TMI Blog2000 (11) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... s contained in the agreement. The said property is encumbered with the monthly tenancy created by respondent No. 5 in favour of the pro forma respondents Nos. 6 and 7 who were once sought to be evicted unsuccessfully. The property in question in wakf property. So the Joint Charity Commissioner, Vadodara Division, Gujarat, with whom the wakf is registered had to and indeed permitted to sell the said property by an order dated August 17, 1992, read with order dated June 4, 1993. The said order was passed at the instance of respondent No. 5 permitting to sell the same at Rs. 75.05 lakhs to the petitioner. Before the said order was passed, it had been advertized in two newspapers inviting offers. Pursuant to the said advertisement, the petitioner applied to the said Commissioner. On or about July 26, 1993, a show-cause notice dated July 21, 1993, was issued by respondent No. 1. The writ petitioner filed an objection to the said notice dated July 21, 1993. After having considered the reply to the said show cause the aforesaid impugned order was passed. Mr. Goutam Chakraborty, senior advocate, contends for the petitioner that in the instant case show-cause notice pursuant to which t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the following decisions : (i) Vysya Bank Ltd. v. Appropriate Authority of Income-tax [1998] 233 ITR 560 (Cal) ; (ii) Hotel Mardias Pvt. Ltd. v. Union of India [1996] 220 ITR 94 (Guj); (iii) Ashok Kumar Sood v. Dy. CIT [1995] 216 ITR 193 (All). His next contention is that there cannot be any undervaluation of the apparent consideration in the instant case as such respondent No. 1 had no right, authority and jurisdiction to pass the impugned order. In this case the owners of the said property, respondent No. 5, is a wakf which has been registered with the Joint Charity Commissioner, Vadodara Division, in the State of Gujarat. The permission was granted by the Commissioner on the application of the charitable trust to sell the property to the petitioner before the order was passed. The intended sale was advertised in two newspapers inviting offers from the public to have the best market price. Thereafter, the order was passed under section 36 of the Bombay Public Trusts Act, 1950, at the apparent consideration of Rs. 75.05 lakhs "as it is basis". Therefore, there cannot be any presumption that there was any attempt to evade tax as the order has been passed by the statutory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wever, this point is not seriously pressed by the respondents. The learned lawyer for the respondent argues that the valuation determined by the Charity Commissioner at Rs. 75.05 lakhs is the minimum and/or reserve price, so for the market value of the said property should be more than the reserve price. Under the provisions of the said Act there is no guideline and/or basis for arriving at the valuation. So the authority concerned after having taken assistance of the qualified engineers has determined the aforesaid valuation. Therefore, there is no inconsistency in the revision of the fair market value by the Superintending Engineer. The basis of the rental method while valuing the property is not maintainable under the law. The Superintending Engineer has considered the factor that the property is a tenanted one and in his valuation report it has been reported by him that the fair market value of the unencumbered property is Rs. 226.45 lakhs. Whereas the fair market value of the encumbered property has been held to be Rs. 111.11 lakhs. Under those circumstances, the writ petition should be dismissed. The show-cause notices were duly issued to the transferors, the tenant and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held amongst others that the show-cause notice must spell out the basis for such presumption or such tentative findings and also the materials on which such tentative findings had been arrived at. I have examined the show-cause notice and I agree with Mr. Chakraborty's argument that the impugned show-cause notice did not mention any tentative findings and/or basis. However, I feel because of the omission as above the initiation of the proceedings is not vitiated inasmuch as the petitioner had produced all materials to rebut the presumption of undervaluation in anticipation before the appropriate authority. Therefore, the complaint as regards violation of natural justice at an earlier stage is not entertained by me at this stage. It is the settled position of law that compliance of natural justice is called for when the person aggrieved, is affected by non-compliance. In this case, in my view, the petitioner is not affected by omission of recording tentative findings or non-mentioning of basis of materials. Now I am to examine the final order of pre-emptive purchase under section 269UD. The leading case on this subject is C. B. Gautam's case [1993] 199 ITR 530 (SC) which has l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mises in the same area and localities. Such a method is not accepted by the judicial pronouncement of this court as quoted above. Almost a similar view has been taken in the Gujarat High Court judgment rendered in the case of Ketki Land Holdings Pvt. Ltd. v. Appropriate Authority (1997) 227 ITR 825 that comparable price is not the basis where the property is encumbered. Another Calcutta decision rendered in the case of CED v. Radha Devi Jalan [1968] 67 ITR 761 has held amongst others that if a property is burdened with tenants and the income of the property is controlled by a statute, such control was bound reflect on the value of the property and the application of land and building method could not be a proper method to apply. So, relying on the aforesaid decisions and accepting the argument of Mr. Chakraborty I hold that the basis of the valuation is not legally accept able, Of course, the learned lawyer for the respondent has tried to impress upon me that the valuation done by the departmental authority is the correct valuation and that is the fair market value, Such argument is not acceptable in view of the aforesaid judicial pronouncements. Therefore, I set aside this valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atisfaction which is a condition precedent is not recorded : (i) Vysya Bank Ltd. v. Appropriate Authority of Income-tax [1998] 233 ITR 560 (Cal) ; (ii) Hotel Mardias Pvt. Ltd. v. Union of India [1996] 220 ITR 94 (Guj); (iii) Ashok Kumar Sood v. Dy. CIT [1995] 216 ITR 193 (All). On that score also the impugned order is not sustainable. Therefore, the impugned order exercising pre-emptive purchase is set aside. Since, there is no basis and/or substance for exercising the right of pre-emptive purchase as already observed by me I direct that the respondent authority should issue the no objection certificate in terms of section 269UL(3) of the said Act. The following are the authorities which ruled that such course of action is permissible, (i) Hari Krishna Kanoi v. Appropriate Authority [1994] 207 ITR 743 (Cal) ; (ii) Ketki Land Holdings Pvt. Ltd. v. Appropriate Authority [1997] 227 ITR 825 (Guj) ; (iii) Manik Chand Sethia v. Union of India [1997] 226 ITR 411 (All) ; and (iv) Appropriate Authority v. Mass Traders Pvt. Ltd. [1993] 202 ITR 741 (Kar). The rule issued is made absolute. Respondent No. 5 shall issue this certificate within four weeks from the date of com ..... X X X X Extracts X X X X X X X X Extracts X X X X
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