Judgment N.K.Sud, J. 1. This order will dispose of I. T. A. Nos. 1 to 6, 8 to 15 and 17 to 22 of 1989 preferred by the Revenue under Section 269H of the Income-tax Act, 1961 (for short, the "Act"), against the common order of the Income-tax Appellate Tribunal, Delhi Bench "B", New Delhi (for short the "Tribunal"), dated October 11, 1988, allowing 13 appeals preferred by three persons, namely, M/s. Ansal Housing Finance and Leasing Co. Ltd., M/s. Ansal Properties and Industries (P.) Ltd. and M/s. Ansal Housing and Estate (P.) Ltd., New Delhi. Six of these appeals had been preferred by M/s. Ansal Housing Finance and Leasing Co. Ltd., four by M/s. Ansal Properties and Industries (P.) Ltd. and two by M/s. Ansal Housing and Estate (P.) Ltd. These appeals were directed against the identical orders passed by the competent authority under Section 269F(6) of the Act ordering acquisition of the property purchased by these three persons vide 13 sale deeds. 2. Since the acquisition proceedings have been initiated in an identical style, on the basis of the official valuers report in all these cases and the objections before the valuer and the competent authority had been identical and similar, the appeals were disposed of together after hearing arguments in I. T. A. No. 12/Delhi of 1986. This position is not disputed by counsel for the appellant and, therefore, he addressed the arguments only in I. T. A. No. 1 of 1989 from which the facts have been taken for the purpose of this order. 3. The respondent--M/s. Ansal Housing Finance and Leasing Company Limited, vide sale deed registered at serial No. 760 dated May 13, 1986, purchased five bighas, eight biswas of land situated in village Chakkarpur, Tehsil Gurgaon, from S/Shri Chandgi Ram and Laxmi Narain, sons of Shri Piare Lal, for Rs. 10,15,876. The matter for evaluation of this property was referred to the Valuation Cell of the Government. The Valuation Officer vide his report dated April 26, 1986, determined the fair market value of the property at Rs. 13,79,500. For arriving at this valuation, he took into account sale instances of the land purchased by two other colonisers, namely, D. L. F. Group, which had developed D. L. F. Enclave, and M/s. Unitech Limited, which had developed South City after acquiring agricultural land at some distance from the land purchased by the respondent. 13,79,500. For arriving at this valuation, he took into account sale instances of the land purchased by two other colonisers, namely, D. L. F. Group, which had developed D. L. F. Enclave, and M/s. Unitech Limited, which had developed South City after acquiring agricultural land at some distance from the land purchased by the respondent. However, since the land purchased by the respondent was at some distance from the land purchased by those colonisers, and there was also difference in proximity of time, the Valuation Officer granted reduction varying from 10 to 20 per cent. Similarly, where sale instances pertained to an earlier period, he resorted to some estimated increase. He also granted reduction for disadvantageous position of the land of the respondent. It is in this back-drop that the competent authority had issued notice under Section 269D(1) of the Act initiating the acquisition proceedings. 4. During the course of proceedings before the competent authority, the respondent raised the following objections against the valuation determined by the Government Valuation Officer which have been noticed in para. 4 of the order of the competent authority dated March 29, 1988. "(i) It was submitted that in certain cases agreement to purchase the land had been entered into in the year 1981. Therefore, the valuation made on the date of the execution of the sale deed was incorrect. (ii) The Kind compared by the Government Valuation Officer is located in the area where 70-80 per cent. of the development work for the purpose of colonising the said area had been completed ; land had been levelled ; road had been constructed ; sewer line had been laid ; water line provided ; electricity poles installed and many of the buildings are under construction. As such the comparison made was totally unrealistic and cannot be taken into account at all. Pockets of land which the transferee-company might be compelled to buy later on as some farmers were not selling their lands with the object to get higher price because development would have taken place. (iii) The land under consideration was underdeveloped raw land and development in the area had yet to be started. (iv) Compared sale instances are in respect of left out pockets which had been bargained at a higher figure due to development in the surrounding areas at all with the transactions under consideration. (iii) The land under consideration was underdeveloped raw land and development in the area had yet to be started. (iv) Compared sale instances are in respect of left out pockets which had been bargained at a higher