JUDGMENT
B.K. Mehta, J.
1. What is the width, scope and purport of s. 269F(9) of the I.T. Act, 1961(hereinafter referred to as “the said Act”), which excludes the evidence of an agreement to sell property other than that registered under the Registration Act, 1908, as inadmissible for purposes of rebutting the presumption of untrue statement of consideration raised under s. 269C(2)(a) of the said Act, is a short but interesting question arising in this appeal. The question arises in the following circumstances:
Jaidip Sinhji Chauhan, who was a Ruler of the erstwhile State of Devgadh Baria in Panchmahals District(hereinafter known as “the transferor”), entered into an agreement on March 7, 1968, to sell an open plot of land admeasuring 4,048 sq. mts. bearing No. 663, situate in the town of Devgadh Baria to one Dharia Ochhavlal Laljibhai(hereinafter known as “the transferee”) for a consideration of Rs. 25,000 at the rate of Rs. 6.25 per sq. yard. This plot of land formed part of the parcel of land of S. No. 458. A sum of Rs. 251 was paid by way of earnest money by the transferee to the transferor. It appears that there was some dispute about the title of the transferor which as ultimately resolved in about the year 1972. A deed of conveyance was accordingly executed by the transferor in favour of the transferee on September 17, 1973.
2. The IAC, Acquisition Range II, Ahmedabad, who happened to be the competent authority, decided to initiate proceedings for the acquisition of the aforesaid plot of land under s. 269D(1) of the said Act since it was found by him that the said transferor had sold his adjoining plot of land admeasuring about 5,982 sq. yards to one co-operative housing society, namely, Kunjvihari Co-operative Housing Society, in May, 1970, at the rate of Rs. 10 per sq. yard, and that since then the valuation of the immovable property had appreciated considerably by the time the plot of land sought to be acquired was conveyed in September, 1973. The competent authority, therefore, by his order of February 21, 1974, initiated proceedings for the acquisition of the aforesaid plot of land. The Gazette notice was accordingly published on June 8, 1974, while individual notices to the transferor and the transferee were served respectively on March 1, and March 2, 1974, the locality notice was published by affixation on the notice board as well as by affixing on the property in question and by beat of drum on April 11, 1974.
3. The transferor did not file any objections while the transferee filed his objections on April 3, 1974. The transferee, inter alia, contended that since he had agree to purchase the plot in question under an agreement of March 7, 1968, he was legally bound to purchase the said property at the rate agreed upon by and between the parties, and, therefore, the apparent consideration stated accordingly in the instrument of transfer was truly and correctly stated, and since that was the only price for the said property at the date of the transfer, no presumption could arise that the apparent consideration has not been stated truly or correctly, and, in any case, there was no ulterior motive of either concealment of income or tax evasion which would render the property liable to be acquired by the Government. In any case, it was contended that the transferee himself has sold the plots of land bearing plot Nos. 664 and 666 adjoining the plot under acquisition at the rate Rs. 3 per sq. metre only and, therefore, there was no understatement as to the consideration.
4. These contentions were rejected by the competent authority who found that the transferor has sold a plot of land bearing No. 657 admeasuring 5,982 sq. mts. At the rate of Rs. 10 per sq. yard to Kunjvihari Co-operative Housing Society on May 25, 1970, and the alleged sales by the transferee of the adjoining plots Nos. 654 and 666 were grossly under-rated since the transferee was in the habit of understating the true consideration and, therefore, the market value of the plot in question as evaluated by the District Valuation Officer in the sum of Rs. 48,600 at the rate of 12 per sq. Yard was perfectly justified since the price for immovable property had gone up considerably in the course of the period from May 25, 1970, to the date of the impugned transfer in September, 1973. The competent authority refused to admit the alleged agreement to sell of March 7, 1968, on which heavy reliance was placed by the transferee in support of his contention that this was the only value of the property at which he was bound under the agreement to purchase the property in view of the bar contained in s. 269F(9) of the said Act. The competent authority, therefore, by his order of September 9, 1975 decided to acquire the plot of land in question under s. 269F(6) since all the conditions necessary for the exercise of his powers were satisfied.
5. The transferee being aggrieved by the above order of acquisition, carried the matter before the I.T. Appellate Tribunal. A number of contentions were urged before the Tribunal. One of the contentions urged on behalf of the transferee was that the provisions of s. 269F(9) could not have retrospective effect so as to exclude from evidence those agreements which have been entered into before the provisions contained in Chap. XX-A were put on the statute book on November 15, 1972, and, therefore, the agreement in question of March 7, 1968, in the present case, is admissible in evidence for proving that the difference in the apparent consideration specified in the instrument of transfer and the fair market value thereof at the relevant date was not due to any other reason but the agreement between the parties since the parties were solemnly bound by the terms of the said agreement and any deviation from the agreement would expose the party deviating from the agreement to a decree for specific performance of the said agreement, or in the alternative, to a decree for damages.
6. The Tribunal was impressed by this contention and was of the opinion that if the contention of the revenue about the inadmissibility of such evidence was accepted, it would tantamount to holding that the provisions contained in s. 269F(9) had retrospective effect which the Tribunal found itself unable to spell out in the absence of any specific provision in the said section or in any other provision of Chap. XX-A. The Tribunal also emphasised that it was not possible for either the transferor or the transferee to get the agreement registered even if they were minded to do so since the limitation permitted under the law for registering the documents had already expired by November 15, 1972, when Chap. XX-A was put on the statute book. The Tribunal, therefore, concluded that the competent authority was not justified in excluding the agreement in question and in rejecting the contention urged on behalf of the transferee that the apparent consideration specified in the instrument of transfer was stated in view of the said agreement. The Tribunal thereafter proceeded to consider and held that the report of the Valuation Officer suffered from serious infirmities as he failed to consider any comparable sale instance that might have taken place in the year 1968, when the agreement was executed. In the opinion of the Tribunal, if, therefore, the agreement to sell was entered into before the provisions contained in Chap. XX-A were put on the statute book, it could not be presumed that the said agreement was made with a view to avoid any tax liability since, in any case, there was no material on record to suggest or support this presumption raised by the competent authority. In that view of the matter, the Tribunal ruled as under:
“… The sale deed or instrument of transfer was executed by the transferor and the transferee to give to the agreement of sale which was entered into in the year 1968 and there is no material on record that the consideration stated in the agreement of sale was not the true consideration. We are of the opinion that the proceedings for acquisition of the said property initiated and completed by the competent authority were not justified. We are, therefore, unable to sustain the order of the competent authority passed under the provisions of section 269F(6) of the Income-tax Act, 1961. The said proceedings are hereby quashed.”
