JUDGMENT N.K. Jain J. 1. The petitioner, by this petition under Article 226/227 of the Constitution of India, seeks issuance of an appropriate writ to quash the proceedings initiated by respondent No. 2--Inspecting Assistant Commissioner of Income-tax, Acquisition Range, Bhopal--under Section 269C of the Income-tax Act, 1961 (for short "the Act"). 2. Right at the threshold it may be noted that the petitioner has come at the stage of issuance of show-cause notice. As a general rule, this court does not interfere at that preliminary stage of issuance of notice and the noticee is left free to contest the notice before the authority concerned and seek other remedies by way of appeal and revision, etc., as may be available under the law. However, in the instant case, what is challenged is the very jurisdiction of the competent authority to issue the impugned notice. Further, the way and manner in which proceedings in the case have been conducted by the successive competent authorities, also call for judicial review of those proceedings by this court under Article 227. 3. A few relevant facts as unfolded by the pleadings and the documents of the parties are these : 4. The petitioner along with three others, namely, Tulsiram Khandelwal, Smt. Ratanbai Khandelwal and Krishna Khandelwal, on October 31, 1980, purchased a house No. 22/3, South Tukoganj, Street No. 1, Indore, from Haji Gulam Ali and his sons for an apparent consideration of Rs. 13.25 lakhs through a registered sale deed (annexure P/1). The sale deed though executed on October 31, 1980, was registered on November 1, 1980. Respondent No. 2-the competent authority-appointed by the Central Government under Section 269B of the Act, on July 23, 1981, drew up a preliminary notice (annexure P/3) under Sub-section (1) of Section 269D and got it published in the Gazette of India on August 22, 1981 (vide annexure P/2), thus initiating action for acquisition of the aforesaid house under Chapter XX-A of the Act. From this notice it transpires that the competent authority was of the view that the apparent consideration stated in the sale deed was less than the fair market value of the property and that the parties to the transaction have not truly stated the amount of consideration for which the sale was actually made, with a view to evade tax liability. It is from this stage that the proceedings of the case make curious reading. Having drawn up and published the notice in the Official Gazette on July 23, 1981, and August 22, 1981, the competent authority seemed to have put the case under hibernation for a long period of five years and it was only on August 22, 1986, that notices, as contemplated under Sub-section (2) of Section 269D, were issued to the transferors and transferees and served on the petitioner on August 28, 1986. The petitioner filed his reply (annexure P/4) to the notice on September 3, 1986. The matter was heard finally. The petitioner also submitted his written arguments (annexure P/5) on October 30, 1986. The hearing of the case was thus concluded in October, 1986, but, interestingly, the case file was again sent on a long holiday for more than 4 1/2 years. The file was reopened in May, 1991, and a fresh notice for hearing of the case was issued to the parties on May 10, 1991 (vide annexure P/6). It is on receipt of this notice that the petitioner has approached this court under Article 226/227 of the Constitution seeking quashment of the entire proceedings, inter alia, on the grounds : (i) that the proceedings are without jurisdiction inasmuch as the competent authority has not, before issuing/publishing notice under subsection (1) of Section 269D, recorded his reasons for doing so as mandated under the two provisos to Sub-section (1) of Section 269C ; (ii) that no notice under Sub-section (2) of Section 269D could legally be issued to the petitioner after a lapse of five years, being contrary to the scheme and the spirit of the law and also violative of the principles of natural justice ; and (iii) that while hearing the arguments and concluding the same in October, 1986, an impression was given to the petitioner that the proceedings would be dropped. The impression was reinforced by the fact that no adverse order was communicated to the petitioner for a period of 4 1/2 years. Under the circumstance, the proceedings could not have been reopened at that distance of time. This action of respondent No. 3, it is contended, is again violative of the principles of natural justice. 5. The respondents have filed a reply in oppugnation of the averments made in the petition. Under the circumstance, the proceedings could not have been reopened at that distance of time. This action of respondent No. 3, it is contended, is again violative of the principles of natural justice. 