing year. There was no material on which competent authority could infer evasion of tax or understatement of value of sale consideration. No assessment of tax has been made in the hands of the transferor. The value adopted for the purpose of capital gain is sufficient evidence for the market price. Learned counsel argued that in this connection the value recorded and accepted by registering authority is the correct index. The revenue failed to prove to the contrary. Heavy burden lay on the competent authority to prove that apparent sale consideration was lesser than actual market price. Such a finding cannot be recorded on the basis of mere surmises, conjectures, doubts and suspicions. ITA95/2003 // 9 // 13. Land adjacent to the disputed land was sold to M/s Jodhpur Zila Sahakari Sangh vide agreement to sell dated 20.02.1976 by same transferor @ Rs.8.20 per square yard on advance payment of Rs.10,000/-. Exemption was also granted under Ceiling Law on the basis of said agreement. The District Valuation Officer was therefore wholly unjustified in holding that there was no comparable sale instances in immediate neighbourhood of disputed land. He also erred in law in relying on sale of plots auctioned by Urban Improvement Trust, Jodhpur, which cannot be said to be comparable because those plots were situated in developed colony and were smaller in size. There was no justification for competent authority to hold that fair market value of the property exceeded the apparent sale consideration by more than 15%. Learned counsel relied on judgment of this court in Krishna Kumar Rawat and Others Vs. Union of India – (1995) 214 ITR 610, wherein it has been held that comparison can be made only in respect of land having similar character and proximity with similar advantage and amenities. Proximity in time is also an important factor in such a case. In this connection, learned counsel relied on judgment of Delhi High Court in CIT Vs. Dunkans Agro Industries Limited – (1991) 192 ITR 310, and judgment of Gujarat High Court in CIT Vs. Shri Manaklal Chiman Lal Shah Trust – (1980) 125 ITR 417. Reliance was also placed on judgment of this Court in CWT Vs. ITA95/2003 // 10 // Rajkumari Bhubaneshwari Kumar – (1994) 210 ITR 711, to argue that the asset, which is subject to certain hazards having effect of diminishing its market value, are relevant factors to be taken into consideration while estimating value of asset in open market. 14. Shri N.M. Ranka, learned senior counsel further argued that even though the legislature in its wisdom did not provide for any time limit for completion of proceedings under Chapter XX-A of the Act of 1961. Nevertheless, it is well settled proposition of law that since acquisition proceeding affects property rights of citizens, therefore, even if no time limit is prescribed, they have to be completed expeditiously without any delay and without negligence and inaction on the part of competent authority. The legislature purposely inserted such proviso in Section 269UD under Chapter XX-C of the Act of 1961 for providing two months. Revenue has not given any satisfactory explanation for this enormous delay of 17 years. The acquisition proceedings under Chapter XX-A should be informed of expediency. While provisions of Section 269J provides for payment of apparent sale consideration for transfer + 15% of the said amount by way of compensation but Section 269J(1) of the Act does not provide for payment of any interest or damages on account of delay on the part of competent authority. The plea set up by revenue that acquisition proceedings could not be finalized ITA95/2003 // 11 // earlier because separately proceedings for acquiring this land under ceiling law were pending is totally irrelevant. It was argued that the Supreme Court in Government of India Vs. Citadel Fine Pharmaceutical and Others – (1990) 184 ITR 467 observed that every authority has to exercise its power within a reasonable period and whenever a question regarding inordinate delay is raised, it would be open to the assessee to contend that it is bad on the ground of delay. Kerala High Court in Iswara Bhat Vs. Commissioner of Agricultural Income Tax - (1993) 200 ITR 238, held that statutory powers must be exercised bona-fide, reasonably, without negligence and for purpose for which they were conferred. Even in absence of a time limit prescribed by the statue, the authority should initiate the proceedings within a reasonable time; by the same token, even for the completion of the proceedings, the same logic should apply and the final order should be passed within a reasonable time. 15. It was argued that this court by its order dated 10.01.1986 stayed proceedings pending before competent authority-cum-Additional Commissioner, Urban Land (Ceiling & Registration) Act, but this could not be construed as stay of any action under any of the law except ceiling law and there was no stay of proceedings under Chapter XX-A of the Act of 1961, which was initiated on 15.03.1985. The competent authority erred in law, ITA95/2003 // 12 // therefore, in relying on the opinion of Advocate Shri Ashok Gaur without confronting the assessee with that opinion in acquisition proceedings and without permitting cross-examination of the standing counsel. The ITAT was wrong in accepting explanation of delay up-to 2002 observing that litigation came to end only in 2002 whereas fact is that leave to appeal was granted by Supreme Court on 28.10.2002 and impugned order of competent authority is dated 16.10.2002. 16. Shri N.M. Ranka, learned senior counsel further argued that valuation file, details working etc. were not provided. The District Valuation Officer was also not produced for cross-examination though the appellant specifically raised this demand before the competent authority. The competent authority erred in law in relying on comparable sale price of other lands, which were not referred to and relied upon by District Valuation Officer and which were also not comparable and not similarly situated. It was wholly illegal for competent authority to accept the record of District Valuation Officer because he relied on plots auctioned by Urban Improvement Trust, Jodhpur at Ratnada which is a developed colony and there was no dispute about nature and title of that land or any other hazard and the auction took place on 03.07.1983. They were not similar nature of plots. The District Valuation Officer has made valuation of the property in ITA95/2003 // 13 // question on imaginary, unreal and unreasonable basis. He did not base his valuation on sale instances of similar land with similar dispute. Those plots were situated at some distance and were of very small size ad-measuring between 207 to 240 square yards. Whereas the land in dispute was a big chunk of land. 17. It is argued that observations made by competent authority are contrary to material on record. This court stayed proceedings pending before competent authority under urban ceiling law by order dated 16.12.1985. There was no stay on acquisition proceedings or any other proceedings under any other law or Act except ceiling law. There was then no reason to keep acquisition proceedings under Section XX-A in abeyance for such a long period. Observations made by the ITAT on this aspect in para 38 of the judgment are contrary to the material on record. In para 40 of the judgment, the ITAT observed about publication of notice and requirement under Section 269D(2)(b) of the Act of 1861. The ITAT was wholly unjustified in doubting bona-fides of the assessee on the ground that some paper was produced by Shri Naveen Dangi on 21.01.1974. There was nothing unusual. In this case, Shri Naveen Dangi was authorized by Board of Directors of the transferor-company to negotiate the transaction. The ITAT also failed to consider affidavits of Shri Naveen Dangi, Shri Kundanmal Jain, Shri Manvendra Singh, Shri Bhawani Singh and ITA95/2003 // 14 // Shri Mukut Singh. Observation of ITAT that on 2nd October, 1974, which was national holiday, the agreement to sell could not be entered into, was wholly uncalled for as there was no prohibition that parties could not enter into agreement to sell on that date. 18. It is argued that observation of ITAT about failure of assessee to produce original agreement to sell is wholly misconceived. Original agreement to sell was demanded by ITAT only on 02.04.2003 at the time of final hearing of appeal. Reasons for non production of such agreement was duly explained in para 7 at page 4 of the written submissions that the same was filed in this court at its Principal Seat, Jodhpur in Writ Petition No.101/1986. Certificate dated 02.04.2003 to this effect issued by the assessee's Advocate Shri K.N. Joshi, was also produced. No adverse inference therefore could be drawn against assessee for mere non-production of agreement to sell. 19. It is argued that though sale deed was presented for registration before registering authority on 01.02.1982 and assessee deposited the registration charges on that very day, however, registering authority did not register sale deed on the ground of various litigations and on account of stay order passed by Division Bench of this Court. An application was made by assessee-Samiti before Division Bench with request to allow it to get the sale-deed registered at its own risk. The Division ITA95/2003 // 15 // Bench so permitted. It was therefore that the sale- deed was registered on 27.07.1984. By operation of law, it should relate back to date of agreement dated 02.10.1974. 