7. This order of the Tribunal is the subject-matter of this appeal before us at the instance of the Commissioner of Income-tax, Gujarat-III. At the time of hearing of this appeal, the learned Govt. Pleader, appearing on behalf of the Commissioner, raised the following three contention:
(1)The Tribunal committed a grave error of law in holding that section 269F(9) of the said Act would not apply to agreements effected prior to the coming into force of Chap. XX-A of the Act of 1961 and they were admissible in evidence for explaining the difference in the apparent consideration and the fair market value of the property, inasmuch as the Tribunal failed to appreciate that the provision contained in the said sub-s. (9) was merely a rule of evidence and on accepted principles of interpretation of statutes it will be retrospective and would, therefore, apply even to agreements entered into before the said provision was put on the statute.
(2) The Tribunal committed an apparent error on the face of the record, inasmuch as it completely failed to consider the question of the factum of execution of Banakhat in spite of the finding of the competent authority that the execution of the Banakhat was not established satisfactorily.
(3) In any case, the Tribunal committed an error of law in drawing a wrong inference about the existence of the alleged agreement though there was no evidence worth its name its name to warrant such a finding.
8. The first pertinent question, which, therefore, arises for our determination is, whether the provisions contained in s. 269F(9) is merely a rule of evidence or a substantive provision of law. Before we answer this question, it would be profitable to recapitulate the scheme incorporated in Chap. XX-A of the I.T. Act, 1961, for purposes of the exercise of the right of acquisition of an immovable property sought to be transferred for a consideration which may be understated with the ulterior motive of tax evasion. This court has, in CIT v. Smt. Vimlaben Bhagwandas Patel [1979] 118 ITR 134, examined in detail the material provisions contained in Chap. XX-A in this connection and held as under (headnote p. 135:
“There is no ambivalence in the provisions relating to compulsory acquisition of immovable property to prevent of tax. The entire scheme as conceived and incorporated in Chap. XX-A of the I.T. Act, 1961, postulates a basic premise that the understatement of consideration in an instrument of transfer by sale is untruly made if it falls short of the fair market value by 25% and the ulterior motive should be presumed to be concealment of income or tax evasion unless rebutted by the parties to the transfer. Parliament has provided artificial rules of evidence so as to raise the presumption about the guilt of the parties to the transfer in respect of the offence of tax evasion or concealment. The rationale underlying these provisions is to cure the economy of the nation by operating upon the cancerous growth which is destroying it by creating black money and tax evasion which have the pernicious effect of ‘seriously undermining the equity concept of taxation and wrapping its progressiveness’. This scheme is sought to be implemented broadly by providing for a power to acquire such properties at the grossly understated consideration and forfeit the difference between such consideration and the fair market value to the Government as penalty… It is not merely the untrue statement of consideration in the instrument of transfer but, coupled with that, the ulterior motive of tax evasion or concealment of income is the gist of the offence and till that ulterior motive is established and found the power in question cannot be exercised.”
9. This court further examined the scope and width of s. 269C(2) while negativing the contention of the revenue that the presumption prescribed in sub-s. (2)(a) and(b) of s. 269C would also arise at the stage of initiation of the acquisition proceedings and not merely at the final stage of decision, and observed as under (p. 175) :
“Clause(b) of sub-s. (2) provides in effect that where the apparent consideration is less than the fair market value of the property transferred, it shall be presumed, unless the contrary is proved, that the agreed consideration has not been stated truly in the instrument with the object of tax evasion. Clause (a) provides that if the fair market value of a property exceeds the apparent consideration by more than 25% it shall be conclusive proof that the agreed consideration has not been truly stated…. We must frankly admit that we have not been able to appreciate the rationale underlying the rule of evidence contained in sub-s. (2)(a) of s. 269C. It does not appear to be fair and just that there should be any presumption by an artificial rule of evidence that mere disparity between the apparent consideration and the fair market value by a prescribed margin of 25% would be conclusive proof that the parties to a transfer have been untruthfully stating the agreed consideration in the instrument of transfer since there may be countless bona fide cases where the agreed consideration may be lower than the fair market value on the date of the execution of sale deed. We have been to our wit’s end to find out as to whether the legislature really intended that the presumption provided in sub-s. (2)(a) and(b) would operate before the proceedings are initiated, and if so, what is its practical value since sub-s. (3) of s. 269E permits an objector to rebut the presumption raised in clause (a) of sub-s. (2) of s. 269C. The Delhi High Court was, therefore, constrained to hold that the presumption raised by clause (a) of sub-s. (2) was rebuttable in view of sub-s. (3) of s. 269E. The presumption prescribed in clause (a) of sub-s. (2) is clearly a rebuttable provision in every case including a case falling under clause (a)”
10. It should be added here that though Parliament permitted an objector to rebut the presumption raised in clause (a) of sub-s. (2) of s. 269C by making an explicit provision in that behalf in sub-s. (3) of s. 269E, in sub-s. (9) of s. 269F it has again provided for exclusion, in the course of hearing of objections, of the evidence of an agreement to sell property unless it is a registered one for purposes of rebutting the aforesaid presumption. These two relevant provisions, namely, s. 269E(3) and s. 269F(9), read as under:
“269E. (3) For the removal of doubts, it is hereby declared that objection may be made under sub-section(1) that the provisions of clause(a) of sub-section(2) of section 269C do not apply in relation to any immovable property on the ground that the fair market value of such property does not exceed the apparent consideration therefor by more than twenty-five per cent. of such apparent consideration.”
“269F(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, 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 sale in the open market on the date of the conclusion of the agreement to sell the property, except where such agreement has been registered under the Registration Act, 1908(16 of 1908).”
