JUDGMENT S.K. Jha, J.
1. These appeals have been preferred under Section 269H of the Income-tax Act, 1961 (hereinafter to be referred to as " the Act "), against the order dated September 21, 1976, passed by the Income-tax Appellate Tribunal, 'B' Bench, Patna, in I.T. (Acquisition) Appeals Nos. 2, 5, 4, 9, 7 and 8 (Pat.) of 1974-75, respectively. Copies of the impugned order were served on the appellants in Miscellaneous Appeals Nos. 5, 6, 7, 9 and 10 of 1977 on November 10, 1976, whereas on the appellant in Miscellaneous Appeal No. 325 of 1976 on October 21, 1976. By the impugned judgment, the Tribunal has dismissed the appeals of the appellants and affirmed the order dated November 11, 1974, passed by the Competent Authority, IAC of Income-tax, Acquisition Range, Patna (hereinafter to be called the "Competent Authority") in File Nos. III-64/Acq/73-74, III-71/Acq./73-74, III-66/Acq/73-74, III-75/Acq/73-74, III-72/Acq/73-74 and III-75/Acq/ 73-74.
2. At the outset, in all fairness, I must state that initially only Miscellaneous Appeal No. 325 of 1976 was posted for hearing as shown in the daily cause list. Learned counsel for the parties, however, agreed that since a number of appeals have been filed by different parties against the same order, all of them should be heard together. Miscellaneous Appeals Nos. 5, 6, 7, 9 and 10 of 1977 had already been admitted and notices issued and received by the parties. Two other appeals, namely, Miscellaneous Appeals Nos. 4 and 8 of 1977, had not by then been admitted. Therefore, with the consent of the parties, we took up for hearing all the appeals excepting Miscellaneous Appeals Nos. 4 and 8 of 1977 which, as stated above, had not been admitted at the time of hearing of these appeals. Accordingly, we heard learned counsel for the parties in Miscellaneous Appeals Nos. 325 of 1976 and Nos. 5, 6, 7, 9 and 10 of 1977 only. Since all these appeals arise out of the same order, they have been heard together and are being disposed of by a common judgment.
3. 17.85 kathas of land bearing holding No. 567/401 (new) corresponding to holding No. 316 (old) in circle No. 6, ward No. 2, street No. 31, plot No. 762, with the building thereon on Exhibition Road, Patna, were transferred to twelve persons including the appellants of these appeals under ten sale deeds executed on August 30, 1973, for an aggregate consideration of Rs. 1,85,000. On September 5, 1973, these sale deeds were registered. According to the valuation report dated January 11, 1974, of the valuation officer the value of the property was estimated to be Rs. 6,58,000. This fact having been brought to the notice of the taxation authorities, the notices under Section 269D(1) of the Act were issued on January 31, 1974, and the same were published in Part III, Section 1 of the Gazette of India, dated March 2, 1974, at page 1045 and that dated June 1, 1974, at pages 3452 to 3458 and page 3480, of which a Hindi version was published at pages 3397 to 3404. Under the notices, the appellants were called upon to show cause as to why the immovable property transferred under those sale deeds be not acquired by the revenue authorities.
4. The appellants duly showed cause. According to them, the property in question was claimed by Shri Niwas Ram to be his exclusive property. He was fighting a suit for partition, namely, Partition Suit No. 36 of 1932. In the course of the litigation Shri Niwas Ram died on October 24, 1960. Vijay Kumar, Smt. Urmila Devi, wife of Vijay Kumar, Sanjay Kumar and Vinay Kumar, sons of Vijay Kumar, are the vendors of the impugned sale deeds. Another set of claimants in the partition suit was Champa Devi, widow of Shri Niwas Ram, and her branch. After the death of Shri Niwas Ram, Champa Devi and others made application for substitution. That application was objected to by Vijay Kumar. The objection was overruled and Champa Devi and her branch were substituted. On May 9, 1962, Vijay Kumar instituted a Title Suit No. 54 of 1962 to establish his absolute title to the exclusion of Mst. Champa Devi. This suit ultimately culminated in a compromise decree dated June 10, 1975, on the basis of a compromise petition filed on April 10, 1975. After having obtained the sale deeds in question from Vijay Kumar, his wife, Shrimati Urmila Devi, and his sons, Sanjay Kumar and Vinay Kumar, in order to purchase peace and to avoid litigation, the appellants also took sale deeds in respect of the same property from the contestants, namely, Champa Devi and her heirs. It was in these circumstances that the appellants claim that the case was not one in which the provisions of Section 269C of the Act were attracted. The Competent Authority under Section 269B(1), who initiated the proceeding, and objections having been filed by the appellants under Section 269E, passed an order under Section 269F of the Act for the acquisition of the property in question. The appellants preferred appeals to the Appellate Tribunal under Section 269G and by the impugned order the Tribunal has dismissed the appeals of the appellants. It is against this order that these appeals have been preferred by the different transferees under the impugned sale deeds.
