Punjab-Haryana High Court
Commissioner Of Income-Tax vs Ganesha Mal And Anr. on 14 December, 1995
Equivalent citations: [1996]219ITR271(P&H)
Author: Ashok Bhan
Bench: Ashok Bhan
JUDGMENT Ashok Bhan, J.
1. Whether the initiation of the proceedings for the acquisition of immovable property under Chapter XXA of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), is complete by the publication of the notice in the Official Gazette under Section 269D(1) or from the date of service of the said notice on the transferor/transferee under Section 269D(2) of the Act is the question which falls for determination in this appeal.
2. One Ramesh Kumar, son of Shri Manohar Lal, resident of village Sukheranwal tehsil Dabwali, District Sirsa, sold agricultural land measuring 182 kanals 11 marlas to Sarvshri Ganesha Mal and Chetan Dass, sons of Dewani Mal, vide registered sale deed dated February 8, 1977, for an apparent consideration of Rs. 30,000. The competent authority on receipt of information from the Sub-Registrar, Dabwali, in Form No, 37-G made a reference to the Income-tax Officer, B-Ward, Sirsa, who also acted as the Agricultural Land Valuation Officer for determining the fair market value of the land sold. The Agricultural Land Valuation Officer after making enquiry submitted his report determining the fair market value of the land as Rs. 92,000. On the basis of the report submitted by the Agricultural Land Valuation Officer, the "Competent Authority" having reason to believe that the immovable property of the fair market value exceeding Rs. 25,000 had been transferred and the difference between the market value and the apparent consideration of such property being more than 15 per cent., there was reason to believe that the consideration as agreed between the parties had not been truly stated in the instrument of transfer with the object of :
(a) facilitating the reduction or evasion of the liability of the transferor to pay tax under this Act in respect of any income arising from the transfer ; or
(b) facilitating the concealment of any income or any moneys or other assets which have not been or which ought to be disclosed by the transferee for the purposes of the Indian Income-tax Act, 1922, or this Act or the Wealth-tax Act, 1957."
3. The competent authority initiated the proceedings by the issuance of notice for publication in the Official Gazette under Section 269D(1) on September 9, 1977. The notification was published in the Official Gazette on October 1, 1977. The notices published in the Official Gazette under Section 269D(1) were caused to be served on the transferors on January 18, 1978, and on the transferees on January 19, 1978, as was required under Section 269D(2)(a) of the Act. Proclamation by beat of drum and pasting of a copy of the notice on a conspicuous part of the property was done on April 3, 1978. A copy of the notice was also displayed on the notice board of the office of the competent authority as is required under Section 269D(2)(b) of the Act. According to the competent authority, all the formalities under Section 269D of the Act were complied with.
4. The competent authority received objections from the transferors on February 8, 1978, and from the transferees on February 16, 1978. The objections raised included the objections regarding the service of notice under Section 269D(2) being time-barred as the notices were served upon the transferor/transferees beyond nine months from the date of the sate of the property.
5. The competent authority rejected the objections filed by the transferor and the transferees. It held that the time limit of nine months prescribed applied only to the publication of notice under Section 269D(1) and not to the causing of service of such notice on the transferors/transferees or other interested persons under Section 269D(2) of the Act. It exhaustively dealt with the question regarding valuation and concluded that the differences between the market value and the apparent consideration was more than 15 per cent. of such apparent consideration and the consideration for such transfer as agreed to between the parties had not been truly stated in the instrument of transfer with such object as is referred to in Clause (a) or (b) of Sub-section (1) of Section 269C of the Act ; that such a property was liable to be acquired under Chapter XXA of the Act. According to the competent authority, all the formalities as required under Section 269D of the Act were complied with.
6. Aggrieved against the aforesaid order of the competent authority, the transferees filed an appeal before the Income-tax Appellate Tribunal, Chandigarh Bench (hereinafter referred to as the Tribunal). The Tribunal accepted the appeal filed by the transferees and held that initiation of proceedings for acquisition under Chapter XX-A would be complete not by the publication of notice in the Official Gazette but from the date the notice is served on the transferors/transferees and the limitation of nine months has to be counted from the date the notice is served on the transferors/transferees. It was held that the notices on the transferors/ transferees were caused to be served only on January 19, 1978, which were beyond the statutory period of nine months and, therefore, the entire acquisition proceedings including the acquisition order passed by the competent authority were bad in law which deserve to be cancelled. Aggrieved against the aforesaid order of the Tribunal, the present appeal has been filed.
7. The relevant part of Section 269D of the Act reads as under :
(1) The competent authority shall initiate proceedings for the acquisition, under this Chapter, of any immovable property referred to in Section 269C by notice to that effect published in the Official Gazette :
Provided that no such proceedings shall be initiated in respect of any immovable property after the expiration of a period of nine months from the end of the month in which the instrument of transfer in respect of such property is registered under the Registration Act, 1908 (16 of 1908)....