figure due to development in the surrounding areas at all with the transactions under consideration. Average purchase rates of adjoining colony Phase I shall be comparable to the lands of the transferee. (v) The average selling price of the compared colony was much higher than the selling price booked by the transferee-company for the prospective purchasers. (vi) Land under consideration was not comparable with a land which was on the main road and the development being in full swing. The land of the transferee had only unlevelled kacha village rasta and was without any approach road. (vii) It is stated that they are still in the process of buying lands in the surrounding area on negotiated rates. The purchase rate depends upon the reputation of the buyer, negotiation of deal, development around the land, urgency on the part of the seller, the level and approach to the land, etc. (viii) Purchase made by M/s. Unitech Limited (South City) in village Salokhra in the surrounding areas are detailed below : MN_381.htm (ix) They also enclosed a list of some of instances of sale deeds in the villages Sukhrali, Salokhra and Chakkarpur after obtaining from the records of the Sub-Registrar, Gurgaon, (x) About the sale instance furnished by the Department it was stated that these lands form part of their approved colony called Qutab Enclave. Since mostly the sale instances given in this and other cases initiated are of lands purchased by the D. L. F. Group in different villages for their scheme Qutab Enclave, it was pointed out that lay-out plan for Qutab Enclave had been approved by the Haryana Government in 1981. In the initial stages, when there were no frequent sales or transactions of agricultural lands in an area and intending coloniser explores and enters the field, the prices which start at rock bottom go on increasing with the passage of time. Land in D. L. F. Colony Phase II is adjoining the Maruti Factory all along the new National High Way which has already been constructed and, therefore, these lands have better location and cannot be compared with the land of the transferee. Land in D. L. F. Colony Phase II is adjoining the Maruti Factory all along the new National High Way which has already been constructed and, therefore, these lands have better location and cannot be compared with the land of the transferee. (xi) It was submitted that sale instances quoted by the Government Valuation Officer are of villages Shahpur and Sarhol forming part of the lay-out plan for Qutab Enclave. This lay-out plan had been approved by the Haryana Government in 1981-82 and at the time of sale deeds all the sellers knew that D. L F. had already acquired licence and the Government had approved the development and sale of land for residential colony. The seller could, therefore, realise higher price. (xii) In their cases they entered into agreement for the purchase of land in village Sukharli and other surrounding villages in July/August, 1981, and immediately thereafter started having second thoughts about going ahead with the acquisition of further land for obtaining the licence for a colony. As a matter of fact, they dropped the idea and subsequently started filing suits against the sellers not for specific performance, but for recovery of earnest money and advances paid under agreements to sell. It was only in March/April 1985, that they revised their decision and got the licence in July, 1985. Therefore, the sale instances of D. L. F. were not at all applicable and comparable on this score. (xiii) It was submitted that notification under Section 4 of the Land Acquisition Act regarding acquisition of land in villages Sarhol, Sukhrali and Chakkarpur had ultimately been issued in March, 1985, and there was a near panic among the land owners in these and surrounding villages including Kanhai. Most of them, therefore were anxious to have the sale deeds executed and realise their money as the state of slump came. (xiv) It was submitted that for fear of pre-emption rights in the lands, some of the buyers of the lands might have been interested in the past to have the sale amount inflated in the sale deed with a view to protect their interest against the exercise of pre-emption rights by the interested parties. The fear of pre-emption was relieved with the decision of the Supreme Court dated February 27, 1986, in the State of Haryana and others. The fear of pre-emption was relieved with the decision of the Supreme Court dated February 27, 1986, in the State of Haryana and others. (xv) After the purchase of the above lands, a lot of development expenditure had been incurred by the transferee. (xvi) It was submitted that the land purchased by them was their stock-in-trade and it would never be in their interest to deflate the actual cost of the land and pay tax at over 60 per cent. of the cost inflated. On the contrary, a tax evading assessee would try to inflate the cost to reduce the profits. (xvii) It was submitted that taking into account the objections, ingredients and requirements of Chapter XX-A of the Income-tax Act, 1961, the initiation of proceedings for acquisition are wholly misplaced, misconceived and contrary to ordinary principles of reason and logic. Therefore, there cannot, on the very face of it, be any motive for understatement of sale consideration with a view to evade tax. The company is engaged in colonisation by acquiring and developing the land and selling them in plots, etc. The lands are being acquired by this company not as a capital asset, but as a stock-in-trade." 