S. Jagadeesan, J.
1. The petitioner has filed this writ petition to quash the order of the first respondent in his proceedings F. No. I/December, 1985, dated March 11, 1988.
2. The petitioner purchased the property situated in R. S. No. 126/5 (part) under a registered sale deed dated August 9, 1985, for a total consideration of Rs. 32,20,000 from one R.V. Sarojini Devi. The vendor obtained the certificate under Section 230A of the Income-tax Act, 1961. The property consists of 12 grounds and 494 sq. ft. with a building of 2,200 sq. ft. in the ground floor and 800 sq. ft. in the first floor. The land attracts the purview of the Land Ceiling Act and the petitioner has to meet the proposed land acquisition proceedings arising out of the Urban Land Ceiling Regulation Act. The vendor is in any way not responsible to clear the proceedings that would arise under the Land Ceiling Act. Keeping all these in mind, the value of the property has been fixed at Rs. 32,20,000 which represents the fair market value.
3. The first respondent issued a notice dated July 10, 1986, calling upon the petitioner to produce certain documents relating to the purchase of the property. The petitioner was served with another letter from the District Valuation Officer, Income-tax Department, Madras-6, on July 2, 1986. The District Valuation Officer requested the petitioner to furnish certain documents to him on or before July 14, 1986, on the ground that the first respondent had requested him to value the property. The petitioner furnished the documents to the District Valuation Officer. After receipt of the papers, the District Valuation Officer sent a communication to the petitioner that he would inspect the property on November 5, 1986. But, however, the inspection was not carried out. The reason for not carrying out the inspection on November 5, 1986 was communicated to the petitioner by letter dated November 27, 1986, which was received by the petitioner on November 29, 1986. The petitioner was directed to appear before the District Valuation Officer on December 4, 1986. Thereafter the inspection was made by the District Valuation Officer and the report dated December 10, 1986, was furnished to the petitioner, wherein the District Valuation Officer has determined the valuation of the property at Rs. 41,83,000. On the basis of the valuation fixed by the District Valuation Officer, the first respondent issued a notice on December 10, 1986, under Section 269D(1) of the Income-tax Act stating that he has reason to believe that the immovable property having a fair market value exceeding Rs. 1 lakh, the property in question has been transferred for an apparent consideration which is less than the fair market value of the aforesaid property and that he has reason to believe that the fair market value of the property exceeds the apparent consideration thereof by more than 15 per cent. and that the consideration for such transfer as agreed to between the parties has not been truly stated in the said instrument of transfer with the object of facilitating the reduction or evasion of the liability of the transferor to pay tax under the Income-tax Act and/or facilitating the concealment of any income or money which ought to be disclosed by the transferee for the purpose of the Income-tax Act and hence he initiated proceeding's to acquire the aforesaid property in pursuance of Section 269C of the Income-tax Act. The petitioner submitted objections to the said notice. But, however, the first respondent passed final orders on March 11, 1988, acquiring the property in accordance with Section 269F(6) of the Income-tax Act.
4. The said order is being challenged in this writ petition on the following grounds :
There is no material before the competent authority on the date of the notice to form the opinion that the property is undervalued and as such the entire proceedings are vitiated.
5. The acquisition proceedings had been initiated on the basis of the report of the District Valuation Officer who inspected the property only on December 4, 1986, and hence the Commissioner ought to have formed the opinion only on the basis of the said report which is more than nearly a year after the registration of the sale. As per Section 269D of the Income-tax Act the acquisition proceeding can be initiated within nine months from the date of registration of the sale. Since the report of the District Valuation Officer is beyond the period of limitation, the competent authority has no power or jurisdiction to proceed with the acquisition of the property.
6. Moreover, the competent authority must give valid reason to proceed with the acquisition. The impugned proceedings do not contain any valid reason and hence the same is illegal.
7. The notice under Section 269C does not reveal the basis for the opinion of the competent authority and hence it cannot be said that the competent authority has formed the opinion on the basis of any material available on record. If no material is available, then the opinion of the competent authority is without any basis.
8. It is stated that the inspector of the Income-tax Department has valued the property at Rs. 61.66 lakhs whereas the District Valuation Officer has valued the property at Rs. 41.83 lakhs. When two different valuations are available, the authorities ought to have resorted to the third opinion with regard to the value of the property and ought not to have proceeded on the basis of the value given by the District Valuation Officer.
9. The competent authority has failed to consider that the sale consideration is much more than the guideline value fixed by the revenue authorities and as such it cannot be said that the property has been undervalued.
10. The respondents have caused delay in seeking the opinion of the District Valuation Officer and proceeding with the acquisition and, hence, the entire proceedings are affected on the ground of laches or afterthought.
11. The authorities have totally failed to consider the agreement between the parties to determine the value of the property and give any finding in respect of that, especially when the property is subject to the land ceiling proceedings.
12. The limitation prescribed under Section 269G of the Income-tax Act is an unreasonable restriction on a person whose property is to be acquired under Chapter XX-A and thereby the alternative remedy provided under the statute has become inefficacious. The petitioner has further stated that they have preferred an appeal under Section 269G before tbe Income-tax Appellate Tribunal and the said Tribunal has rejected the appeal as not maintainable, as being barred by limitation. Hence, the writ petition has been filed.