11. In our opinion, therefore, the net effect of a conjoint reading of s. 269C(2)(a) and (b), s. 269E(3) and s. 269F(9) is that where the fair market value of a property exceeds the apparent consideration by more than 25% it shall be conclusive proof that the consideration has not been truly stated subject to the right of the objector to displace the said presumption on the ground that in fact the fair market value does not exceed the apparent consideration by the prescribed margin; provided, however, Has will not be entitled, in the course of hearing of objections, to adduce any evidence in support of his objection that the apparent consideration did not fall short of the fair market value because he was bound under the agreement to sell or convey the property at the agreed rate unless such an agreement is registered under the Registration Act, 1908. This is in short the effect of the different rules enumerated in Chap. XX-A in respect of finding out whether the apparent consideration has been untruly stated or not. On a plain reading of these material provisions, we do not entertain any doubt in our mind that the provisions contained in the aforesaid sub-sections are merely rules of evidence and procedure and cannot, by any stretch of imagination, be said to be substantive provisions of law.
12. This distinction between a substantive provision of law and a rule of evidence has been clearly brought out by the Supreme Court in Izhar Ahmad Khan v. Union of India AIR 1962 SC 1052. The Supreme Court was concerned with the question of validity of r. 3 of Sch. 3 of the Citizenship Rules, 1956,, raising an irrebuttable presumption to the effect that a citizen of India obtaining a passport of the Government of any other country shall be conclusive proof of his having voluntarily acquired the citizenship of that country. The principal ground on which the validity of r. 3 was assailed w as that the Central Govt. as, in purported exercise of the delegated power of legislation under s. 9(2) of the citizenship Act, 1955, prescribed a rule of substantive law, which it could not have done in exercise of the delegated authority. Negativing this contention, Gajendragadkar J., as he then was, speaking for majority court, ruled as under (p. 1059) :
“In appreciating the merits of this argument, it is essential to bear in mind the genesis of the law of Evidence and the function which its enactment is intended to discharge. The division of law into two broad categories of substantive law and procedural law is well known. Broadly stated, whereas substantive law defines and provides for rights, duties and liabilities, it is the function of the procedural law to deal with the application of substantive law to particular cases and it goes without saying that the Law of Evidence is a part of the law of procedure. The law of evidence deals with the question as to what facts may, and what may not, be proved, what sort of evidence may or may not be given and by whom and in what manner such evidence may or may not be given. Consistently with the broad functions of the law of evidence, the Indian Evidence Act also deals with the topics that usually fall within the purview of such law. It prescribes the rules of relevance, it provides for the exclusion of some evidence, as for instance, exclusion of hearsay evidence or of parol evidence in some cases; it deals with onus of proof with the competence of witnesses, with documentary evidence and its proof, with presumptions and with estoppel.”
13. It cannot be gainsaid that the provisions contained in s. 269E and s. 269F of the 1961 Act which, inter alia, provide for the period of limitation during which the persons affected or interested are entitled to file their objections, and the procedure for hearing the objections, are parts of the law of procedure. In the course of hearing of objections under s. 269F, if Parliament has shut out the evidence of an unregistered agreement to sell immovable property which the transferor or transferee may intend to adduce for purposes of rebutting the presumption of untruthful statement of consideration under s. 269C(2)(a), no grievance can be made on the alleged ground that since it deprives a party of his right to lead evidence in support of his case, it should be deemed to be a provision of substantive law and, therefore, cannot have any retrospective operation. This contention overlooks the point that there is no vested right in any procedure because the procedure is, as observe by Lord Penzance in Kendall v. Hamilton [1879] 4 App Cas 504(HL), the machinery of law whereby law is administered and justice is reached. Gajendragadkar J.in Izar Ahmad’s case. AIR 1962 SC 1052, speaking for the majority court, observed as under(p. 1060):
“Judicial evidence with which the Evidence Act deals is a species of the genus ‘evidence’, and, according to Best, is for the most part nothing more than natural evidence, restrained or modified by rules of positive law. The statutory provisions contained in the Law of Evidence may be said to be based on the doctrine that that system of law is best which leaves least to the Judge’s discretion. That is why the laws of every well-governed State have established rules regulating the quality, and occasionally the quantity, of the evidence necessary to form the basis of judicial decisions.”
14. We, therefore, find ourselves unable to agree with the contention urged on behalf of the respondent-transferee that the provisions contained in s. 269F(9) in so far as it shuts out the evidence of an unregistered agreement effected before Chap. XX-A was put on the statute book, interferes with the vested right and, therefore, should be construed as a substantive law, which, in the absence of an express provision or necessary implication, cannot have retrospective operation. The learned advocate for the respondent-transferee was at pains to impress upon us that the right of the transferee under a contract to purchase an immovable property is a vested right in the nature of an actionable claim and, therefore, it is movable property as held by the Bombay High Court in CGT v. Matilda Ferreira [1978] 112 ITR 934. We have not been able to appreciate how this decision relied upon by the learned advocate is of any assistance to his cause. In the first instance, the learned advocate has clearly overlooked the distinction between vested right and an existing right as held by Buckley L. J. in West v. Gwynne [1911] 2 Ch D 1(CA), at page 12, that it must be a vested right in the strict sense in order to raise the presumption, “for there is no like presumption that an Act(of Parliament) is not intended to interfere with existing rights. Most acts of Parliament, in fact, do interfere with existing rights. ” The Court of Appeal in that case was concerned with the question whether the operation of s. 3 of the Conveyancing Act, 1892, which sought to prevent in future the exaction of fine by a lessor for giving a lessee a licence to assign should not be restricted to cases where the lease was granted after the commencement of the said Act. Cozens Hardy M. R. said that generally a statute is presumed not to have a retrospective operation unless by express language or necessary implications a contrary intention is manifested. He, however, failed to apply that principle to the statute in question before him. He observed as under(p. 11):
“‘Retrospective operation’ is an inaccurate term. Almost every statute affects rights which would have been in existence but for the statute. Section 46 of the settled Estates Act, 1877, above referred to, is a good example of this. Section 3 does not annul or make void any existing contract; it only provides that in the future, unless there is found an express provisions authorising it, there shall be no right to exact a fine. I doubt whether the power to refuse consent to an assignment except upon the terms of paying a fine can fairly be called a vested right or interest. Upon the whole I think s. 3 is a general enactment based on grounds of public policy, and I decline to construe it in such way as to render it inoperative for many years wherever leases for 99 years, or it may be for 999 years, are in existence.”
