TMI Blog1995 (7) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... section 269UD(1) of the Income-tax Act, 1961 (hereinafter referred to as " the Act "), the respondent exercised power to purchase immovable property consisting of land with superstructure situated in Bootee Street in Cantonment area, Pune, bearing house No. 900 (GLR Survey No. 390/ 5A), admeasuring 0.34 acres (14,810.4 sq.ft or 1,375.92 sq.meters) (PUC for short). By order, annexure " H ", passed under section 269UE(2) of the Act, the property was ordered to be taken over from the transferor. It is the case of the petitioner that in the light of the memorandum of understanding (" MOU for short "), entered into on December 29, 1994, the petitioner agreed to purchase land from one Mr. Shahrokh Rustom Mazda on old grant tenure with three tenants therein. In the MOU, it was mentioned that the land was owned by the Central Government and held by the vendor on old grant tenure. It was also stated that the land was occupied by three sitting tenants and it was for the purchaser to get them evicted at his own cost if he wished to do so. The consideration which was agreed between the parties was Rs. fifty one lakhs. An amount of Rs. 5 lakhs was paid by way of earnest money at the time of e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... around Rs. 260 per sq.ft. would have to be incurred. It was also mentioned that the PUC was occupied by three sitting tenants, namely; (1) Mr. Behram Surty, (2) Mr. F. G. Hirani, and (3) Mr. Behram Shahbadi. The PUC was surrounded by motor garages which would reduce the value of any property. The plot was also faced by a burial ground which had further reduced its value. It was having a very small frontage. In the light of all those facts, the petitioner contended that the consideration for which the property was agreed to be sold was reasonable and the notice was required to be withdrawn. The vendor also submitted a similar reply on April 21, 1995. After considering the replies of the parties, the appropriate authority passed an order under section 269UD(1) of the Act, holding that it was satisfied that the market rate of the PUC would not be less than Rs. 7,500 per sq.mtr, and thus, there was understatement by more than 15 per cent. and it was proper to pass an order for pre-emptive purchase, and accordingly the impugned order was passed. In para 4, the appropriate authority stated : " 4. We have carefully gone through the submission made by the transferor and transferee an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be said to be comparable to the PUC. He submitted that when in the impugned order itself, a finding is recorded that the location of SIP 1 and SIP 2 was superior to the PUC, no order could have been passed placing reliance on SIP 1 and SIP 2. Mr. Shah argued that the PUC was occupied by three tenants and though that fact was accepted by the appropriate authority, it committed a serious error of law in observing that " it would not change the situation ". According to counsel, the authority was not right in observing that conversion charges which were required to be paid by the petitioner would not affect the value of the PUC inasmuch as in the case of the SIPs also, such conversion charges had to be paid. Finally, Mr. Shah contended that on the same day and in similar circumstances, an order was passed by the same authority in the case of SIP 2 and upheld the contention similar to the one raised by the petitioner. In almost identical circumstances, an order of pre-emptive purchase was made against him which is illegal and contrary to law. According to Mr. Shah, there is an error apparent on the face of the record, committed by the respondent authority in passing the impugned ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e territories within which the cause of action, wholly or in part, arises for the exercise of such power, notwithstanding that the seat of such Government or authority or the residence of such person is not within those territories. " Since part of the cause of action can be said to have accrued at Ahmedabad within the territorial jurisdiction of the High Court of Gujarat, this court has jurisdiction to entertain the petition. The preliminary contention raised by Mr. Shelat, therefore, fails and the same is rejected. On the merits, we are of the view that the contentions raised by Mr. Shah are well-founded and must be upheld. Looking to the contents of show-cause notice, we see considerable force in the arguments of learned counsel for the petitioner that notice does not disclose relevant facts as to the location of the PUC and the SIP 1 and SIP 2. In para 3, it was stated : " The PUC is situated in Bootee Street in cantonment area. The SIP 1 is situated on General Thimmaya Road in cantonment area. SIP 2 is situated about 150 metres from General Thimmaya Road. In view of the above, the apparent consideration and the discounted consideration of the PUC appears to be understate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be passed. The matter can yet be looked from a different angle. The petitioner has stated in the petition that there were three sitting tenants in PUC. The said fact is also mentioned in the agreement to sell as well as in the reply to the show-cause notice. It is not the case of the appropriate authority that the said fact was not correct. On the contrary, looking to the order, it clearly appears that the authority had accepted that fact. It was observed in the order that the condition of tenancy would not change the situation to such an extent that the consideration quoted by the parties can be said to be proper. In the affidavit-in-reply also, it was observed by the authority that " monthly tenancies have no claim in transaction of this kind. They cannot object to the transfer of land or giving of development rights. " Here also, in our opinion, the approach of the authority cannot be said to be in consonance with law. The question is not whether the tenants have right in such proceedings. The question is as to the amount of consideration to be paid by a willing purchaser to a willing seller when there are sitting tenants in the property in question. In our opinion, the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate authority and a finding was recorded to that effect. It was observed : " Secondly, the SIP was subject to the payment of conversion charges of Rs. 200 to Rs. 300 per sq.ft. to Pune Cantonment Board thereby, increasing the cost of development of the SIP by Rs. 2,153 to Rs. 3,229 per sq.mtr. Such conversion charges in the case of PUC have already been paid. " Thus, even on this ground, the order is vulnerable. Mr. Shelat contended that the present petition is filed by the transferee who has no locus standi in such proceedings to challenge the order passed under section 269UD(1) of the Act. But even if it is assumed that he has such right, then also, the right is a limited one. For the said proposition of law, reliance is placed on the decisions in Devesh Behari Saxena v. Deputy CIT [1994] 208 ITR 637 (All), Smt. Vimla Devi G. Maheshwari v. S. K. Lal [1994] 208 ITR 734 (Bom), Vimal Agarwal v. Appropriate Authority [1994] 210 ITR 16 (Bom) and in Lok Housing and Construction v. Appropriate Authority, in Writ Petition No. 548 of 1995, decided by a Division Bench of the High Court of Bombay on April 26, 1995. In the said case, after considering the relevant provisions of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice is required to be issued to both---transferor as well as transferee. That point is also concluded in C. B. Gautam's case, [1993] 199 ITR 530 (SC). If such notice is required to be given, it is open to the aggrieved party to challenge that decision and in that case, he can take all the contentions available to him in law. In our opinion, therefore, the contention that the transferee has only limited right to challenge cannot be said to be well-founded and is negatived. Apart from the above grounds, Mr. Shah is right in submitting that the satisfaction contemplated by section 269UD must be based on objective facts. There must be evidence and material to reach the conclusion and satisfaction. Rejection of sale instance and/or grounds and/or reasons put forth by the party is one thing. At the most, it can be said to be a negative finding for not accepting the case of the transferor/transferee. But the law requires something more. In our considered opinion, it is incumbent upon the appropriate authority to come to a positive and definite conclusion that the property was undervalued. A similar question arose before us in Special Civil Application No. 869 of 1995, decided on March ..... X X X X Extracts X X X X X X X X Extracts X X X X
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