13. The respondents have filed counter. In the said counter in paragraph 2, the respondents have extracted the grounds of attack raised by the petitioner. It is further stated by the respondents that the petitioners have filed the appeal against the impugned proceedings before the Income-tax Appellate Tribunal and the same was dismissed as time barred. Since the petitioners have availed of the alternative remedy available under the statute to challenge the impugned proceedings of the first respondent, they are precluded from invoking the extraordinary jurisdiction of this court under article 226 of the Constitution of India. It is also stated that against the order of the Tribunal an appeal is provided under the statute to the High Court under Section 269H of the Income-tax Act and hence the writ petition is not maintainable without exhausting the alternative remedy available under the Income-tax Act. The non-furnishing of the report of the inspector is not violative of the principles of natural justice, since the competent authority has not relied upon the valuation of the inspector. The impugned order is based on the valuation of the District Valuation Officer, the copy of which was furnished to the petitioner. There is no need for the respondents to furnish to the petitioner the materials which are not relied upon by the respondents. The District Valuation Officer had arrived at the value at Rs. 41.83 lakhs as against Rs. 32.20 lakhs shown as consideration in the sale deed and thus the value in the sale deed is less by nearly 30 per cent. and hence the acquisition proceedings are perfectly valid. The various disadvantages stated by the petitioner in the affidavit filed in support of this writ petition for claiming that the value arrived at by the District Valuation Officer is not correct, have all been taken into account and considered by the District Valuation Officer in arriving at the market value fixed by him. The report of the District Valuation Officer gives the entire details on which he arrived at the fair market value of the property. The petitioners had been given sufficient opportunity for presenting their case. The District Valuation Officer made the inspection of the property on December 4, 1986, after due notice to the petitioner and in the presence of the representative of the petitioner. The conclusion arrived at by the District Valuation Officer that the value of the property is Rs. 41.83 lakhs, as against the value of Rs. 32.20 lakhs shown as consideration in the sale deed and the difference being nearly 30 per cent. of the sale consideration itself is sufficient for the competent authority to entertain the reasonable belief that the apparent consideration of the property referred to in the sale deed is less than the fair market value of the property and this is for the purposes stated in the two sub-clauses of Section 269C of the Income-tax Act for taking proceedings under Chapter XX-A of the Income-tax Act. The reasonable belief of the competent authority is only a prima facie view which can be rebutted by the parties to the transaction.
14. But, in the instant case, there was no valid rebuttal of the presumption that had been raised as stated specifically by the first respondent in the impugned order.
15. As soon as the writ petition was taken up for hearing, standing counsel for the respondents took a preliminary objection with regard to the maintainability of the writ petition. Against the impugned order, the petitioner preferred an appeal before the Tribunal and the same was dismissed. The transferor and the petitioner preferred further appeals in T. C. No. 420 of 1991 and T. C. No. 373 of 1993, respectively. This court dismissed the said appeal T. C. No. 420 of 1991 by order dated June 30, 1998 (R.V. Sarojini Devi (Smt) v. I.A.C. of I. T. : [2000]242ITR329(Mad) . Since the petitioners have exhausted their alternative remedy provided under the statute the writ petition is not maintainable.
16. On the contrary, learned senior counsel for the petitioner contended that in the affidavit itself the petitioner has stated that the appeal was not preferred within the period of limitation and there was a delay in preferring the appeal and as such the petitioner filed a petition for condonation of delay in preferring the appeal. The Tribunal had rejected the petition for condonation of delay against which order a further appeal was preferred before the High Court. This court concurred with the findings of the Tribunal that the Tribunal has no jurisdiction to condone the delay and thereby confirmed the order of the Tribunal and dismissed the appeal. When the petition for condonation of delay had been dismissed by the Tribunal and the same was confirmed by the High Court, it cannot be said that the petitioner had exhausted their alternative remedy as provided under the statute. Since the preliminary objection has been taken it is necessary to consider the same before going into the merits.
17. Section 269G provides an appeal to the Appellate Tribunal against the order for the acquisition of any immovable property by the competent authority under Section 269F. Section 269G of the Income-tax Act reads as follows :
'269G. Appeal against order for acquisition--(1) An appeal may be preferred to the Appellate Tribunal against the order for the acquisition of any immovable property made by the competent authority under Section 269F,--
(a) by the transferor or the transferee or any other person referred to in Sub-section (8) of that section, within a period of forty-five days from the date of such order or a period of thirty days from the date of service of a copy of the order on such person under the said sub-section, whichever period expires later ;
(b) by any other person interested in such immovable property, within forty-five days from the date of such order :
Provided that the Appellate Tribunal may, on an application made in this behalf before the expiry of the said period of forty-five days or, as the case may be, thirty days, permit, by order, the appeal to be presented within such further period as may be specified therein if the applicant satisfies the Appellate Tribunal that he has sufficient cause for not being able to present the appeal within the said period of forty-five days or as the case may be, thirty days.
(2) Every appeal under this section shall be in the prescribed form and shall be verified in the prescribed manner and shall be accompanied by a fee of two hundred rupees.
(3) The Appellate Tribunal shall fix a day and place for the hearing of the appeal and shall give notice of the same to the appellant and to the competent authority.
(4) The Appellate Tribunal may, after giving the appellant and the competent authority an opportunity of being heard, pass such orders thereon as ft thinks fit.
(5) The Appellate Tribunal may, at any time within thirty days from the date of the order, with a view to rectifying any mistake apparent from the record, amend any order passed by it under Sub-section (4) and shall make such amendment if the mistake is brought to its notice by the appellant or the competent authority :
Provided that if any such amendment is likely to affect any person prejudicially, it shall not be made without giving to such person a reasonable opportunity of being heard.
(6) The Appellate Tribunal shall send a copy of any orders passed under this section to the appellant and to the Commissioner.
(7) Save as provided in Section 269H, orders passed by the Appellate Tribunal on appeal shall be final.
(8) Every appeal under this section shall be disposed of as expeditiously as possible and endeavour shall be made to dispose of every such appeal within ninety days from the date on which it is presented.
