Commissioner of Income Tax vs Ludhiana Hosiery and Textile Association

Ajay Kumar Mittal, J.—This order shall dispose of Income Tax Appeal Nos. 1 to 3 of 1994 as these involve identical facts and common questions of law.

IT Appeal No. 1 of 1994

In this appeal, the Assessee purchased land measuring 46 kanals 16 biswas at Taraf Insar, Panipat vide sale deed registered at No. 1816 dated 5th July, 1984 with the sub-Registrar, Panipat for an apparent consideration of Rs. 22,76,562.

IT Appeal No. 2 of 1994

The Assessee purchased lands measuring 26 bighas 11 biswas at Taraf Insar, Panipat vide sale deed registered at No. 2932 dated 6-8-1984 with the sub-Registrar, Panipat for an apparent consideration of Rs. 13,55,156.

IT Appeal No. 3 of 1994

The Assessee purchased lands measuring 54 bighas 2 biswas at Taraf Insar, Panipat vide sale deed registered at No. 2931 dated 6-8-1984 with the sub-Registrar, Panipat for an apparent consideration of Rs. 28,08,228.

Being identical matters, the facts are extracted from IT Appeal No. 1 of 1994.

This appeal has been preferred by the revenue u/s 269H of the Income Tax Act, 1961 (in short "the Act") against the order dated 14th Sept., 1993 passed by the Income Tax Appellate Tribunal, Delhi Bench E, Delhi (hereinafter referred to as "the Tribunal") whereby the order of the competent authority for acquisition of property was quashed.

The Assessee purchased lands measuring 46 kanals 16 biswas at Taraf Insar, Panipat vide registered sale deed dated 5-7-1984 for an apparent consideration of Rs. 26,76,562. The competent authority made a reference for valuation to the Government Valuation Officer who vide report dated 19-1-1985 determined the fair market value of the property at Rs. 34,59,600. Acquisition proceedings were initiated for acquisition of the property in question. Due opportunity of hearing was given to the Respondent. After appraising the evidence and the valuation report, the competent authority ordered for acquisition of the property under the provisions of the Act. The Assessee feeling aggrieved, preferred an appeal before the Tribunal who vide order dated 14-9-993 set aside the order of acquisition and decided the appeal in favour of the Assessee.

Learned Counsel for the revenue submitted that the Tribunal had erred in reversing the finding recorded by the competent authority and the valuation as determined by the Tribunal is perverse. According to the learned Counsel, the Departmental Valuation Officer (DVO) had submitted his report dated 19-1-1985 where he had assessed the fair market value of the property at Rs. 34,59,600 against apparent consideration of Rs. 22,76,562. He urged that the competent authority was justified in ordering acquisition of the property in dispute under Chapter XX-A of the Act but the Tribunal has erroneously not accepted the valuation report of the DVO.

We have heard learned Counsel for the Appellant and are unable to accept the aforesaid contention. The Assessee had purchased the property measuring 46 kanals 16 biswas at Taraf Insar, Panipat vide registered sale deed dated 5th July, 1984 for an apparent consideration of Rs. 22,76,562. The Tribunal while reversing the finding of the competent authority had recorded as under:

...In our view, the report of the DVO wholly relied upon by the competent authority suffered from the material defects and infirmities in as much as the sale instances relied upon by him bear no comparison to the properties under orders of acquisition. The learned competent authority failed to take into account that the properties of the Assessee Appellant were inferior in location and also situated outside the municipal limit thereby materially affecting their value. It is also a matter of record that in Assessees own case the competent authority dropped the proceedings initiated for acquisition of properties registered with deed Nos. 1676 to 2286 dated 26-6-1984 and llth July, 1985 @ Rs. 2,20,000 per acre as also registration No. 1825 dated 6-7-1984 @ Rs. 2,45,000 per acre and property sold with registration No. 5577 dated 7-2-1985 for Rs. 2,45,000 per acre. The competent authority was not justified in ignoring material and glaring defects pointed out by the Assessee in the report of the DVO including the fact that the comparable case of property of M/s Ludhiana Wool and Shawl Manufacturing Association also showed sale price of Rs. 2.5 lacs per acre for the rear portion while the DVO took only the value of the front portion of the said property @ Rs. 4,00,000 to determine the value of the properties involved which are admittedly situated at the back portion for which only a rebate of 10 per cent was allowed. In our view, the competent authority misdirected himself in relying upon the report of the DVO giving a complete go by to the material defects pointed out by the Assessee Appellant in the report of the DVO. We, therefore, find merit in these appeals and allowing the same quash the order of the competent authority viz. Dy. Commissioner (Appeals), Range, Rohtak.

The Tribunal on appreciation of evidence had come to the conclusion that the properties which had been purchased by the Assessee were located at inferior place and could not be made the basis of comparable sale for determining the market value. It was also recorded that the land was situated outside the municipal limits which affected the value. It was further recorded that the DVO had assessed the value by applying the rate of Rs. 4,00,000 per acre which was the rate of properties situated at front portion whereas the property of the Assessee was located at back portion, which had approximately valuation of Rs. 2,50,000 per acre.

Learned Counsel for the revenue could not point out any perversity or misreading of evidence which may lead us to conclude that the finding recorded by the Tribunal was erroneous or perverse.

Accordingly, we do not find any illegality or perversity in the finding recorded by the Tribunal which may warrant interference by this Court with the impugned order. The appeals are, therefore, dismissed.