15. Buckley L. J., his concurring opinion, observed as under (p. 11):
“To my mind the word ‘retrospective’ is inappropriate, and the question is not whether the section is retrospective. Retrospective operation is one matter. Interference with existing rights is another. If an Act provides that as at a past date the law shall be taken to have been that which it was not, that Act I understand to be retrospective. That is not this case. The question here is whether a certain provision as to the contents of leases is addressed to the case of all leases or only of some, namely, leases executed after the passing of the Act. The question is as to the ambit and some of the Act, and not as to the date as from which the new law, as enacted by the Act, is to be taken to have been the law.
Numerous authorities have been cited to us. I shall not travel through them. To my mind they have but little bearing upon this case. Suppose that by contract between A and B there is in an event to arise a debt from B to A, and suppose that an Act is passed which provides that in respect of such a contract no debt shall arise. As an illustration take the case of a contract to pay money upon the event of a wager or the case of an insurance against a risk which an Act subsequently declares to be one in respect of which the assured shall not have an insurable interest. In such a case, if the event has happened before the Act is passed so that at the moment when the Act comes into operation a debt exists, an investigation whether the transaction is struck at by the Act involves an investigation whether the Act is retrospective. Such was the point which arose in Moon v. Durden [1848] 2 Ex D 22 and in Knight v. Lee [1893] 1 QB 41. But if at the date of the passing of the Act the event has not happened, then the operation of the Act in forbidding the subsequent coming into existence of a debt is not a retrospective operation, but is an interference with existing rights in that it destroys A’s right in an event to become a creditor of B.”
16. There is no disturbance of the vested right of the transferee-respondent because he is only entitled to have a conveyance executed in his or her favour as held by the Bombay High Court in Matilda Ferreira’s case [1978] 112 ITR 934.
17. In Craxfords(Ramsgate) Ltd. v. Williams and Steer Manufacturing Co. Ltd. [1954] 3 All ER 17, the Queen’s Bench Division was concerned with the question, whether s. 2 of the Law Reform (Enforcement of Contracts Act, 1954, repealing s. 4 of the Sale of Goods Act, 1893, which required a note or a memorandum in writing evidencing a contract, was retrospective or not, inasmuch as it deprived the defendant in that case of the plea which he had raised in his written statement in a suit brought by the plaintiff claiming damages for the breach of an oral contract for sale of goods. It was held that no vested right of the defendant which he could have been said to have acquired by raising a plea in the written statement was disturbed because s. 4 which was procedural had been repealed before the section commenced. It was contended on behalf of the defendant in that case that he had, before the passing of the new Act, a vested right of defence to the action which was brought before the new Act was passed and, therefore, such a vested right to defend afforded to him under s. 4 of the Sale of Goods Act can only be taken away by express words in the new enactment. On the other hand, it was contended on behalf of the plaintiff that s. 4 was a procedural section and constituted only a fetter on the power of the court to grant a remedy. Pilcher J., in that connection, held as under (p. 18):
“It is conceded that if a party to litigation has acquired a vested right or interest in an action, the right or interest will not be destroyed by a subsequent statutory enactment unless the subsequent statutory enactment specifically so provides. The authority for that proposition is Hitchcock v. Way [1837] 6 Ad & El 943…… It is submitted(and I think it is not really in dispute) that if it is right to regard the provisions of s. 4 as procedural provisions then the court will only look at the law as it stands at the time when the case comes before it. It is to be borne in mind, I think, that s. 4 does not affect the legal rights of the parties. It does not affect the passing of property under a contract which would be subject to its terms. If a party desires to rely on the section that party has to plead and plead it with some particularity. It is not a substantive provision of the law in the sense that the court itself will take judicial notice of the fact that the provision of the section has not been complied with, unless the point is raised by one of the parties. The section in effect provides that contracts which are covered by it shall be proved in a certain fashion and that unless they are proved in that fashion the court will not enforce them…… It seems to me difficult to suppose that because this action had been commenced before the passing of the new Act and the defendants had put in a defence relying on s. 4 before the passing of the new Act, they thereby acquired a vested right to rely on defences open to them under s. 4. Such defences, as I have pointed out, raise questions of the evidence which is available at the trial of the action to support the contract which is being set up; and it is light of the evidence which is available that the court will arrive at a determination whether or not a contract for the sale of goods of the value of more than Pounds 10 can be enforced. The new Act applies to contracts made before it was passed and I have come to the conclusion that defences based on s. 4 in regard to such contracts can no longer be relied on.”
18. In Halsbury’s Laws of England, 2nd. Edn., Vol. 31, there is a discussion about the effect of statutes on the right of action. It is observed in para. 672 at p. 516 as under:
“Although an existing right of action is not prima facie taken away by a new statute, there is no insuperable objection to construing the language of a statute so as to make it apply to pending proceedings, if such a construction is rendered necessary by the proper interpretation of the language used by the Legislature. Express words are unnecessary to take away vested rights of action for which legal proceedings have been commenced. Clear language is sufficient. There is no rule that when a person has commenced an action he has a vested right in the then state of the law.”
19. The learned advocate for the respondent-transferee, therefore, attempted to persuade us that if the court is inclined to hold that the provision contained in s. 269F(9) is retrospective in its operation, it would virtually tantamount to holding that the presumption raised under s. 269C(2)(a) would be unrebuttable, which clearly is not so as held by this court in Smt. Vimlaben’s case [1979] 118 ITR 134 in view of the clear provision to that effect under s. 269E(3) which permits an objector to rebut the said presumption. In that view of the matter, it was urged by him that the impugned provision in sub-s. (9) should be construed to be substantive provision of law. We are afraid, we cannot be constructed to the substantive provision of law. We are afraid, we cannot agree with this submission of the learned advocate since, assuming that is an unrebuttable presumption, even then, it cannot amount to a substantive provision of law. Gajendragadkar J.in Izhar Ahmad’s case, AIR 1962 SC 1052, negatived this very contention in the following terms(p. 1063):
“In deciding the question as to whether a rule about irrebuttable presumption is a rule of evidence or not, it seems to us that the proper approach to adopt would be to consider whether fact A from the proof of which a presumption is required to be drawn about the existence of fact B, is inherently relevant in the matter of proving fact B and has inherently any probative or persuasive value in that behalf or not. If fact A is inherently relevant in proving the existence of fact B and to any rational mind it would bear a probative or persuasive value in the matter of proving the existence of fact B, then a rule prescribing either a rebuttable presumption or an irrebuttable presumption in that behalf would be rule of evidence. On the other hand, if fact A is inherently not relevant in proving the existence of fact B or has no probative value in that behalf and yet a rule is made prescribing for a rebuttable or an irrebuttable presumption in that connection, that rule would be rule of substantive law and not a rule of evidence. Therefore, in dealing with question as to whether a given rule prescribing a conclusive presumption is a rule of evidence or not, we cannot adopt the view that all rules prescribing irrebuttable presumptions are rules of substantive law. We can answer the question only after examining the rule and its impact on the proof of facts A and B.”