20. In order to substantiate his arguments, learned counsel relied on judgment of Supreme Court in Gurbax Singh Vs. Kartar Singh and Others – (2002) 254 ITR 112 (SC), judgment of this court in Maharani Yogeshwari Kumari Vs. CIT, (1995) 213 ITR 541 (Rajasthan), judgment of Andhra Pradesh High Court in M. Syamala Rao Vs. CIT – (1998) 234 ITR 140 and judgment of Gujarat High Court in CIT Vs. Mor Masji Mancharji Vaid – (2001) 250 ITR 542 (Gujarat Full Bench). 21. It was argued that Sub Registrar accepted the sale consideration indicated in the sale-deed as just, correct and reasonable. There was therefore no occasion for the competent authority to doubt correctness of the sale consideration. Learned counsel relied on judgment of Madras High Court in CIT Vs. Dr. V.K. Bhaskaran Nair and Others – (1979) 116 ITR 873 (Mad), wherein it was held that the value adopted by Sub Registrar, who had a right to independently value the property not only for assessment to stamp duty but also for purposes of charging appropriate registration fee, is a proper guide and has to be taken note of. Karnataka High Court in IAC Vs. National Flag Perfumery Works – (1986) 159 ITR 737 (Kar), held that power of acquisition has to be ITA95/2003 // 16 // exercised with full responsibility and onus of proving the market value was on competent authority. 22. Shri N.M. Ranka, learned Senior Counsel appearing on behalf of assessee, argued that competent authority has on extraneous, irrelevant and arbitrary considerations, came to conclusion about evasion of tax by transferor or transferee. Admittedly, in present case, the assessment of transferor has been completed accepting the apparent sale consideration and the appellant- society was not shown to have any taxable income, and was not assessed to income tax or wealth tax. The valuation made by District Valuation Officer at Rs.1,20,91,000/- is wholly arbitrary, whimsical, capricious and without material and not based on comparable sales of similarly situated land and is against principles of law. 23. The Income Tax Officer, Central Circle Ward, Jodhpur, issued a notice under Section 230A (1) of the Act of 1961 on 22.01.1982 finding value recorded at Rs.24,45,452/- as just, fair and reasonable and this was done after due verification and complete satisfaction. Only addition of Rs.1,00,000/- by registering authority was for the purpose of computing fair market value because he did not allow deduction of that amount on account of development done by appellant-society. In fact, this valuation was accepted as correct in the assessment of transferor-company by the ITAT in its ITA95/2003 // 17 // order dated 08.11.2002. 24. Learned counsel argued that competent authority is required to record his reasons before initiating proceedings under Chapter XX-A of the Act of 1961. Competent authority has, in show cause notice, while initiating proceedings, used both expressions “and/or” with reference to Section 269C of the Act of 1961 and was uncertain as to which was of the two clauses would be attracted and germane for initiation of proceedings. The satisfaction arrived in initiation of proceedings by competent authority was thus vitiated by non- application of mind. In this connection, learned counsel relied on the judgments of Bombay High Court in All India Reporter Limited Vs. Competent Authority, Inspecting Assistant Commissioner – (1986) 162 ITR 697 (Bom.), Apeejay Premises Co- operative Society Ltd. Vs. Nishar Ahmed and Another - (1990) 185 ITR 487 (Bom.), Udharam Aildas Thadani and Others Vs. I.A.C. of Income-tax - 184 ITR 439 (Bom.), Carmichael Shikarkunj Co-operative Housing Society Ltd. Vs. Union of India and Others – (1991) 189 ITR 441 (Bom.) and judgment of Punjab and Haryana High Court in CIT Vs. Khetan Electricals Limited – (2004) 134 Taxman 797 (P&H). 25. Shri Shiv Charan Gupta, learned counsel appearing as intervener for one of the allottees, argued that main object of Chapter XX-A of the Act of 1961 was to prevent evasion of tax liability, therefore it was incumbent upon the competent ITA95/2003 // 18 // authority to arrive at satisfaction about prima facie foundation that (i) the apparent sale consideration was less than fair market value by 15%, (ii) the consideration stated in instrument was at a lesser figure than that actually received by assessee, (iii) it was to facilitate evasion of tax liability by transferor, or (iv) to facilitate concealment of income by transferee for Income-tax Act or Wealth-tax Act. In present case, none of these ingredients were proved inasmuch as it was also not proved as to what amount was actually received by transferor, which was more than fair market price nor the department has made out a case of concealment of income as against transferee, rather in assessment of transferor, it was held that department has not been able to discharge burden of evidence cast upon it to show that assessee had understated sale consideration. Learned counsel in this connection relied on judgment of Supreme Court in K.P. Varghese's case reported in 1981 (4) SCC 173. It was argued that District Valuation Officer has illegally made valuation of land on the basis of plots of smaller size about 200 square yards, which is wholly illegal. Learned counsel in this connection relied on the judgment of Supreme Court in Rishi Pal Singh Vs. Meerut Development Authority - 2006 (3) SCC 205. In the case of transferor, valuation of Rs.24,45,452/- as stated in subject agreement was taken as correct. Besides, the District Valuation ITA95/2003 // 19 // Officer computed the value as on 27.07.1984 whereas agreement to sell was executed on 02.10.1974 and the sale deed is dated 01.02.1982. The ITAT has computed the value of the property as on the date of execution of sale deed i.e. 01.02.1982. 26. Learned counsel argued that details which were worked out in the valuation report were not supplied to either appellant-society or any of its members. It was an ex-parte valuation done by Income Tax department. The District Valuation Officer has wrongly mentioned that there was no other instances of comparable sale in neighborhood of the land whereas the instances were there; for example-sale agreement dated 20.02.1976 executed by same transferor, namely, Jai Marwar Company in favour of another purchaser Jodhpur Zila Sahakari Sangh from the same chunk of land at the rate of Rs.8.20 per square yard. The land in question remained entangled in litigation and proceedings were started under the Rajasthan Land Reform and Acquisition of Land Owners Estate Act, 1964, and Urban Land Ceiling and Regulation Act, 1976, and therefore also its valuation could not be same as of any other land, which was free from encumbrances. In fact, this land was declared as construction zone by this court in Writ Petition (PIL) No.6073/1993 filed by one Mahendra Mal Lodha. The judgment of this court dated 15.04.2002 was challenged before Supreme Court in Special Leave Petition. The Supreme Court set aside the same by ITA95/2003 // 20 // its judgment dated 08.05.2002. Income Tax Department gave clearance certificate for registration of sale-deed wherein it accepted the sale-consideration of Rs.24,45,452/- as valid. It is argued that ITAT had no legal jurisdiction to question genuineness and validity of agreement to sell/sale-deed, which jurisdiction was available only to a civil court in a regular civil suit. The ITAT has wrongly relied on order of District Judge, Jodhpur, with regard to award of compensation in lieu of acquired plots of smaller size under the Land Acquisition Act. It has further erred in law in increasing value of the land without giving reasonable deductions for developing residential colony, including the colony roads, gardens, parks, play grounds, community center, schools, dispensary etc., which are basic amenities. 27. Shri S.C. Gupta, learned counsel further argued that the Chapter XX-A of the Act of 1961 stood already repealed with effect from 01.10.1986 and further that proceedings pending thereafter were ordered to be dropped in view of Circular No.455 dated 16.09.1986 where value of the property was upto Rs.5,00,000/-. The main object behind all these enactments was to prevent evasion of tax liability but when it was realized that the provisions were being misused, the same was repealed. It is further argued that observations of the competent authority that agreement was vicious and was prepared with oblique motive to escape from ITA95/2003 // 21 // the proceedings of Rajasthan Urban Property (Restriction on Transfer) Act, 1973 and that the agreement was not genuine, were not only extraneous but had influenced the decision making process of the competent authority as well as of the ITAT and as such same suffers from malice in law. 28. Per contra, Shri J.K. Singhi, learned counsel for revenue, argued that on receipt of information regarding transfer of immovable property under Section 269P, competent authority requested valuation officer to determine fair market value of the property as on the date of registration of transfer-deed. Valuation of the property for the purpose of Section 269C of the Act of 1961 has to be made as on the date of registration of transfer-deed and not on the date there-before. Since, in present case, sale-deed was executed on 06.07.1984, the valuation officer on that basis determined fair market value at Rs.1,20,91,000/- as against declared sale- consideration of Rs.24,45,452/-. It is argued that report of District Valuation Officer is statutory evidence under Section 269L(1)(a) of the Act of 1961. Since there was a very substantial difference between fair market value of the property and declared sale consideration in instrument of transfer coupled with the fact that agreement to sell remained unregistered and unsubstantiated for seven years, the competent authority had reason to believe that consideration in instrument of ITA95/2003 // 22 // transfer was not truly stated and that prima facie this was with object of facilitating reduction/evasion of liability of transferor/ transferee to pay tax. On given material, this satisfaction of competent authority was rational and justified. Learned counsel argued that sufficiency of reasons is not required to be gone into details. In support of this contention, learned counsel relied on judgments of Supreme Court in I.T.O. Vs. Lakhmani Mewal Das – (1976) 103 ITR 437 (SC), Ganga Saran & Sons Private Limited Vs. Income-tax Officer and Others (1981) 130 ITR 1 (SC), Raymond Woollen Mills Limited Vs. Income-tax Officer and Others – (1997) 236 ITR 34 (SC), Assistant Commissioner of Income-tax Vs. Rajesh Jhaveri Stock Brokers P. Limited (2007) 291 ITR 500 (SC) and judgment of Gujarat High Court in C.I.T. Vs. Vimlaben Bhagwandas Patel – (1979) 118 ITR 134 (Guj.). 