(9) The provisions of Section 255 [except Sub-section (3) thereof] shall, so far as may be, apply in relation to the powers, functions and proceedings of the Appellate Tribunal under this section as they apply in relation to the powers, functions and proceedings of the Appellate Tribunal under Chapter XX.'
18. From the above provision it is clear that Sub-clause (a) of Sub-section (1) of Section 269G gives the right to the transferor or the transferee or any other person referred to in Sub-section (8) of Section 269F to prefer the appeal within a period of 45 days from the date of such order or within a period of 30 days from the date of service of a copy of the order on such person under the said sub-section whichever period expires later. Sub-clause (b) of Sub-section (1) of that section gives liberty to any other person interested in such immovable property to prefer an appeal within forty five days from the date of such order. The proviso to Sub-section (1) empowers the Tribunal to enlarge the period of limitation by an order on the application of the parties mentioned in Sub-clauses (a) and (b) if they filed an application before the Tribunal before the expiry of the period specified in Sub-clause (a) or (b). This means that the transferor or the transferee would be deprived of their right of appeal if they have not applied before the Appellate Tribunal by way of an application for extension of time for preferring such appeal before the period of 45 days or 30 days, as the case may be, expires.
19. In this case, admittedly, the petitioner did not apply for any extension of time as contemplated under the proviso to Sub-section (1). However, the petitioners preferred an appeal with a petition to condone the delay. The same was dismissed by the Tribunal on the ground that in view of the restrictions imposed in the proviso to Sub-section (1), the Tribunal has no power to Condone the delay, as the application for extension of time was not filed by the petitioner within 45 days of the order or within 30 days from the date of the receipt of the copy of the order. The petitioners preferred an appeal under Section 269H of the Income-tax Act before the High Court. The High Court confirmed the order of the Tribunal finding that the Tribunal has no power to condone the delay.
20. Now the question for consideration is whether the rejection of the petition for condonation of delay for want of jurisdiction would amount to exhaustion of the alternative remedy.
21. It may be worth while to refer to a passage from the Administrative Law by Sir William Wade, 7th edition, at page 721 :
'In principle there ought to be no categorical rule requiring the exhaustion of administrative remedies before judicial review can be granted. A vital aspect of the rule of law is that illegal administrative action can be challenged in the court as soon as it is taken or threatened. There should be no need first to pursue any administrative procedure or appeal in order to see whether the action will in the end be taken or not. An administrative appeal on the merits of the case is something quite different from judicial determination of the legality of the whole matter. This is merely to restate the essential difference between review and appeal, which has already been emphasised. The only qualification is that there may occasionally be special reasons which induce the court to withhold discretionary remedies where the more suitable procedure is appeal, for example where an appeal is already in progress, or the object is to raise a test case on a point of law. ... A paradoxical contention, occasionally put forward is that the exercise of an administrative appeal implies a waiver of judicial remedies. In Ridge v. Baldwin [1962] 1 All ER 834 the Court of Appeal held that since the chief constable had appealed to the Home Secretary unsuccessfully he had thereby waived his right to seek a declaration from the court that his dismissal was legally invalid. The House of Lords reversed this decision, which rests on an obvious confusion between appeal on the merits of the case and judicial review of the legality of the whole proceeding. Since these arc quite different things, it would be an illogical trap if they were, mutually exclusive. Administrative remedies are highly desirable and people should be encouraged to use them. But to allow unlawful action to stand, merely because it has been appealed against on its merits, is indefensible . . . Recently the case law has produced a crop of judicial statements which conflict with the rule just explained. It has been said that, where there is some right of appeal, judicial review will not be granted 'save in the most exceptional circumstances'; and that the normal ride is that the applicant should first exhaust whatever other rights he has by way of appeal. This novel attitude, which does not appear to be based on authority, may be due to the increasing pressure of applications for judicial review, which are now so numerous. It has not, as yet, in practice led to denial of judicial review where eligible grounds for it are shown, merely because a right of appeal has not been exercised. But that may occur before long if these formidable dicta are taken at face value.'
22. From the above portion of the text, the author had expressed his view that even where the alternative remedy has (not ?) been exhausted still judicial review is possible if the order is patently illegal.
23. In such circumstance, the question for consideration is whether the petitioner had exhausted the alternative remedy. It can be said that when an appeal has been filed against an order and the appeal is dealt with on the merits by the appellate authority after application of mind and consideration of the objections with regard to the validity or the legality of the impugned order, the appellate authority passes an order, then only it can be said that the appeal had been entertained and the alternative remedy had been exhausted. When an application for condonation of delay has been dismissed either for want of jurisdiction or sufficient cause then there cannot be any dispute that the appeal was not entertained on the merits by the appellate authority. If that be so, then how can the petitioner be deprived of the remedy under this proceeding on the ground of exhaustion of the effective alternative remedy. The word 'alternative' had been explained in the Law Lexicon by P. Ramanatha Aiyar, second edition, as follows :
'The one or the other of two things ; a privilege of choosing one of two things or courses, either of two objects offered to one's choice. (Abbott L. Dict.) (as) alternative contract ; alternative obligation ; alternative remedy ; alternative turns, alternative courts.
(1) the one or the other of two things ; of two things such that one or the other, may be chosen, the choice of either involving the rejection of another ; that which is in the alternative ; either of two courses open to choose between ;
(2) offering a choice of two or more things ; expressing a choice or choices.'