20. Applying this principle enunciated by the majority court in Izhar Ahmad’s case, AIR 1962 SC 1052, if the basic fact that the difference between the apparent consideration in an instrument of transfer and its market value exceeds more than 25% proved, the Legislature has prescribed that the presumption would be raised about the untruthfulness of the statement of consideration in an instrument of transfer and it will be conclusive proof of the inference that the apparent consideration has been untruly stated subject to the right of an objector to lead evidence in rebuttal thereof as provided in s. 269E(3). It has been further provided by the Legislature that on such conclusion having been reached, a further presumption would arise that the apparent consideration was untruly stated with the ulterior motive of tax evasion or concealment of income. It cannot be urged successfully that the basic fact of the difference of 25% between the apparent consideration and the fair market value of a property is inherently irrelevant or has no probative or persuasive value to the inference permitted to be drawn as to the untruthfulness of the consideration. In any case, from the basic fact that the statement of apparent consideration is untruly made, the further inference that it has been done with an ulterior motive cannot be said to be one which no reasonable man would reach or that the basic fact would be inherently irrelevant or improbable.
21. In view of the legal position as settled in Izhar Ahmad’s case, AIR 1962 SC 1052, even assuming than an irrebuttable presumption has been permitted to be raised, which is not the case before us, since the Legislature has permitted to rebut the presumption about the untruthfulness of the consideration by clearly making a provision that objection may be made under sub-s. (1) of s. 269E that the provisions of s. 269(2)(a) do not apply in relation to immovable property on the ground that the fair market value thereof does not exceed the apparent consideration by the prescribed margin of 25% by excluding the evidence of unregistered agreement to sell, it would not amount to a substantive provision of law. It should be emphasized that what sub-s. (9) of s. 269F seeks to achieve is merely providing for the quality of evidence, which would be considered sufficient in case an agreement to sell the property is relied upon the purposes of explaining the difference between the apparent consideration and the fair market value of the property with a view to rebut the presumption which has been raised under s. 269(2)(a) of the 1961 Act. It cannot be urged without violence to the language, that it virtually renders a rebuttable presumption about the untruthfulness of consideration into an irrebuttable one merely because it excluded the evidence of an unregistered agreement. The learned advocate for the respondent-transferee made a strenuous attempt to persuade us that the ratio of the decision in Izhar Ahmad’s case, AIR 1952, was not attracted and could not be pressed into service in the context of the provisions with which we are concerned. In his submission, there was no basic fact which is required to be proved in the present context and, therefore, there is no question of consideration, whether it is relevant or has probative value to the fact which is to be presumed. We are afraid that the learned advocate for the respondent-transferee has failed to appreciate the scheme contained in Chap. XX-A in this behalf. As stated above, before a competent authority can decide for acquisition of an immovable property, two facts must be established, viz.,(i) untruthfulness of the apparent consideration, and(ii) ulterior object as to tax evasion or concealment of income. It is no doubt true that the first circumstance about the untruthfulness of the consideration is to to be presumed from the prescribed margin of 25% between the apparent consideration and the fair market value of a property. On such presumption being raised, the ulterior object for making such statement is also to be presumed that it is for tax evasion or concealment of income.
22. The learned advocate for the respondent-transferee was not justified in urging that the ratio of the decision in Izhar Ahmad’s case, AIR 1962 SC 1052, would not be attracted in the present case,. As a matter of fact it was throughout his contention that inasmuch as s. 269F(9) virtually makes the presumption irrebuttable, though an objector has been given liberty to rebut the presumption raised under s. 269C(2)(a) the former provision should be considered to be a substantive provision of law. It was with a view to repel this contention that the learned Govt. pleader for the revenue relied on the decision of the Supreme Court in Izhar Ahmad’s case, 1962 SC 1052. In our opinion, sub-s. (9) of s. 269F does not raise a rebuttable or an irrebuttable presumption. It merely provides that in the course of hearing of objections against the proposed acquisition, which necessarily postulates the untruthfulness of consideration and the ulterior motive of tax evasion, an objector would not be entitled to explain the difference between the apparent consideration and the fair market value by relying on an agreement to sell unless that agreement is registered. It is, as we have stated above, as a part of the entire procedure of hearing objections that the legislature has provided about the quality of evidence, by shutting out any evidence of unregistered agreement to sell for purposes of explaining the real reason for the difference between the apparent consideration and the fair market value of a transferred property. It is a rule of evidence merely and, therefore, part of the procedure. If it is a part of the procedural law, it will operate on the accepted principles of interpretation of statutes retrospectively. In Craies on Statute Law, 7th edn., at page 401, the principle is digested as under:
“It is perfectly settled that if the legislature forms a new procedure, that, instead of proceeding in this form or that, you should proceed in another and a different way, clearly there bygone transactions are to be sued for and enforced according to the new form of procedure. Alterations in the form of procedure are always retrospective, unless there is some good reason or other why they should not b ? [(Gardner v. Lucas [1878] 3 App Cas 582, 603, R v. Southampton Income Tax Commissioners [1916] 2 KB 249 – affirmed in [1917] 1 KB 259(CA)]. In other words, if a statute deals merely with the procedure in an action, and does not affect the rights of the parties, ‘it will be held to apply prima facie to all actions, pending as well as future’.”
23. In Blyth v. Blyth [1966] 1 All ER 524(HL), a question arose whether s. 1 of the Matrimonial Causes Act, 1963, which permitted a husband to given evidence to rebut the presumption of condonation arising from the presumption of material intercourse would be applicable to a pending petition at the instance of the husband. The House of Lords held that s. 1 of the Matrimonial Causes Act, 1963, was concerned with a procedural matter, viz., the admissibility of evidence to rebut the presumption of condonation, irrespective of the date of the events to which the evidence might be directed, and accordingly the husband’s evidence of absence of intention to condone the wife’s adultery had been held admissible. Lord Denning enunciated the rule in the following terms while holding that such evidence was admissible(p. 535):
“The rule that an Act of Parliament is not to be given retrospective effect only applies to statutes which affect vested rights. It does not apply to statutes which only after the form of procedure, or the admissibility of evidence, or the effect which the courts give to evidence.”
