Section 269F — Hearing of Objections

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

Section 269F — Hearing of objections

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 It stands superseded by Chapter XX-C (pre-emptive purchase) and, for current transactions, by section 50C / section 56(2)(x).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: The adjudication and order section. After hearing objections and on the satisfaction specified (value threshold, gap exceeding the prescribed percentage, and untrue statement with the proscribed object), and with the Commissioner's approval, the competent authority may make a reasoned order of acquisition.

Litigation profile: Heavily litigated on natural justice, the reasoned-order requirement, the operation of the section 269C(2) presumptions, and the standard of satisfaction.

A. COMMENTARY

The adjudicatory stage

Section 269F is where the Chapter's coercion crystallises. The competent authority fixes a hearing, gives notice to objectors and to the transferee, hears them, considers the material, and only if satisfied of the statutory ingredients — and after obtaining the Principal Commissioner's/Commissioner's approval — may pass an order of acquisition, recording reasons on each objection.

Natural justice

C.B. Gautam is decisive in spirit: before a citizen is divested of property, a real opportunity of hearing must be afforded and the order must deal with the objections; natural justice is read into the scheme even where the language is sparse. A non-speaking order, or one that ignores objections, is liable to be set aside.

Presumptions and burden at this stage

It is here — and only here — that the section 269C(2) presumptions operate (Bani Roy Chowdhury; Madho Properties). Even so, K.P. Varghese requires the revenue to establish real understatement, and the presumption of the proscribed object is rebuttable (C.B. Gautam). Valuation disputes (e.g. the belting method) are resolved on evidence at this stage, as in Madho Properties.

Strict construction and approval

Vimlaben underscores the penal character and the need for strict compliance; the requirement of the Commissioner's prior approval is a substantive safeguard, not a formality.

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.

Hearing of objections.

269F. (1) The competent authority shall fix a day and place for the hearing of the objections made under section 269E against the acquisition under this Chapter of any immovable property, and shall give notice of the same to every person who has made such objection :

Provided that such notice shall also be given to the transferee of such property even if he has not made any such objection.

(2) Every person to whom a notice is given under sub-section (1) shall have the right to be heard at the hearing of the objections.

(3) The competent authority shall have the power to adjourn the hearing of the objections from time to time.

(4) The competent authority may, before disposing of the objections, make such further inquiry as he thinks fit.

(5) The decision of the competent authority in respect of the objections heard shall be in writing and shall state the reasons for the decision with respect to each objection.

(6) If after hearing the objections, if any, and after taking into account all the relevant material on record, the competent authority is satisfied that,—

(a) the immovable property to which the proceedings relate is of a fair market value exceeding one hundred thousand rupees ;

(b) the fair market value of such property exceeds the apparent consideration therefor by more than fifteen per cent of such apparent consideration ; and

(c) 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) of section 269C, he may, after obtaining the approval of the Principal Commissioner or Commissioner, make an order for the acquisition of the property under this Chapter.

Explanation.—In this sub-section, "Principal Commissioner or Commissioner", in relation to a competent authority, means such Principal Commissioner or Commissioner as the Board may, by general or special order in writing, specify in this behalf.

(7) If the competent authority is not satisfied as provided in sub-section (6), he shall, by order in writing, declare that the property will not be acquired under this Chapter.

(8) The competent authority shall serve a copy of his order under sub-section (6) or sub-section (7), as the case may be, on the transferor, the transferee and on every person who has made objections against such acquisition under section 269E.

(9) In any proceedings under this Chapter in respect of any immovable property, no objection shall be entertained on the ground that although the apparent consideration for the property is less than the fair market value of the property on the date of the execution of the instrument of transfer or where such property is of the nature referred to in sub-clause (ii) of clause (e) of section 269A on the date of the transfer, the consideration as agreed to between the parties has been truly stated in the instrument of transfer because such consideration was agreed to having regard to the price that such property would have ordinarily fetched on such transfer in the open market on the date of the conclusion of the agreement to transfer the property, except where such agreement has been registered under the Registration Act, 1908 (16 of 1908).

C. AUTHORITIES

Natural justice, reasoned orders, the operation of the section 269C(2) presumptions and the burden of proof converge at the section 269F hearing.

Natural justice and the reasoned order

C.B. Gautam v. Union of India — [1993] 199 ITR 530 (SC)

Cognate Decided on Chapter XX-C (section 269UD pre-emptive purchase), the successor scheme. The Supreme Court held that pre-emptive purchase / acquisition for undervaluation can be resorted to only where there is 'significant undervaluation' (of the order of 15%), which raises a rebuttable presumption of an attempt to evade tax, and that the principles of natural justice — a reasonable opportunity of hearing — must be read into the provision before an order divesting a citizen of property is made, even where the statute is silent.

Relevance The Court expressly traced the lineage of the pre-emptive-purchase scheme to Chapter XX-A; its reasoning on undervaluation-as-rebuttable-presumption and on natural justice is directly transposable to sections 269C and 269F.

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.

Presumptions, burden and valuation at adjudication

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.

K.P. Varghese v. ITO, Ernakulam — [1981] 131 ITR 597 (SC)

Cognate Decided on section 52(2), but its burden-of-proof rule is the doctrinal backbone of Chapter XX-A litigation. The revenue cannot proceed on understatement merely by showing that the fair market value exceeds the declared consideration by the statutory margin; the burden lies on the revenue to prove that the assessee actually received more than what was disclosed.

Application Carried into section 269C: a mere arithmetical gap between fair market value and apparent consideration is not, by itself, proof that the consideration was 'not truly stated'; understatement (extra consideration passing) must be established.

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.

Valuation evidence (belting method and fair market value)

Mathura Prosad Rajgharia v. State of West Bengal — Supreme Court

Cognate (valuation) Approved the belting method for valuing urban land acquired compulsorily; the method is scientific where the diminution of value with distance from the road is borne out by data. Applied in Madho Properties to fair market value under Chapter XX-A.

Smt. Tribeni Devi v. Collector, Ranchi — Supreme Court

Cognate (valuation) Fair market value must be assessed on an objective standard, taking account of the property's present condition and its reasonable potential; guidance relied upon for the 'fair market value' enquiry under sections 269A/269C/269J.