Section 269D — Preliminary Notice

CHAPTER XX-A — ACQUISITION OF IMMOVABLE PROPERTIES IN CERTAIN CASES OF TRANSFER TO COUNTERACT EVASION OF TAX

Section 269D — Preliminary notice

Case Laws & Commentary — Income-tax Act, 1961 (as amended by the Finance Act, 2026) — bharattax.co Treatise

Status: Historic / spent. Chapter XX-A was inserted by the Taxation Laws (Amendment) Act, 1972, with effect from 15 November 1972, and does not apply to transfers of immovable property made after 30 September 1986 (section 269RR). It stands superseded by Chapter XX-C (pre-emptive purchase) and, for current transactions, by section 50C / section 56(2)(x).

Finance Act, 2026: No amendment. The Finance Act, 2026 does not touch any provision of Chapter XX-A.

Mechanism: Prescribes how acquisition proceedings are initiated — by a notice published in the Official Gazette within nine months from the end of the month of registration — and requires individual notice on the transferor, transferee, occupant and every known interested person, plus local publication.

Litigation profile: Litigated on limitation (the nine-month bar), the mandatory character of Gazette publication, and service of individual notice on all interested persons.

A. COMMENTARY

The two-fold notice requirement

Initiation is by a Gazette notice (sub-section (1)); but sub-section (2) additionally requires the competent authority to serve individual notice on the transferor, the transferee, the person in occupation (if different) and every person known to be interested, and to publicise the notice locally by affixture and proclamation. Both limbs matter: the Gazette notice fixes the date of initiation for limitation; individual service secures natural justice.

Limitation — the nine-month bar

Proceedings cannot be initiated after nine months from the end of the month in which the instrument of transfer is registered (or the statement under section 269AB is recorded). The bar is jurisdictional: a notice published out of time is a nullity. Periods covered by a court injunction restraining initiation are excluded in computing the nine months.

Recording of reasons and valid initiation

Reading section 269D with the first proviso to section 269C(1), the reasons must be recorded before the Gazette notice issues. Bani Roy Chowdhury quashed a section 269D(1) notice where the foundation was defective; Madho Properties stresses strict adherence to the recording-of-reasons and procedural requirements of sections 269C and 269D; Vimlaben treats valid initiation as the gateway to the whole proceeding.

Effect of defective notice

Because the Chapter is expropriatory, defects in initiation are not curable as mere irregularities — a time-barred Gazette notice, or initiation on a foundation that does not satisfy the twin conditions, vitiates everything that follows.

B. STATUTORY TEXT (verbatim)

Reproduced verbatim from the Income-tax Act, 1961, as amended up to the Finance Act, 2025 (the Finance Act, 2026 makes no change). Page-header/footer artefacts of the source PDF have been removed; wording, clause-lettering and punctuation are unaltered.

Preliminary notice.

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—

(a) in a case where it is determined under sub-section (4) of section 269B by the competent authority who has initiated proceedings for the acquisition of any immovable property under this Chapter or by the Board that such competent authority has no jurisdiction to initiate such proceedings, the competent authority having jurisdiction may initiate such proceedings within—

(i) the period of nine months specified in the foregoing proviso ; or

(ii) a period of thirty days from the date of such determination, whichever period expires later ;

(b) in a case where proceedings for the acquisition of any immovable property under this Chapter could not be initiated during any period of time by reason of any injunction or order of any court prohibiting the initiation of such proceedings or preventing the examination of documents or other materials required to be examined for the purpose of determining whether such proceedings should be initiated, the time of the continuance of the injunction or order, the day on which it was issued or made and the day on which it was withdrawn shall be excluded in computing the period during which such proceedings may be initiated under this sub-section.

(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 ;

(b) cause such notice to be published—

(i) in his office by affixing a copy thereof to a conspicuous place ;

(ii) in the locality in which the immovable property to which it relates is situate, by affixing a copy thereof to a conspicuous part of the property and also by making known in such manner as may be prescribed the substance of such notice at convenient places in the said locality.

Explanation.—The provisions of the Explanation to sub-section (2) of section 269B shall apply for the purposes of this sub-section as they apply for the purposes of that sub-section.

C. AUTHORITIES

Limitation, the mandatory Gazette notice and individual service, and the recording of reasons govern the validity of initiation under section 269D.

Validity of initiation — recorded reasons and quashing of defective notice

Smt. Bani Roy Chowdhury v. Competent Authority, Inspecting Assistant Commissioner of Income-tax, Acquisition Range II — [1978] 112 ITR 111 (Calcutta); per Ramendra Mohan Datta J (decided 18 June 1976)

Held The presumptions in section 269C(2) operate only at the stage of adjudication of objections and cannot be pressed into service to form the 'reason to believe' for initiation under section 269C(1); at that threshold the authority must possess material independent of the statutory presumptions.

Also Simultaneously anchoring the belief to both clauses (a) and (b) of section 269C(1) betrayed non-application of mind; the authority had wrongly treated a confirming party (Hindusthan Building Society Ltd.) as a transferor, and had relied on irrelevant advertisements/comparables for fair market value.

Result The section 269D(1) notice was quashed — an early and influential statement of the procedural discipline governing Chapter XX-A.

CIT v. Smt. Vimlaben Bhagwandas Patel and Smt. Kamlaben Kanjibhai Patel — [1979] 118 ITR 134 (Gujarat) (decided 25 January 1979)

Facts Notice under section 269D(1) initiating acquisition of two industrial sheds transferred below the competent authority's estimate of fair market value; the transferee challenged initiation.

Held The leading judgment on Chapter XX-A. The acquisition machinery is expropriatory and penal in character and must be construed strictly. Initiation under section 269C(1) requires the competent authority to entertain reason to believe BOTH limbs of the 'twin conditions' — (i) that the fair market value exceeds the apparent consideration (understatement), and (ii) that the consideration was not truly stated with the ulterior object in clause (a) or (b) (reduction/evasion of the transferor's tax or concealment by the transferee). The statutory presumptions in section 269C(2) belong to the post-initiation adjudicatory stage (section 269F) and cannot supply the reason to believe at the threshold.

Also Where the authority records more than one ground, the initiation is not vitiated merely because one ground is later found defective, so long as a valid ground survives. Reasons must have a rational nexus with the material.

Strict adherence to sections 269C–269D procedure

CIT, West Bengal-II v. Madho Properties Ltd. — Calcutta High Court, per Dipak Kumar Sen & C.K. Banerji JJ (decided 12 September 1980)

Held The 'belting method' of valuing urban land (the front belt valued highest and successive rear belts at a discount by distance from the road) is a scientific and acceptable mode of arriving at fair market value when supported by data; it was approved following Mathura Prosad Rajgharia v. State of West Bengal (SC) and Smt. Tribeni Devi v. Collector, Ranchi (SC).

Also Reaffirmed that the section 269C(2) presumptions cannot be invoked at the initiation stage; the Tribunal's adoption of the belting method was upheld and the Revenue's appeal dismissed.