5. The aforesaid objections were disposed of by the competent authority in para, of his order 5 as under : "As regards objection No. (i) it is found that in some of the cases the agreement had been entered into before the date of purchase. Even for the lands for which agreement was entered into no benefit could be allowed for the unregistered and unauthenticated agreements entered into with the agriculturists as laid down under Section 269F(6) of the Income-tax Act. As regards objections Nos. (ii), (iii), (iv), (v) and (vi) due consideration would be given to these objections while arriving at the fair market value. As regards objection No. (vii), I agree with the contention of the transferee that the purchase rate depends upon the reputation of the buyer, etc. I have come to know that the transferee enjoys a very good reputation in the area and the transferee is a well known coloniser in the area. As regards objection No. (viii), the transferee had relied upon a few selected sale instances of coloniser M/s. Unitech Limited (South City) who had purchased land in village Salokhra. I have come to know that the transferee enjoys a very good reputation in the area and the transferee is a well known coloniser in the area. As regards objection No. (viii), the transferee had relied upon a few selected sale instances of coloniser M/s. Unitech Limited (South City) who had purchased land in village Salokhra. First of all, it is clarified that we are supposed to rely upon the highest sale instance of the area and not on the sale instance showing the lowest rate of the area as selected by the transferee. My contention finds support from the judgment of the Supreme Court in the case of S.R.M.V. Rao Bahadur Rani of Vuyyar v. Collector of Madras [1968] 2 SCJ 869, wherein it was held that if there were several sale instances, then it was advisable to select the one where highest value had been declared. Similar was the decision of the honble Punjab and Haryana High Court in the case of CIT v. Mohan Singh [1978] 112 ITR 430. M/s. Unitech Limited (South City) are small coloniser of the area unlike the transferee. They have also purchased the pieces of land showing higher rates than that of the transferee in village Sukharali for colonisation as under : MN_381A.htm As regards objection No. (ix) as already discussed in the order, we are supposed to rely upon the highest sale instance of the area and not on the lowest sale instance quoted by the transferee. The transferee has built up a colony comprising of the lands of villages Sukharali, Salokhra and Chakkarpur. He has quoted some of the sale instances showing lower rates of purchases. As already stated, we are to rely upon the highest sale instances of the area. As regards objection No. (x), it is stated that the sale instances of the land purchased by D. L. F. Universal Ltd. had been relied upon by the Department. The D. L. F. Universal are coloniser and the transferee-company are also the coloniser. The land of one coloniser is being compared with the land of another coloniser. M/s. Universal Ltd. have planned a colony known as Qutab Enclave and the transferee have built a colony known as Sushant Lok. Both the colonies are located on Delhi-Mehrauli Road, opposite to each other. Therefore, in my opinion, these are the best comparable cases. The land of one coloniser is being compared with the land of another coloniser. M/s. Universal Ltd. have planned a colony known as Qutab Enclave and the transferee have built a colony known as Sushant Lok. Both the colonies are located on Delhi-Mehrauli Road, opposite to each other. Therefore, in my opinion, these are the best comparable cases. As regards the fact that M/s. D. L. F. Universal Ltd. are old coloniser and their land is slightly better with regard to location, etc. This factor would be kept in mind while arriving at the fair market value. As regards objection No. (xi), this factor would be given consideration while arriving at the fair market value of the property. As regards objection No. (xii), regarding suits of recovery, it is found from the lists of cases filed that suits have not been filed in any case under consideration. Therefore, no benefit can be allowed on this ground also. As regards objection No. (xiii) the issue of acquisition notice under Section 4 of the Land Acquisition Act, I find from the