24. In Herridge v. Herridge [1966] 1 All ER 93(CA) a question arose before the Court of Appeal whether resumption of cohabitation constituted condonation and would disentitle a wife to relief of divorce on the ground of matrimonial offence of cruelty under s. 2(1) of the Matrimonial Causes Act, 1963, which came into force on July 31, 1963, after the alleged cohabitation on November 5, 1962. The Court of Appeal held that s. 2(1) of the said Act was a procedural provision, for it dealt with the adducing of evidence in relation to an allegation of condonation in any trial after July 31, 1963, and accordingly the sub-section was applicable even though the evidence related to events before that date, and the resumption of cohabitation in the present case did not amount, by reason of s. 2(2), to condonation. The trial court, though it found that there was sufficient proof of such conduct as would justify a finding of currently, dismissed the petition of the wife for divorce on the ground of condonation, because after the last act of cruelty, the wife resumed cohabitation for about a month and condoned the matrimonial offence. Section 2(1) of the Matrimonial Causes Act, 1963, which provided, inter alia, that the acts of cruelty shall not be deemed to have been condoned by reason only of continuation or resumption of cohabitation between the parties for a period not exceeding three months, or anything during such cohabitation if it is proved that the cohabitation was continued or resumed, as the case may be, with a view to effecting a reconciliation. A question was urged before the appellate court that the Act did not apply to events which took place before it was made effective. Willmer L. J., following the decision of House of Lords in Blyth v. Blyth [1966] 1 All ER 524, held that s. 2(1) of the Act of 1963 was properly to be regarded as a procedural provision dealing with what evidence may or may not be adduced in relation to an allegation of condonation in any trial taking place after the Act came into force, even though that evidence may relate to events which took place before that time. He, therefore, held that s. 2(1) was applicable.
25. In Hutchinson v. Jauncey [1950] 1 All ER 165(CA), a landlord initiated eviction proceedings on May 25, 1949, against his tenant as he had shared his scullery for cooking purposes with another tenant, and, therefore his tenancy forfeited the protection under the Rent Restriction Acts, 1920 to 1939. On June 2, 1949, the Landlord and Tenant Rent(Control) Act, 1949, came into operation into altering the law as enunciated in Neale v. Del Soto [1945] 1 All ER 191(CA), which held that such tenancy lost its protection under the Rent Restrictions Act. The county court judge made an order for possession against the tenant that the acquired rights of the landlord, pursuant to the law as it stood before the new Act came into force, could not be disturbed by the new Act since, in his opinion, though ss. 9 and 10 of the new Act applied to all lettings which commenced before or after the commencement of the said Act yet not as to affect anything or omitted during any such period. The Court of Appeal reversed this decision and held that the effect of ss. 9 and 10 of the new Act was to make the tenant retrospectively a protected tenant although at the date of the issue of the proceedings he was not entitled to remain in possession of the premises. Lord Evershed M. R. observed that if the necessary intendment of the Act is to affect pending causes of action, the court will given effect to the intention of the Legislature even though there is no express reference to pending actions.
26. In Anant Gopal Sheoray v. State of Bombay, AIR 1958 SC 915, the facts were that a complaint was filed against the appellant and three others before the Supreme Court under s. 282 of the Indian Companies Act read with ss. 465 and 477A of the Indian Penal Code on January 13, 1953, and the proceedings commenced in 1954 before a magistrate but they were transferred to a Court Special Magistrate on May 18, 1955, who commenced recording evidence on July 4, 1955. The Criminal Procedure Code(Amendment) Act(26 of 1955) came into force on January 2, 1956. The appellant made an application on January 14, 1956, to the Magistrate claiming right to appear as a witness on his behalf under s. 342A of the amended Code for disproving the charges made against him. His application was dismissed and the High Court of Nagpur confirmed the same in revision since the High Court was of the opinion that the proceedings would be governed by the unamended Code. A question, therefore, arose before the Supreme Court, whether s. 342A, as amended, applied to pending proceedings. Kapur J., speaking for the court, observed as under(p. 917, para. 4):
“There is no controversy on the general principles applicable to the case. No person has a vested right in any course of procedure. He has only the right of prosecution or defence in the manner prescribed for the time being by or for the court in which the case is pending and if by an Act of Parliament the mode of procedure is altered, he has no other right than to proceed according to the altered mode. See Maxwell on the Interpretation of Statues on p. 225: Colonial Sugar Refining Co. Ltd. v. Irving [1905] AC 369(PC). In other words a change in the law of procedure operates retrospectively and unlike the law relating to vested right is not only prospective.”
27. It was urged on behalf of the respondent-transferee that as held by this court in Smt. Vimlaben’s case [1979] 118 ITR 134 that since the power of acquisition in Chap. XX-A of the 1961 Act is a penal provision, it must be held to be prospective. We are afraid this is too broad a contention to which we can agree; in the first place, the provision with which we are concerned, namely, s. 269F(9) being a rule of the evidence part of the procedural law, there is no question of the same applying prospectively only because at the most it creates certain disabilities and neither creates new offences nor prescribes new punishments as held by Cockburn C. J. in R. v. Vine [1875] LR 10 QB 195.
28. In State of Bombay v. Vishnu Ramchandra, AIR 1961 SC 307, a question arose whether s. 57 of the Bombay Police Act, 1951, would authorise the police authorities to pass externment orders on the basis of the past actions of the persons committed before the coming into force of the Act. Hidayatullah J., speaking for the court, observed as under(p. 309):
“… in our opinion, the High Court was not right in the view it had taken of s. 57 of the Act. The question whether an enactment is meant to operate prospectively or retrospectively has to be decided in accordance with well settled principles. The cardinal principle is that statutes must always be interpreted prospectively, unless the language of the statutes makes them retrospective, either expressly or by necessary implication. Penal statues which create new offences are always prospective but penal statues which create disabilities, though ordinarily interpreted prospectively, are sometimes interpreted retrospectively when there is a clear intendment that they are to be applied to past events…
29. There are, however, statutes which create no new punishment, but authorise some action based on past conduct. To such statutes, if expressed in language showing retrospective operation, the principle is not applied. As Lord Coleridge C. J. observed during the course of arguments in R. v. Birwistle [1889] 58 LJ MC 158:
‘Scores of Acts are retrospective and may without express words be taken to be retrospective, since they are passed to supply a cure to an existing evil.’