24. In order to exclude the jurisdiction of this court on the ground of exhaustion of alternative remedy by the petitioner, it should be established by the respondent that the petitioner has preferred the alternative remedy of appeal before the Tribunal and that appeal has been disposed of on the merits and a finality has been given to the original order. In this case, neither the Appellate Tribunal nor this court had an occasion to deal with the impugned order on the merits since the appeal preferred by the petitioner had been dismissed as time barred.
25. If the petitioner has preferred an appeal after the disposal of their appeal under Section 269H of the Income-tax Act before the High Court, then the matter would have been different. The petitioner has filed this writ petition immediately after the petition for condoning the delay in preferring the appeal has been rejected by the Appellate Tribunal and in this writ petition the petitioner not only challenges the validity of the original order but also the validity of the proviso to Section 269G(1) and hence it cannot be said that the writ petition is not maintainable. Apart from this, the conduct of the respondent in raising' the preliminary objection is also to be taken note of. The respondents are very much parties to T. C. No. 420 of 1991 (Sarojini Devi (R.V.) (Smt.) v. I.A.C. of I. T. : [2000]242ITR329(Mad) filed by the transferor before the Division Bench. Had it been brought to the notice of the Division Bench about the pendency of this writ petition, naturally the Division Bench would have taken up the writ petition along with T. C. No. 420 of 1991 (Sarojini Devi (R. V.) (Smt.) v. LA, C. of I. T. : [2000]242ITR329(Mad) and decided the issue. For the reasons best known to the parties, neither the petitioner nor the respondents, has brought to the notice of the Division Bench about the pendency of this writ petition and to have the same for disposal along with the said T. C. No. 420 of 1991 (Sarojini Devi (R. V.) (Smt.) v. IAC of I.T. : [2000]242ITR329(Mad) .
26. The apex court in the judgment reported in Shivram Poddar v. ITO : [1964]51ITR823(SC) , has held as follows : [1964]51ITR829(Ker) :
'We may observe that we have proceeded to decide this case on the footing that the business of the firm was discontinued on dissolution of the firm. It is, however, necessary once more to observe, as we did in C. A. Abraham's case : [1961]41ITR425(SC) , that the Income-tax Act provides a complete machinery for assessment of tax, and for relief in respect of improper or erroneous orders made by the Revenue authorities. It is for the Revenue authorities to ascertain the facts applicable to a particular situation, and to grant appropriate relief in the matter of assessment of tax. Resort to the High Court in exercise of its extraordinary jurisdiction conferred or recognised by the Constitution in matters relating to assessment levy and collection of income-tax may be permitted only when questions of infringement of fundamental rights arise, or where on undisputed facts the taxing authorities are shown to have assumed jurisdiction which they do not possess.'
27. From the above extracted text of the Administrative Law by Sir William Wade and the apex court judgment, it is clear that the existence of alternative remedy may not be a ground to dismiss the writ petition.
28. In a recent judgment of the apex court reported in CIT v. U. P. Forest Corporation : [1998]230ITR945(SC) , the apex court has observed as follows (page 957) :
'Before concluding, we would like to observe that the High Court ought not to have entertained the writ petitions when adequate alternative remedy was available to the respondent. Under the peculiar facts and circumstances of the present case and inasmuch as the litigation between the parties has been going on for a number of years, we do not think it will be appropriate to dismiss these appeals on this ground at this late stage.'
29. In this case also the matter is pending for nearly ten years and considering the fact of lapse of time, I am of the view that the writ petition cannot be dismissed on the ground that the petitioner has not exhausted the alternative remedy especially when the appeal was not entertained on the merits.
30. It may be worth while to note two judgments of this court where the assessees under the Sales Tax Act preferred statutory appeals as well as writ petitions. Inspite of the fact that the appeal was pending before the appellate authority, a Division Bench of this court has entertained the writ petition on the merits and set aside the order of assessment directing the petitioner to withdraw the appeal pending before the Appellate Tribunal. In Murali Trading Co. v. Joint Commercial Tax Officer [1967] 19 STC 221 (Mad), the Division Bench has held as follows (page 224) :
'We, therefore, direct that the writs would issue striking down the assessments and that the detailed explanations of the assessee now supplemented by further detailed statements, should be taken up and considered, and the assessment carried through again in due compliance with the requirements of law, and the principles of natural justice. The concerned assessee is directed to withdraw the appeals pending before the Sales Tax Appellate Tribunal in view of the allowance of the writs.'
31. In yet another judgment reported in Ramana Reddy (N.) v. Joint Commercial Tax Officer [1971] 28 STC 683 (Mad) a single judge has followed the same principle in the following passage (page 686) :
'In a case where the matter was pending with the Sales Tax Appellate Tribunal and where it was found that the principles of natural justice, in particular, the principle of audi alteram pattern was not observed, a Division Bench of this court in Murali Trading Co. v. Joint Commercial Tax Officer [1967] 19 STC 221 set aside the original order of assessment and directed the concerned assessee to withdraw the appeal pending' before the Sales Tax Appellate Tribunal. Following this decision, I direct the asses-see to withdraw the appeal before the appellate authority and contemporaneously set aside the, order of assessment which is impugned herein, as a full and fair trial has not been given to the petitioner when the order of assessment has been made.'
32. For the reasons stated above, I am of the view that the preliminary objection raised by the respondents cannot be sustained. Hence, it is necessary to deal with the matter on the merits.
33. Coming to the merits of the case, the petitioner has challenged the order of the first respondent mainly on the following grounds :
Section 269D of the Income-tax Act empowers the authority to initiate the proceedings for acquisition within nine months from the last date of the month of the registration of the document. In this case, the document has been registered in December, and the notice under Section 269D(1) was issued only on August 6, 1986.
