Chinnappa Reddy, J. - (1.) ON October 28, 1972, Mudunuri Linga Raju and Narasimha Raju executed a deed of sale in favour of the petitioner in respect of a property described as "Sri Saraswathi Picture Palace "for a consideration of Rs. 1,00,000. Consideration passed and possession was delivered that day ; the document was presented to the Sub-Registrar, also an the same day, for registration. After complying with all formalities, the Sub-Registrar directed the vendors to produce the tax clearance certificate prescribed by Section 230 of the Income-tax Act in order to complete the registration. The vendors obtained the certificate on November 16, 1972, and the document was registered on the same day. ON May 18, 1972, the competent authority under Chapter XX-A of the Income-tax Act issued a notice to the petitioner informing him that he proposed to acquire the property under Section 269D as he had reason to believe that the property had been under-valued with a view to facilitate the evasion of tax by the transferor and to facilitate the concealment of income and assets of the transferee. The competent authority invited the petitioner to state his objections, if any. The petitioner raised a preliminary objection to the exercise of jurisdiction by the competent authority. He claimed that the sale took effect from the date of execution of the sale deed, i.e., October 28, 1972, while Section 269C came into force on November 15, 1972, and, therefore, the sale was not affected by Section 269C. The preliminary objection was overruled by the competent authority. The petitioner has invoked the jurisdiction of this court under article 226 of the Constitution.
(2.) SRI Y. V. Anjaneyulu, learned counsel for the petitioner, submitted that the effect of Section 47 of the Registration Act wa's that a deed ot sale took effect from the date of its execution and not from the date of its registration and, therefore, the sale in favour of the petitioner was untouched by Section 269C of the Income-tax Act. SRI Anjaneyulu relied on Kalyanasundaram Pillai v. Karuppa Mooppanar, AIR 1927 PC 42. 43, 44, Sadei Sahu v. Chandramani Dei, AIR 1948 Pat 60, Thirumagaral Mudaliar v. Muruga Pillai, and Adaikappa Chettiar v. Kumbakonam City Union Bank Ltd., Section 54 of the Transfer of Property Act prescribes that a sale of property exceeding the value of one hundred rupees can be made only by a registered instrument. Section 47 of the Registration Act provides : "A Registered document shall operate from the time from which it would have commenced to operate if no registration thereof had been required or made, and not from the time of its registration." The question is what is the effect of Section 47 of the Registration Act on Section 54 of the Transfer of Property Act ?
(3.) IN Kalyanasundaram Pillai v. Karuppa Mooppanar], the question before the Privy Council was whether an adoption of a son by a Hindu made after the execution and delivery of a deed of gift in favour of a charity, but before its registration, rendered the deed void as against the adopted son. The answer to the question depended on the effect of Section 47 of the Registration Act on Section 123 of the Transfer of Property Act which provided that a gift must be effected by a registered instrument. The Privy Council quoted with approval what had been said by the High Court : "The effect of those Sections in my judgment is that if a title is complete except for registration, no subsequent alienation or dealing with the property by the vendor or donor as the case may be can defeat the title which on registration becomes an absolute title dating from the date of the execution of the document." Subject to the qualification that the gift should have also been accepted by or on behalf of the donee, the Privy Council also expressed its approval of the following statement of law in Venkati Rama Reddi v. Pillati Rama Reddi, 1916 40 ILR(MAD) 204 [FB] : "There is nothing in Section 123 of the Transfer of Property Act which requires the donor to have the deed registered. All that is required is that he should have executed the deed. Once such an instrument is duly executed the Registration Act allows it to be registered even though the donor may not agree to its registration, and upon registration the gift takes effect from the date of execution." ;