30. Indeed, in that case which arose under the Married Women (Maintenance in Case of Desertion) Act, 1886, the Act was held retrospective without express words. It was said:
‘It was intended to cure an existing evil and to afford to married women a remedy for desertion, whether such desertion took place before the passing of the Act or not’.”
31. In Memon Abdul Karim Haji Tayab v. Deputy Custodian-General, New Delhi, AIR 1964 SC 1256, the facts were that in January, 1946, the sister of the appellant deposited a sum of Rs. 85,000 with the appellant. She migrated to Pakistan some time between June and August, 1949. The question which arose in that context was, whether the appellant was liable to pay the amount of deposit to the Custodian. The appellant contested the right contending that the money had been given to him as a loan and its recovery was bared in January, 1949, long before his sister migrated to Pakistan. The Assistant Custodian directed the recovery of the said amount as arrears of land revenue under s. 48 of the Administration of Evacuee Property Act, 1950, as it stood then. The matter was taken in appeal before the Custodian, Saurashtra, who rejected it. The revision before the Custodian-General also met with the same fate. A learned single judge of then Saurashtra High Court rejected the special civil application challenging the said order in revision. However, in the Letters Patent Appeal, the appellant succeeded since, according to the Division Bench of the said High court, the amount was not recoverable under s. 48 of the Administration of Evacuee Property Act as it stood at the relevant time. The Division Bench rendered is decision on December 9, 1957. Meanwhile, s. 48 had been amended on October 22, 1956; a fresh notice was issued by the Assistant Custodian on January 22, 1958, calling upon the appellant to deposit the said amount. The Assistant Custodian directed the amount to be recovered. The appellant again carried the matter in appeal to the Custodian-General who allowed the appeal in August, 1958, and remanded the proceedings for further inquiry. The Custodian-General had held that s. 48, as amended, applied to the fresh proceedings which began on the notice issued by the Assistant Custodian in January, 1958, and the amount was recoverable under the amended s. 48 provided it was due to the evacuee and vested in the Custodian. He remanded the matter for determination of that question and also of the period of limitation since the appellant contended that the transaction was a loan transaction. On remand, the Assistant Custodian held that it was a deposit and was recoverable when the property vested in the Custodian. An appeal from the said order was dismissed by the Custodian-General. The appellant moved the Supreme Court by way of special leave. Wanchoo J., speaking for the court, held that sub-ss. (1) and(2) of the amended s. 48 were clearly procedural and would apply to all cases which were to be investigated in accordance therewith after October 22, 1956, even though the claim might have arisen before the amended section was inserted in the Act, since it was well settled that procedural amendments to a law apply in the absence of anything to the contrary, retrospectively in the sense that they apply to all motions Appeal from the Judgment and Order dated er the date they came into force even though the actions may have begun earlier or the claim on which the action may be based may be of an anterior date. Wanchoo J. considered the entire s. 48 and observed as under:
“…… It will be seen that this is mainly a procedural section replacing the earlier s. 48 and lays that sums payable to the Government or to the Custodian can be recovered thereunder as arrears of lands revenue. The section also provides that where there is any dispute as to whether any sum is payable or not to the Custodian or to the Government, the Custodian has to make an inquiry into the matter and give the person raising the dispute an opportunity of being heard and thereafter decide the question. Further, the section makes the decision of the Custodian final subject to any appeal or revision under the Act and not open to question by any court or any other authority. Lastly, the section provides that the sum shall be deemed to be payable to the Custodian notwithstanding that its recovery is barred by the Indian Limitation Act or any other law for the time being in force relating to limitation of action. Sub-sections(1) and(2) are clearly procedural and would apply to all cases which have to be investigated in accordance therewith after October 22, 1956, even though the claim may have arisen before the amended section was inserted in the Act.”
32. In K. Eapen Chako v. Provident Investment Company(P.) Ltd., AIR 1976 SC 2610, a question arose, whether s. 125(1) and (3)of the Kerala Land Reforms Act, 1964, as amended by Act 35 of 1969 with effect from January 1, 1978, which provided exception to the exclusion of jurisdiction of civil courts in respect of proceedings pending in a civil court on January 1, 1979, were retrospective or not. Ray C. J., speaking for the court, said as under(p. 2617, col. 2):
“If the legislature forms a new procedure alterations in the form of procedure are retrospective unless there is some good reasons or other why they should not be. In other words, if a statute deals merely with the procedure in an action, and does not affect the rights of the parties it will be held to apply prima facie to all actions, pending as well as future.”
33. In view of this settled legal position, we are of the opinion that what s. 269F(9) seeks to provide is merely in connection with the procedure in the course of hearing of objections. It seeks to exclude evidence in the nature of unregistered agreements to sell immovable property for purposes of rebutting the presumption about the untruthfulness of the consideration prescribed under s. 269C(2)(a). It does not in any way curtail or prejudicially affect the rights under an agreement to sell property. It does not invalidate the contract nor does it make an agreement ineffective as was the case in In re Joseph Suche & Co. Ltd. [1875] 1 Ch D 48(Ch D). By no stretch of imagination can it be contended that any vested rights are sought to be divested nor can it be urged successfully that a substantial provision of law is enacted for the first time prescribing new disabilities or remedy.
34. In J. P. Jani, ITO v. Induprasad Devshanker Bhatt [1969] 72 ITR 595(SC), a contention that under s. 148 of the I.T. Act, 1961, an ITO can reopen the assessment of an assessee even though that right might have been barred under the 1922 Act, was sought to be re-enforced by placing reliance on s. 297(2)(d)(ii) of the 1961 Act, and it was negatived by the Supreme Court since neither by express language nor by necessary implications of the said section there was a revival of the right of the ITO to reopen an assessment which was already barred under the old Act. The Supreme Court reaffirmed the recognised principle of interpretation of statutes that unless the terms of the statues expressly so provide or unless there is a necessary implication, retrospective operation should not be given to the statute so as to affect, alter or destroy any right already acquired or to revive any remedy already lost by efflux of time. It, therefore, cannot be said, much less successfully contended, that the impugned provision affects, alters or destroys any right already acquired or tries to revive any remedy lost by efflux of time.