5. Mr. Lal Narain Sinha, learned counsel for the appellants, raised a number of points in support of these appeals. I shall, however, deal with only such of the points as have any relevance on the matter involved in these appeals.
6. It was first argued that there were certain conditions precedent to the commencement of acquisition proceeding. Analysing the provisions of Section 269C(1) of the Act, it was contended and rightly so, that the following cumulative conditions must be satisfied before the acquisition proceedings can be commenced under Chapter XX-A.
(i) There must be a transfer of immovable property of a fair market value exceeding Rs. 25,000.
(ii) The transfer must not be by a person to his relative on account of natural love and affection for a consideration which is less than the fair market value, with a recital to that effect in the instrument of transfer.
(iii) The Competent Authority must have reason to believe that the fair market value of the property exceeds an apparent consideration by more than 15 per cent. of the apparent consideration.
(iv) The Competent Authority must have reason to believe that the consideration for the transfer as agreed to between the parties has not been truly stated in the instrument of transfer.
(v) The Competent Authority must have reason to believe that the understatement of the aggregate consideration in the instrument of transfer was with the object of either facilitating the reduction or evasion of the tax liability of the transferor in respect of any income arising from the transfer or facilitating concealment of any income or wealth of the transferee.
(vi) Before initiating the proceedings the Competent Authority must record his reasons for doing so, and, lastly.
(vii) The initiation of proceedings by a notice in the Official Gazette should be within the period of limitation prescribed by Section 269D.
7. By virtue of the provisions of Clause (b) of Section 269C(2), 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, (i) the aggregate consideration has not been truly stated in the instrument of transfer, and (ii) the understatement was with the object of tax evasion. Clause (b) of Section 269C(2), therefore, shifts the burden of proof and presumes the party guilty unless he proves himself to be innocent.
8. It was contended by Mr. Sinha that the fair market value has been defined under Section 269A(d) of the Act. Section 269A(d) defines "fair market value" as the price that the immovable property could ordinarily fetch on sale in the open market on the date of execution of the instrument of transfer of such property. Such fair market value, in relation to any property, it was argued, must mean the specific property effectively transferred. This is reinforced by the other part of the definition, namely, that price which is likely to be fetched on sale in open market. A prudent purchaser would necessarily take into account the extent and the quality of the title as well as all attending circumstances and factors which tend to push up the value or to depress it. This piece of legislation under Chap. XX-A being a piece of expropriatory legislation must receive strict construction and the interpretation which this Chapter must receive must be in relation to the question of evasion of tax. The property that actually passes is not that which is purported to be so passed but that which the transferor is entitled to sell. In view of the circumstances in which the property in question was transferred, it was submitted that a litigation with regard to the title to the property being in process, no reasonable and prudent buyer could have purchased it at its real market value, for the purchaser would take such property with a great amount of risk. This is doubly reinforced by the fact that the very same appellants who purchased the property from Vijay Kumar, son of Shri Niwas Ram, Mahabal Kumari, widow of Shri Niwas Ram, and Sanjay Kumar, son of Vijay Kumar, had also, to avoid litigation, paid consideration to the other set of claimants, namely, Champa Devi and others, who were claiming a share in that property. It was argued that it was clear, therefore, that the appellants purchased from the widow, son and grandson of Shri Niwas Ram, deceased, not the property that was purported to be sold but a mere chance of getting the property. Such a likely chance of the appellants' claim, being owner of the property, was set at rest only when they again purchased the same property from the other set of claimants.