29. Shri J.K. Singhi, learned counsel for revenue, argued that time limit for initiation of proceedings under Section 269D(1) of the Act of 1961 is nine months from end of the month in which instrument of transfer was registered. In present case, sale-deed was registered on 27.07.1984 and notice of initiation of proceedings under Section 269D(1) of the Act was issued on 15.03.1985, which was published in official gazette on 06.04.1985. The notice was thus published within permissible time limit which time limit expired on 30.04.1985. ITA95/2003 // 23 // It was argued that assessee is a society registered as cooperative society. It represents interests of its members. Membership keeps changing with approval of the society at different points of time. The society was always in effective occupation and control and use of said land. Service of notice on the society has to be taken as service affected also on its members for purposes of Section 269D(2). In any case, it is the society which purchased the disputed land against sale consideration and in whose favour the agreement to sell was executed and ultimately sale deed was registered and instrument of transfer was executed. Members of assessee-society have been allotted plots subsequently. None of its members has filed appeal against the impugned order under Section 269F of the Act of 1961 raising objection regarding non-service of notice under Section 269D(2). This objection about non-service of notice on its members was not available to assessee-society. The notice was in any case published in official gazette and also affixed in the locality and was affixed in office of competent authority. Learned counsel in this connection relied on judgment of Gujarat High Court in C.I.T. v. Premanand Industrial Cooperative Society Limited – (1980) 124 ITR 772, to argue that objections as to non-service of notice can only be taken by the person on whom notice is not served. As regards mention of words “and/or” between sub-para 'Ka' and sub-para “Kha' ITA95/2003 // 24 // of Para B of reasons recorded in show cause notice dated 15.03.1985, learned counsel argued that mention of both words did not and could not vitiate proceedings because sub-clause (a) of Section 269C of the Act is separated from sub-clause (b) only by word “or”, and Section 292B of the Act provides that no proceedings shall be invalid on account of such mistakes, defect or omission. In support of this argument, learned counsel relied on judgment of Madras High Court in I. Devarajan and Others Vs. Tamil Nadu Farmers Service Co-operative Federation and Others – 131 ITR 506. 30. It was argued that issuance of certificate under Section 230A of the Act of 1961 cannot be a reason to hold present proceedings illegal. Initiation of proceedings on that basis cannot be said to be illegal because that provision simply considers as to if any demand of tax is pending against assessee or not and if it is so, whether satisfactory arrangement has been made for its payment. This certificate does not in any way legitimize the valuation done in the sale-deed. 31. Shri J.K. Singh, learned counsel further argued that order under Section 269F(6) of the Act of 1961 was passed by competent authority on 16.10.2002 because so many cases were pending regarding this land and this was yet to be decided whether land in question would be otherwise acquired by State Government under ceiling law. Thus, only in the event of other proceedings being ITA95/2003 // 25 // dropped it would be free land available for sale. There was an order by this Court at its Principal Seat, Jodhpur in S.B. Civil Writ Petition No.101/1986, in which interim order was passed by this court on 10.01.1986, whereby proceedings under Urban Land (Ceiling and Regulation) Act, 1976, were stayed and ultimately that interim stay order was vacated on 19.11.1999. The land came out of purview of ceiling law when the ceiling proceedings were dropped on 19.11.1999 with the repeal of ULCAR Act. The delay in completion of proceedings was therefore owing to valid and justified reasons and does not affect the validity of the impugned order. 32. Shri J.K. Singhi, learned counsel for revenue, argued that mere non-providing opportunity to cross-examine the District Valuation Officer does not have any effect of violating the principles of natural justice as per the ratio of judgment of Supreme Court in State of Jammu & Kashmir Vs. Bakshi Gulam Mohammad – AIR 1967 SC 122. Even otherwise, the appellant-society failed to show as to what prejudice was caused to it by mere non-providing opportunity to cross-examine the District Valuation Officer. On the question of prejudice, the learned counsel has relied on judgments of Supreme Court in Union of India & Ors. vs. Alok Kumar - 2010 (5) SCC 349, Sarva U.P. Gramin Bank v. Manoj Kumar Sinha 2010 (3) SCC 556, Om Prakash Mann Vs. Director of Education (basic) ITA95/2003 // 26 // and Others - 2006 (7) SCC 558 and Aligarh Muslim University Vs. Mansoor Ali Khan - AIR 2000 SC 2783. 33. Shri J.K. Singhi, learned counsel for revenue, further argued that competent authority was fully justified in arriving at valuation of property on the basis of sale-deed and in doing so he rightly accepted the sale-consideration declared by the society at Rs.25,45,452/- on on 02.10.1974 as per agreement to sell and accordingly the fair market value was arrived as on 01.02.1982 when the sale-deed was executed. The competent authority in Para no.4.3 at Page 13 of his order has given reasons for his observation that the agreement to sell dated 01.10.1974 was superseded on 18.08.1980 and has further referred to pages 16/17 of the sale-deed according to which fresh agreement was arrived at on 18.08.1980. Consideration shown in the alleged agreement to sell is Rs.25,45,452/- and in the sale-deed it is only Rs.24,54,452/-. It was argued that fair market value under Section 269A(d) (i) means the price that the immovable property would ordinarily fetch on sale in the open market on the date of execution of the instrument of transfer of such property. Instrument of transfer under Section 269A(f) of the Act means the instrument of transfer registered under the Registration Act. So in this case though the sale- deed is dated 01.02.1982 but it was registered on 02.07.1984. The fair market value has to be therefore determined with reference to the date of ITA95/2003 // 27 // execution of instrument of transfer. The date of agreement to sell is thus not relevant in arriving at fair market value. It was further argued that District Valuation Officer under Section 269L of the Act is statutory authority with statutory role to determine fair market value and also to represent before the ITAT, if so required by the competent authority. The report submitted by the District Valuation Officer is statutory evidence. He cannot therefore be taken to be a witness. He was thus not liable to be cross-examined. The District Valuation Officer prepared the valuation report in due discharge of his duties. There being no allegation of mala-fide against him, he need not be subjected to cross-examine in respect of his report. It was argued that competent authority had provided to the appellant-assessee copy of the report of District Valuation Officer and other relevant documents. The appellant filed its objections to the report. The competent authority visited disputed property and also the comparable cases cited by the District Valuation Officer. The competent authority has exhaustively considered and dealt with the objections of the transferee to the report of District Valuation Officer in order of acquisition under Section 269F(6) of the Act. In this connection, learned counsel referred to Para 14 to 23 of the impugned order. 