34. There is no basis for the first respondent to form the opinion in August, 1985, with regard to the value of the property, since the first respondent did not communicate to the petitioner about the basis on which he formed the opinion before the acquisition proceedings are initiated.
35. The notices dated November 26, 1985, and July 10, 1986, cannot be construed as the initiation of the acquisition proceedings because the issue of notice under Section 269D(1) alone can be construed for the initiation of the proceedings.
36. The objection with regard to the valuation of the District Valuation Officer has not been considered by the first respondent.
37. Coming to the first and second objection, it is necessary to see the provisions of the Act. Section 269D of the Income-tax Act reads as follows :
'269D. Preliminary notice.--(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), or, as the case may be, Section 269AB : Provided further that-
(a) in a case where it is determined under Sub-section (4) of Section 269B by the competent authority who has initiated proceedings for the acquisition of any immovable property under this Chapter or by the Board that such competent authority has no jurisdiction to initiate such proceeding's, the competent authority having jurisdiction may initiate such proceedings within-
(i) the period of nine months specified in the foregoing proviso ; or
(ii) a period of thirty days from the date of such determination, whichever period expires later ;
(b) in a case where proceedings for the acquisition of any immovable property under this Chapter could not be initiated during any period of time by reason of any injunction or order of any court prohibiting the initiation of such proceedings or preventing the examination of documents or other materials required to be examined for the purpose of determining whether such proceedings should be initiated, the time of the continuance of the injunction or order, the day on which it was issued or made and the day on which it was withdrawn shall be excluded in com puling the period during which such proceedings may be initiated under this sub-section.
(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.
Explanation.--The provisions of the Explanation to Sub-section (2) of Section 269B shall apply for the purposes of this sub-section as they apply for the purposes of that sub-section.'
38. From the above provision, it is clear that the competent authority is empowered to initiate proceedings for the acquisition under Chapter XX-A in respect of any immovable property referred to in Section 269C by notice to that effect published in the official gazette. The proviso restrained the authorities from initiating the acquisition proceedings after the expiry of the period of nine months from the end of the month in which the instrument of transfer in respect of the property is registered. To initiate the acquisition proceedings under Section 269D of the Income-tax Act, the competent authority must have reason to believe that any immovable property of a fair market value exceeding Rs. 1 lakh has been transferred for an apparent consideration which is less than the fair market value of the property, as required under Section 269C(1) which provision is as follows :
'269C. Immovable property in respect of which proceedings for acquisition may be taken.--(1) Where the competent authority has reason to believe that any immovable property of a fair market value exceeding one hundred thousand rupees has been transferred by a person (hereafter in this Chapter referred to as 'the transferor') to another person (hereafter in this Chapter referred to as 'the transferee') for an apparent consideration which is less than the fair market value of the property and that the consideration for such transfer as agreed to between the parties has 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 (11 of 1922), or this Act or the Wealth-tax Act, 1957 (27 of 1957),
the competent authority may, subject to the provisions of this Chapter, initiate proceedings for the acquisition of such property under this Chapter :
Provided that before initiating such proceedings, the competent authority shall record his reasons for doing so :
Provided further that no such proceedings shall be initiated unless the competent authority has reason to believe that the fair market value of the property exceeds the apparent consideration therefor by more than fifteen per cent. of such apparent consideration.
(2) In any proceedings under this Chapter in respect of any immovable property,--
(a) where the fair market value of such property exceeds the apparent consideration therefor by more than twenty-five per cent. of such apparent consideration, it shall be conclusive proof that the consideration for such transfer as agreed to between the parties has not been truly stated in the instrument of transfer ;
(b) where the property has been transferred for an apparent consideration which is less than its fair market value, it shall be presumed, unless the contrary is proved, that the consideration for such transfer as agreed to between the parties has not been truly stated in the instrument of transfer with such object as is referred to in Clause (a) or Clause (b) of Sub-section (1).'
39. The requirements of the above section are :
(i) The competent authority has reason to believe that the document does not represent the actual market value.
(ii) Before initiating any proceedings, the competent authority shall record his reasons for doing so.
(iii) The competent authority cannot initiate the proceeding unless he has reason to believe that the fair market value of the property exceeds the apparent consideration therefor by more than 15 per cent. The notice dated November 26, 1985, is as follows :
'Government of India,
Office of the Inspecting Assistant Commissioner of Income-tax
(Acquisition Range-II),
617, Anna Salai,
Madras - 600 006.
F. No. 1/Dec/85
Dated : 26-11-85
To
Vorion Chemicals Distillers Ltd.
Sir/Madam,
Property bearing door No. 12, Nungambakkam High Road.
Doc. No. 570/85
Action under Chapter XX-A of the Income-tax Act, 1961 (provisions to acquire immovable property) has been initiated for the acquisition of the above property by publishing a notice under Section 269D(1) of the Income-tax Act, 1961, in the Government of India Gazette. In this connection, you are requested to appear before me at my office at the below address on December 8, 1985, at 3 p. m. for a hearing. After the hearing inspection of the property will be taken up, if necessary. If you have not filed objections to acquisition proceedings so far, you are requested to file your objections, if any, to the acquisition of the said property in writing on the date of hearing.
(Sd.) A. R. Reddy,
The Inspecting Asst. Commissioner,
Acquisition Range-II,
Madras-6.'
40. The above notice though dated November 26, 1985, it requires the petitioner to appear before the first respondent on December 8, 1985, at 3 p.m. for hearing. In this notice, the first sentence reads as if the action under Chapter XX-A of the Income-tax Act has been initiated by publishing a notice under Section 269D(1) of the Income-tax Act in the Government of India Gazette. Neither the copy of the Gazette was produced before this court nor in the counter affidavit of the respondent the date of the notification in the Gazette has been mentioned. When the notice under Section 269D(1) had been published in the Gazette, no such notice has been served either on the transferor or on the transferee as required under Section 269D(2) immediately after the publication. The notice under Section 269D(1) of the said Act is dated August 6, 1986, which is as follows :
'Notice under Section 269D(1) of the Income-tax Act, 1961 (43 of 1961).
