9911796707
TMI Blog1997 (7) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... led Form No. 37-I on October 21, 1994, before respondent No. 1, as was required under section 269UC of the Income-tax Act, 1961. However, respondent No. 1 did not accept the value reflected by the petitioner and respondent No. 5 in the aforesaid agreement for sale and instead passed an order on January 31, 1995, whereby the said property was purchased by the Central Government at the amount of Rs. 16,03,500 which was an amount equal to the amount of effective apparent consideration. This purchase actually was in the nature of a pre-emptive purchase effected by the Central Government through respondent No. 1 in terms of section 269UD(1) of the Income-tax Act, 1961. It is this order which is under challenge in this petition filed by the petitioner, the vendee, under article 226 of the Constitution of India. As observed, the learned advocate for the petitioner initially raised a, number of questions relating to the correctness and the validity of the impugned order, but ultimately the case was argued by the parties only on a single question, that is, the non-observance of the provisions contained in section 269UG of the Act relating to the failure on the part of the respondents in ten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... munication dated February 14, 1995, from the solicitors and advocates whereby the respondents were informed that the present writ petition would be moved on February 16, 1995, in this court and that the petitioner would ask for an interim relief. In fact, it is revealed from the affidavit-in- opposition that on February 24, 1995, a cheque for Rs. 16,03,500 was sent to respondent No. 1 apparently towards the consideration price of the aforesaid property. It is claimed by the respondents that the amount of consideration was not tendered to respondent No. 5, the vendor, in terms of section 269UG(3) of the Act since there was a dispute as to the title of the person concerned to receive the amount of consideration. It is worthwhile to mention that the Central Board of Direct Taxes, New Delhi, vide its communication dated April 26, 1995, had enquired from the Chief Commissioner of Income-tax-II, Calcutta, as to why the consideration amount was deposited in the account of the appropriate authority. The text of this letter reads as under : " I am directed to refer to your letters No. CC-II/AA/Cal/1136/ October, 94/94/1591, dated 22/1st March, 1995, and April 3, 1995, on the above subject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty for any taxes is discovered, payable by the person entitled to the consideration money, the appropriate authority may in lieu of the payment of the amount of consideration set off the amount of consideration or any part thereof against such liability after giving an intimation in this behalf to the person entitled to the consideration. The other relevant provision contained in section 269UG is that if the person entitled to the amount of consideration does not consent to receive it or, if there is any dispute as to the title to receive the amount of consideration, the Central Government shall deposit with the appropriate authority the amount of consideration within the period specified in sub-section (1) of 269UG. Sub-section (3) of section 269UG reads thus : " 269UG. (3) Notwithstanding anything contained in sub-section (1), if the person entitled to the amount of consideration does not consent to receive it, or if there is any dispute as to the title to receive the amount of consideration, the Central Government shall deposit with the appropriate authority the amount of consideration required to be tendered under sub-section (1) within the period specified therein : Provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... executors to receive the amount of consideration. In our view, the word ' title ' in sub-section (3) of section 269UG should be considered not merely as relating to the ' ownership ' of the part or whole of the consideration but as referable to the ' entitlement ' of the persons to receive the consideration. The word ' entitlement ' would necessarily give a wider meaning to the word ' title ', thereby taking in even a dispute as to the entitlement of the person challenging the provisions of the Act or the order of vesting earlier passed by the authorities. The position is that when a person challenging the vires of the provisions relating to compulsory acquisition under the Income-tax Act, is consequentially challenging the validity of the order of vesting, or is independently challenging the order of vesting, it would, in our view, be not unreasonable for the Income-tax Department to say that such a person is not unconditionally entitled to receive the apparent consideration within the period specified in section 269UG(1) and that there is a dispute as to the entitlement of the person to receive the consideration. In such an event, it would be open to the Department not to tende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firm. The tender of the cheque could not, therefore, be treated as tender to the appellant. It was reasonable to assume that the cheque would not be honoured by the banker to credit the amount of that cheque to the account of the appellant, since it would relate to another legal entity, a limited company. In such a situation, the appellants were justified in taking the view that the cheque was not meant for them, and they could not lawfully require the bank to deposit the amount of the cheque in their account. The result is that the tender of the amount of consideration was short to the extent of Rs. 60 lakhs for which amount this cheque was made. There was, thus, clear non-compliance with the requirement of section 269UG(1) of the Act. The consequence envisaged by section 269UH of the Act ensued. Accordingly, the order dated April 24, 1995, made under section 269UD(1) by the appropriate authority stood abrogated and the property was revested in the transferors in terms of sub-section (1) of section 269UH of the Act with the other consequential results including those specified in sub-section (2) of section 269UH and sub-section (3) of section 269UD. It is not necessary to detai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the amount was to be tendered but has not been so tendered." From what has been stated above the conclusion becomes inescapable that the respondents had no justification in not tendering the amount of consideration to respondent No. 5 as was required under section 269UG(1) of the Act and that the stand taken by them is not tenable in law. There was no dispute with regard to the title of the person receiving the consideration money. In any event, as is noticed, in the communication addressed to the Central Board of Direct Taxes, the respondents have not taken this as a ground in not tendering the amount to the vendor. Only two grounds have been specified, in that communication, firstly, about the filing of the petition by the vendee in the High Court and, secondly, with regard to the liability of the vendor to pay the Calcutta Municipal Corporation tax. The aforesaid communication of the respondents to the Central Board of Direct Taxes clearly indicates the reasons which they had in not tendering the amount of consideration to r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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