TMI Blog1996 (6) TMI 81X X X X Extracts X X X X X X X X Extracts X X X X ..... ent holders") of the property bearing Municipal No. 6-1-145 to 149, situate in Walker Town, Padmarao Nagar, Secunderabad, and the petitioner in Writ Petition No. 12417 of 1994 is the owner (hereinafter referred to as "vendor") of the said property. To appreciate the various contentions raised in these writ petitions, it is necessary to refer to the relevant facts, briefly, giving rise to the filing of these writ petitions. On May 3, 1988, the vendor agreed to sell the said property in favour of the first agreement holder for a total consideration of Rs. 24,70,000 and the first agreement holder paid a sum of Rs. 1,50,000 to the vendor. On second thoughts, the first agreement holder deemed it fit to purchase the said property in the joint names of himself and his wife and a fresh agreement was executed by the vendor in favour of the agreement holders on December 16, 1988. It is stated that the general power of attorney was also given by the vendor when the agreement dated December 16, 1988, was executed. The entire sale consideration was paid but on various dates, from May 3, 1988, to May 31, 1989, by the agreement holders to the vendor and it is contended that the possession of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed into on May 3, 1988, could not be accepted. It is stated that the first respondent has furnished all the relevant material in the show-cause notice dated April 26, 1994, when the agreement holders and other affected parties were called upon to file their objections against the proposed order of pre-emptive purchase by the Central Government and, thus, adequate opportunity was given to the agreement holders. It is submitted that the contention of the agreement holders that Chapter XX-C is not retrospective and does not operate to cover the agreements entered into prior to June 1, 1989, is not tenable as no deed was executed and registered conveying the property in question in favour of the agreement holders by the time Chapter XX-C was made applicable to the Hyderabad City and Chapter XX-C is attracted to the transaction in question. It is stated that the agreement holders paid a substantial part of the sale consideration after publication of the Notification No. S. O. 339(E), dated May 8, 1989, as such the agreement holders cannot even claim that they are prejudicially affected by the said notification under which the provisions of Chapter XX-C of the Act are extended to the Hyd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Income-tax Department, submits that the agreement holders themselves understood that Chapter XX-C applies to their case and accordingly filed Form No. 37-1 before the first respondent showing the date of agreement as December 16, 1988. He contends that the definition of "transfer" contained in section 269UA(f), cannot be made applicable to the provisions of Chapter XX-C wherever that term occurs and that a different meaning would have to be given to that expression in various provisions. In any event, submits learned counsel, in view of the finding recorded by the first respondent that possession of the property was not handed over to the agreement holders on May 31, 1989, as alleged, there was no "transfer" within the meaning of that expression and Chapter XX-C has been rightly made applicable and the order of pre-emptive purchase cannot be questioned on that ground. He argues that the first respondent has relied on three comparable sales and even if the sale in respect of the property situated at Sarojini Devi Road, Secunderabad, which is a commercial area, is excluded, the sales in respect of properties situated at Barkatpura and Padmaraonagar are sufficient to conclude that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... months before the intended date of transfer. Sub-sections (2) to (4) of section 269UC are procedural and it is not necessary to refer to them in any detail. Section 269UD confers power on the appropriate authority to make an order for the purchase by the Central Government of such immovable property at an amount equal to the amount of apparent consideration. We shall revert to it presently. While upholding the constitutional validity of Chapter XX-C in C. B. Gautam v. Union of India [1993] 199 ITR 530, the Supreme Court observed, inter alia, that the powers of compulsory purchase conferred under the provisions of Chapter XX-C are intended to be (and are being) used only in cases where, in an agreement to sell an immovable property in an urban area in which the provisions of that Chapter apply, there is a significant undervaluation of the property by 15 per cent. or more ; if the appropriate authority is satisfied that the apparent consideration shown in the agreement for sale is less than the market value by 15 per cent. or more, it may draw a presumption that this undervaluation has been done with a view to evading tax ; such a presumption, however, is rebuttable and the intend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a position to rebut the presumption of tax evasion. It was also held that it was inconceivable that the order which was required to be served by the appropriate authority under section 269UD(2), would be one which did not contain the reasons for the passing of the order or was not accompanied by the reasons recorded in writing. Therefore, the reasons for the order must be communicated to the affected party. The legislative recognition of the observations of the Supreme Court came by inserting sub-section (1A) in section 269UD which says that before making an order under sub-section (1), the appropriate authority shall give a reasonable opportunity of being heard to the transferor, the person in occupation of the immovable property if the transferor is not in occupation of the property, the transferee and to every other person whom the appropriate authority knows to be interested in the property and sub-section (1B) provides that every order made by the appropriate authority under sub-section (1) shall specify the grounds on which it is made. However, the observation of the Supreme Court that the pre-requisite for passing the order of compulsory purchase, viz., where, in an agre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 269UC in respect of any immovable property, the appropriate authority may make an order for the purchase of the property by the Central Government at an amount equal to the amount of apparent consideration. That power is subject to the provisions of sub-sections (1A) and (1B). The first proviso prescribes a period of limitation of two months from the end of the month in which the statement referred to in section 269UC, in respect of such property is received by the appropriate authority, to make an order of pre-emptive purchase of such property by the Central Government. The second proviso deals with the specific situation of cases where the statements were filed on or after June 1, 1993, in which case the extended period of limitation of three months will apply. The third proviso deals with the situation where the statement is handed over to the appropriate authority, other than the appropriate authority having jurisdiction in which case the period of limitation should be reckoned from the date of receipt of the statement by the appropriate authority who has jurisdiction. If the appropriate authority was prevented from passing the order of pre-emptive purchase on account