Government of India,
Office of the Inspecting Assistant Commissioner of Income-tax,
Acquisition Range-II, Madras-600 006.
Ref : No. I/Dec. 1985
Dated : 6-8-1986
Whereas Sri A. B. Reddy, being the competent authority under Section 269D of the Income-tax Act, 1961 (43 of 1961) (hereunder referred to as the said Act), have reason to believe that the immovable property having a fair market value exceeding Rs. 1,00,000 and bearing No. Door No. 12, Nungambakkam High Road, situated at Madras-34 (and more fully described in the schedule annexed hereto) has been transferred under the Registration Act, 1908 (16 of 1908), in the office of the Registration Officer, at Thousand Lights/Doc. No. 570 of 1985, on December, 1985, for an apparent consideration, which is less than the fair market value of the aforesaid property and / have reason to believe that the fair market value of the property as aforesaid exceeds the apparent consideration therefor by more than fifteen per cent. of such consideration and that the consideration for such transfer as agreed to between the parties has not been truly stated in the said instrument of transfer with the object of:
(a) facilitating the reduction or evasion of the liability of the transferor to pay tax under the said Act, in respect of any income arising from the transfer ; and/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 (11 of 1922), or the said Act or the Wealth-tax Act, 1957 (27 of 1957).
Now, therefore, in pursuance of Section 269C of the said Act, I hereby initiate proceedings for the acquisition of the aforesaid property by the issue of this notice under Sub-section (1) of Section 269D of the said Act, to the following persons, namely :--
Smt. R.V. Sarojini Devi,
12, Nungambakkam High Road, Madras-34
(Transferor)
Vorion Chemicals and Distilleries Ltd.,
by Managing Director,
Mr. N. P. V. Ramaswamy Udayar,
10, Sriman Srinivasan Road, Madras-18
(Transferee)
(Person in occupation of the property)
(Person whom the undersigned knows to be interested in the property)
Objections, if any, to the acquisition of the said property may be made in writing to the undersigned.
(a) by any of the aforesaid persons within a period of 45 days from the date of publication of this notice in the Official Gazette or a period of 30 days from the service of notice on the respective persons, whichever period expires later.
(b) by any other person interested in the said immovable property, within 45 days from the date of the publication of this notice in the Official Gazette.
Explanation.--The terms and expressions used herein as are defined in Chapter XX-A of the said Act, shall have the same meaning as given in that Chapter.
Schedule
Land and bungalow : 'Dunduan' No. 4-B (New No. 12),
Nungambakkam High Road,
Madras-34,
Thousand Lights/Doc. No. 570 of 1985.
(Sd.) A. B. Reddy,
Competent Authority,
Inspecting Assistant Commissioner of
Income-tax, Acquisition Range-II,
Madras 600 006.'
Dated : August 6, 1986
41. When the notice under Section 269D(1) is dated August 6, 1986, it is notknown as to how the respondent in the notice dated November 26, 1985; tothe petitioner has stated that the notice under Section 269D(1) of the saidAct had been published in the Government of India Gazette. Further, thenotices dated November 26, 1985, as well as July 10, 1986, do not revealthat the competent authority has reason to believe as required under Section 269C(1) that the value of the property mentioned in the documentdoes not represent the actual market value. Only the notice dated August6, 1986, makes it clear that the competent authority has reason to believethat the immovable property has been transferred for a lesser consideration than the fair market value. Further, the said notice clearly specifiesthat the initiation of the proceedings for acquisition is made only by theissue of the same which is clear from the following words :
'I hereby initiate proceedings for the acquisition of the aforesaid property by issue of this notice under Sub-section (1) of Section 269D of the said Act,'
42. Hence, there is no doubt that the initiation of the proceedings has been done only by the issuance of the notice dated August 6, 1986. It is contended on behalf of the petitioner that when the document admittedly is dated August 9, 1985, the nine months period specified in the proviso to Section 269D(1) expired by May, 1986, and hence in this case there cannot be any doubt that the initiation of the acquisition proceedings is beyond the period prescribed in Section 269D of the Income-tax Act.
43. Learned standing counsel for the Department, however, contended that though the date of sale is August 9, 1985, the same was registered in December, 1985, and, hence, the notice was issued to the petitioner on July 10, 1986, for the preliminary enquiry and notice under Section 269D(1) on August 6, 1986, and as such, the proceedings had been initiated within nine months from the date of registration, as required by the proviso to Section 269D(1) and, accordingly, the acquisition proceedings cannot be said to be barred by limitation.
44. I am unable to agree with learned counsel for the respondents. As already pointed out, the requirement of the initiation of proceedings under Section 269D is the publication of the notice under the said section in the Official Gazette and the service of the said notice on the transferee, transferor or any other person interested or in occupation of the property. In this case, the notice under Section 269D(1) is dated August 6, 1986. There is absolutely nothing on record to show as to when the said notice was published in the Government Gazette. Further, there is no material placed by the respondents in this regard. In the absence of any such publication of the notice in the Government Gazette, as contemplated under the statute, I am of the opinion that the entire acquisition proceedings are void.
