M.C. AGARWAL, J.M. These are three appeals by purchasers of property No. R-3 1 , Inderpuri Colony, Delhi, which has been ordered to be acquired under s. 269F of IT Act, 1 96 1 by Competent Authority, Acquisition Range III, New Delhi v i d e order dt 23rd Dec., 1 985. We have heard Id. departmental representative and ld. Counsel for appellants and have perused material placed before us. 2 . One Smt. Saroj Saini was owner of property No. R-3 1 , Inderpuri Colony which consisted of buildings measuring 2 11 2 sq. ft. on plot of land measuring 200 sq. yards. She sold aforesaid property to present appellants vide sale deeds dt. 6th March, 1 984 which was registered in office of Sub-Register, Delhi on 1 4th March, 1 984. consideration for sale mentioned there was Rs. 2,76,000. 3. Intimation in Form No. 37G reached Competent Authority and vide reasons recorded on 3 1 st Oct., 1 984, Competent Authority initiated acquisition proceedings under s. 269C as in its opinion fair market value of property as on date of sale was Rs. 4,38,328. For this difference in apparent sale consideration and fair market value as arrived at by ld. Competent Authority, it had reason to believe that consideration for sale had not been truly stated in instrument of transfer with object specified in s. 269C. notices were issued to persons concerned and present appellants filed objections asserting inter alia that Rs. 2,76,000 was full consideration paid for purchase of property and that ld. Competent Authority had no material before it to have necessary satisfaction as required by s. 269C for initiation of acquisition proceedings. ld. Competent Authority after hearing appellants and taking into consideration valuation report held that fair market value of property as on date of sale was Rs. 4,39,400 and pressing into service presumption under s. 269C(2) hold that consideration had not been truly stated for purpose of avoidance of tax. Acquisition of property was accordingly ordered. 4. In present appeal, ld. Counsel for appellant raised two points : 1 . That initiation of proceedings under s. 269C was invalid as ld. Competent Authority had no material before it from which it could have reason to believe that consideration for transfer of property had not been truly stated in instrument of transfer with object specified in s. 269C( 1 )(a) &(b). 2. That market value of property as determined by ld. Competent Authority is not correct and fair market value was Rs. 2,76,000 as determined by assessee's valuer, which is also consideration paid by assessee. 5 . We would take first point first. ld. Counsel for appellant referred to reasons recorded by ld. Competent Authority on 3 1 st Oct., 1 984. relevant portion is as under: "I have looked into instrument of transfer and made enquiries about facts which are relevant for determining fair market value (as defined in cl. (d) of s. 269A of IT Act) of above mentioned property as on date of its transfer and on basis of data available with me I have reason to believe that fair market value of property as on date of its sale would not be less than Rs. 4,38,328. fair market value of property exceeds apparent consideration by Rs. 1 ,62,328 i.e. about 58 per cent of apparent consideration. I have reason to believe that above mentioned property has been transferred for apparent consideration of such transfer as agreed to between vendor and vendee has not between truly stated in instrument of transfer with object of : (a) facilitating reduction or evasion of liability of transfer to pay tax under ITA, 1 96 1 , in respect of any income arising from transfer, and (b) facilitating concealment of any income or any moneys or any other assets which have not been or ought to be disclosed by transferee for purpose of Indian ITA, 1 962 or ITA, 1 96 1 or WTA, 1 957. purpose of Indian ITA, 1 962 or ITA, 1 96 1 or WTA, 1 957. Therefore, in accordance with provisions of s. 269C of ITA, 1 96 1 . I am initiating acquisition proceedings for above mentioned property by issue of notice under s. 269D ( 1 ) of IT Act, 1 96 1 . New Delhi. Dated 3 1 - 1 -84 Sd/- (G.S. Gopala) Inspecting Asstt. Commissioner, of Income-tax, Acquisition Range-III, New Delhi. F.H.V. worked out as under : . Land 200 sq. ft. yds. (DDA sales Rs. 1 ,600 per sq. . yd. ) I apply paid rate of Rs. 1 ,000 per sq. yd. . Rs. 200 * 1 2,00,000 Building : G.F. 1 4 1 8 sq. ft. ) 2 11 2 . F.F. 694 sq. ft. ) . Rs. Rs. 1 40 per sq. yd. 2 11 2 * 1 40 2,95,680 Rs. Boundary wall and gate etc. on estimate. 20,000 Rs. 5, 1 . 