of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reement dated December 16, 1988. Chapter XX-A ceased to apply to the transactions entered into after September 30, 1986. The alleged transfer of the property in question was made on November 16, 1988, which was after Chapter XX-A ceased to be operative and before Chapter XX-C was extended to the twin cities of Hyderabad and Secunderabad on June 1, 1989. Admittedly, there has been no registered deed of sale. What is contended is that pursuant to the agreement for sale, in part performance of that agreement, possession of the property was handed over to the agreement holders by the vendor. But, the appropriate authority did not accept the plea that the vendor handed over the possession of the property to the agreement holder on May 31, 1989. Consequently, there was no "transfer" of the property before June 1, 1989. This finding is canvassed before us by Mr. Ratnakar as being erroneous on the ground that the first respondent has not taken into consideration the general power of attorney dated May 31, 1989, and the fact that all the payments relating to the sale consideration were made before that date. It is further contended that the fact of handing over possession is evident from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve been accepted. We are afraid, we cannot accede to this contention. The fact that the bundle was containing such a letter and the same was picked up by the appropriate authority would not add to the veracity of the letter nor would it increase its probative value. That letter by itself cannot be treated as irrefragable evidence of handing over possession. Yet another factor which is pressed into service is execution of the general power of attorney by the vendor on May 31, 1989. We have perused the general power of attorney. Nothing is mentioned in the general power of attorney which leads to the conclusion that possession was handed over to the agreement holders pursuant to the agreement for sale. The fact that the preamble portion contains a recital "upon handing over of possession", in our view, is not conclusive of the fact of handing over of possession pursuant to the agreement of sale. In our view, no reliance can be placed on the averments in the affidavit filed in support of the present writ petition or earlier writ petition to the effect that possession was handed over to the agreement holders as those averments were made long after the dispute with regard to handing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given effect to, the provisions of Chapter XX-C of the Act were not applicable and that only the provisions of Chapter XX-A were applicable. The reasoning of the judgment appears to be that as the transaction was already covered by the provisions of Chapter XX-A, the newly introduced provision of Chapter XX-C had no application. It may be noted that there, under the provisions of Chapter XX-A having regard to the definition of "transfer" and "immovable property", the transaction of "transfer" was completed. In the instant case, as we have pointed out, the finding of fact regarding completion of transfer is against the petitioners. Therefore, that decision does not help the petitioners. In Sunshine Travels and Tours P. Ltd. v. Union of India [1995] 213 ITR 749 (Delhi) also there was a finding that possession of the property was given to the transferee. The Division Bench of the Delhi High Court held that a transaction effected prior to October 1, 1986, which involved the transfer of a right enabling the transferee to enjoy the building to be constructed became a statutory transfer for purposes of Chapter XX-A and such a "transfer" was subject to the statutory steps contemplated by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transfer" which was completed before the coming into force of Chapter XX-C. Inasmuch as in the case on hand, the plea that possession was handed over was not accepted by the appropriate authority and we are not persuaded to disturb that finding, as such there was no completed "transfer" of the property before application of Chapter XX-C to the twin cities of Hyderabad and Secunderabad. We consider it unnecessary for purposes of this case to express any opinion on the question as to what would have been the position had the "transfer" in this case been completed within the meaning of section 269UA(f) of the Act. This takes us to the second question, namely, whether the impugned order passed by the first respondent is sustainable in law. It has already been pointed out that in Gautam's case [1993] 199 ITR 530, the Supreme Court laid down that having regard to the history of the legislation, compulsory purchase under Chapter XX-C can be made only when there is a significant undervaluation of the property by 15 per cent. or more. In such a case a presumption can be drawn that the undervaluation had been done with a view to evading tax. But such a presumption, however, is rebuttable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Otherwise there is no way for us to verify the calculations made by you and the opportunity of hearing becomes an empty formality. In our submission, these proceedings are also quasi-judicial proceedings and on our side whatever sale documents we have referred to, we have furnished copies to the appropriate authority without any default on our part. The agreements referred to in the show-cause notice by you are not registered documents. Consequently, we are not in a position to obtain the same from the Registrar of Documents. The parties have refused to give us any information. We are, therefore, left with no alternative except to reiterate our request to the appropriate authority for furnishing the same. Our request may once again be considered. " The appropriate authority, however, did not furnish copies of the documents relied upon by him but dealt with the request of the petitioners in the impugned order as follows : ".. . . The nature of the properties and the conditions of the agreement are matters of facts which could be verified by the transferee from local enquiry. With regard to the request of the transferee to assist him with the detailed information available wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tent of 163.32 sq. yards was sold for Rs. 1,90,000 in August, 1990. The appropriate authority described this property as that of lower middle class and on that ground he declined to consider it as a comparable sale. What is more surprising is that the appropriate authority did not rely on sale of property in the same locality as not a comparable sale whereas he relied upon agreement for sale of property in another locality which is about 10 kms. away, namely, Barkatpura, treating it as a comparable sale. We have perused the plan prepared by the appropriate authority delineating all the three properties in Padmarao Nagar, namely, the property sale of which is relied upon by the agreement holders, the property in respect of which pre-emptive purchase order is passed and the property in respect of which agreement for sale is treated by the appropriate authority as comparable sale. We must point out that the other two properties are not only in the same locality but also in close proximity to the property in question. Indeed, from the plan it appears that the comparable sale relied upon by the agreement holders is of the property which is only 250 metres away from the property in que ..... 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