45. Even though the document has been registered in December, 1985, and the notice dated August 6, 1986, under Section 269D(1) is within the period prescribed under the proviso to Section 269O(1) still the said notice cannot be said to be valid, since at the relevant point of time the first respondent did not have any basis to entertain the reason to believe that the property is undervalued. The notice reveals that the competent authority has reason to believe that the immovable property having a fair market value exceeding Rs. 1 lakh has been transferred under the Registration Act, 1908, for a lesser consideration than the fair market value. When the competent authority expresses that he has reason to believe, then naturally there should be some basis for his reasonable belief that the property has been undervalued. From the counter affidavit it is clear that the competent authority entertained a reasonable belief only on the basis of the valuation report of the District Valuation Officer. This is clear from the following passages of the counter affidavit of the respondents :
'Even on merits, it is submitted that with reference to the claim of the petitioner that the impugned order of the first respondent is not valid ,because the valuation of the property was done by the inspector who was not competent to value the property as he did not possess the requisite qualifications therefor and a copy of the said valuation report of the inspector was not furnished to the petitioner and hence the order is violative of the principles of natural justice, a perusal of the impugned order will clearly show that the first respondent did not rely on the valuation report of the inspector for the purpose of his conclusion that the property will have to be acquired but relied only on the valuation report of the District Valuation Officer, copy of which had been furnished to the petitioner. In such circumstances the question of furnishing' a copy of the report of the inspector which was not relied on for the purpose of passing' the impugned order, does not arise as claimed by the petitioner . . . The further claim of the petitioner that in view of the non-inspection of the property by the District Valuation Officer or the competent authority there were no materials which could lead the competent authority to believe that the fair market value of the property exceeds the apparent consideration, it is submitted that the conclusion arrived at by the District Valuation Officer that the value of the property is Rs. 41.83 lakhs as against the value of Rs. 32.20 lakhs shown as consideration in the sale deed and the difference being nearly 30 per cent of the sale consideration is itself sufficient for the competent authority to entertain the reasonable belief that the apparent consideration of the property referred to in the sale deed is less than the fair market value of the property and this is for the purposes stated in the two sub-clauses of Section 269C of the Act for taking proceedings under Chapter XX-A of the Act.'
46. It may be pertinent to note that the competent authority had inspected the property only on December 4, 1986, and submitted the report only on December 11, 1986. Hence, on August 6, 1986, the report of the District Valuation Officer was not before the competent authority to entertain the reasonable belief. So far as the dates of inspection and submission of the report of the District Valuation Officer is concerned, there is no dispute. From this it is clear that on August 6, 1986, the date on which the notice under Section 269D(1) was sent to the petitioner, the competent authority had no basis to entertain the reasonable belief.
47. Learned counsel for the respondent further contended that S. Govindan, the inspector of the Income-tax Department was deputed to assess the value of the property who had submitted the report stating that the value of the property is Rs. 61,65,920. This report of the inspector is the basis for the competent authority to entertain the reasonable belief and hence it cannot be said that the notice under Section 269D(1) is without any basis to entertain the reasonable belief. Though the impugned order dated March 11, 1988, refers to the report of the inspector of the Income-tax Department, it is not known as to on what date the said inspector had inspected the property and submitted the report. Admittedly, the petitioner was not given any notice before such inspection and the petitioner was not furnished with the copy of the report of the inspector. Paragraph 2 of the impugned order gives the reason for deputing the inspector as follows :
'As this was a time-barring case, I deputed the inspector of this office Sri S. Govindan, to inspect the property and to give a report.'
48. When the counter as well as the impugned order is very silent with regard to the date of inspection of the inspector, it can be inferred that the first respondent could have deputed the inspector only to receive the report and keep it on file in order to give life to the proceedings ; especially when it is admitted that this was a time barring case. This is clear from the impugned order itself, wherein it is stated that since the property was referred to the District Valuation Officer on June 19, 1986, and the valuation report has not been received and the matter is time barring, the inspector was deputed.
49. As already pointed out, from the portion of the counter, the competent authority has entertained a reasonable belief that the apparent consideration of the property referred to the sale deed is less than the fair market value of the property, only on the basis of the conclusion arrived at by the District Valuation Officer. If the reasonable belief is only based on the valuation of the District Valuation Officer, the report of the inspector, Govindan, is of no use either to entertain a reasonable belief or to come to the conclusion that the property is undervalued. When the petitioners were not given any notice by the inspector of the Income-tax Department before his inspection and the failure on the part of the first respondent to furnish the copy thereof would clearly establish that the inspection of the inspector is only a make-believe story.
50. For the reasons stated above, I find that the first respondent had no basis on August 6, 1986, to form the reasonable belief, since as admitted in the counter, the reasonable belief is only on the report of the valuation submitted by the District Valuation Officer which is dated December 11, 1986. Hence, the initiation of acquisition proceedings is without any basis.
51. Coming to the third contention of counsel for the petitioner that the notices dated November 26, 1985, and July 10, 1986, cannot be construed as the initiation of the proceedings under Section 269D(1) is concerned, I am entirely in agreement with counsel for the petitioner. The notice dated November 26, 1985, does not reveal that the first respondent had reasonable belief regarding the undervaluation of the property. Further the preliminary notice dated July 10, 1986, refers to various sections barring Section 269D(1). The acquisition proceedings can be said to be initiated under Section 269D(1), only after the publication of notice in the Central Government Gazette and service of such copy of notice on the transferee or the transferor. Only the notice dated August 6, 1986, served on the petitioner can be construed as a notice under Section 269D(1) which is already found that the same is invalid as it was issued without any basis to entertain the reasonable belief regarding the undervaluation of the property, since the respondents have categorically admitted that the first respondent entertained the reasonable belief only from the report of the District Valuation Officer which is dated December 11, 1986. Hence, both the notices cannot be construed as the proceedings initiated under Section 269D(1) of the Income-tax Act.