34. It is also argued that the competent authority has discussed the report of the ITA95/2003 // 28 // registered valuer filed on behalf of the transferee and given valid reasons in Para 17.5 of the order as to why it cannot be accepted. After considering the objections and relevant legal provisions, the competent authority has concluded that the fair market value of the disputed property should be determined as on the date of sale-deed i.e. 01.02.1982. The competent authority has found that the agreement to sell dated 01.10.1974 cannot be relied on for that purpose. He has agreed that the date of execution of instrument of transfer, the date of sale deed i.e. 01.02.1982 should be the date for determining fair market value and not the date of its registration i.e. 27.07.1984. It is on that basis that competent authority has determined the value of Rs.61,31,630/- as fair market value as on 01.02.1982 as against Rs.24,45,452/-, as stated in the said deed. The competent authority has further relied on the judgment of the learned District Judge, Jodhpur, in the case of a similarly situated land across the road measuring 35,553 square yards at Rs.49.50 per square yard as on 10.10.1974 and has thus arrived at the rate of Rs.154.67 per square yard as on 01.02.1982, and thus was awarded compensation in a land acquisition case. Thus, in all situations, the fair market value of the land was much higher than 15% of the apparent sale consideration. Learned counsel further argued that competent authority has given valid and convincing reasons for valuation of fair ITA95/2003 // 29 // market value and for the conclusion that it exceeds the apparent consideration by more than 15% and that there is understatement of consideration in the instrument of transfer with a view to facilitating evasion of tax. The competent authority has rightly considered the commercial potential of the property, which has not been considered by the registered valuer, who has relied on sale consideration of the property, which cannot be said to be comparable sale instances of constructed property. Besides, he was also influenced by the sale-deed dated 01.02.1982, which was not found to be genuine. 35. Shri J.K. Singhi, learned counsel for revenue, argued that even otherwise the date of agreement to sell being 01.10.1974, date of execution of sale-deed being 01.02.1982 was more than 7 years later, it is reasonable to believe that during this long period of seven years fair market value of property in dispute must have been doubled. Non-disclosure of true sale consideration was solely intended to evade tax by both transferor and transferee. Learned counsel, in support of his argument, has relied on judgments of the Supreme Court in Ravinder Narain and Another Vs. Union of India - (2003) 4 SCC 481, Rishi Pal Singh and Others Vs. Meerut Development Authority and Another - (2006) 3 SCC 205, Chimanlal Hargovinddas Vs. Special Land Acquisition Officer, Poona and Another - AIR 1988 SC 1652, Land Acquisition Officer, ITA95/2003 // 30 // Revenue Divisional Officer, Chittoor Vs. Smt. L. Kamalamma - AIR 1998 SC 781 and Subh Ram and Others Vs. State of Haryana and Another - (2010) 1 SCC 444. 36. We have give our earnest considerations to the rival submissions, perused the impugned orders and other material on record and respectfully studied the cited precedents. 37. Before adverting to merits of the case we consider it necessary to decide the objection raised by the appellant that the acquisition order dated 16.10.2002 could not have been passed almost 18 years after registration of sale-deed on 27.07.1984. Indisputably, proceedings under ceiling law were initiated by the government for acquiring this very land under Urban Land (Ceiling & Registration) Act soon after registration of sale- deed. Those proceedings were assailed by none other than the appellant herein i.e. M/s. Naveen Grah Nirman Sahakari Samiti by filing Writ Petition No.101/1986. This court by order dated 10.01.1986 while issuing notice to the government directed that in the meantime further proceedings pending before Competent Authority-cum-Additional Collector, Urban Land (Ceiling & Registration) Act, Jodhpur shall remain stayed. The competent authority in the present case therefore was advised by their standing counsel on 23.02.1999 that in view of stay order granted by this court, department could not proceed to acquire the land ITA95/2003 // 31 // under Chapter XX-A of the Act. In our view, the department was justified in taking that approach because if the land was already subject matter of acquisition under Urban Land (Ceiling & Registration) Act, 1976, there was no point in continuing with the proceedings for acquisition of this very land under Chapter XX-A of the Act by the Central Government. The Income Tax Department on this aspect was thus rightly advised in taking that view because the proceedings under the Act could not have been concluded prior to finalization of the proceedings under Urban Land (Ceiling & Registration) Act. Finally, the Urban Land (Ceiling & Registration) Act was repealed through an Ordinance on 11.01.1999 which was followed by Urban Land (Ceiling & Regulation) Repeal Act, 1999, which received assent of President of India on 22.03.1999 and published in Official Gazette of India dated 22.03.1999. The said Central Enactment (Repeal Act) was adopted by the Rajasthan State Legislature on 23.09.1999 with effect from 11.01.1999. The interim order was thereafter vacated on 19.11.1999 and thus the land became free from acquisition proceedings under ULCAR Act. Delay in present case in finalization of proceedings under Chapter XX-A of the Act of 1961, therefore, cannot be attributed to the Income Tax Department. Mere non supply of opinion of the standing counsel/advocate of the Income Tax Department cannot be said to have occasioned any prejudice to the appellant because ITA95/2003 // 32 // opinion by an Advocate to its client is a privileged communication in the meaning of Section 126 of Indian Evidence Act, 1872. What the appellant can be said to have been concerned with was the reason for such decision of the Income Tax Department and not the opinion given, which was not to go ahead with the proceedings under Chapter XX-A of the Act, which reason, as noticed above, was already known to the appellant because the same appellant had assailed the proceedings under the Urban Ceiling Law before this Court by filing writ petition. After those proceedings were dropped on 19.11.1999, the Income Tax Department carried the proceeding under Chapter XX-A further to its logical conclusion by ultimately passing the order on 16.10.2002. The argument of the appellant is therefore liable to be rejected and we according do so. 38. The next most significant argument that has been advanced on behalf of the appellant is that there was no prima facie material with the competent authority so as to furnish “the reason to believe” that the consideration in instrument of transfer was not truly stated with the object of facilitating reduction/evasion of liability of transferor/transferee to pay tax. In order to consider this argument, we have to first analyze the reasons which competent authority in the notice under Section 269D (i) of the Act dated 15.03.1985 has disclosed. In that notice, it was stated that ITA95/2003 // 33 // competent authority had reason to believe that fair market value of the immovable property was exceeding Rs.1,00,000/-, and land situated at Jodhpur, has been transferred under the Registration Act, 1908 in the office of the Registering Officer at Jodhpur on 27.07.1984 for an apparent consideration, which is less than the fair market value of the aforesaid property and that the fair market value of the property as aforesaid exceeds the apparent consideration thereof by more than fifteen percent of such apparent consideration and the consideration for such transfer as agreed to between the parties has not been truly stated. The notice was accompanied by the reasons which were that while the sale consideration of the property has been declared to be Rs.24,45,452/- whereas its prevalent market value was estimated as high as Rs.1,20,91,000/- and difference between the two is by more than 25%. The competent authority in doing so relied on the report of the District Valuation Officer, which is on record. In column no.4 of the said valuation report, it is mentioned that the said land is situated near Ratnada Circuit House, Dhanwantari Nagar, Jodhpur and the total land area is 1,81,818 square yards. In column no.6 it is described to be a freehold land. In column no.6.3 it is further mentioned that the land falls in the planned area of U.I.T., Jodhpur, and that it is fully occupied by the owner. In column no.7, the method of valuation has been mentioned and it has ITA95/2003 // 34 // been stated that the valuation has been made on parallel sale instances basis and the reason why this method has been adopted is also stated that the vacant possession has been transferred, therefore the parallel sale instances method of valuation has been adopted. The rate of Rs.66.50 per square yard has been applied for arriving at the aforesaid valuation. The land rate analysis has been separately attached with the valuation report, which was done on the basis of four plots sold by U.I.T., Jodhpur, in auction, each measuring 250 square yards on 03.07.1983 at the rate of Rs.210, 207, 213 and 243 per square yard, respectively; and substantial reduction on this rate has been given for the reason of lack of good residential colonies in immediate neighbourhood of the land in dispute. The land rate at Rs.175/- per square yard was considered fair and reasonable for developed plots in the said land in July, 1984 and on that basis it was stated that rate of Rs.200/- per square yard was considered fair and reasonable. Allowing 1/3rd open spaces for roads, parks etc., the land rate was taken to be reduced to Rs.133/- per square yard and further allowing deduction for development of roads, drains, street lights, sewers etc., and for the purpose of leveling the land etc., the land rate was reduced to Rs.66.50 per square yard and it is on that basis the value of the land admeasuring 1,81,818 square yards was worked out to Rs.1,20,90,897/- i.e. approximately ITA95/2003 // 35 // Rs.1,20,91,000/-. Against the backdrop of these facts, we