TMI Blog2009 (12) TMI 111X X X X Extracts X X X X X X X X Extracts X X X X ..... ropolitan Magistrate (Economic Offences), Egmore, Chennai, wherein he is facing trial for the alleged offences under sections 276AB read with 269UC and 269UL(2) of the Income-tax Act, 1961 (hereinafter called "the Act"), has filed the above criminal original petition seeking to quash all further proceedings therein. 2. A perusal of the complaint filed by the respondent against the petitioner and others reveals the following allegations: (a) That in pursuance of section 269UC of Chapter XX-C of the Income-tax Act, 1961, no transfer of any immovable property of such value exceeding Rs. 25 lakhs shall be effected except after an agreement for transfer is entered into between the transferor and the transferee in accordance with the provisions of sub-section (2) at least four months before intended date of transfer. Both the transferor and the transferee have got a legal obligation to file with the Appropriate Authority, Income-tax Department the particulars of such agreement in Form No. 37-I prescribed und rule 48L of the Income-tax Rules, 1962, within the statutory time limit prescribed thereunder. (b) Accused Nos. I and 2 are the owners of the landed property comprised TS No. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statutory time limit prescribed thereunder, since the value of the property situated at Door No. 7, First Main Road, Gandhi Nagar, Adyar, Chennai-20 exceeds Rs 25 lakhs. (g) It is further alleged in the complaint that the above legal obligation of filing Form No. 37-I as required under section 269UC of the Income-tax Act, both the transferors and the transferee have wilfully and deliberately split up the sale transaction into two registered two sale deeds valued at Rs. 15 lakhs each though the property conveyed was a single unit measuring 13,642 sq. ft. valued at Rs. 30 lakhs. Thus, accused Nos 1 to 4 contravened the provisions of section 269UC of the Income-tax Act, 1961 which constitutes an offence under section 276AB of the Income-tax Act, 1961. (h) It is further alleged in the complaint that under section 269UL(2) no person has got any right to transfer any immovable property the value of which exceeds Rs. 25 lakhs without obtaining a no objection certificate from the Appropriate Authority, Income-tax Department. Accused Nos. 1 and 2 by transferring the said property by two registered sale deeds without obtaining no-objection certificate as required under section 269UL(2) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entire property measuring 13,642 sq. ft. which is shown as "A" schedule in their respective sale deeds which has resulted in a miscarriage of justice. 9. On the aforesaid submissions the learned special public prosecutor for a the income-tax cases was heard. 10. The learned special public prosecutor submitted that since the undivided share of 500/22,000 of 13,642 sq. ft. each has been sold by the first and second accused, the provisions contained in section 269UC is attracted. In support of the said contention, the learned special public prosecutor based reliance on the decision of the apex court reported in Appropriate Authority v. Smt. Varshaben Bharatbhai Shah [2001] 248 ITR 342. In the said decision, the apex court has laid down as under (page 348): "What, in our opinion, therefore, has to be seen for the purposes of attracting Chapter XX-C is: what is the property which is the subject matter of transfer and what is the apparent consideration for such transfer. This has to be seen in a real light with due regard to the object of the Chapter and not in an artificial or technical manner. If the apparent consideration for the transfer is more than the limit prescribed f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... comprised TS No. 23, Block No. 30 of Kottur Village wherein Corporation Door No. 7, 1st Main Road, Gandhi Nagar, Adyar, Chennai, measuring an extent of 13,642 sq. ft. the value of which is exceeding Rs. 25 lakhs." 13. Again, in paragraph 6, it is stated that accused Nos. 1 and 2 by two separate sale deeds, dated March 28, 2002, have sold the above mentioned property in favour of the accused No. 3 represented by the accused No. herein for a total consideration of Rs. 30 lakhs. 14. Again, in, in paragraph 9 of the complaint, it is stated that though two separate sale deeds have been executed by accused Nos. 1 and 2 in favour of accused No.3 the property conveyed was a single unit measuring a total area of 13,642 sq. ft. as mentioned in schedule A or each sale deed. Therefore, the market value of the property as a single unit which was transferred by the accused Nos.1 and 2 to the accused No. 3 was Rs. 30 lakhs. 15. In paragraph 11 also similar averments have been made. Thus, it could be seen that the complaint proceeds on the footing that accused Nos. 1 and 2 are the owners of the entire landed property measuring an extent of 13,642 sq. ft. comprised in T. S. No. 23, Block No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this court, such a complaint cannot be filed. When accused Nos.1 and 2 are the income-tax assessees and they are two different legal entities in the eye of law, the purchases made by them under two sale deeds can be dealt with by them individually and as such the sales effected by them cannot be clubbed together and that it cannot be alleged that the single unit has been transferred under two sale deeds to get over the provisions of the Income-tax Act. 18. In the decision reported in Appropriate Authority v. Smt. VarshabenBharathhai Shah [2001] 248 ITR 342 the apex court was dealing with a case,where co-owners had agreed to transfer their property rights and each co-owner was to be paid an amount of consideration which is less than the amount specified, i.e., each co-owner-transferor will get less than Rs. 25 lakhs as per the agreement and the facts of which are as follows: 19. On August 12, 1995 the second and third respondents entered into an agreement to sell to the first respondent immovable property situated in Ahmedabad for the sum of Rs. 47 lakhs. The Appropriate Authority of the Revenue came to the conclusion that the apparent consideration in respect of the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasonings, the apex court reversed the judgment of the High Court holding that what had been sold by the second and third respondents to the first respondent was their equal share in the said immovable property that the apparent consideration was, therefore, more than Rs. 25 lakhs and that, therefore, the provisions of Chapter XX-C would apply. The apex court further observed that even if the agreement of transfer had been so drawn as to show the transfer of the equal shares of the second and third respondents in the said immovable property, their conclusion would have been the same for, looked at realistically, it was the said immovable property which was the subject of the transfer. 22. In the considered view of this court the facts of that case are totally different from the facts of the case on hand. If in the light of the law laid down by the apex court, the facts of the case on hand are considered it could be seen that the immovable property dealt with by accused Nos.1 and 2 have been purchased by them under two different sale deeds and the same has been shown in their respective income-tax returns. Here, individual agreements have been entered into by accused Nos.1 and 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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