5,680 Less : Depreciation @ 1 .5 per cent p.a. for 1years Rs. i.e. 1 5 per cent 77,350 Rs. F.H.V. 4,38,330 ld. counsel contended that reasons consisted of printed form in which certain figures regarding valuation of property have been incorporated and that mention that ld. Competent Authority made any enquiries about valuation is incorrect and no enquiry whatsoever was made. ld. Deptl. Representative could not point out what were enquiries made by ld. Competent Authority. As regards calculation of fair market value of property, ld. counsel contended that ld. Competent Authority has determined value of land by adopting rate of Rs. 1 ,000 per sq. Yard. After mentioning that DDA rate was Rs. 1 ,500 per sq. yard. According to appellant's counsel, DDA had not made any sales in this area and any sales that might have been made in Baraiha, area of 4 kms. away could not be applied to property in question. Here also ld. Deptl. Representative could not controvert appellant's argument by showing that any property in vicinity of property in question had been sold by DDA at Rs. 1 ,500 per sq. mt. calculation of fair market value of property at Rs. 4,38,329 is thus almost conjectural and we hold that Competent Authority had no valid material to have reason to believe that fair market value of property had exceeded apparent consideration by more than 1 5 per cent. 6 . ld. Deptl. Representative, however, contended that initiation of acquisition proceedings is administrative matter and Competent Authority could initiate proceeding on its subjective satisfaction. Reliance was placed on judgment of Hon'ble Calcutta High Court in Raj Bahadur G.V. Swaika Estate Pvt. Ltd. & Ors. vs. M.R. Tewari & Ors. ( 1 980) 1 6 CTR (Cal) 75: ( 1 980) 1 26 ITR 3 1(Cal). That was writ matter and Hon'ble High Court observed that s. 269C( 1 ) involves exercise not of judicial or quasi judicial powers and that in forming its belief for initiation of proceedings for acquisition, Competent Authority acts on its subjective satisfaction which is arrived at upon application of mind to certain objective facts. Hon'ble Court went on to say that Competent Authority cannot act arbitrarily in initiating proceedings. All these observations clearly indicate that Competent Authority has to have some relevant material on which to base its beliefs that there need not be any material whatsoever is not sustainable from this ruling. Another case relied upon by ld. Deptl. Representative is on Mahavir Metal Works vs. Union of India ( 1 974) 95 ITR 1 97 (Del). Hon'ble Delhi High Court observed that on basis of valuation report Competent Authority had reason to believe that fair market value of property transferred was more than stated consideration. This ruling too does not help Revenue because in present case while initiating proceedings, there was no valuation report before ld. Competent Authority. On other hand in CIT vs. Arun Mehra ( 1 986) 49 CTR (Del) 11 9: ( 1 986) 1 57 ITR 308 (Del) Hon'ble Delhi High Court held that at time of initiation of proceedings, no presumption was available to Competent Authority and it must have material before it to show that fair market value was more than 1 5 per cent of apparent consideration. 7 . Further apart from mere difference in valuation, Competent Authority has to have further reason to believe that consideration has not been truly stated in instrument of transfer with object of facilitating reduction or revision of tax liability of transfer of facilitating concealment of any income or any moneys by transferee. On this point reasons recorded by ld. Competent Authority do not throw any light and ld. Deptl. Representative also could not point out any material on basis of which belief could be formed. ld. Competent Authority did not even take trouble to enquire as to what was real consideration for sale and whether any of transferees or transferor was taxpayer from before or was there any chance of their having understanding consideration for avoidance of tax. For all these reasons we agree with ld. Counsel for assessee and held that Competent Authority did not have cogent material before it to arrive at requisite belief and, therefore, initiation of proceedings under s. 269C was not valid. 8. Now we come to next question as to whether fair market value of property in question exceeded apparent consideration by more than 1 5 per cent. As already stated apparent consideration in this case is Rs. per cent. As already stated apparent consideration in this case is Rs. 2,76,000. Competent Authority has determined fair market value of property at Rs. 4,39,400. ld. Competent Authority had referred matter to Departmental Valuation Officer, who determined value of this property at Rs.4,45, 1 0. valuation officer determined value of building at Rs.2, 1 9,400 and that of land at Rs. 2,25,700. In other words, Valuation Officer adopted land building method. 