5. The respondents have filed a reply in oppugnation of the averments made in the petition. It is submitted that the reasons for initiation of the proceedings under Section 269D(1) have been stated clearly in the notice (annexure P2/3) itself. The proceedings, it is explained, were initiated after obtaining a valuation report (annexure R/1) from a recognised valuer (seated at Jaipur) which furnished valid ground for initiation of acquisition proceedings against the petitioner and others. The notice (annexure P/1) was published within the statutory period of limitation (nine months) prescribed under Section 269D and so any subsequent delay in issuance of notices to the parties or in conclusion of the proceedings are of no legal consequence. Lastly, it is contended that Chapter XX-A provides for a complete code for adjudication of the acquisition proceedings and also for the effective remedy by way of two appeals against any order which may be passed by the competent authority. The petitioner, therefore, cannot be allowed to take recourse to the writ jurisdiction of this court without first exhausting the said alternative remedies. 6. I have heard Shri G. M. Chaphekar, learned senior counsel appearing with him Shri S. S. Samvatsar for the petitioner ; and Shri R. L. ]ain, learned standing counsel for the Revenue (respondents). 7. The main question requiring determination in this petition is whether initiation of proceedings under Section 269C by respondent No. 2, was without jurisdiction. It is urged on behalf of the petitioner that the competent authority (respondent No. 2) could acquire no jurisdiction to initiate proceedings under Sub-section (1) of Section 269C, unless : (i) he had reasons, i.e., some material before him, to believe that the fair market value of the property exceeds the apparent consideration disclosed in the, transfer deed, by more than 15 per cent.; and, (ii) such reasons are recorded by him in writing. 8. 8. As against it, the contention of the Revenue is that formation of belief and issuance of notice are a part of the same process, i.e., initiation of proceeding and so if the notice issued under Sub-section (1) of Section 269D disclosed the reasons for initiation of proceedings then as provided by Clause (b) of Sub-section (2) of Section 269C, a presumption arises, unless the contrary is proved, that the consideration for such transfer as agreed to between the parties has not been truly stated in the instrument of transfer. Learned counsel for the Revenue further pointed out that a report of an authorised valuer (annexure R/1) was before the competent authority when he issued the impugned notice. 9. In order to appreciate the rival contentions it is necessary to refer to the relevant provisions of Chapter XX-A. Section 269C thus reads as follows : "269C. (1) Where the competent authority has reason to believe that any immovable property of a fair market value exceeding one hundred thousand rupees has been transferred by a person (hereafter in this Chapter referred to as the transferor) to another person (hereafter in this Chapter referred to as the transferee) for an apparent consideration which is less than the fair market value of the property and that the consideration for such transfer as agreed to between the parties has not been truly stated in the instrument of transfer with the object of-- (a) facilitating the reduction or evasion of the liability of the transferor to pay tax under this Act in respect of any income arising from the transfer ; or (b) facilitating the concealment of any income or any moneys or other assets which have not been or which ought to be disclosed by the transferee for the purpose of the Indian Income-tax Act, 1922 (11 of 1922), or this Act or the Wealth-tax Art, 1957 (27 of 1957), the competent authority may, subject to the provisions of this Chapter, initiate proceedings for the acquisition of such property under this Chapter : Provided that before initiating such proceedings, the competent authority shall record his reasons for doing so : Provided further that no such proceeding's shall be initiated unless the competent authority has reason to believe that the fair market value of the property exceeds the apparent consideration therefor by more than fifteen per cent. of such apparent consideration. of such apparent consideration. (2) In any proceeding's under this Chapter in respect of any immovable property,-- (a) where the fair market value of such property exceeds the apparent consideration therefor by more than twenty-five per cent. of such apparent consideration, it shall be conclusive proof that the consideration for such transfer as agreed to between the parties has not been truly stated in the instrument of transfer ; (b) 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 the consideration for such transfer as agreed to between the parties has not been truly stated in the instrument of transfer with such object as is referred to in Clause (a) or Clause (b) of Sub-section (1)." 10. The relevant parts of Section 269D may also be reproduced as under : "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 : Provided that no such proceedings shall be initiated in respect of any immovable property after the expiration of a period of nine months from the end of the month in which the instrument of transfer in respect of such property is registered under the Registration Act, 1908 (16 of 1908), or, as the case may be, Section 269AB : Provided further that-- . . . (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 ; . . ." 