K.S. VISWANATHAN, A.M.: This is appeal by transferees in respect of property which had been subject matter of acquisition proceedings. property bears door Nos. 19, 20, 20A, 21, 22, 23 and 24 situated in Ward No. 13, Subhas Road, Anantapur. transferor is Sardar Rajendrapal Singh and transferees are B. Narayana Reddy and 11 others. consideration as per document was Rs. 5 lacs. According to competent authority fair market value of this property would be Rs. 9 lacs. It is on this finding of fair market value that he had passed order of acquisition. property situated in Bellary Road has frontage of 44 ft. It extends to 176 ft. On road front, there, are 5 shops. In rear, there are number of rooms which are also let out as shops. first floor consists of number of rooms, Lodge is run here. second floor is open terrace with two rooms in rear. There are in all 19 shops and lodge consists of 30 rooms. shops have been let out to number of persons. It appears that previous owner Rajendrapal Singh had filed eviction suits to get vacant possession of some of shops. At time of transfer of property, these suits are still pending. competent authority on receipt of information of transfer had preliminary valuation done by Inspector. Inspector's valuation was Rs. 9,33,265. Since property has been transferred only for Rs. 5 lacs, competent authority was satisfied that there was understatement of consideration and he initiated acquisition proceedings. In course of proceedings, transferees submitted valuation report in which approved valuer had valued properties at Rs. 5,16,000. After discussing objection raised by transferees with regard to valuation done by Inspector, competent authority wanted to be more sure of his grounds on valuation and he referred question of valuation to valuation Officer. Valuation Officer gave his report showing value of Rs. 5.32 lakhs. We may mention that both approved valuer and Valuation Officer had proceeded to value property on land and building method. On other hand, Inspector had valued property both on land and building method as well as capitalisation of income method. competent authority then discussed pros and cons of there reports and himself valued property at Rs. 10 lacs. He was, therefore, of opinion that order of acquisition should be passed under these circumstances. transferors have not filed appeal against this order. But, transferees have filed appeal and they are represented by Sri Ranganathachari. Sri Ranganathachari's first submission is that notice of acquisition has not been issued to all 12 transferees and therefore proceedings are ab initio void. For this submission, he referred to decision of Andhra Pradesh High Court in case of Mohd. Mehboob Ali Saheb vs. IAC (1978) 113 ITR 176 (AP). Sri Padmanabhan for Department, however, submitted that this is not factually correct and there is evidence to show that notices have been issued to all transferees. He placed before us records and we find that 12 notices have been placed in one cover and had been issued for service on all transferees. Sri Chari submitted that all 12 notices were placed in one cover and address was written only to one of transferees. Although, this may be so, we are satisfied that notices have been served on all transferees, 12 notices have been acknowledged together. other transferees on receipt of notices have also sent replies to competent authority. These replies no doubt are identical but that is only to be expected on facts of case. We are, therefore, satisfied that notices have been served on all transferees. second objection raised by Sri Ranganathachari is also technical. He submitted that according to requirements of s. 269D (2) (b), notice has to be published in office by affixing copy in conspicuous place and also in locality in which immovable property is situated by affixing copy thereof to conspicuous part of property. According to Sri Chari, this requirement has not been complied with. Quoting Supreme Court's decision reported in AIR 1973 (SC) 552, he submitted that this is mandatory requirement and if this is not complied with, proceedings are not valid. Departmental Representative, on other however, was unable to state that as matter of fact this requirement was complied with. However, he submitted that he cannot fact this requirement was complied with. However, he submitted that he cannot also submit that it was not complied with. These requirements are not normally noted in records and he submitted that it must have been complied with in normal course of proceedings. Since we are unable to ascertain whether as matter of fact, these requirements have been complied with, we would not like to rest our decision on this technical point. Sri Chari then submitted that there was delay in availability of Gazette publication and therefore proceedings are already barred by limitation. He, however, was unable to state on which date Gazette was available to public. On other hand, it has been categorically stated that notification for acquisition was gazetted on 4th Oct., 1981. Sri Chari submitted gazette notification was available on 10th Oct., 1981. Even then nothing turns on these two different dates and we are satisfied that proceedings are not barred by limitation. next objection is also technical was that tenants were not given any notice. There are 5 shops and lodging rooms. According to Sri Chari, tenants of these shops and those in lodging room, should have been served with notices. Sec. 269D(2) requires competent authority to serve notice on transferor, transferee, person in occupation of property, if transferee is not in occupation thereof, and on every person whom competent authority knows to be interested in property. Normally, these information will be available to competent authority from term to be filed in Form No. 34A for certificate under s. 230A. As matter of facts, it is from Form No. 34A that Department gets valuable information in respect of transferors although there is requirement that Registrar should also intimate Department about any transfer registered by them. Form 34A does n o t given any particulars about person in occupation of property. However, when property to be acquired consists of several shops and Department knows that shops have been let out, it would be normal to expect that Department will also ascertain whether property is in occupation of transferee or not. If it is not in their occupation then section requires that occupants i.e. tenants should be served with notice. Inspector's