TMI Blog2006 (12) TMI 93X X X X Extracts X X X X X X X X Extracts X X X X ..... lant in W.A. No. 495 of 1997. The brief facts necessary for the disposal of the above appeals are as under: M/s. Ashok Leyland Finance Limited, the petitioner in W.P. No. 4584 of 1993, (hereinafter referred to as "the company") is a company incorporated under the Companies Act, 1956, and engaged in hire-purchase and leasing business. On April 30, 1990, the petitioner entered into an agreement with one P. Nataraja Sastry (petitioner in W.P. No. 4700 of 1993) for development of the property situate in No. 51, 1st Main Road, Gandhi Nagar, Adyar, Chennai 20, measuring a total extent of 5 grounds and 1050 sq. ft. for a sum of Rs. 30,81,700. The company and the said Nataraja Sastry submitted a statement in Form No. 37-1 of the Income-tax Act, 1961 (in short "the Act") on May 2, 1990, to the first respondent-Appropriate Authority, Income-tax Department. Then, the first respondent passed an order dated July 13, 1990, acquiring the property and requesting the transferor to hand over the property within 15 days from the date of the order. Nataraja Sastry (hereinafter referred to as "the petitioner") filed a writ petition (W.P. No. 12608 of 1990), questioning the order passed by the first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is not a fit property to be compared with the subject property ; (ii) The existence of longstanding tenants in the property has not been properly considered; (iii) The loss of original title deeds of the property has not been properly considered; (iv) The order of the Appropriate Authority relies on two other comparative sale instances, for which notice was not given to the petitioner; and hence, it is against the principles of natural justice; (v) The guideline value of the property has not been properly considered; (vi) The purchase order stands abrogated under sections 269UG and 269UH of the Act, as the apparent consideration has neither been tendered to the vendor, nor deposited with the Appropriate Authority by the Central Government within 30 days from the date of the order; and (vii) A subsequent sale deed in 1992 by Malar Hospitals' on the same road at a lower rate was not taken note of by the Appropriate Authority and the same may be considered by this court. Learned senior standing counsel appearing for the Income-tax Department met all the contentions by placing relevant materials. Before considering the various contentions, it is useful to refer t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nths and fixed the market value at Rs. 11.33 lakhs per ground. The Appropriate Authority has further stated that the extent of land under transfer in the instant case being 88% of 5 grounds and 1050 sq. ft., namely, 4.785 grounds, the fair market value as on April 30, 1990, would come to 4.785 x Rs. 11.33 = Rs. 54.21 lakhs. It is the claim of the Appropriate Authority that against the estimated fair market value of the property at Rs. 54.21 lakhs, the value of apparent consideration (after discounting) in the instant case is mentioned as Rs. 30,52,891, which is nearly 77.60% of the estimated fair market value. Accordingly, the Appropriate Authority has concluded that as the fair market value exceeded the apparent consideration by more than 15%, it raised a presumption that there was understatement of sale consideration in the agreement of sale with a view to evade "tax". Pursuant to such conclusion, a show-cause notice was issued for appearance of the petitioner on February 18, 1993. The petitioner filed a written submission before the Appropriate Authority highlighting various aspects. The very same objections projected before the Appropriate Authority and the learned single judge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that FSI is excess of 2.5 times was achieved in the Malar Hospitals' property, whereas only FSI in excess of 1.50 times is applicable to the instant case. Therefore, according to them, the comparison is not fair. It is also projected that inasmuch as the multi-storey construction beyond 1.5 FSI would not be possible in the instant case, the price was negotiated accordingly. It is not in dispute that FSI does playa crucial role in the determination of the market value of properties. It is also not in dispute that under the DCR of the CMDA, there are several criteria laid down covering the permissible FSI, such as land use, zone in which the property is situated, road width, size of the plot, frontage, etc. There is no dispute that both the lands viz. properties at door Nos. 51 and 52 are on the same First Main Road, Gandhi Nagar, Adyar, Chennai 20. As far as the size of the properties is concerned, the property at door No. 51, i.e., the subject property is about 5.44 grounds, whereas the adjacent property at door No. 52 with which comparison is made is about 6.3 grounds. It is also not in dispute that the frontage available in the instant case is 90 feet, while the adjacent proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... advice by the proceedings dated December 15, 1989. The petitioner/P. Nataraja Sastry also remitted demolition charges on December 19, 1989. The copies of the demolition advice and challan for remittance were placed before the Appropriate Authority. Though on the date of agreement the subject property was free from tenancy as seen from column 3 of 37-I statement dated May 2, 1990, the claim of the appellants regarding various efforts in evicting the tenant, viz., Animal Welfare Board from the premises in question, we are of the view that though the said aspect is not a primary factor, it is one of the relevant factors to be considered while arriving at the value of the property. It is the claim of the appellants that the loss of original title deeds of the property has not been properly considered by the Appropriate Authority as well as the learned single judge. It is the case of the appellants that the property in question was mortgaged to Indian Bank, Madras and after the redemption of mortgage, the said bank did not return the original title deeds relating to the property and the bank informed that the title deeds had been lost, but refused to admit the same in writing. It is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perty in question, but absolutely there is no reference to the other two properties situate at First Main Road, Gandhi Nagar and Kasturbha Nagar respectively. In para 7.1 of the order, the Appropriate Authority has taken note of all the three instances, including the Malar Hospitals' property for comparison with the subject property. In the same paragraph, the Appropriate Authority, after adverting to the details regarding the properties at Door No. 47, 1st Main Road, Gandhi Nagar, and No. 12 1st Main Road, Kasturbha Nagar, arrived at a conclusion that in the instant case the price at Rs. 6.38 1akhs per ground, is below the 15% margin fixed by the Supreme Court. It is clear from the above order of the Appropriate Authority that, particularly, paras. 