have to examine whether the competent authority had “reason to believe” that consideration in instrument of transfer was not truly stated and that prima facie this was so done with the object of reduction/evasion of liability of transferor/transferee to pay tax. In other words, whether competent authority had justification for initiation of proceedings under Section 269C of the Act. 39. In this connection, we may refer to the judgment of Supreme Court in I.T.O. Vs. Lakhmani Mewal Das – (1976) 103 ITR 437, wherein it was observed by the Supreme Court that reasons for formation of belief contemplated by Section 147(a) of the Income-tax Act, 1961 for reopening of an assessment must have a rational connection or relevant bearing on the formation of the belief, which postulates that there must be a direct nexus or live link between the material coming to the notice of the Income-tax Officer and the formation of his belief that there has been escapement of the income of the assessee from assessment in the particular year because of his failure to disclose fully and truly all material facts. It was held that the court cannot go into sufficiency or adequacy of material and substitute its own opinion for that of the Income-tax Officer on the point as to whether action should be initiated for reopening the assessment. At the same time, however the ITA95/2003 // 36 // Supreme Court held that it should be borne in mind that it is not any and every material, howsoever vague and indefinite or distant, remote and far- fetched, which would warrant the formation of such belief. 40. In C.I.T. Vs. Vimlaben Bhagwandas Patel – (1979) 118 ITR 134, what was held by Gujarat High Court was that satisfaction of the competent authority for initiation of acquisition proceedings is a subjective satisfaction of the objective facts. The reasons for formation of belief must have a rational and direct connection with the material coming to the notice of the competent authority, though the question of sufficiency or adequacy of the material is not open to judicial review. 41. The Supreme Court in Ganga Saran & Sons Private Limited Vs. Income-tax Officer and Others (1981) 130 ITR 1, while considering the scope of Section 147(a) of the Act on the question of “has reason to believe” held that these words are stronger than the words “is satisfied”. The belief entertained by the ITO must not be arbitrary or irrational. It must be reasonable or in other words it must be based on reasons which are relevant and material. The courts, however, cannot investigate into the adequacy or sufficiency of reasons which have weighed with the ITO in coming to the belief, but the court can certainly examine whether the reasons are relevant and have a bearing on the ITA95/2003 // 37 // matters in regard to which he is required to entertain the belief before he can issue notice under Section 147(a). The same view was reiterated by the Supreme Court in Raymond Woollen Mills Limited Vs. Income-tax Officer and Others – (1997) 236 ITR 34, when it held that on this question the courts can only consider whether there was a prima facie case for reassessment. The courts cannot go into sufficiency of material in determining whether commencement of reassessment proceedings was valid. The courts have only to see whether there was prima facie some material on the basis of which the Department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at the stage of notice. 42. In Assistant Commissioner of Income-tax Vs. Rajesh Jhaveri Stock Brokers P. Limited (2007) 291 ITR 500 (SC), the Supreme Court again considering the provisions of Section 147 held that the expression “reason to believe” in that provision would mean cause or justification. If the assessing officer has cause or justification to know or suppose that income had escaped assessment, he can be said to have reason to believe that income had escaped assessment. The expression cannot be read to mean that the assessing officer should have at that stage finally ascertained the fact by legal evidence or conclusion. What is required is “reason to believe” but not the established fact of escapement of income. ITA95/2003 // 38 // 43. In view of settled proposition of law as noticed above, in our considered view, what the competent authority at the stage of issue of notice for initiation of proceedings was required to see was that he should have “reason to believe” for which purpose the only requirement was that there was prima facie some material on the basis of which he could have come to hold such “reason to believe” that the consideration in instrument of transfer was not truly stated for prima facie object of facilitating the reduction or evasion of liability of transferor/transferee to pay tax. At that stage, he could not be expected to come to final conclusion so as to make determination of fact with certainty that this was done for facilitating reduction or evasion of liability of transferor/transferee to pay tax. At such initial stage, what is required is that there is some relevant material on the basis of which a reasonable person can form requisite belief; although such subjective satisfaction has to be based on objective material. In the present case, we are not inclined to hold that comparable sale instances which were made basis for the purpose of valuation by the District Valuation Officer and which report was relied by the competent authority for the limited purpose of initiation of proceedings under Chapter XX-A, were either vague and indefinite or distant or remote or far-fetched. This court cannot go into the sufficiency or ITA95/2003 // 39 // adequacy of such material and all that it has to see is whether there was some material with competent authority to entertain that requisite belief. 44. Contention that notice that was issued by the competent authority for initiation of proceedings under Section 269D of the Act was defective because it referred to “and/or” whereas the legislature has separated sub-clause (a) of Section 269C of the Act by use of the word “or” from sub-clause (b) thereof and that since the notice that was issued in the present case has used both words “and/or”, it reflects total non- application of mind on the part of the competent authority and indicates that it was not definite as to under which of the two clauses, the matter would fall, is noticed only to be rejected, for reasons which we shall presently state. 45. In order to buttress his argument, the learned counsel for appellant-assessee has relied on the Division Bench judgment of Punjab and Haryana High Court in Commissioner of Income-tax Vs. Norton Motors – (2005) 275 ITR 595, wherein, in the context of Section 292B of the Act, it was held that if the notice or summons suffers from an inherent lacuna affecting jurisdiction, the same cannot be cured by having resort to Section 292B. In this connection, further reliance has been placed by learned counsel on the judgment of Allahabad High Court in CIT Vs. Shital Prasad ITA95/2003 // 40 // Kharag Prasad – (2006) 280 ITR 541 (All) . Learned counsel for assessee has also cited two judgments of Gujarat High Court in Indian Dyestuff Industries Limited Vs. Inspecting Assistant Commissioner of Income-tax and Another – (1994) 206 ITR 485 and Unique Associates Cooperative Housing Society Limited vs. Union of India and Others – (1983) 152 ITR 114, to gain support on the proposition that since the notice had used both words “and/or”, which only indicates that notice was vague and it was not definitely stated whether it was for the object (a) or object (b), for which purpose the proceedings have been initiated therefore the competent authority lacked the jurisdiction to initiate proceedings. 46. In Indian Dyestuff Industries Limited's case (supra), the Gujarat High Court noticed the argument with regard to vagueness and uncertainty about satisfaction of competent authority of reflecting from use of both words “and/or”, it ultimately decided the issue in favour of the assessee on arriving at conclusion that there was no material with the competent authority to initiate proceedings under Section 269C of the Act. In Apeejay Premises Co-operative Society Limited and Another Vs. Nishar Ahmed and Another - (1990) 185 ITR 487 (Bom.), though this very argument was considered by the Court to hold that use of both words “and/or” is reflecting non-application of mind on the part of the competent authority that he ITA95/2003 // 41 // was uncertain as to whether the understatement was with the object of one or the other. But, in this connection the counsel for revenue has cited judgment of Madras High Court in I. Devarajan and Others Vs. Tamil Nadu Farmers Service Co-operative Federation and Others – (1981) 131 ITR 506 (Mad.). In that case, an argument was raised that Form No.45, in the context of search and seizure under Section 132 of the IT Act, had not been properly filled up and that the exercise of power under Section 132 was invalid and illegal. What was pointed out was that in the whole body of the first page of Form No.45 after the words “whereas information has been laid before me and on the consideration thereof I have reason to believe that....” a part of the form has been left intact while the rest has been scored out. The argument was that this shows that the authority did not apply its mind properly and that in a serious matter like this, where the right of property guaranteed under Articles 19 and 31 of the Constitution was interfered with, then the provisions of Statue have to be strictly complied and any defeat in such compliance will render the whole action illegal. The Division Bench of Madras High Court repelling this argument held that omission to score out part of the wordings was not such which misled anyone and that the search held in pursuance thereof cannot to be characterized as illegal exercise of powers. At the most, there were ITA95/2003 // 42 // some irregularity in not scoring out that part of the form but that did not in any manner affect the power of the authority concerned. It was held that Section 299B provides that no proceedings taken in pursuance of the Act shall be invalid, by reason of any mistake or defect in the proceedings if it is in effect in conformity with or according to intent of purposes of the Act. Thus any defect in the Form was held to have been cured by the provision in Section 292B of the Act of 1961. 