9. Although I am not feeling persuaded to accept the entire chain of reasoning of Mr. Sinha, for all practical purposes, shorn of minute details, his submission seems to be well founded. I do not agree that Chap. XX-A of the Act being a legislation, more or less, penal in nature, must receive strict construction even though the language may be clear. The question of strict or liberal interpretation can arise only if the language is ambiguous. In any statute, be it penal, expropriatory or otherwise, if the language is clear and unequivocal, there can be no scope for either liberal or strict interpretation. The grammatical interpretation of clear and unequivocal language of a statute is primary and the golden rule of construction (constructio ut res magis valeat quam pereat). And, further it is well settled that taxation laws, if clear, admit of no equity, " in a taxing Act" said Rowlatt J. in Cape Brandy Syndicate v. IRC [1921] 1 KB 64 at p. 71 (KB), " one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used."
10. What, however, appeals to me most is the clear and unequivocal language of the definition of "market price" as given in Section 269A(d).
11. Section 269A(d) defines "fair market value" thus :
"'Fair market value ', in relation to any immovable property transferred, 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."
12. It will be seen from the definition that the above definition can safely be analysed thus:
(i) The fair market value of an immovable property transferred has to be fixed.
(ii) The fair market value means the price that the particular property would ordinarily fetch if sold in the open market on the date of the execution of the deed of transfer.
13. The first point to be decided, therefore, is what is the immovable property transferred of which the fair market value is to be fixed ? In other words, price has to be fixed for the property transferred effectively and not the property purported to be transferred. The property that actually passes under the instrument of transfer is only that which the transferor is entitled to sell and not what he purports to sell. In the instant case, as already noticed above, there were two sets of claimants for this property which was the subject matter of litigation in civil courts of competent jurisdiction and ultimately the right, title and interest to a share in the property was actually found in favour of Champa Devi and others who were not the transferors under the impugned deed executed by Vijay Kumar, Shrimati Urmila Devi, Sanjay Kumar and Vinay Kumar. The price of Rs. 1,85,000 paid to the transferors was, therefore, not in respect of the actual transfer effected of the entire property but involved an imminent likelihood of litigation between the appellants on the one hand and Champa Devi and others on the other. Although the transferors, namely, Vijay Kumar and others, had purported to sell the entire property, what was actually and effectively transferred was their own interest in the property only. The Competent Authority and the Tribunal were, therefore, in my view, not right in taking the market value of the entire property, if at all that could be taken, to be Rs. 6,58,000.
14. That brings us to the other part of the definition of fair market value. The price which an immovable property may fetch if sold in the open market would be the price that a prudent purchaser would be willing to pay necessarily taking into account the extent and the quality of title as well as all the factors which tend to push up the value or depress it. The material elements which ought to be taken into consideration in transfers of immovable property of the instant nature must inevitably embrace within them the considerations of a reasonable purchaser. Some of such elements in the instant case are that the property in question is in a damaged condition in the occupation of a tenant at Rs. 116 per month as rental, the fact that in the State of Bihar a tenant is in many cases protected against eviction and enhancement of rent under the Bihar Buildings (Lease, Rent and Eviction) Control Act, 1947, the depressing effect of the imminent risk of acquisition of about 4,000 square feet of the property in question for road development by the Patna Improvement Trust on its price, the protracted litigation against the tenant for having him evicted from the house, cost of hypothetically demolishing the house, developing the property for commercial purposes and so on and so forth. These are factors which, in my view, are germane to the determination of fair market value, the price that a prudent purchaser would be willing to pay for the property in question.