7.1 and 7.2, the said authority heavily relied on the other two properties which were admittedly not mentioned in the show-cause notice. In such circumstances, as rightly pointed out by learned senior counsel for the appellants, the appellants were not given an opportunity to ascertain the details of those properties, which were discussed and considered by the Appropriate Authority. It is a relevant aspect affecting the principles of na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a situated at 55, 1st Main Road, Gandhi Nagar, Adyar, Chennai 20, and the said property was purchased by Malar Hospitals. In the said sale deed, the sale consideration is shown as Rs. 6.09 lakhs per ground. By pointing out the said document it is argued that the said sale deed is relied upon only to demonstrate the fact that the sale consideration mentioned in respect of the property at No. 52, 1st Main Road, Gandhi Nagar, Adyar (Malar Hospitals') would not reflect the actual price in that area at the relevant point of time and that the property at No. 52 (Malar Hospitals') itself is incapable of being compared with subject property. As rightly pointed out, it can be found from document No. 3658 of 1992 that in respect of the property on the same road purchased three years after the subject transaction, the sale consideration is only stated to be Rs. 6.09 lakhs per ground. In the light of the subsequent transaction referred to above which reflects a lesser sale consideration, the appellants' contention regarding the consideration mentioned in the sale deed in question has to be accepted. It is relevant to note that the petitioner has contended that the Appropriate Authority took in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under sub-section (1) of section 269UD shall stand abrogated and the immovable property shall stand revested in the transferor after the expiry of the aforesaid period." It is clear that section 269UG of the Act mandates that the amount of consideration shall be tendered to the person entitled thereto within a period of one month from the end of the month in which the immovable property concerned becomes vested in the Central Government. Section 269UH of the Act makes it clear that if the Central Government fails to tender or deposit either the whole or any part of the amount of consideration required to be tendered or deposited within the period specified in sub-section (1) of section 269UG, the order to purchase the immovable property by the Central Government made under sub-section (1) of section 269UD shall stand abrogated, and it shall revest in the transferor after the expiry of the aforesaid period. The above provisions have been interpreted in various decisions. In the case of M.P. Poddar (HUF) v. Appropriate Authority [1999] 240 ITR 372, a Division Bench of the Delhi High Court, after considering the relevant provisions in Chapter XX-C has held that as per the scheme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nch of the Gujarat High Court has concluded: "Once we have come to the conclusion that the amount of consideration was not tendered within the time prescribed under section 269UG and there was no ground for making deposit to the Appropriate Authority the consequence which has been provided under section 269UH would necessarily follow, namely the order of purchase shall stand abrogated and the immovable property shall stand reverted to the transferor on the expiry of the period in which amount was to be tendered but has not been so tendered." Learned senior standing counsel for the Income-tax Department, relying on a decision of this court in the case of R. Padma v. Appropriate Authority, IT Department [1990] 185 ITR 269 (Mad) contended that if there is an order of stay at the instance of any of the parties to the agreement of sale, the Central Government cannot be blamed for not tendering or depositing the amount. No doubt, in the penultimate paragraph, the Division Bench has observed that in matters of this nature, whenever a star order is obtained at the instance of any of the parties to the agreement of sale and if there is any interdiction by the court preventing the author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder section 269UD(1), stands revested in the transferor, i.e., the petitioner. To put it clearly, under section 269UH, the property will stand revested in the transferor on failure of payment or deposit of consideration. In our case, admittedly, there is no offer or communication regarding the deposit of amount with the Appropriate Authority. Inasmuch as the amount of consideration has not been tendered in terms of sub-section (1) of section 269UG to the transferor, the order passed under section 269UD(1) stands abrogated. In view of the admitted factual position regarding non-compliance of the above mandatory provision, the order of the Appropriate Authority is liable to be quashed on this ground also. These aspects -have not been properly considered by the learned judge. The analysis of various instances pointed out by the appellants clearly show that all of them are relevant factors in valuing the property. The power vested in the authority under Chapter XX-C of the Act is a special power which is required to be exercised with great care and with utmost fairness. When the provisions enable the Government to take over any property, the authorities cannot exercise the power in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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