TMI Blog2000 (11) TMI 61X X X X Extracts X X X X X X X X Extracts X X X X ..... the parties that the purchaser, viz., the appellant herein, should pay the balance sale consideration within fifteen days from the date of receipt of the approval from the office of the appropriate authority. The appropriate authority after receiving the said Form No. 37-I issued a notice to the parties under section 269UD(1A) of the Income-tax Act, 1961. The District Valuation Officer, inspected the property on October 9, 1995, followed by another inspection by the members of the appropriate authority on October 20, 1995. Based on the inspection and the value of the other properties, which the appropriate authority considered comparable, the authority prima facie came to the view that there was significant undervaluation to the extent of 51.37 per cent. giving rise to a presumption of attempt to evade tax. The appropriate authority after hearing the parties concerned, viz., the appellant and the fourth respondent, passed an order dated November 27, 1995, holding that the property had been undervalued and that presumption of attempt to evade tax had not been rebutted. In the said order, the appropriate authority compared two other properties, the first one can be referred to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the petitioner but also the discounted amount paid by the Department as well, the Department is entitled to proper protection for the amount which it has already paid. As the impugned order is being set aside at the instance of the petitioner, the petitioner is directed to deposit with the appropriate authority the sum paid by the Central Government as the discounted consideration together with interest thereon at the rate of 15 percent. per annum from the date of such payment by the Central Government to the transferor, till date of deposit by the petitioner. Such deposit shall be made by, the petitioner within six weeks from today. On such deposit being made by the petitioner, the appropriate authority shall make a fresh order after due consideration in accordance with law and after hearing the parties, within four weeks thereafter. (b) If the deposit is not made by the petitioner as directed above, the order of pre-emptive purchase shall stand restored and the petitioner shall not be entitled to question the same thereafter. The Central Government will then be free to sell the property by public auction. (c) Counsel for the petitioner contended that possession of the prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tended that inasmuch as the learned single judge of this court rightly found that the appropriate authority failed to consider the objections raised by the appellant in the manner it ought to have done and directed the said authority to reconsider the matter and that too when the appellant has not been put in possession of the property in question, the condition imposed by the learned single judge to pay interest at the rate of 15 per cent. per annum on the amount paid by the Central Government to the fourth respondent for the period from December 9, 1995, the day when the Central Government paid the amount to the fourth respondent till the date the appellant deposits the money, is contrary to law. In support of his contention, learned counsel for the appellant relied upon two decisions reported in R. Shan muganathan v. Appropriate Authority (No. 2) [2000] 242 ITR 652 (Mad) and Smt. Jaspal Kaur v. Union of India [1999] 240 ITR 493 (Delhi). Per contra, learned counsel appearing for the Revenue contended that in view of the pendency of the proceeding instituted by the appellant, viz., the writ petition, even though the Central Government with the permission of this court notified f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge, in para No. 17 of the judgment, observed as under : "The authority itself appears to have been aware of the difficulties in comparing the Boat Club Road property with the schedule property when it is stated in para. 5 of the order that the Boat Club property is fairly comparable with this property. No reasons have been given for rejecting the factors mentioned by the petitioner, as distinguishing this property from the property of the Boat Club Road." Again in para No. 27, the learned single judge observed thus : "Learned counsel for the parties rightly submitted that it would not be unjust if the authority were to be directed to reconsider the matter and make a fresh order, as the authority has not dealt, with the objections raised by the petitioner in the manner it ought to have done." With the above categorical findings, the impugned order was set aside and the matter was remitted back to the appropriate authority. As already noted, the impugned order was passed on November 27, 1995, and thereafter, the appellant filed W. P. No. 16777 of 1995, which was ultimately allowed on February 11, 1997. In view of that, the appellant cannot be blamed as being responsible for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bona fide in passing the order of pre-emptive purchase. Coming to the fourth respondent, viz., the transferor, for his part, handed over possession of the property and received the sale consideration. So far as the appellant is concerned, he has not been put in possession of the property. The learned single judge has found that the impugned order of the first respondent is not in accordance with law and hence the appellant cannot be blamed in the sense that he cannot be called upon to pay the interest for the period from the date of payment by the Central Government to the transferor till the date of