copy of the notification that this notification had been issued on March 22, 1985, and this notice had been withdrawn on November 4, 1985. After having gone into the record, I find that barring one or two cases of the transferee situated in village Sarhol, no notification of acquisition had been issued in any other case. Due consideration could be given only in the cases where the notice under Section 4 of the Land Acquisition Act had been issued. Lands of cases No. G. R. G./128 of 1985-86 and GRG/1 of 1986-87 were purchased after the withdrawal of notice under Section 4 of the Land Acquisition Act. Therefore, no benefit could be given on this account. As regards objection No. (xiv), this argument of the transferee does not carry much weight as the fear of pre-emption lurked in the mind of every buyer of the land. Therefore, no benefit can be allowed on this account, as everybody whosoever may be the purchaser of land had the same fear, if any. As regards objection No. (xv), every coloniser is supposed to incur expenditure on development of the lands purchased for converting the land into a colony. Similar expenditure had also been incurred by M/s. D. L. F. Universal Ltd. with whom we are comparing the case of the transferee. As regards objection No. (xv), every coloniser is supposed to incur expenditure on development of the lands purchased for converting the land into a colony. Similar expenditure had also been incurred by M/s. D. L. F. Universal Ltd. with whom we are comparing the case of the transferee. Therefore, no benefit can be allowed on this account. As regards objections Nos. (xvi) and (xvii), it is mentioned that the fair market value as determined below exceeds 25 per cent. of the apparent consideration and the provisions of Section 269C(2)(a) are attracted. When the fair market value exceeds by such percentage then the Inspecting Assistant Commissioner of Income-tax (Acquisition) is not supposed to establish that the underhand consideration has passed. The other objections are of general nature and without any evidence on record and do not call for any comments. After taking into account all the disadvantageous factors mentioned by the transferee in the reply filed before me a deduction of 15 per cent. is allowed. The fair market value of the property in question is computed as under : MN_381B.htm This gives a difference of 29 per cent." 6 Since as per the above calculations, the difference between the fair market value and the apparent consideration worked out to 29 per cent., the competent authority vide order under Section 269F(6) of the Act on March 29, 1988, ordered the acquisition of the land in question. 7. Aggrieved by the said order, the transferee filed an appeal before the Tribunal, which has been allowed vide the impugned order dated October 11, 1988. The Tribunal observed that the sale instances relied upon by the Government Valuation Officer were not comparable both from the distance point of view as well as from the time point factor. This position stood accepted even by the Valuation Officer as also by the competent authority, who have allowed reduction in price on this score. The members of the Bench of the Tribunal had personally inspected the plots in question on September 2, 1988, to verify the factual position. This position stood accepted even by the Valuation Officer as also by the competent authority, who have allowed reduction in price on this score. The members of the Bench of the Tribunal had personally inspected the plots in question on September 2, 1988, to verify the factual position. Their findings in respect of that inspection are as under : "On September 2, 1988, when we had gone to inspect these plots in question with plots which came to be compared, it was found as a fact that from west end corner the Tiratha from which goes two roads, one to Palam Vihar on right and the other to DLF Enclave Phases 1 to 3 on straight. This was at a distance of 8 kms. from west end. From the Tiratha DLF Enclave started after 4 kms. and ended after another 4 kms. This is true that 4 kms. length of DLF 1, 2 and 3 Phases were running along with the National Highway No. 8, the point at which DLF Enclave ended on National Highway No. 8 was joined by Gurgaon Mehrauli Road which also moved along with DLF Enclave Phases 1 to 3 for about some distance of 4 kms. Therefrom we returned back to the Tiratha again which was about 12 kms. covering distance of 4 kms. on Mehrauli-Gurgaon Road and another 4 kms. on National Highway No. 8 and again from DLF start to Tiratha. From Tiratha, proceeding towards Palam we moved to the old National Highway No. 8 on which there was a diversion, there ran a very narrow road leading to Palam Vihar which was a distance of 7 kms. or so. We entered the Palam Vihar area which further ran into a distance of 4 kms. in the Palam Vihar area it was visible that most of the plots did not indicate heavy digging due to brick kilns. Compared to DLF, Palam Vihar had very little construction coming up. Coming to Sushant Lok situation undoubtedly it is on Gurgaon-Mehrauli Road, but this is true that it has only an opening on that road which is about less than half km. or so. As that Sushant Lok colony goes long inside whereas as above said DLF has 4 kms. of length along with the same road. Then the perusal of the sale instances in certain cases is of two years earlier." 