enquiry and report which is basis for proceedings showed that there were certain shops which were let out. In fact, his valuations is based on rents received from shops. Therefore, even before proceedings were started, competent authority was aware that property is tenanted and in occupation of tenants. As already stated decision of Andhra Pradesh High Court in case of Mohd. Mehboob Ali Saheb (supra) has laid down that notices must be served on all persons mentioned in s. 269D(2). Sri Padmanabhan for Department fairly admitted that notices have not been served on those who are in occupation of shops. But, he submitted that this objection can be taken only by those tenants and proceedings as far as tenants are concerned must b e void but this objection will not be available to those on whom notices were served. We are unable to accept this submission. Andhra Pradesh High Court has not made such distinction. If notices have not been served on persons mentioned in s. 262D(2), then proceedings become void. On this issue, we will uphold objection of Sri Chari. This will take as next to question of fair market value of property. Sri Chari's submission is that fair market value is more or less value recorded in document and in support of his submissions, he points out that Valuation Officer of Department has valued property at Rs. 5.32 lakhs and approved valuer has valued property at Rs. 5.10 lakhs. He also pointed out that transferees have paid Rs. one lakh towards furniture, etc. part of this could even be considered as consideration for property itself because these figures re ad-hoc figure. In this case, we are faced with four different valuations. There is initially valuation by Inspector which gave figure of Rs. 9.33 lakhs. Then, there is valuation by approved valuer which gave figure of Rs. 5.16 lakhs. Thirdly, there is valuation by departmental valuer who had valued at Rs. 5.32 lakhs. Finally, there is valuation by competent authority who had ascertained value and estimated same at Rs. 9 lakhs there is fairly nice variation in these figures. In this connection, we hold that auction administered by Karnataka High Court in case of National Flag Perfumery Works 159 ITR 737. (Har) (Sic). They had stated that acquisition under IT Act, 1961 can be made by IAC on evidence that can stand in test of scrutiny by appellate authority under Act and not assumption and presumptions. power has to be exercised with responsibilities, circumspection, earnestness and not casually. Keeping this in mind, we would be very slow in valuation of two experts i.e departmental valuer and approved valuer and solely on valuation made by Inspector and competent authority. We totally agree with Sri Padmanabhan that Valuation Officer's report is not binding on competent authority and on this point, provisions of law are different from WT Act. Nevertheless, it is piece of evidence and in discarding that evidence one should be very cautious. This will take us scrutiny of report of Inspector as well as competent authority. They have proceeded on income capitalisation method. competent authority found that rent from shops was Rs. 8,418 and h e capitalised same at 8 per cent and arrived at figure of Rs. 1,05,225. N o w ground floor of property consists of entirely shops. On income capitalisation method, ground floor had value of Rs. 1,05,225 only. It is difficult to imagine therefore that first floor will be of further value of Rs. 9 lakhs. competent authority had arrived at figure of Rs. 9.4 lakhs as value of lodge. That means value of first floor where lodge is run is Rs. 9.4 lakhs. This is based on their receipts from lodge which are estimated at Rs. 1,55,185 per year. Against which outgoings of Rs. 79,948 is allowed and net income worked out at Rs. 75,236. Now this ignores fact that lodge in run is business. It cannot be equated with ordinary letting out of properties. It requires staff to maintain lodge for benefit of lodgers as well as administrative and other services. It will be very difficult to value property which is run as lodge or hotel on basis of rents receivable. It ignores salient features of business and equates it to mere income from property. This is not correct. profits from business can be attributed to management, capital, services, goodwill, etc. In order to equate return from business with return from building in which business is carried on, it will be necessary to show that income from business is only due to building and none of other elements of business had contributed to it. On materials placed before us, it is very difficult for us to say that receipt estimated at 1.5 lakhs, from lodging business was entirely due to building alone. lodging business had been conducted in these very premises by transferor. It is accepted position that receipts from lodging business were very poor. If lodge now yields gross receipt of 1.5 lakhs surely this itself is sufficient evidence to show that increase in receipts is due to factors other than building. To what extent other factors have contributed to increase in receipts, it is not for us to say. It may be that efficient running of lodge along with change in management might have generated goodwill for lodge which would have increased these gross receipts. What we emphasise here is danger of basing market value of building mainly on receipts of business run in that building. There are two different things. We also find that competent authority had capitalised net income from lodge at 8 per cent. This will not be reasonable in respect of business turnover. Even in ordinary building which is let out, capitalisation at 8 per cent would lead to very unrealistic figure. We are, therefore, unable to find rate of capitalisation adopted to be reasonable. Thus, these are three glaring infirmities in valuation given by competent authority. Firstly when ground floor is valued at Rs. 1 lakh, first floor cannot be valued at Rs. 9.5 lakhs. Secondly, receipts from lodging business run on first floor is not indicator of value of building by itself. receipts are result of several other factors and these other factors should not be ignored. Thirdly, rate of capitalisation is unrealistic. When these three factors are considered along with valuation given by two experts, we find that value fixed by competent authority cannot be supported at all. For above reasons, we are unable to sustain acquisition order. appeal stands allowed. *** B. NARAYANA REDDY & ORS. v. INSPECTING ASSISTANT COMMISSIONER (ACQ.)