deposit by the appellant. It has to be noted that the appellant was within its legal rights to challenge the order of acquisition and its stand is vindicated by the fact that the order of pre-emptive purchase passed by the appropriate authority has been quashed by this court. It is not as if the appellant was called upon to deposit the sale price at any point of time and it failed to do so. It has also to be remembered that the appellant had to keep the amount ready and available and it could not have utilised the amount for other investments. The appellant filing the writ petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stioned by the owners in W. A. No. 755 of 1999. The Division Bench of this court allowed the same, holding as under : "The appellants though succeeded before the learned judge in getting the impugned order set aside and thereby they got the property acquired by the respondent-authority under the provisions of the Income-tax Act, on condition that the petitioners/appellants shall refund to the respondent the entire amount received by them together with interest at the rate of 15 per cent. from the date on which they received the money till the date they refund the money to the respondent-authority, the appellants have filed the above appeal aggrieved against the direction, directing them to pay interest at the rate of 15 per cent. As submitted by learned counsel appearing for the appellants, when the learned judge has found that the acquisition of the appellant's property under the provisions of the Income-tax Act cannot be sustained in law, as the respondent-authority has no jurisdiction to acquire the said property under Chapter XX-C of the Income-tax Act, the appellants/petitioners should not have been directed to pay interest at 15 per cent. By the alleged acquisition unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Bench of the Delhi High Court which considered the matter came to the conclusion that the appropriate authority would not be entitled for any interest, as claimed. In coming to such conclusion, the court also considered the earlier ruling of the Karnataka High Court, reported in Appropriate Authority v. Mass Traders Pvt. Ltd. [1993] 202 ITR 741. We consider it necessary to extract the relevant portions which run as under : "We have considered the rival contentions of learned counsel for the parties. In the facts and circumstances of the case it appears that neither of the three parties can be faulted. So far as the appropriate authority is concerned, it was acting in bona fide discharge of its statutory duties and it cannot be blamed for having passed the orders regarding pre-emptive purchase of the property. Law has taken its course and the orders were ultimately set aside by the court. That should not be taken to mean that the action of the authority was not bona fide. The vendor, i.e., respondent No. 3, cannot be held liable in any manner for payment of any interest to the appropriate authority. The vendor had to receive the sale consideration of the property. She handed ove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have earned on that amount. The purchasers had to keep the amount always ready and available and they could not have utilised the amount for other investments. We feel it would be inequitable to ask the purchasers to pay interest whatsoever on this amount. As already noted the amount of Rs. 13.5 lakhs has already been deposited by the petitioners with respondent No. 2 on April 23, 1999. The prayer of respondent No. 2 for award of interest on the amount of Rs. 13,50,000 is accordingly rejected. Respondent No. 2 is directed to issue, the 'no objection certificate' in terms of section 269UL(3) of the Income-tax Act forthwith, not later than four weeks from the date of this order and simultaneously deliver the possession of the property to the vendee. There will be no order as to costs." Learned senior counsel appearing for the Revenue placed reliance on the ruling of the Karnataka High Court reported in Appropriate Authority v. Mass Traders Pvt. Ltd. [1993] 202 ITR 741. The brief facts in that case are thus : It was concerning a property in the Bangalore City owned by two persons, which they agreed to sell to "X", in April, 1988. Following that, the parties submitted Form No. 37- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annum on the sum of Rs. 1,84,06,325 from September 14, 1989, till April 15, 1993, or till the date of deposit, whichever is earlier. (b) In the event respondent No. 1 fails to deposit the amount of Rs. 1,84,06,325 with interest at 12 per cent. per annum from September 14, 1989, on or about April 15, 1993, the pre-emptive purchase order passed and the consequences flowing from it shall stand restored and the Central Government would be free to proceed further in the matter on the basis of the pre-emptive purchase order. (c) In the event respondent No. 1 deposits the aforesaid sum within the time as stipulated above, the appropriate authority shall decide the matter afresh as indicated above on or before June 15, 1993. (d) Till then, the Central Government is permitted to retain the property in question. Similarly, the owners are also permitted to retain the sum which has been paid to them by the Central Government. (e) We also make it clear that it is open to respondent No. 1 to withdraw the sum of Rs. 37.5 lakhs deposited by the Central Government in Canara Bank, Branch at Trinity Circle, Bangalore, in the name of respondent No. I along with interest accrued thereon. (f) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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