15. It goes without saying that the estimate of the Competent Authority must not be arbitrary or capricious. The fair market value is the best price which a vendor can reasonably obtain in the circumstances of a particular case. What is required to be done for the ascertainment of such market value is to ascertain the price which a willing, reasonable and prudent purchaser would pay for the property. In ascertaining that, all factors having any depressing or appreciating effect on the value of the property have to be taken into account. If considerations germane for such ascertainment have not been taken into account or if irrelevant considerations have entered the inquiry, the finding becomes vitiated in law. This is the error luminous in the orders of the Competent Authority as well as of the Tribunal. The impugned judgments are, therefore, vitiated.
16. There was yet another point canvassed by Mr. Sinha in support of these appeals. It was submitted that the initiation of the proceeding is by publication of notice under Section 269D(1) and, therefore, the notice under Section 269D(2) is illegal and non est. The relevant portion of Section 269D(1) reads thus:
"269D. (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 "
17. Section 269D(2) is reproduced below :
"269D. (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 to 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 arid also by making known in such manner as may be prescribed the substance of such notice at convenient places in the said locality."
18. The submission was that the initiation of the proceedings by the Competent Authority for the acquisition must be by a notice published in the Official Gazette and under Sub-section 2(2) of Section 69D. It is only a notice under Sub-section (1) that has to be served on the transferor or published. That means, it was argued, that so long as the notice was not published in the Official Gazette under Section 268D(1), there could not be any such notice to be served on the transferor or published in the places mentioned in Clause (b) of Sub-section (2). This argument of Mr. Sinha, although attractive, does not seem to me to have any substance. In support of his argument, learned counsel relied upon the decisions in the cases of Gujarat Electricity Board v. Girdharlal Motilal, AIR 1969 SC 267, Nazir Ahmad v. King Emperor, AIR 1936 PC 253, and CIT v. Ramsukh Motilal [1955] 27 ITR 54 (Bom). In the case of Gujarat Electricity Board, it was held that the provisions of Section 6(1) of the Indian Electricity Act, 1910, as amended in 1959 were mandatory and they; must be strictly complied with. Section 6(1)(a) empowers the Electricity Board to interfere with the property rights of the licensee. Therefore, such a power has to be strictly construed. Where the notice issued by the Board merely notified to the licensee that the Board had decided to exercise the option of purchasing the undertaking, the notice was held to be invalid. In that case, the notice that was issued by the Board merely said that the Gujarat Electricity Board had decided to exercise and shall exercise the option of purchasing the undertaking on 3rd January, 1963, the date on which the licence granted by the Govt. of Baroda expired. While testing the validity of such a notice, the provisions of Section 6(1)(a) of the Indian Electricity Act, 1910, as amended by the Amendment Act, 1959 (Act 32 of 1959), were noticed which laid down that in the case of a licence granted before the commencement of the Amending Act, 1959, on the expiration of each such period as is specified in the licence, the State Electricity Board shall have the option of purchasing the undertaking and "such option shall be exercised by the State Electricity Board serving upon the licensee a notice in writing of not less than one year requiring the licensee to sell the undertaking to it at the expiry of the relevant period referred to in this sub-section". It was held that the aforesaid provision even authorised the Electricity Board to purchase the undertaking by means of a notice to the licensee, to sell the undertaking to it on the expiry of the period for which the licence had been given. The impugned notice did not require the licensee to sell the undertaking. It was on that account that the Supreme Court held that the notice was not in accordance with law. It is a primary rule, I must say that if a notice is required to be given for the purpose of acquisition with certain specific stipulations and such stipulations had not been incorporated in the notice, the notice cannot be upheld as sustainable in law. There is no such effect in the instant cases. This case is, therefore, clearly distinguishable.
19. Similar distinction applies to the decision of the Judicial Committee of the Privy Council in the case of Nazir Ahmad, AIR 1936 PC 253.
