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2022 (5) TMI 299 - HC - Income TaxOrder by appropriate authority for purchase by Central Government of immovable property u/s 269UD - Undervaluation of property- determining the fair market value of the property - why the fair market value of the said property should not be taken as Rs.75,94,560/- and why an order should not be made in accordance with the provisions of Section 269UD (1) - HELD THAT:- In the case at hand, there is no finding that the undervaluation was intended to evade tax, let alone discharge the onus of establishing that undervaluation was with a view to evade tax. In the impugned order, it is only stated that the transaction under consideration was proposed to take place at a rate lower than the fair market value by more than 15% considering the fair market value determined by the Appropriate Authority. On this ground alone, the impugned order is liable to be quashed and set aside. In our view, the view taken by the Appropriate Authority is palpably erroneous and cannot stand to the scrutiny of law even on merits. Therefore, to recap, the Valuation Officer has noted on 22nd April 1991 and the Deputy Commissioner of Income Tax (A.A.) has noted on 24th April 1991 that the said property was not undervalued. The Appropriate Authority (respondent no.2) has not stated in its reasons recorded in 1991 why they did not accept these two reports. The Appropriate Authority (respondent no.2) has not stated anywhere why it was not accepting the three comparables mentioned by VO. The Appropriate Authority (respondent no.2) has not given the basis for comparing “Sea Face Park” and “Navroze Apartment” with the said property, when those two properties were farther away than the three properties used by VO to compare Valuation of Navroze Apartment used in the first order dated 29th April 1991 by the Appropriate Authority (respondent no.2) was only about 9% more compared to the said property. The mathematical calculations by adding and subtracting advantages and disadvantages to arrive at a conclusion that there was undervaluation in excess of 15% limit can be stated to be far from being honest. This 15% limit also cannot be applied mechanically but a reasonable margin of error has to be considered. There is also no finding that the undervaluation was intended to evade tax, which, as held in Mrs. Amarjit Thapar (Supra), was mandatory vitiating the stand of respondents. Even for a moment we assume there was a difference of 15%, the Appropriate Authority cannot assume jurisdiction under Section 269UD of the Act automatically. Various factors determine the price for a property like demand, supply, terms of payment, the urgency for the seller to sell or for the buyer to buy, relationship between parties, dominance of a party etc. None of these points are also considered by the Appropriate Authority while arriving at its conclusions in the impugned order. The impugned order, therefore, requires to be set aside. Respondent no. 2 could not have acquired the said property under Section 269UD. We hold that petitioner shall be entitled to the said property alongwith the shares in the society upon payment to respondent nos.1 to 4 of consideration of Rs.61,77,411/-. If this amount is not paid within twelve weeks from today, interest thereon at 12% p.a. shall become payable until payment / realisation. Petitioner shall pay all society charges payable at the relevant time, i.e., 1991, together with interest, if any, for getting the shares transferred in its name. The Prothonotary and Senior Master shall refund to respondent nos.1 to 4 the sum of Rs.1,75,500/- deposited during the second petition together with accumulated interest, if any. This amount shall be paid provided (a) respondent nos.1 to 4 file a declaration that they are not challenging this order or judgment or (b) the SLP or petition to be filed by respondent nos.1 to 4 is dismissed or rejected. From the minutes of the order dated 13th September 1991 filed in the second petition, there is a sum of Rs.1,22,589/- that would become payable to respondent nos.5 to 7 in that petition together with interest thereon at 10% per annum from 13th September 1991 until payment.
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