(2) The competent authority shall -
(a) cause a notice under Sub-section (1) in respect of any immovable property to be served on the transferor, the transferee, the person in occupation of the property, if the transferee is not in occupation thereof, and on every person whom the competent authority knows to be interested in the property ;
(b) cause such notice to be published--
(i) in his. office by affixing a copy thereof in a conspicuous place ;
(ii) in the locality in which the immovable property to which it relates is situate, by affixing a copy thereof to a conspicuous part of the property and also by making known in such manner as may be prescribed the substance of such notice at convenient places in the said locality ..."
8. The stand taken by counsel for the Department Mr. R.P. Sawhney, is that initiation of acquisition proceedings is complete under Chapter XXA of the Act by publication of notice to that effect in the Official Gazette whereas the stand taken by counsel for the respondent-transferees is that assumption of jurisdiction commences and is complete only by publication of notice in the Official Gazette as also the valid service of notice on the transferor/transferees, occupants and other interested persons as specified in Sub-section (2)(a) of Section 269D of the Act.
9. On a reading of Section 269D(1) it is clear that proceedings for acquisition under Chapter XXA of the Act get initiated by the publication of the notice in the Official Gazette and thereafter notices have to be served on the transferor/transferees and on the general public by publishing the same in the locality by pasting a copy of the notice on a part of the property and in the office of the competent authority to enable them to file objections. Publication in the Official Gazette is the notice to the public in general regarding initiation of proceedings and the individual notices and publication in the locality of the notices is in the nature of secondary way of informing the transferor/transferees regarding initiation of the proceedings which had taken place by publication in the Official Gazette. Initiation of proceedings for acquisition is complete with the publication of the notice in the Official Gazette.
10. The point in issue is not res Integra. Noticing the difference of opinion on this point between the various High Courts, a Division Bench of this court referred the matter to a larger Bench. On a reference, the Full Bench of this court in CIT v. Amrit Sports Industries [1983] 144 ITR 113, held that initiation of acquisition proceedings is complete on the publication of notice in the Official Gazette. The view taken by the Full Bench in Amrit Sports Industries' case [1983] 144 ITR 113 (P & H), was later on followed by a Division Bench of this court in CIT v. Mela Singh [1986] 161 ITR 78. The point in issue was exhaustively dealt with by the Full Bench and it was concluded by their Lordships of the Full Bench in Amrit Sports Industries' case [1983] 144 ITR 113 (P & H) (headnote) :
"Viewed in the correct perspective, Sub-section (1) of Section 269D is the primary and the main provision for the initiation of acquisition proceedings. Sub-section (2) is a provision subsidiary, and supplementary to Sub-suction (1). It is elementary that where public, notice by publication in the Official Gazette is provided and, added thereto, individual notices or other modes of publication are also provided, then the latter are secondary in nature. The notices prescribed under Sub-section (2) are merely reflections and copies of the notice originally published in the Official Gazette under Sub-section (1). The law provides primarily and first, the publication of the notice in the Official Gazette and then a replica thereof is to be served on individuals or published as laid down in Sub-section (2)(b). An overall analysis of the section discloses that, apart from publication in the Gazette, the law also provides for publication in the locality where the property is situated as also affixing a copy thereof in the office of the competent authority. These are in the nature of public notices supplemental to the publication in the Official Gazette which plants presumptive knowledge of the same to every one concerned. Apart from these, a further mode of service of notice is provided on the transferor, the transferee, the occupant and other persons interested in the property if known to the competent authority. These are subservient and supplemental provisions and the initiation of proceedings is complete with the publication in the Official Gazette. The assumption of jurisdiction by the competent authority arises from such publication. The proceedings under Section 269D(2) being procedural and supplementary, are in no way jurisdictional. Any defect or irregularity therein consequently cannot affect the assumption of jurisdiction by the competent, authority and, therefore, in no way vitiates the initiation of proceedings, once validly done. Therefore, a default in service on the persons interested or even of publication under Sub-section (2)(b) docs not affect the jurisdiction of the competent authority but at the very highest pertains to the exercise of the power thereunder. It is well-settled that an erroneous exercise of the power does not vitiate the proceedings, but merely calls for correction, be it in the appellate, revisional or any other jurisdiction.
Therefore, an initiation of the proceedings for acquisition of immovable property in certain cases of transfers to counteract evasion of tax under Chapter XX-A and the consequent assumption of jurisdiction by the competent authority is complete by the publication of the notice in the Official Gazette under Section 269D(1). Any procedural defect in compliance with Sub-section (2) would not affect the jurisdiction of the competent authority and would not vitiate the whole of the proceedings under the section."
11. We respectfully agree with and follow the view taken by the Full Bench of this court in Amrit Sports Industries' case [19831 144 ITR 113, and the subsequent Division Bench judgment of this court in Mela Singh's ease [1986] 161 ITR 78.
12. For the reasons recorded above, this appeal is accepted and the impugned order of the Tribunal is set aside and that of the competent authority restored.
13. The Tribunal did not go into the merits of the dispute as it had set aside the order of the competent authority on the question of jurisdiction alone. We, therefore, accept the appeal and remit the case back to the Tribunal for decision on the merits of the dispute.