TMI Blog1998 (3) TMI 122X X X X Extracts X X X X X X X X Extracts X X X X ..... e Corporation concluded way back in October, 1991. They were also told that their sale rate was far less than the minimum rate of Rs. 350 per sq. ft. prescribed under the Collector's guidelines for 1994-95. 2. The appellants replied to the notice explaining that the disputed land was under encroachment and the land sold by the National Textile Corporation was superior and that the Collector's guidelines indicated the average sale rate and not the minimum rate. Their plea, however, did not find favour culminating in the impugned order, dt. 30th Nov., 1994, directing compulsory purchase of the disputed land and the return of consideration amount to them. 3. The appellants assailed this in WP No. 44 of 1995, but failed to obtain any stay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant's case by making the subsequent event of auction sale the basis for its rejection. Needless to emphasise, the writ petition deserved treatment on its own merit. It could not be rejected by reference to the subsequent event of auction sale and in disregard of the merits of the issues involved. All auction sales are not the true index and cannot be safely relied upon to determine the fair market value. Such a sale may be one of the factors but not the sole basis to support a charge of undervaluation. Be that as it may, the appellant's case is that the impugned order of compulsory purchase was vitiated as the Appropriate Authority had failed to determine the fair market value of the disputed land and had disregarded the sale instances ci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mind. He argued that the writ Court was not sitting as Appellate Authority to scrutinise the order and could not substitute its view for that of the Authority. All it could examine was whether the Authority had applied its mind and observed the principles of natural justice. The impugned order satisfied this test as it was a reasoned order though some of the reasons were not happily put forth. 8. It is in this scenario that we are called upon to test the validity of the controversial order and all that falls for consideration is whether the Authority had acted in reasonable fairness and within its jurisdictional boundaries. Needless to point out that Chapter XX-C was incorporated in the IT Act to deal with the menace of tax evasion in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conferred on the Authority by this provision or the manner of exercising it. Though seemingly drastic, it was exercisable judiciously and in tune with the well-recognised principles and on satisfying the laid down requirements. Having regard to this the Authority was first to feel objectively satisfied that the transaction under consideration involved undervaluation by 15 per cent or more vis -a-vis the fair market value. It was not to do so on speculation or guess work but by objective decision-making on some basis and material and also make sure that such undervaluation was directed at evading tax. If it was otherwise it could not proceed in the matter, because all cases of lesser sale price do not necessarily involve undervaluation for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that undervaluation was intended to evade tax and refused to consider the comparable sale instance submitted by the affected party its action would be vitiated on the face of it. 11. In the present case all this was apparent. The Appropriate Authority had failed to determine the fair market value of the property and had also unjustifiably disregarded the comparable sale instances of the appellant on an irrelevant ground that these related to property of less than Rs. 10 lakhs value in respect of which power of pre-emptive purchase was not exercisable. It had also wrongly clung to the average rate indicated in the Collector's guidelines mistaking it for the minimum rate which otherwise could not constitute the sole basis to determine unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the reasons given, we hold that the Appropriate Authority had failed to satisfy the statutory requirements by not determining the fair market value of the property under consideration and by disregarding the comparable sale instances submitted by the appellants on an untenable and irrelevant ground and thus its action would not sustain. 14. This should have led to quashment of the impugned order, dt. 1st Dec., 1994, passed by the Authority but having regard to overall circumstances, we propose to dispose of the writ petition, WP No. 44 of 1995, of the appellants in the following terms: "The appellants (writ petitioners) are required to deposit Rs. 90 lakhs along with 12 per cent interest for the relevant period (from receipt till ret ..... X X X X Extracts X X X X X X X X Extracts X X X X
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