G. P. Mathur, J. - (1.) This appeal, by special leave has been preferred against the judgment and order dated 21-7-1999 of the High Court of Punjab and Haryana by which the appeal preferred by the appellant under Section 269H of Income Tax Act, 1961 against the order dated 16-8-1992 of the Income Tax Appellate Tribunal, Chandigarh, was dismissed.
(2.) The respondent M/s. Pearl Mechanical Engineering and Foundry Works (P) Ltd., Ludhiana executed a sale deed of plot No. 427, Industrial Area-A, Ludhiana in favour of M/s. Oswal Woolen Mills Limited for Rs. 10,05,000/- on 5-2-1980. The Government valuer, on receipt of a reference from the Inspecting Assistant Commissioner, estimated the fair market value of the property at Rs. 18,31,000/-. Proceedings for acquisition of the property were then initiated in accordance with Chapter XXA of Income Tax Act, 1961 (hereinafter referred to as the Act) and notice under Section 269D (1) of the Act was published in the official gazette on 15-11-1980. The notices issued under Section 269D (2) of the Act were served upon the transferor and the transferee on 10-10-1980. The competent authority, after hearing the objections, passed orders for acquisition of the property. The appeals preferred against the said order by the transferor and transferee were allowed by the Income Tax Appellate Tribunal, Chandigarh, and the order of the competent authority was set aside mainly on the ground that the notices under Section 269D(2) had been served prior to the publication of the notice in the official gazette. Feeling aggrieved by the order of Tribunal the Commissioner of Income Tax, preferred an appeal under Section 269H of the Act but the same was dismissed by the High Court on 21-7-1999. The High Court has held that by the publication of the notice in the official gazette proceedings for acquisition of property were initiated and the service of notice on the transferor and the transferee under Section 269D(2) prior to the publication in the gazette is meaningless and an exercise in futility rendering the entire proceedings illegal and without jurisdiction.
(3.) The main question which requires consideration is whether the service of notice upon the transferor and the transferee under Section 269D(2) of the Act prior to the publication of the notice in the official gazette in accordance with Section 269D (1) of the Act would render the entire proceedings illegal and without jurisdiction. Chapter XXA comprising Sections 269A to 269S was inserted by the Taxation Laws (Amendment) Act, 1972 with effect from 15-11-1972. The Statement of Objects and Reasons shows that the amendment was incorporated to counter evasion of tax through understatement of the value of immovable property in sale deeds and also to check the circulation of black money by empowering the Central Government to acquire immovable properties and to curb the widespread practice of benami holding of property with a view to tax evasion by debarring the real owner from enforcing his claim to such property in a Court of law unless he has declared the income from that property or the property itself for purposes of income tax and wealth tax or has given notice of his claim to the property to the income-tax authorities.;