11. Sub-section (1) of Section 269C consist of two stages : one, formation of belief by the competent authority as to the existence of the matters specified in that Sub-section and recording of reasons for such belief; and, two, the actual initiation of proceedings. Section 269D prescribes the procedure for such initiation. Stage two is obviously dependent on stage one. Sub-section (1) of Section 269C consist of two stages : one, formation of belief by the competent authority as to the existence of the matters specified in that Sub-section and recording of reasons for such belief; and, two, the actual initiation of proceedings. Section 269D prescribes the procedure for such initiation. Stage two is obviously dependent on stage one. The two provisos to Sub-section (1) of Section 269C make it mandatory for the competent authority to record his reasons for formation of his belief as to the existence of the grounds for initiation of proceedings. The words "shall record his reasons" occurring in the first proviso and the words "no such proceeding shall be initiated" in the second proviso, make this legal position abundantly clear that unless the competent authority has reasons, i.e, some material to believe that the fair market value of the property is at least 15 per cent. more than the apparent value disclosed in the transfer deed and unless he records his reasons for such belief, he would not acquire jurisdiction to initiate proceedings for acquisition and no notice as envisaged under Section 269D can be issued by him. 12. A Division Bench of the Calcutta High Court in Competent Authority, IAC of I. T. v. Smt. Bani Roy Chowdhury [1981] 131 ITR 578, has made the legal position on the point more luculent in the following terms (page 585): "Under Sub-section (1) of Section 269C, before initiating proceedings for the acquisition of any immovable property which has been transferred, the competent authority must have reason to believe in regard to four matters, namely, (i) the immovable property has a fair market value exceeding Rs. 25,000, (ii) the apparent consideration is less than such fair market value by more than 15 per cent. of the apparent consideration, (iii) the consideration as agreed to between the parties has not been truly stated in the instrument of transfer, and (iv) such untrue statement has been made with the object of evasion of taxes as mentioned in Clauses (a) and (b). Sub-section (1) consists of two stages, the first one is for the formation of belief by the competent authority and the second one is for the initiation of proceedings. The second stage is dependent on the first. Sub-section (1) consists of two stages, the first one is for the formation of belief by the competent authority and the second one is for the initiation of proceedings. The second stage is dependent on the first. In other words, if there be no reason to believe in regard to the four matters specified above, there is no question of initiation of proceedings. It, therefore, follows that in the first stage there is no proceeding, but it relates to preparation for the initiation of proceedings. The boundary between the first stage and the second stage is the existence of materials on the basis of which the competent authority may form his belief and, in order to reach the second stage for the purpose of initiating proceedings for acquisition, the boundary has to be crossed." 13. It is well settled that a taxation statute has to be interpreted strictly. This is more so in a case where the Revenue is enforcing a penal or quasi-penal provision under such a statute as is the case here. The competent authority purporting to act under Chapter XX-A was required to act strictly in accordance with its provisions. 14. In the instant case, respondent No. 2 seems to have totally ignored stage one of Section 269C(1) and straightway took recourse to stage two and issued notice of initiation of proceedings under Section 269D(1). The petitioner has in his petition and affidavit made a specific averment that no material had existed before the competent authority nor did he record the reasons for his belief to initiate proceedings for acquisition. This specific averment could not be and has not been denied by the Revenue. What was submitted is that the notice itself contained the reasons for the belief of the competent authority. The contention is wholly unacceptable. The question of issuance of notice would arise only when the competent authority had first satisfied himself as to the existence of the ground for initiating proceedings for acquisition and recorded his reasons for such satisfaction. There is not even a whisper in the reply or the documents filed by the respondents that any proceedings were recorded by the competent authority before issuance of the impugned notice. No document in this behalf could also be produced. There is not even a whisper in the reply or the documents filed by the respondents that any proceedings were recorded by the competent authority before issuance of the impugned notice. No document in this behalf could also be produced. It is significant to note that on the notice (annexure P/3) the number of the case file noted reveals that the file was opened some time in the year 1986. In this context, it is interesting to note that although the notice (annexure P/3) purports to have been drawn up on July 23, 1981, and published in the Gazette on August 22, 1981, it was actually issued to the petitioner and other parties to the transaction in question in August, 1986. The petitioner had received the notice on August 28, 1986. It is thus clear that there was no case file in existence before August, 1986. The drawal of notice and its publication on July 23, 1981, and August 22, 1981, was thus a mere formality inasmuch as the notice thereafter remained stale for a long period of five years. 