47. In the present case also, we are not inclined to uphold this contention because mere use of both the words “and/or” simultaneously does not mean that competent authority did not apply its mind to the material and that he lacked the jurisdiction to initiate proceedings. This is because while clause (a) of Section 269C(i) provides that consideration of transfer has not been truly stated with the object of facilitating the reduction or evasion of liability of the transferor to pay tax under the Act in respect of any income arising from the transferee, clause (b) however provides that consideration has not been truly stated with the object of facilitating concealment of any income or any money or other assets, which ought to have been disclosed by the transferee for the purpose of Income-tax Act or Wealth Tax Act. It is thus apparent that while clause (a) of Section 269C(i) pertains to the object of facilitating reduction or evasion of ITA95/2003 // 43 // liability to pay tax by the transferor, clause (b) thereof is applicable qua the transferee on the premise that true sale consideration was not stated in the instrument of transfer with the object of facilitating concealment of any income or money or other assets, which should have been or which ought to have been disclosed by the transferee for the purpose of Income Tax Act or Wealth Tax Act. It cannot be said that for initiation of proceedings under Section 269(1) a matter, even though it may be both evasion of tax and concealment of income, should always fall in one clause to the exclusion of another and that proceeding must always be initiated only against transferee and not against transferor or vice-versa. 48. In present case, the notice for initiation of such proceedings was served upon the transferor and the transferee both and therefore at that stage, the competent authority did not in our view commit any mistake in using both words “and/or” because that was the stage of initiation of proceedings, he could not have let off one and merely proceeded another while in his prima facie view both the transferor and transferee, may have been responsible for not stating the true sale consideration for facilitating reduction or evasion of liability to pay tax, in so far as transferee was concerned and for transferee, the competent authority entertained a prima facie belief that he did so though for facilitating concealment of his ITA95/2003 // 44 // income or any money or other assets, which he ought to have disclosed for the purpose of Income Tax Act or the Wealth Tax Act. 49. In this view of the matter, use of words “and/or” together can at the maximum be described as a mere technical omission or defect and in view of provisions contained in Section 292B, the notice for initiation of proceedings cannot be held to be invalid or deemed to be invalid by mere reason of such a mistake, defect or omission. This view has been expressed not only by Madras High Court in I. Devarajan and Others Vs. Tamil Nadu Farmers Service Co-operative Federation and Others – (1981) 131 ITR 506, relied on by learned counsel for revenue but also by the Division Bench of Punjab and Haryana High Court in Commissioner of Income-tax Vs. Norton Motors (supra). This argument of the assessee is also therefore rejected. 50. This now bring up to question whether the revenue has been able to discharge the burden of proving that the apparent consideration has been understated; that there has been evasion of tax; it was not a bona-fide transaction; and that the consideration has not been truly stated in the instrument of transfer with the object of facilitating reduction or evasion of liability of transferor to pay tax or facilitating concealment of income or money or assets, which have not been and which ought to have been disclosed by the transferor for the purpose of Income-tax Act and ITA95/2003 // 45 // Wealth-tax Act. In order to substantiate this argument, learned counsel for the assessee has relied on the judgments of Gujarat High Court in C.I.T. Vs. Vimlaben Bhagwandas Patel – (1979) 118 ITR 134, judgment of Karnataka High Court in IAC Vs. National Flag perfumery Works – (1986) 159 ITR 737, judgments of the Supreme Court in K.P. Varghese Vs. Income-tax Officer, Ernakulam and Another – (1981) 131 ITR 597 (SC) and CIT Vs. Shivakami Company Private Limited – (1986) 159 ITR 71 (SC), and judgment of this Court in CIT Vs. Raja Narendra – (1994) 210 ITR 250 (Raj.). 51. In all these judgments it has been held that the burden of proof is on the revenue to show that the assessee had received the amount more than what has been declared by him of consideration in the sale-deed, namely, the burden of proving such understatement or concealment is on the revenue. 52. We may at the outset observe that scope of interference under Article 226/227 of the Constitution of India, which can be culled out from catena of judgments of the Supreme Court, is that while examining validity of an acquisition order under Chapter XX-I or similar preemptive purchase order under Chapter XX-C of the Act of 1961, this court in exercise of its powers of judicial review can interfere only if it finds that (i) relevant material has been ignored or (ii) irrelevant or erroneous material has been considered or (iii) it has been passed in utter violation of principles of ITA95/2003 // 46 // natural justice or (iv) there has been infraction of any statutory provision in the process of decision making or (v) decision is such which no reasonable person could on available material arrive at. We have to therefore examine the arguments and counter arguments advanced in this case on the touchstone of these parameters. 53. This shall have to be decided on the basis of material whether or not the revenue has been able to discharge its burden which material has been taken into consideration by competent authority in arriving at such decision. The competent authority for the purpose of valuation relied on the sale-deed dated 01.02.1982 wherein it is stated that consideration of sale as on 02.10.1974 was Rs.25,45,452/-. It is on that basis that the fair market value was computed and arrived at by the competent authority as on 01.02.1982, the date on which the sale-deed was executed. The competent authority has also taken into consideration the fact that the agreement to sale dated 02.10.1974 was superseded on 18.08.1980 on which date a fresh agreement was arrived at. While in the agreement to sale a sum of Rs.25,45,452/- has been shown to be sale consideration but in the sale-deed it is indicated to be only Rs.24,54,452/-. The agreement to sell dated 02.10.1974 was not registered under the Registration Act, 1908 nor notarized and a doubt was expressed as to whether it was a genuine ITA95/2003 // 47 // document as it was alleged that the agreement to sell was back dated and fabricated some time in 1980-1982 to escape the provisions of Urban Land (Ceiling & Regulation) Act, 1976 so that the land could have been transferred to appellant M/s Naveen GNSS but that issue was not found to be relevant for deciding the present controversy. Though the sale-deed is dated 01.02.1982 but it was registered on 27.07.1984 and it is on this date that the valuation of the land has to be considered for the purpose of compulsory acquisition of the property under Chapter XX-A of the Act of 1961. But, considering the fact that the Sub Registrar refused to register the property due to operation of the ULCAR Act, the competent authority proceeded to decide the question of fair market value/sale consideration of this disputed property as on 01.02.1982, the date on which the sale-deed was executed. On the amount of consideration of Rs.24,45,452/- declared as on 02.10.1974, the competent authority increased the cost of the land from 02.10.1974 to 01.02.1982 at the rate of 150% so as to arrive at its fair market value as on 01.02.1982 and with addition of Rs.36,68,178/-, arrived at a total sum of Rs.61,13,630/-. As against this, the apparent consideration mentioned in the sale-deed was of Rs.24,45,452/-. Thus there was a difference of more than 15% between the fair market value and the apparent sale consideration as on 01.02.1982. ITA95/2003 // 48 // 54. In comparison to this, the value computed by the District Valuation Officer as on 27.07.1984 was Rs.1,20,90,000/-, according to which the rate of the land would come to Rs.66.50 per square yard. This was done on the basis of four comparable sale instances in the Ratanada area of Jodhpur. For this, however, objection of the appellant is that the said plots of the land were sold in auction by the U.I.T. in 1983 whereas agreement to sell in the present case was executed in 1974 and that they were smaller in size whereas the land in dispute is a big chunk of land. The competent authority in Para 17.1 of its order dated 16.10.2002 has noticed the comparable sale instances produced by the assessee. The land size whereof ranged between 655 square meters to 1409 square meters. But the competent authority found that the land of which instances were given by the District Valuation Officer was closure to the disputed land and therefore they could form better basis for arriving at fair market value of disputed land. The competent authority has noted that the disputed land touches the main road for its whole length for nearly 1000 square yards and that it has tremendous commercial value as is borne out by the fact that the assessee itself sold 66 commercial plots as per list submitted by the assessee and the map of the land prepared by the assessee shows land was left for cinema halls and hotels etc. therein. The valuation submitted by the assessee from ITA95/2003 // 49 // registered valuer was not accepted because he deducted the cost of construction from sale consideration in three comparable instances cited by him, which was not held to be according to the prevalent market practice. 