8. or so. As that Sushant Lok colony goes long inside whereas as above said DLF has 4 kms. of length along with the same road. Then the perusal of the sale instances in certain cases is of two years earlier." 8. On the basis of the above, the Tribunal was of the view that the reduction granted by the Valuation Officer/competent authority from the price reflected in the valuation report was totally arbitrary and without any basis. It was found as a fact that even on the date of inspection, there was a difference to the extent of 50 per cent. in the sale price of two areas whereas reduction had been allowed by the Valuation Officer/competent authority varying from 10-15 per cent. only. The Tribunal also disapproved the findings of the competent authority that when numerous sale instances in the area were available, only the highest sale instances were to be relied upon. It further observed that that except in four cases, even the competent authority had itself not accepted the valuation assigned by the official valuer and had elected to grant further reduction. The Tribunal also observed that the Valuation Officer while relying on comparable sale instances, had not kept in view the various important factors affecting the valuation of a property. Thus the Tribunal held that the valuation determined by the Valuation Officer/competent authority could not be accepted. It also took note of the fact that the transferees were colonisers and developers of land and that the land acquired by them was their stock-in-trade. Thus they could not have any interest in understating the consideration as that would only result in their paying more tax on the income in the course of colonisation business. Similarly, the transferors also could have no interest in understating the valuation as the land was not liable to levy of capital gains tax. The Tribunal also observed that in the presence of the departmental representative, it was found the distance of land of the transferee from the land covered by the sale instances relied upon by the Valuation Officer was far in excess, almost double the distances mentioned by the Valuation Officer. This, according to the Tribunal, shook the very foundation of the Valuation Officers report. 9. It is clear that the Tribunal has mainly based its findings on the factual aspect of the matter. This, according to the Tribunal, shook the very foundation of the Valuation Officers report. 9. It is clear that the Tribunal has mainly based its findings on the factual aspect of the matter. Various infirmities in the valuation report, as already noticed above, have been pointed out. Mr. A.S. Tewatia, learned standing counsel for the Revenue was given a specific opportunity to controvert the aforementioned factual findings of the Tribunal. However, he has fairly conceded that there is nothing on record to show any error in the same. He also could not explain the basis on which reduction in price ranging from 10-20 per cent. had been allowed by the Valuation Officer/competent authority while dealing with the comparable instances on account of difference in proximity of location as also in proximity of time. 10. In view of the above, we are satisfied that the Tribunal was justified in rejecting the estimate of the fair market value determined by the Valuation Officer/competent authority. The basis of the Valuation Officers report is the sale instances of some other colonisers. These are admittedly neither proximate in location nor in time. The distance of the land in dispute from the land in the sale instances has not been correctly noticed by the Valuation Officer. He has understated it by almost 50 per cent. as found by the members of the Tribunal on their personal visit. Again there is no basis whatsoever for the reduction of 10 to 20 per cent. granted by the Valuation Officer/competent authority. Thus, the Tribunal was right in observing that the report of the Valuation Officer, which was the very foundation of these proceedings, was totally arbitrary and unreliable. We are also satisfied that the Tribunal has given valid reasons to come to the conclusion that there could not possibly be any motive on the part of either the vendor or the vendee to understate the sale consideration in the sale deeds. Thus, in our considered view, the Tribunal was fully justified in quashing the acquisition proceedings. 11. Consequently, all the appeals filed by the Revenue are dismissed. However, in the circumstances of the case, there shall be no order as to costs.