TMI Blog1994 (2) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... ideration of Rs. 30 lakhs. Thus, the first three respondents are the prospective transferors and the fourth respondent is the prospective transferee. After entering into this agreement, both the transferors and the transferee filed an application before the appropriate authority as per the provisions of Chapter XX-C of the Income-tax Act, 1961. That application was filed in Form No. 37-I on October 27, 1987. The said Chapter was inserted by the Finance Act, 1986, being 23 of 1986 with effect from October 1, 1986. As per the said Chapter, sections 269U to 269UO were inserted in the Income-tax Act. That Chapter deals with purchase by the Central Government of immovable properties in certain cases of transfer. The appropriate authority, considering the application filed by the concerned respondents, held that the value of the property quoted by the respondents in their agreement was far below the market value of the property. Consequently, the appropriate authority, purporting to exercise power under section 269UD(1) of the aforesaid Chapter made an order for purchase by the Central Government of the said immovable properties of respondents Nos. 1 to 3 at an amount equal to the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsiderations which might induce a seller to sell his immovable property at less than what might be considered to be its fair market value. For example, he might be in immediate need of money and unable to wait till a buyer is found who is willing to pay the fair market value for the property. There might be some dispute as to the title to the immovable property as a result of which it might have to be sold at a price lower than the fair market value or there might be a subsisting lease in favour of the intending purchaser. There might similarly be other genuine reasons which might have led the seller to agree to sell the property to a particular purchaser at less than the market value even in cases where the purchaser might not be his relative. Unless an intending purchaser or intending seller is given an opportunity to show cause against the proposed order for compulsory purchase, he would not be in a position to rebut the presumption of tax evasion and to give an interpretation to the provisions which would lead to such a result would be utterly unwarranted. The very fact that an imputation of tax evasion arises where an order for compulsory purchase is made and such an imputati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever, the learned single judge has set aside the impugned order, annexure "D" under section 269UD on the ground that it involved non-application of mind by the appropriate authority. The learned judge noted the contentions advanced on behalf of the petitioners that there was a single agreement under which the properties were sought to be sold to respondent No. 4 being the prospective purchaser. But the shares of the three petitioners, the prospective transferors, were not equal in value. The value of the first petitioner's share was 44 per cent., the value of the second petitioner's share was 29 per cent. and the value of the third petitioner's share was 27 per cent. It was contended that the value of the properties of the second and third petitioners would fall short of the limit fixed under rule 48L of the Rules framed under the Act. The learned judge also noted the contention of the appellant-Revenue that when the value of each co-owner's share falls short of Rs. 10 lakhs, it may be permissible for the parties to sell the properties without application of Chapter XX-C of the Act but in cases where the value of one of the co-owner's share exceeds Rs. 10 lakhs, the entire property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conceded that even if the court finds some substance in this contention of his, the impugned order, annexure "D", cannot be sustained by the Revenue for the simple reason that as laid down by the Supreme Court in C. B. Gautam's case [1993] 199 ITR 530, the requisite procedure before passing such an order of giving reasonable opportunity to the concerned parties is admittedly not followed by the Department as by the time the impugned purchase order was passed on December 17, 1987, the guidelines given by the Supreme Court in C. B. Gautam's case [1993] 199 ITR 530 were not available for the Department and, therefore, as on date, even if on the first point, the Revenue is in a position to make headway, the consideration on that point by this court would be academic as the purchase order, annexure "D", will remain a still-born order in the light of the Constitution Bench decision of the Supreme Court in C. B. Gautam's case [1993] 199 ITR 530, and, therefore, appeals of the Revenue will have to be dismissed on that ground. He, therefore, submitted that without pressing the appeals on the first point, he would request this court to pass an appropriate order while confirming the order of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, that the statement in Form No. 37-I submitted by the petitioner as set out earlier shall be treated as if it were submitted on the date of the signing of this judgment. Thereafter, if the appropriate authority considers it fit, it may issue a show-cause notice calling upon the petitioner and other concerned parties to show cause why an order for compulsory purchase of the property in question should not be made under the provisions of sub-section (1) of section 269UD and give a reasonable opportunity to the petitioner and such other concerned parties to show cause against such an order being made. In view of the limited time-frame, this will have to be done with a sense of urgency. If, after such an opportunity is given, the appropriate authority so considers it fit, it may hold an inquiry, even though summary in nature, and may pass an order for compulsory purchase by the Central Government of the property in question under section 269UD(1). The appropriate authority will have to decide whether an inquiry is called for in the facts and circumstances of the case after the show-cause notice is issued...." Mr. Dattu, the learned Government advocate, submitted that, therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... autam's case [1993] 199 ITR 530, even then the appellant-Revenue has missed the bus as the Attorney-General on behalf of the Department had moved the Constitution Bench for further directions on November 27, 1992, pointing out that many petitions were pending in the Supreme Court as well as various High Courts wherein the purchase orders were challenged and if the principles in the judgment of C. B. Gautam's case [1993] 199 ITR 530 (SC), had to be followed in such cases, the result would be unworkable as the time permitted for affording an opportunity of being heard to the prospective purchasers and the