55. Most importantly, the competent authority in Para 19 of its order has observed that the disputed land comes closest to the land of which compensation was awarded by the District Judge, Jodhpur, to M/s Umaid Industries Land Development Company vide order dated 09.02.1983. In this case, a huge chunk of land measuring 35,553 square yards was situated just across the road from the disputed land. The disputed land was lying on the west of the road leading from Ratanada Circle to Circuit House, whereas the said acquired land was on the east of the said road just behind Ajit Bhawan. Acquisition proceedings for that land were also started by the U.I.T., Jodhpur on 03.06.1974 and question before the District Judge, Jodhpur was for determination of compensation to be paid by the U.I.T./Government of Rajasthan as on that date. The District Judge relied on certain sale instances to determine the rate at which the land had to be acquired. There were 30 instances of sale at or about the relevant time, which were considered by the District Judge. While in six instances relied upon by the U.I.T., the rate varied from Rs.4.40 per square feet to Rs.5/- per square feet; in two other cases, the rate as per records of the ITA95/2003 // 50 // Government of India and Government of Rajasthan was Rs.5/- per square feet and the rates as per 22 instances quoted by the assessee were Rs.3.30 per square feet to Rs.7.15 per square feet. These sale instances were for the period from 24.07.1970 to 07.12.1978. The learned District Judge also noted that the land of Puri Petrol Pump, Ratanada, at the relevant period was valued at the rate of Rs.128.29 per square yard. In another instance, the land adjacent thereto belonging to Shri Ajit Singh was valued by the District Valuation Officer, Income- tax Department between 1968 to 1976 at the rate of Rs.18 to Rs.36/- per square yard. In our view, the competent authority was justified in comparing the rates adopted by the District Judge, Jodhpur, in the case of acquisition of the land just opposite the disputed land which he found to be closure to the land in dispute for the reasons that its size was reasonably large being 35553 square yard and its location is also almost the same from the disputed land and it was closure to the land in dispute as compared to any other land in different instances cited by the revenue and the assessee. The District Judge, Jodhpur, had fixed compensation at the rate of Rs.5.50 per square feet or Rs.49.50 per square yard and also ordered for payment of interest at the rate of Rs.6% per annum from 10.10.1974 till the date of acquisition to 09.02.1983. Having arrived at the rate of Rs.49.50 per square yard as on 10.10.1974 on which basis ITA95/2003 // 51 // acquisition was made in the cited sale instance, the competent authority noted that compensation under Land Acquisition Proceedings was always paid towards lower side and was usually less than the fair market value therefore it should be enhanced by 50%, thus the rate was increased to Rs.74.25, and a further enhancement on appreciation of land price from 1974 to 1982 was made at 150%. Even otherwise, as per the bank rate prevailing in that period, a deposit used to double in 5½ year and triple in eight years. Thus, a sum of Rs.111.37 per square yard was further added to the aforesaid amount of Rs.74.25 so as to arrive at the rate of Rs.185.62 per square yard. 25% was added for commercial potential of the land. Thus taking the rate to Rs.232.02 and a reduction of 1/3rd i.e. 33% of that price, was given for the reason that the land was in a less developed area as compared to the land for which acquisition case was decided by learned District Judge. The net amount that was arrived at was Rs.154.67 per square yard. As against this, the District Valuation Officer had computed the fair market value of the disputed land only at Rs.66.50 per square yard as on 27.07.1984. The objections that were raised by the assessee for adoption of the rate of UILDC's land rates approved by the District Judge were considered and rejected because already for the reason of development of the land, reduction of 1/3rd on the rate computed was given. The competent authority having thus made ITA95/2003 // 52 // the valuation of the land by different modes came to hold that rate of Rs.14.50 per square yard claimed in the registered valuer's report for transfer of the disputed land as on 01.02.1982 could not be justified. Computing the value of the land by any of the above referred to methods, it was found that difference between the apparent sale consideration and fair market value was in every situation much more than 15%. 56. Contention of learned counsel for appellant that since the registering authority has allowed registration of sale-deed on sale consideration of Rs.25,45,452/-, it should be accepted as correct sale-consideration. His further submission is that though originally the sale-deed was presented, sale-consideration of Rs.25,45,452/- but the registering authority has merely disallowed the deduction of Rs.1,00,000/- for the purpose of levelling of the land therefore the valuation so declared by the transferor and transferee and accepted by the registering authority should be considered as final. We find ourselves unable to uphold this submission either. A Division Bench of this Court in Krishna Kumar Rawat and Others Vs. Union of India and Others – 2007 (4) RLW 3132, while repealing challenge to preemptive purchase order passed under Section 269UC of Chapter XX-C of the Act of 1961, held that area-wise static rates fixed uniformly for the purpose of registration of conveyance-deeds, have no application to preemptive ITA95/2003 // 53 // purchase order. It was held that what is popularly known as DLC rates, fixed by the district level committee, by themselves cannot be a conclusive index of prevalent market rate in a given area. 57. In Chimanlal Hargovinddas Vs. Special Land Acquisition Officer, Poona and another – AIR 1988 SC 1652, it was held by the Supreme Court that for making determination of the valuation by instances method the court has to correlate the market value reflected in the most comparable instance which provides the index of market value. Even post notification instances can be taken into account if they are very proximate, genuine and acquisition itself has not motivated the purchaser to pay a higher price on account of the resultant improvement in development prospects. A balance- sheet of plus and minus factors may be drawn for this purpose and the relevant factors evaluated in terms of price variation as a prudent purchaser would do. The Supreme Court in Rishi Pal Singh and Others Vs. Meerut Development Authority and Another – (2006) 3 SCC 20 and Land Acquisition Officer Vs. Smt. L. Kamalamma – AIR 1998 SC 781, also expressed the same view. 58. Contention of learned counsel for assessee that since the agreement to sell that was executed on 02.04.1974 provided an increase in the rate of the land by Re.1/- per square yard, the rate was settled on the said date at Rs.8/- per square yard as per the stipulation of increase of ITA95/2003 // 54 // Re.1/- per square yard for every passing year, the rate should be taken to have been enhanced accordingly in 1982 when sale-deed was presented for registration, cannot be accepted. This would mean that only Rs.6/- should be increased in the rate of land price for six years that have gone by in between whereas according to normal market conditions actual appreciation in the valuation of the land in a fast growing city like Jodhpur was manifold where price of this land cannot be expected to have been increased to only this extent, more particularly when this land is abutting the main road facing the circuit house. 