20. So far as the case of CIT v. Ramsukh Motilal [1955] 27 ITR 54 (Bom) is concerned, perhaps it had escaped the notice of Mr. Sinha that this case was not good law, in view of the decision of the Supreme Court in the case of Director of Inspection of Income-tax (Investigation) v. Pooran Mal & Sons [1974] 96 ITR 390, where it had been held that where the period of limitation prescribed by Section 132(5) of the I.T. Act, 1961, was intended for the benefit of aggrieved persons it was competent for them to agree to a fresh disposal of the case by the ITO and thereby waive it. I think the law is well settled that where a provision of law is intended solely for the benefit of a person who may be aggrieved by that, it is open to that person either to waive it or, if the cause of grievance has already been obliterated, the provision ought to be taken as creating no prejudice to the person making a grievance of it. In the instant cases, it is true that the notices under Section 269D(1) were duly published in the Gazette of India dated March 2, 1974, and June 1, 1974. But it is the admitted case of the parties that the notices which were so published in the Gazette were issued to the appellants under Section 269D(1) on January 31, 1974, in substantially the same terms. The purpose of the publication of the notice in the Official Gazette and the service thereof on the parties to be effected either by affixing at the places mentioned in Sub-section (2) of Section 269D or serving on the appellants was merely to apprise the persons concerned that such proceedings were going to be initiated against them. That had admittedly been done by the individual notices sent to the appellants under Section 269D(1) on January 31, 1974, before the proceedings were initiated. The appellants, therefore, cannot claim to have any grievance on this score. To that extent, the term used in Section 269D(2), namely, notice under Sub-section (1) "or on such notice" must be deemed to be merely directory. Furthermore, the appellants did not make any grievance or agitate this question either before the Competent Authority or before the Tribunal. They must, therefore, be said to have waived the benefit conferred on them by the aforesaid statutory provisions. I thus find no substance in this point of the learned counsel for the appellants.
21. In view, however, of my finding that the considerations germane to the ascertainment of fair market value have not been taken into account by the court below, I would allow these appeals and remand them to the Tribunal, 'B' Bench, Patna, for rehearing the parties afresh, after giving them a reasonable opportunity and after taking in evidence such further materials relevant as the parties may produce before the Tribunal and to decide these cases in accordance with law and keeping in view the observations made above. Learned counsel for the appellants, in this connection, also strenuously contended that the Tribunal had fallen into an error in not taking in additional evidence, the compromise petition dated April 10, 1975, and the decree passed by the civil court on the basis of that compromise petition on June 10, 1975, and some other pieces of evidence which the appellants had prayed to be taken in additional evidence before the Tribunal. Mr. Rajgarhia, for the department, contended that the Tribunal did not take such documents as additional evidence on the ground that they were not required to enable the Tribunal to pass the order. On the facts and in the circumstances of the instant cases, I think that, since the materials sought to be put in as additional evidence were not available to the appellants before the order passed by the Competent Authority, in all fairness it would have been advisable, to say the least, for the Tribunal to take such pieces of evidence as additional evidence as they were not in the possession of the appellants till the 11th of November, 1974, when the Competent Authority made his decision. Since the matter is going back on remand, I have made it clear that fresh orders be passed after rehearing the parties and after giving them a reasonable opportunity to adduce such evidence or such relevant further materials as were not in the possession of the parties on the date when the Competent Authority has passed his order. I, however, make it clear that it would be open to the Tribunal to direct the Competent Authority, if the Tribunal so desires, to go into the questions of fact, namely, the factors relevant for consideration in fixing the fair market value of the property in question by taking such further relevant evidence as the parties may adduce before him and to record his own finding to be transmitted to the Tribunal which shall decide the cases on receipt of the same. The parties will bear their own costs of this court.
B.P. Jha, J.
22. I agree with the well considered judgment of my learned brother, but I would like to discuss the point raised in this appeal. Under Section 269C(1) of the Act, if the Competent Authority has reason to believe that the fair market value of any immovable property exceeds twenty-five thousand rupees which has been transferred by a transferor to a transferee for an apparent consideration which is less than the fair market value of the property and that the consideration for such transfer has not been truly stated in the instrument of transfer and if these conditions are satisfied, the Competent Authority shall initiate a proceeding under Chap. XX-A of the Act for the acquisition of the immovable property. While holding enquiry under Section 269F of the Act, the competent authority shall decide the share transferred by the transferor to the transferee in the instrument of transfer. To illustrate the matter, suppose A, B and C are the owners of a building. A transferred his 1/3rd share in the building to D. The Competent Authority initiated a proceeding under Chap. XX-A of the Act. While holding an enquiry, the Competent Authority shall also hold an enquiry in respect of the share which has been transferred by A to D. This enquiry is necessary because the Competent Authority shall acquire the share in the property transferred by the transferor to the transferee. The Competent Authority shall take possession in respect of 1/3rd share passed on by the transferor to the transferee and only such share shall vest absolutely in the Central Government. The Competent Authority cannot acquire the whole house.