9. In respect of valuation of land, Valuation Officer relied upon exemplars pertaining to Rajouri Garden and Punjabi Bagh. According to ld. Counsel, Rajouri Garden was 7 kms. away and Punjabi Bagh was 11 kms away from Inderpuri, where property in suit is situate and, therefore exemplars from that area could not have even applied to this case. He made local inspection at instance of assessee and found that two colonies Rajouri Garden and Punjabi Bagh, from which Valuation Officer took exemplars were situate at aforesaid distances mentioned by ld. Counsel for assessee. Not only this two colonies were of different character as well. While Inderpuri was lower middle class colony giving look of muffasil town, Rajouri Garden and Punjabi Bagh were good colonies. Since Valuation Officer has relied upon wrong exemplars, valuation of land sold by him has to be rejected outright. As regards valuation made by ld. Competent Authority, he has taken rate of land at Rs. 1 , 1per sq. yard. Incidentally Valuation Officer had also adopted almost same rate. In first instance while initiating proceedings, ld. Competent Authority had adopted rate of Rs. 1 ,000 per. sq. yard only. ld. Competent Authority has mentioned three exemplars which are as below: ( 1 ) piece of land measuring 1sq. yard out of plot measuring 200 sq. yards bearing No. EA- 1 9 was sold in Nov., 1 983 Rs. 900 per sq. yard. Apparently this was very small area and would have more value. Further according to map of locality plot no. EA- 1 9 is on other end of colony i.e. towards main road while plot in question E-3 1 is admittedly towards extreme end of this colony and about 1 50 yards to south of this property colony ends and there are under developed agricultural fields and Govt. Firing range. (2) Another property bearing No. C-43 built up on plot of land measuring 500 sq. yards was transferred in Oct., 1 984 in which value of land was declared at Rs. 950 per sq. yard. He does not know what was extent of construction in that plot and how much was open area. So far as property in question is concerned, it is fully built up leaving no scope for further extension. ld. Counsel for assessee rightly pointed out that plot No. C-43 also has better location as it is situate opposite 3.80 acre area of open land meant for school. (3) vacant plot of land No. B-53 was sold on 4th March, 1 983. Rs. 1per sq. yard. This is about one year after sale in question and is in respect of vacant plot in which purchaser will have option to make construction in any manner whatsoever. Further this plot is open on three sides leaving owner greater choice in manner of construction and making him available air and entry facilities from three sides. property in question is open only on two sides. 1 . As is evident none of these exemplars relates to identical properties. maximum rate shown in exemplars relied upon by ld. Competent Authority is Rs. 1 ,000 per sq. yard in respect of open plot which was sold one year later. Yet ld. Competent Authority has applied rate of Rs. 1 , 1for determining value of this property which was wholly built up. It must be remeasured that value of open plot is always more because purchaser has all option before him. When on plot building is built thereon, value of land goes down to some extent because purchaser looses all those options and has to utilise whatever has been built upon by previous owner. 1 1 . assessee's registered valuer has adopted rate of Rs. 800 per sq. yard for determining value on property in question and looking to various exemplars referred to above, we are of opinion that his estimate of value of land is more realistic and we would adopt same. 1 2. As regards value of building total area is 2 11 2 sq. ft. i.e. 1 4 1 8 sq. ft. in ground floor and 696 sq. ft. in first floor. valuation officer adopted rate of Rs. 1 ,256.45 per sq. ft. for ground floor and Rs. 956.30 for first floor. In addition he has made various additions for tiles, wire gauge, compound walls etc. registered valuer has adopted rate of Rs. 80 per sq. ft. for ground floor and Rs. 75 per sq. ft. for first floor. He thus arrived at total cost of construction at Rs. 1 ,65,490 and allowed depreciation thereon @ 2.5 per cent for 1 2 years. This case to Rs. 49,647 giving net value of building at Rs. 1 , 1 5,843. Valuation Officer has allowed depreciation for 11 years .5 per cent only. building was constructed in year 1 972 when rates of various materials were much cheaper. When building is sold seller cannot recover price by applying market rate of construction in year of sale. benefit of lower prices of construction is shared by purchaser as well to some extent. depreciation calculated by Valuation Officer @ 1 .5 per cent for 11 year is very low. On this point we think that registered valuer was right in calculating depreciation @ 2.5 per cent for 1 2 years. calculating market value of property Valuation Officer has adopted rates fixed by Public Works Department while it is common knowledge that private properties built under personal supervision are much economical than Govt. Ones. registered valuer has valued building at Rs. 1 , 1 6,000 and we are of view that though there may be scope for little variations, this value is more nearer to correct value of this property. 1 3. For above reasons, we hold that it was not established that fair market value of property in question was more by 1 5 per cent than apparent consideration of Rs. 2,76,000. It is also not proved that apparent consideration has not been truly stated in document of transfer. In our view, therefore, property in question could not be acquired and acquisition order has to be quashed. These appeals are accordingly allowed and order of acquisition is hereby quashed. *** SHAM SUNDER POPLI v. INSPECTING ASSISTANT COMMISSIONER (ACQ.)