Give cogent reasons on property undervaluation: HC

The Madras High Court has ruled that officials should give cogent and convincing reasons for coming to the conclusion that the value mentioned in the document of a property was below market value or not truly set forth.
Justice Vimala S Vimala of Madurai bench, allowing a petition filed by C Chinnaswamy, said sub-registrar cannot mechanically come to the conclusion that there was deliberate undervaluation of property. If the officer says "There is reason to believe the fraudulent intention to evade payment of proper duty", then he should come out with materials or reasons, the judge said.
"The word reason to believe means some material on the basis of which the department could reopen the proceedings and collect more duty."

The appellant submitted that he purchased two properties measuring 1.24 acres and 0.86 acres at Sitthayankottai for Rs.37200 and Rs.35,800 respectively. He paid Rs .4500 as stamp duty. However, the Special Deputy Collector (Stamps) contended that value of the property, near the road, should be fixed on square foot basis at the rate of Rs 15 per square ft, and said he should pay Rs 92,818 and Rs.63,887 as stamp duty.
The appellant then asked the officials to fix the market value as adopted in the Instrument itself. The Deputy Collector confirmed the value, forcing him to appeal to the Inspector General of Registration.

After inquiry, the IG directed him to pay more stamp duty-- Rs 1.64 lakh and Rs.1.16 lakh respectively-- following which he filed the present appeal.

The appellant contended that the officials violated various rules of the Stamp Duty. The registering authority had not mentioned any reason to come to the conclusion that the market value of the property had not been truly set forth.
In fact the market value of the property had to be determined based on the date on which documents were executed.
The judge rejected the contention that non-mentioning of the guideline value itself was not fatal, and on that basis the order could not be set aside.

"When the Additional Government Pleader was asked to state what are the materials based on which the market value would be fixed, he was not in a position to give any concrete answer," the judge said.
As the orders of the Deputy Collector and then IG did not rely upon any basic or prima facie materials, the court had no other option but to set them aside, the judge said.