23. Similarly, in the present case, Vijay Kumar, and his sons, Binay Kumar and Sanjay Kumar, executed ten registered sale deeds on 5th September, 1973, in respect of a house situated at Exhibition Road in favour of these petitioners. On 9th May, 1962, Vijay instituted Title Suit No. 54 of 1962 to establish his absolute title to the suit properties. According to him, Champa Devi was not the widow of Srinivas Sah, who claimed herself to be his widow. Vijay Kumar is the son of Srinivas Sah. The suit was ultimately compromised, and a compromise decree was passed on 10th June, 1975, on the basis of a compromise petition filed on 10th April, 1975. Copies of the compromise petition dated 10th April, 1975, and the compromise decree dated 10th June, 1975, were produced before the Appellate Tribunal. The appellants prayed that these documents be also taken as additional evidence. The Tribunal refused to take these documents as additional evidence on the ground that the Tribunal did not require such documents to enable it to pass orders. In my opinion, the Tribunal erred in law in holding so. These documents could not have been presented before the Tribunal as the Competent Authority had passed its order on 11th November, 1974. By virtue of its order dated 11th November, 1974, the Competent Authority passed the order for acquisition of the whole house which is situated at Exhibition Road at Patna. The case of the appellants was that by virtue of the sale deeds dated 30th August, 1973, which were registered on 5th September, 1973, Vijay Kumar and his family members transferred only their share to the appellants. By virtue of the compromise, Srimati Champa Devi and others were also holding share in the subject-matter of the property. It was for this reason that the compromise petition and the compromise decree were filed before the Tribunal. In my opinion, the Tribunal required these documents for the purpose of passing orders in the appeals pending before it. On the basis of these documents, the Tribunal could have known the extent of share which was transferred by Vijay Kumar and his family members to these appellants. The Tribunal also could have known the shares of Champa Devi and others. If the Tribunal would have cared to look into these documents, then the Tribunal would not have upheld the acquisition proceeding in respect of the whole house. Ordinarily, the Tribunal should respect the decree passed by the civil court unless it comes to the conclusion that the decree obtained was a collusive one. Hence, in my opinion, it was essential on the part of the Tribunal to admit these documents. Hence, these appeals have to be remanded to the Income-tax Tribunal, Patna, for rehearing of the appeals and deciding the appeals after taking the said documents as additional evidence, as mentioned above. I, therefore, agree with the whole operative portion of the order made by my learned brother.
24. In my opinion, the scheme of Chap. XX-A of the Act is to check undervaluation mentioned in the instrument of transfer. In order to check this, this chapter has been enacted to enable the Competent Authority to acquire the immovable property where the instrument of transfer does not mention the true consideration amount. In such a case, the proceeding will be initiated under Chap. XX-A of the Act and wrongdoers shall be punished by acquisition of the land mentioned in the deed of transfer. Hence, it is necessary for the Competent Authority to enquire in respect of the extent of share passed on by the transferor to the transferee. If this enquiry is not made, then it will be difficult for the Competent Authority to acquire the property. Suppose A has transferred 1/3rd share in a house, the Competent Authority shall acquire only 1/3rd share in the house and only such share shall vest in the Central Govt. If the Competent Authority does not make any enquiry as to the extent of the share held by the transferee, then an anomalous position will arise and the Competent Authority will have difficulty in acquiring the property. The Competent Authority will also find difficulty in taking possession of the property. Hence, in order to check these difficulties, it is mandatory on the part of the Competent Authority to decide the extent of share held by the transferee in the property which is proposed to be acquired by the Competent Authority. Hence, I direct the Competent Authority and the Appellate Tribunal to keep this view in mind before deciding the case.