concerned prospective sellers would not be available in such pending matters and on the basis of the aforesaid submission of the Attorney-General for the Union of India, the Constitution Bench by its order dated November 27, 1992, issued supplementary directions which are at page 564 of the report in C. B. Gautam's case [1993] 199 ITR 530 (SC). Those directions read as under: "We, accordingly, clarify by this supplemental direction to be read as part of the judgment that, in respect of cases other than that of the petitioner, C. B. Gautam, the period of two months referred to in s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court at page 564 of the report as quoted above and such a course would amount to going behind the express directions issued by the Constitution Bench in the aforesaid clarificatory order. And, therefore, according to learned counsel for the respondents, the only course open to this court is to confirm the final order passed by the learned single judge quashing the impugned order, annexure "D", and no further directions or observations can be made in favour of the Revenue as sought to be got done by the Revenue relying on the directions issued by the Constitution Bench of the Supreme Court at page 564 of the report in C. B. Gautam's case [1993] 199 ITR 530. In view of the aforesaid rival contentions, the following points arise for our determination : (1) Whether the order under appeal can be sustained on a different ground, namely, that it is rendered contrary to the procedure laid down by the Supreme Court in C. B. Gautam's case [1993] 199 ITR 530. (2) If so, what further orders can be passed in the present proceedings ? As points Nos. 1 and 2 are inter-connected, we shall deal with them together. Points Nos. 1 and 2 : Having given our anxious consideration to the rival ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasonable opportunity of being heard to the concerned parties by the appropriate authority while passing the impugned order, in the light of the decision in C. B. Gautam's case [1993] 199 ITR 530 (SC). Under these circumstances, therefore, it is not possible for us to agree with the contentions of learned counsel for the respondents that we should not permit the Revenue to submit that the appeals of the Revenue may be dismissed and the impugned order, annexure "D", may be quashed following the decision of the Constitution Bench of the Supreme Court in C. B. Gautam's case [1993] 199 ITR 530. When the Constitution Bench judgment of the Supreme Court is thus pressed into service by both the sides, it would be too much for the respondents to submit that we should keep that judgment aside and decide the first point and if the first point is held in favour of the Revenue then only we can fall back upon the decision in C. B. Gautam's case [1993] 199 ITR 530 (SC) and sustain the order of the learned single judge. The application of the Constitution Bench decision of the Supreme Court on the admitted facts on record, cannot be avoided on the specious plea by the learned counsel for the res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to the laudable object of Chapter XX-C, Form No. 37-I submitted by the petitioner shall be treated as if it were submitted on the date of signing the judgment and thereafter if the appropriate authority considers it fit, it may issue show-cause notice calling upon the petitioner and other concerned parties to show cause why an order for compulsory purchase of the property should not be made under the provisions of sub-section (1) of section 269UD. However, in the clarificatory order at page 564, it has also been laid down that the two months' period in section 269UD shall be reckoned with reference to the date of disposal of each of such pending matters before the High Courts and that this clarification shall be supplemental to the main judgment. Now the short question is whether the Revenue in the present case has missed the bus and the two months' period as laid down by the Supreme Court should be counted from December 15, 1992, when the learned single judge disposed of the writ petitions as contended by the respondents or whether the requisite period has to be counted from the date on which we sign the present judgment. In our view, on a conjoint reading of the directions and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on-granting of reasonable opportunity to the concerned parties by the appropriate authority, the question of further time being available to the Revenue would arise and once the supplemental direction is so read, the main directions contained at page 561 would operate to the effect that the statement in Form No. 37-I submitted by the petitioners as set out earlier shall be treated as if it were submitted on the date of signing of this judgment. It is not possible to agree with the submission of the learned advocates for the respondents that the directions at page 564 of C. B. Gautam's case [1993] 199 ITR 530 (SC) would apply to any type of disposal of pending writ petitions in the High Court. We may take an example to show how this contention, if accepted, would lead to an impermissible situation. If a pending writ petition is allowed by the learned single judge of the High Court on the ground that Chapter XX-C does not apply to a given transaction, can it be said that still the Revenue will get two months' time from the High Court's decision to invoke Chapter XX-C as per the Supreme Court's directions at page 564? The answer must be obviously in the negative. In such a case if the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order being made. We, accordingly, issue similar directions in the present cases. However, in connection with these directions which are issued in consonance with the Constitution Bench decision of the Supreme Court in C. B. Gautam's case [1993] 199 ITR 530, one aspect needs clarification. The Supreme Court while issuing such directions at pages 561 and 564 had contemplated a period of two months referred to in section 269UD(1) as it stood then. We are issuing such directions only today. As on date, the period of two months as earlier mentioned in section 269UD(1) has undergone a legislative amendment. Section 269UD(1) has been amended by the insertion of an additional proviso by the Finance Act, 1993, to the following effect : "Provided further that where the statement referred to in section 269UC in respect of any immovable property is received by the appropriate authority on or after the first day of June, 1993, the provisions of the first proviso shall have effect as if for the words 'two months', the words 'three months' had been substituted." As per our direction, following C. B. Gautam's case [1993] 199 ITR 530 (SC) Form No. 37-I filed by the petitioners will have to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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