59. Learned counsels for assessee/intervenor have cited judgment of Supreme Court in K.P. Varghese Vs. Income-tax Officer - (1981) 131 ITR 597 (SC) and argued that on the question understatement the difference between the market value and consideration declared, the assessee must be shown to have received more than what is declared or disclosed by him as consideration and the burden to prove so is on the revenue. What the Supreme Court in K.P. Varghese's case (supra) held was that this burden may be discharged by the revenue “by establishing facts and circumstances from which a reasonable inference can be drawn that the assessee has not correctly declared or disclosed the consideration received by him and there is an understatement or concealment of consideration in respect of transfer.” It may ITA95/2003 // 55 // not be possible for the revenue to pin-pointedly prove by direct evidence the factum regarding understatement of valuation or consideration. As rightly held by the Supreme Court in K.P. Verghese's case, supra, it is only by establishing facts and circumstances from which a reasonable inference can be drawn by a person of ordinary prudence that assessee has not correctly declared or disclosed income received by him and there is understatement or concealment of consideration in respect of this land. There are in this case several such factors owing to which the competent authority was fully justified in drawing that inference. The ITAT has in this behalf rightly concurred with the view expressed by the competent authority. 60. Adverting now to the argument that competent authority should have issued/served notice to/on each of the members of the assessee- society, we must observe that this argument cannot be upheld because the members claimed their right or interest only through the society and that their existence come into being only after the society had acquired this land by execution of the sale- deed. It was the society which was in effective occupation and control of land in dispute and service of notice on the society was sufficient compliance for the purpose of Section 269D(2). Members have despite subsequent allotment of plots to them not come forward to either raise objection ITA95/2003 // 56 // or file appeal against acquisition order. It is the members who can come forward and take such objection and not the assessee-society which itself claims to represent the cause of the members. Reference in this connection may be usefully made to the judgment of Gujarat High Court in C.I.T. v. Premanand Industrial Cooperative Society Limited – (1980) 124 ITR 772, wherein the Division Bench of Gujarat High Court analyzing the meaning of phraseology “persons interested” while dealing with objection of non-service of notice under Section 269D(2), held that such objection can be properly taken not by the third party but only by the person on whom notice is not served and we are in respectful agreement with that view. 61. Merely because the certificate under Section 230A of the Act was issued, it cannot be held that the option of the Income-tax Department to compulsorily acquire this land stood foreclosed. This provision simply intends to ensure whether any payment of tax is pending against assessee or not, and if it is so, whether satisfactory arrangement has been made for its payment. Issuance of certificate under that provision cannot be taken as approval of the correctness of the valuation shown therein nor does it otherwise legitimize the sale. Such view taken by the competent authority and the ITAT cannot be faulted. Intention of legislature in inserting Section 230A in the Act is merely to ensure recovery of dues from a person who defaulted ITA95/2003 // 57 // in making payment of arrears or payment of tax. Otherwise if he is allowed to transfer his property without payment of such dues, it is the revenue which ultimately is going to suffer because it would not get the property to fall back upon to realize the income-tax. 62. Coming now to the argument about not giving opportunity to cross-examine the District Valuation Officer, we have to consider as to what role the District Valuation Officer has to play. According to Section 269C read with Section 269F, the valuation officer is merely called upon to determine fair market value of a particular immovable property. He merely acts as an expert and adviser to the competent authority for the purpose of enabling such competent authority to determine fair market value of the property firstly at the stage of initiation of proceedings and finally at the time when he has to decide the question whether property has to be acquired under Section 269F. In present case, we are concerned with the report of the valuation officer at the time of initiation of proceedings under Section 269C. But, despite obtaining his report, the competent authority has to take his own independent judgment at the stage of initiation of proceedings. The competent authority in this respect has rightly held that report given by valuation officer in writing has been furnished to the assessee and their objections to such valuation report have also been considered ITA95/2003 // 58 // as also another valuation report submitted by the assessee has been considered. While considering the demand of the assessee to cross-examine the valuation officer and on the question of principal of natural justice, the competent authority in Para 25 of its order rightly relied on the judgment of ITAT Bombay in GTC Industries Limited Vs. ACIT – (1998) 65 ITD 380, wherein similar issues were raised by the assessee and it was held that if material or evidence used for the purpose of assessment is collateral in nature, the rule that adverse evidence and material relied upon to reach finality should be disclosed is not applicable; that right to cross-examine a witness who made an adverse report is not an invariable attribute of requirement of the dictum of audi alteram partem; if witnesses whose statements are only secondary and of subordinate material used to buttress main matter connected with amount of additions, are not allowed to be cross-examined being secondary in nature. 63. The Supreme Court in Transmission Corporation of A.P. Limited and Others Vs. Sri Rama Krishna Rice Mill – (2006) 3 SCC 74, held that one is required to make out a case of prejudice so as to establish that cross-examination is necessary. The nature of adjudication under clause 39.9.2 of terms and conditions of Supply of electrical energy of A.P. State Electricity Board, is somewhat different from an enquiry under Article 311(2) of ITA95/2003 // 59 // the Constitution. It cannot be laid down as a rule of universal application whenever the statement of departmental officer is pressed into service for the purpose of adjudication, a right of cross- examination is inbuilt. It was further held by Supreme Court that in order to establish that cross-examination is necessary, the affected party has to make out a case for the same. Merely stating that statement of an officer is being utilized for the purpose of adjudication, would not be sufficient to uphold the contention of prejudice, if such officer was not liable to be cross- examined. It was held that applications seeking cross-examination are not to be filed in routine manner and equally also not to be disposed of by the authority in casual and routine manner. The affected party has to show as to why cross- examination is necessary. The Supreme Court in State of Jammu and Kashmir and Others Vs. Bakshi Gulam Mohammad and Another – AIR 1967 SC 122 held that right of cross-examination can be claimed and granted only in case of viva-voce evidence or oral evidence given by a witness. 64. In the facts of present case, in our considered view, no prejudice was caused to the assessee by mere fact that he could not cross- examine the District Valuation Officer. 65. Argument that valuation of the land in the hands of transferee Jai Marwar Company Private Company Limited, Jodhpur has been accepted by the ITA95/2003 // 60 // Income-tax Department, cannot be upheld because the ITAT by its order dated 08.11.2002 has merely held the assessment order for assessment year 1985-86 as invalid on the ground that since sale-deed was executed on 01.02.1982, the capital gain can be assessed in assessment year 1982-83 and not in assessment-year 1985-86. It is thus evident that the ITAT without final determination of valuation of the land and the capital gain thereon, simply deleted such addition for the assessment year 1985- 86. It cannot therefore be said to have given finality to valuation of land submitted by the transferor. In this connection, we may usefully refer to Division Bench judgment of Bombay High Court in Commissioner Of Income-Tax Vs Shah Construction Co. Ltd. - (1998) 230 ITR 51 (Bom). In that case, a certain amount was receivable in previous year as service charges which would be income of assessee. According to the revenue, this should be treated as income of assessee for that year. Argument was raised by assessee that since amount receivable by it has not been allowed as deduction while making assessment of party from whom it was receivable, it cannot be taken as income accrued to assessee. It was held by the High Court that so far as assessee is concerned, said amount was receivable as service charges from construction company in question in the previous year relevant to assessment order under reference. There is no reason to hold that it was not ITA95/2003 // 61 // includable in assessee's income. The allowance or disallowance of the same in the hands of the payer is of no relevance in deciding the taxability of the same in the hands of the recipient. 66. In view of what we have held above, the present matter does not fall in any of five categories enumerated in para 52 above and, therefore, we answer all the four questions of law enumerated in para 6 of this judgment in affirmative, in favour of the revenue and against the assessee. 67. Resultantly, challenge to order dated 16.10.2002 passed by the Competent Authority-cum- Additional Commissioner of Income-tax (Acquisition) Range-I, Jaipur, and order dated 25.04.2003 passed by the Income Tax Appellate Tribunal, Jaipur Bench, Jaipur, fails and the appeal is accordingly dismissed with no order as to costs. (Mohammad Rafiq) J. (Arun Mishra) CJ. //Jaiman// "