TMI Blog1999 (9) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 348 of 1993 by the transferees, who are the petitioners in Writ Petition No. 1918 of 1993 on the ground that the order was passed without giving any opportunity of being heard to the petitioners in that petition and without assigning any reason for making the order. Writ Petition No. 348 of 1993, was disposed of by this court by its order dated February 26, 1993. This court set aside the order of compulsory purchase made by the appropriate authority relying on the judgment of the Supreme Court in the case of C. B. Gautam v. Union of India [1993] 199 ITR 530. It appears that thereafter, the appropriate authority issued show-cause notice dated March 3, 1993, asking the petitioners in both these petitions to show cause as to why the property should not be purchased under Chapter XX-C of the Income-tax Act. This show-cause notice did not disclose the material on the basis of which the appropriate authority reached the tentative conclusion that the transaction has been undervalued and, therefore, the transferees addressed a letter to the appropriate authority dated March 10, 1993, making a grievance that in the show-cause notice the reasons for reaching the tentative conclusion tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e authority has reached the tentative conclusion that the transaction has been undervalued. It is further to be seen here that in ground (b) of the petition, a grievance in this regard has been made by the petitioners in Writ Petition No. 2818 of 1994 and in the affidavit in reply filed by the respondent/competent authority, the competent authority does not state the reasons for non-disclosure of the material as also the reasons in the show-cause notice. The Supreme Court in its judgment in C.B. Gautam's case [1993] 199 ITR 530, dealing with this aspect of the show-cause notice, has observed thus: "It is true that the time-frame within which the order for compulsory purchase has to be made is a fairly tight one but, in our view, the urgency is not such as would preclude a reasonable opportunity of being heard or to show cause being given to the parties likely to be adversely affected by an order of purchase under section 269UD(l). The enquiry pursuant to the explanation given by the intending purchaser or the intending seller might be a somewhat limited one or a summary one but we decline to accept the submission that the time limit provided is so short as to preclude an enquiry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t would be utterly unwarranted. The very fact that an imputation of tax evasion arises where an order for compulsory purchase is made and such an imputation casts a slur on the parties to the agreement to sell leads to the conclusion that, before such an imputation can be made against the parties concerned, they must be given an opportunity to show cause that the undervaluation in the agreement for sale was not with a view to evade tax. Although Chapter XX-C does not contain any express provision for the affected parties being given an opportunity to be heard before an order for purchase is made under section 269UD, not to read the requirement of such an opportunity would be to give too literal and strict an interpretation to the provisions of Chapter XX-C and, in the words of Judge Learned Hand of the United States of America 'to make a fortress out of the dictionary'. Again, there is no express provision in Chapter XX-C barring the giving of a show-cause notice or reasonable opportunity to show cause nor is there anything in the language of Chapter XX-C which could lead to such an implication. The observance of the principles of natural justice is the pragmatic requirement of fai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reasons why it prima facie finds that the transaction is under valued, the person to whom the show-cause notice is issued would not be able to put up a defence. Thus issuance of such show-cause notice would defeat the very purpose for which the show-cause notice is required to be issued. This court considering this aspect of the matter in its judgment in Mrs. Nirmal Laxminarayan Grover's case [1997] 223 ITR 572 (Bom), referred to above has observed thus: "There is also force in the contention raised on behalf of the petitioner that in the absence of the particulars of the material or the reason(s) being disclosed in the show-cause notice for entertaining a tentative or a prima facie view that the value of the suit land is grossly understated in the agreement of sale between the parties, the transferor and the transferee have no real opportunity to meet the case of the appropriate authority or the Income-tax Department concerned in that regard and hence there is non-compliance with the basic principles of natural justice. The show cause notice issued by the Department for preemptive purchase by the Central Government under Chapter XX-C of the Act must disclose how the tentativ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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