15. Section 269D(1) provides that the proceedings for the acquisition, under Chapter XX-A shall be initiated by a notice to that effect published in the Official Gazette. The proviso to this sub-section prescribes a nine-month period of limitation for initiation of proceedings from the end of the month in which the instrument of transfer in question is registered under the Registration Act, 1908. Sub-section (2) further mandates that a notice under Sub-section (1) shall be caused to be served on the transferor, the transferee and the person in occupation of the property in question. A reading of these two sub-sections in juxtaposition would make it clear that for initiation of proceedings not only the notice for acquisition is required to be published in the Official Gazette, but it is also required to be served on the parties to the instrument of transfer. The observance of the two sub-sections was to be made simultaneously so as to afford opportunities to the parties concerned to show cause against the proposed acquisition. In any case notices to the parties under Sub-section (2) were required to be issued immediately after publication of the notice under Sub-section (1). An unexplained and inordinate delay of five years in the matter was wholly unjustified and rendered the publication of the notice wholly ineffective, if not infructuous. In any case notices to the parties under Sub-section (2) were required to be issued immediately after publication of the notice under Sub-section (1). An unexplained and inordinate delay of five years in the matter was wholly unjustified and rendered the publication of the notice wholly ineffective, if not infructuous. It also made the proviso regarding limitation nugatory. It was violative of the principles of natural justice too. On this count also, the impugned proceedings were vitiated. 16. Much reliance has been placed by the. respondent-Revenue on the report (annexure K/1) of the valuer which, according to learned counsel appearing for the Revenue, provided sufficient ground for the competent authority to initiate proceedings for the acquisition. In the first place it is noticed that there is absolutely no reference to this report in the notice (annexure P/5). As already pointed out, no proceedings of the case are produced before the court to show that this report was taken into consideration by the competent authority before issuance of the impugned notice. It is interesting to note that this report prepared by a valuer sitting at a distance of more than 500 kms away from Indore, where the property in question is situated, mentions October 31, 1981, as the date of valuation. Although the report purports to have been prepared on July 4, 1981, and it was thus urged that the date of valuation has been wrongly mentioned by typographic mistake. However, the affidavit of the valuer concerned has not been filed to explain this anomaly. The very absence of any reference to this report in the impugned notice and non-production of any document to evidence that this report was taken into consideration by the competent authority before issuing the notice raise grave doubts as to the existence of this report on or before the date of the issuance of impugned notice. Be that as it may, the fact remains that there is no document to evidence that the competent authority had recorded his reasons for initiating proceedings under Chapter XX-A, as required by Sub-section (1) of Section 269C. Under the circumstances, he could not and did not acquire jurisdiction to initiate proceedings under Chapter XX-A and the notice (annexure P/3) issued under Section 269D was thus vitiated. The proceedings were further vitiated on account of the delay in issuance of notice to the parties under Sub-section (2) of Section 269D. Under the circumstances, he could not and did not acquire jurisdiction to initiate proceedings under Chapter XX-A and the notice (annexure P/3) issued under Section 269D was thus vitiated. The proceedings were further vitiated on account of the delay in issuance of notice to the parties under Sub-section (2) of Section 269D. Non-passing of the order for nearly 4 1/2 years after conclusion of arguments was also contrary to the principles of natural justice and fair trial. The Revenue cannot be now permitted to renew the proceedings at this distance of time, i.e., after more than 20 years. The plea of alternative remedy is also not available to them as the very initiation of the proceedings was without jurisdiction and vitiated on other grounds too already stated hereinbefore. 17. In the result, this petition succeeds and is allowed. The notice (annexure P/3) and the proceedings initiated in pursuance thereof are quashed. There shall be, however, no order as to costs of this petition. Security deposit, if any, be refunded to the petitioner after verification.