COMMISSIONER OF INCOME TAX, CHANDIGARH versus M/S. PEARL MECH. ENGG AND FOUNDRY WORKS (P) LTD.

Citation: [2004] SUPP. 1 S.C.R. 339 · Decided: 16-04-2004 · Supreme Court of India · Bench: S. RAJENDRA BABU · Disposal: Appeal(s) allowed
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Judgment (excerpt)

COMMISSIONER OF INCOME TAX, CHANDIGARH 
A 
v 
• MIS. PEARL MECH. ENGG AND FOUNDRY WORKS (P) LTD. 
APRIL 16, 2004 
[S. RAJENDRA BABU AND G.P. MATHUR, JJ.] 
B 
Income Tax Act, 1961: 
Chapter XXA-Section 269D-lmmovable property-Acquisition of by · 
competent authority-Initiation of proceedings-Notices to transferor and C 
transferee issued under S. 269D(2) prior to their publication in official gazette 
under S. 269D(J)-Validity of-'-Held: Publication of notice in the official 
gazette under S. 269(1) is the very foundation of initiation of proceedings for 
acquisition of immovable property-Competent authority got jurisdiction only 
after publication of notice in official gazette-However, service of notice prior O 
to its publication in official gazette was merely an irregularity and could not 
render the proceedings either illegal or without jurisdiction. 
Proceedings for acquisition of the suit property were initiated against 
the respondent in accordance with Chapter XXA of the Income Tax Act, 
1961. However, notice under Section 269D(2) of the Act were served upon E 
the respondent-transferor and the transferee prior to the publication of 
the notice under Section 269D(l) of the Act in the official gazette. The 
competent authority passed an order for acquisition of the said property. 
The Income Tax Appellate Tribunal allowed the appeal preferred by Abe 
respondent-transferor and the transferee on the ground that the notices F 
under Section 269D(2) were served prior to the publica~ion of the notices 
in the official gazette. The High Court upheld the order. Hence the appeal. 
The following question arose before the Court :-
"Whether the service of notice upon the transferor and the transferee 
under Section 269D(2) of the Income Tax Act, 1961 prior to the publicat~on G 
of the notice in the official gazette in accQrdance with Section 269D(l) of 
the Act would render the entire proceedings illegal and without 
jurisdiction?" 
339 
H 
340 
SUPREME COURT REPORTS [2004) SUPP. I S.C.R. 
A 
Allowing the appeal, the Court 
HELD: I. Publication of the notice in the official gazette under 
Section 2690(1) of the Income Tax Act, 1961 is the very foundation for 
initiation of proceedings for acquisition of immovable propert}'. under 
Chapter XXA and the period of limitation for initiation of proceedings 
B has to be reckoned with reference to the said date. The competent 
authority gets jurisdiction to make an order for acquisition of property 
only after publication of the notice in the official gazette. The service of 
notice under Section 2690(2) of the Act upon the transferor and the 
transferee meets the requirement of natural justice so that they may file 
C objections in writing against the action which is proposed to be taken, 
namely for acquisition of property. Any error or mistake committed in 
the service of the notice does not in any manner affect the jurisdiction 
conferred upon the competent authority to take proceedings for acquisition 
of property. The service of notice prior to the publication in the official 
gazette is merely an irregularity committed during the course of the 
D proceedings and cannot have the effect of nullifying the entire proceedings 
which are validly commenced by publication in the official gazette. In fact, 
no prejudice is occasioned to the transferor or transferee by service upon 
them of the notice prior to the publication of the gazette. Therefore, prior 
service of notice under Section 269D(2) of the Act is at bes( an irregularity 
E but it cannot have the effect of rendering the proce~dings either illegal. or. 
without jurisdiction. [345-F-G; 346-A-D] 
C/Tv. Amrit Sports Industries, 144 ITC 113 (P & H) (FB), Smt. Pritpal 
Kaur v. Inspecting Asstt. CIT, 145 ITR 19 (All.), Prem Chandy. /AC 153 
ITR 774 (Kar.) and All India Reporter v. Competent Authority, 162 ITR 697 
F (Born.) and Lalita Todi v. CIT, 123 ITR 40 (Pat.), appr()ved. 
C/Tv. Des Raj, 220 ITR 7 (P & H), C/Tv. VinodGupta, 221ITR213 
(P & H) and Satya Narain Prakash Punj v. Union of India, 160 ITR 693 
(Del.), overruled. 
G 
Nazir Ahmed v. King Emperor, AIR (1936) PC 253, referred to. 
H 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 1196 of2001. 
From the Judgment and Order dated 21. 7 .1999 of the Punjab and 
Haryana High Court in LT.A. No. 14 of 1982. 
C.l.T. v. PEARL MECH. ENGGANDFOUNDRYWORKS(P)LTD. [G.P. MATHUR, J.] 341 
T.L.V. Iyer, K.C. Kausik, Rajiv Tyagi, Ms. Sushma Suri and B.V. A 
Balramdas for the Appellan
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