52. So far as the fourth contention of counsel for the petitioner is concerned, it could be seen that the petitioner has submitted the objection stating that the property on College Road cannot be taken as the criteria or a data sale for fixing the value of the property in dispute and further the transferee is to take care of the proceedings that would arise under the land ceiling proceeding and there is a recital in the sale deed itself to that effect and these aspects have not been taken into consideration by the first respondent while considering the value determined by the District Valuation Officer. In order to determine the value of the land, normally the property near the vicinity of the property in question alone can be taken into consideration and if the property is situated far away, the value of that property cannot form the basis for the determination of the value of the property in question. A perusal of the impugned order does not reveal that the objection with regard to the reliance placed by the District Valuation Officer in respect of the property which is situated on College Road has been considered at all. Moreover, the first respondent, acting as a quasi-judicial authority in this proceeding while determining the value of the property to find out the undervaluation, if any, in the sale deed, ought to have examined the persons concerned with the sale deeds relied upon by the District Valuation Officer. The apex court as well as this court has held even in the rent control proceedings and the land acquisition proceedings, to fix the value of the land in order to determine the fair rent and the compensation respectively, the parties concerned to the sale deeds are to be examined by the parties who rely upon those sale deeds for determination of the value of the land. Without examining such persons, who are concerned with the document, the same cannot be relied upon or cannot be taken into consideration ipso facto.
53. On this aspect, it may be worthwhile to refer two judgments ; one is reported in K. Ramanathan v. B.K. Nalini Jayanthi [1996] (2) L. W. 658, a Division Bench of this court has held as follows :
'To determine the fair rent under Section 4 of the Tamil Nadu Buildings (Lease and Rent Control) Act, evidence in each case is absolutely necessary. It will not be possible for any court to have an idea about the relevant factors, viz., location of the site, proximity, nearness to the developed areas, frontage, situation, etc., etc., in any case, merely on the basis of sale deeds pertaining to some lands in the locality. Even the particulars contained in a given case are sufficient to prove the nature and character of the lands, dealt with therein, there must be evidence before the court to the effect that the lands are similar in nature and the character of the lands dealt with in such sale deeds, and those documents could be taken into consideration for fixing the fair rent for any residential or non-residential building. If a party rests content with producing some sale deeds and if there is no material before the court, the sale deeds cannot be taken into account by the court for determining the market value. Therefore, as held by the Supreme Court in Inder Singh v. Union of India : [1993]3SCR371 and Periyar and Pareekanni Rubbers Ltd. v. State of Kerala : AIR1990SC2192 , referred to supra, persons connected with the sale transactions or the attesting witnesses should be examined in order to prove the transactions as well as the factors referred to therein. The burden of proof is always on the landlord to prove in each case the market value or the site in which the building is constructed, the cost of construction of the building and the cost of provision of any one or more of the amenities specified in Schedule I as on the date of application for fixation of fair rent.'
54. In another judgment reported in Inder Singh v. Union of India : [1993]3SCR371 , the Supreme Court has observed as follows (page 244) :
'It would be possible to have reliable evidence when sale transactions are proved by either the vendor or the vendee, and if either of them was not available, the attesting witness who had personal knowledge of the transaction is to be examined by producing either the original sale deed or certified copies thereof as evidence. Under Section 51A of the Act as amended in 1984 the certified copies have been permitted to be brought on record as evidence of sale transaction recorded therein. The examination of the witnesses is to find that the sale transactions are bona fide and genuine transactions between the willing vendor and willing vendee as reasonable prudent men and the price mentioned is not a throwaway price at arm's length or depressed sales or brought into existence to inflate market value of the lands under acquisition and the sales are accommodating one. Equally it must be brought on record the comparative nature of the lands covered under the sale deed and the acquired lands whether adjacent or actual distance or possessed of similar advantages and whether transactions themselves ore genuine and bona fide transactions. This proposition of law, since settled law, in fairness, has not been disputed across the Bar. The contention is that at the relevant time it was not being insisted upon. Therefore, none of the witnesses was called upon to prove the sale deeds, or to prove the sale transactions. Therefore, when evidence of potential value is available, the same could be considered. We find merit in the contention. At one time we thought of remanding the cases but we find that it would be needless prolongation and the complexion on ground by now would have been completely changed. In view of the above settled legal position and the circumstances, the documentary evidence of sale transactions or in the mutation entries on either side are clearly not admissible and, therefore, they cannot be looked into, and are accordingly-excluded from consideration.'
55. Moreover, even according to the respondents S. Govindan, the inspector has given the valuation of the property at Rs. 61,65,920 and the District Valuation Officer has given the valuation at Rs. 41,83,000. When there is vast difference between two valuations, the authorities ought to have sought for the third valuation in order to get the proper valuation of the property under dispute. Without doing so, the first respondent has merely accepted the valuation of the District Valuation Officer which cannot be said to be proper.
56. Even though learned counsel for the petitioner challenges the validity of Section 269G of the Income-tax Act with regard to the restriction of limitation, I am of the view that it is unnecessary to g'o into the question of, validity of the said provision in this case, since factually it has been found that the impugned order of acquisition is invalid.
57. For the abovestated reasons, 1 am of the view that since the notice under Section 269D(1) of the Income-tax Act dated August 6, 1986, had been issued without any basis to entertain the reasonable belief by the first respondent, the same is invalid and accordingly the writ petition is allowed. No costs.
58. In view of the allowance of the writ petition, the petitioner is directed to withdraw the T. C. No. 373 of 1993 filed by them before this court, in case the same had not already been disposed of.