35. Our attention has been invited to the decision of a Division Bench of the Mysore High Court in Venkatasubbasetty v. Sahukar M. S. Rasavanna Devaru, AIR 1951 Mys 5, where under section 16 of the Mysore Money-Lenders Act a presumption was permitted to be raised for purposes of s. 3 of the Usurious Loans Act, 1923, that where the interest charged is in excess of the rate prescribed as maximum in ss. 14 and 15 of the said Act which permitted the court to grant interest in cases of loans advanced after the Mysore Money-Lenders Act became effective at the rate of 9% in the case of secured loan and 10% in the case of unsecured loan and prohibited a money-lender from recovering by suit interest of any kind at the rate exceeding 6% with yearly rests notwithstanding a contract providing for payment of compound interest, to the effect that the said rate of interest was excessive as the transaction was substantially unfair. It was urged that there was nothing under s. 16 confine its application to loans advanced after the Act. The Division Bench upheld the contention and held that s. 16 is intended to apply not merely to loans advanced subsequent to the enactment of the Money-Lenders Act but also to loans advanced prior to the enactment of the Act since it does not affect any substantive law and merely lays down a rule of evidence in raising the presumption. The Division Bench of the Mysore High Court referred to its earlier decision reported in 14 Mys L. J. 391, where the Mysore High Court had held that if an Amending Act merely alters the forms of procedure or matters of evidence, even if the intention to make it retrospective is not expressly found in the legislation, it is always retrospective unless there is some good reason why it should not be so. We are in respectful agreement with this principle. We must, therefore, reject the contention urged on behalf of the respondent-transferee which impressed the Tribunal that the provision contained in s. 269F(9) is merely prospective and would not apply to agreements entered into before Chap. XX-A was put on the statute book.
36. The learned advocate for the respondent-transferee, therefore, urged in the alternative that it would be contrary to all the recognised canons of construction of statutes to allow a procedural section to whittle down or modify a substantive provision of law(vide Rustom Dinshaw v. State of Bombay [1953] 55 BLR; AIR 1953 271). We do not think that the interpretation which has been canvassed on behalf of the revenue about the retrospectivity of the impugned provision would, in any way, whittle down or modify a substantive provision of law. It is no doubt true that the width of s. 269C(2)(a) which permits an irrebuttable presumption to be raised is sought to be curtailed by enabling an objector to raise objections under s. 269E(3) for purposes of showing that there was no untrue statement of consideration in an instrument of transfer. We do not think that this substantive right of filing objections, assuming that it is a substantive one, is sought to be whittled down or modified by the impugned provision. It merely provides, as we have stated above, what quality of evidence would be required for purposes of effectively rebutting the presumption about the untrue statement of consideration. The learned advocate for the respondent-transferee, therefore, attempted to persuade us that the interpretation which the court is inclined to put on the impugned provision would virtually invalidate all the agreements to sell immovable property effected before November 15, 1972, and, therefore, would amount to substantive provision of law. We are afraid that this contention is not well founded. It is no doubt true that an objector will not be entitled to rely on an unregistered agreement to sell an immovable property for purposes of rebutting the presumption about the untrue statement of consideration in an instrument of transfer. However, on a plain reading of sub-s. (9) of s. 269F this is the limited scope and width of the rule of evidence prescribed therein. In our opinion, it only excludes evidence of unregistered agreements for purposes of rebutting the presumption permitted to be raised about the untrue statement of consideration under s. 269C(2)(a). The revenue cannot be permitted to enlarge its scope and width by excluding unregistered agreements to sell immovable property from consideration altogether. In our opinion, it will be inadmissible only for the limited purpose of rebutting the said presumption under s. 269C(2)(a). Such agreements, however, are admissible for purposes of rebutting the presumption permitted to be raised under s. 269C(2)(b) that the object of untrue statement of consideration was tax evasion or concealment of income. In other words, an objector can always rely on such agreements effected before Chap. XX-A was put on the statute book to rebut the presumption about the object underlying the untrue statement of consideration. The impugned provision would, therefore, operate for the limited purpose of shutting out the evidence in the nature of unregistered agreements to disprove the untruthfulness of the statement of consideration. An objector can always adduce evidence other than such unregistered agreements to prove that the consideration was truly stated for some other valid reason. Nevertheless he can press into service such evidence in the nature of unregistered agreements to show to and satisfy the competent authority that the conceded difference between the apparent consideration and the market value of a property sought to be transferred was not motivated with the ulterior object of tax evasion or concealment of income. The revenue can satisfy itself about the genuineness, validity of factum of, the existence of such an agreement, but it cannot exclude the evidence from its consideration for purposes of finding out the ulterior object underlying the conceded difference between the market value and the apparent consideration of an immovable property. An objector can successfully persuade a competent authority that there was no ulterior motive about the presumed untruthfulness in the statement of consideration and the object, for the obvious difference was not motivated but was the result of the agreement entered into between the parties. We are, therefore, of the opinion that this is the only width and scope of the impugned provision. The learned advocate for the respondent-transferee in this connection invited our attention to the fact that the Tribunal has considered this limited scope of the impugned provision in its order and he relied on the following passage in that behalf:
“…… There is yet another aspect of the matter, viz., that when the agreement of sale was entered into, the provisions contained in Chapter XX-A were not on the statute book. Therefore, it could not presumed that the said agreement was made with a view to evading any tax liability. There is no material on record to suggest or support this allegation of the revenue authorities.”
37. We are of the opinion that this is too short a view of the matter which the Tribunal has taken. It has not considered the factum of the agreement since that was under challenge. The competent authority has also not satisfied itself after giving adequate opportunity to the respondent-transferee to lead evidence to establish the factum and/or genuineness of the agreement. In that view of the matter, therefore, we must set aside the order of the Tribunal and also the order of the competent authority and remand it to him for purposes of disposing the matter afresh according to the correct legal principles indicated in this judgment. Cross-objections are, therefore, disposed of accordingly.
38. In the result, the appeal is allowed accordingly; however, with no order as to costs.
