9911796707
TMI Blog1998 (11) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... closed is Rs. 63,44,000. The appropriate authority found that the rate at which the property is sought to be sold is Rs. 650 per sq. ft. while the actual market value of such land would be Rs. 850 per sq. ft. The method adopted by the appropriate authority in arriving at this conclusion is the comparable sales of similar transactions, and while the instances cited by the vendor and the appellant were rejected, the instances cited by the Department were accepted. On that basis the order was passed. The same was challenged before this court in a writ petition. The learned single judge dismissed the writ petition at the preliminary hearing stage itself by holding that the appropriate authority had followed the procedure set out in Gautam (C. B.) v. Union of India [1993] 199 ITR 530 (SC), after elaborately considering all material factors which were necessary to be established and in para. 17 a conclusion had been drawn that the agreement dated September 25, 1995, does not disclose the true consideration and the amount disclosed therein fell short by more than 15 per cent. of the fair market value. The learned judge was of the view the order does not suffer from any infirmities such as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value shown in the instrument is more than 15 per cent. It is no doubt true that valuation of property cannot be arrived at with mathematical exactitude but an amount of guess work is involved in the same, but such process has to be based on some objective factors, or on some reliable data. It is only in those circumstances a just conclusion can be arrived at. One of the safest methods adopted in matters of valuation is that of the comparable cases which are in respect of lands having similar characteristics within the vicinity of the land which is sought to be sold having similar advantages and other amenities. The location and other facilities, besides the size of the plot, would be relevant factors. In the present case, the property is situated in V Block at Jayanagar. The Department took into consideration five transactions and they are : (i) In respect of property comprised in No. 29/10, 38th Cross, 8th Block, Jayanagar; (ii) No. 167, 21st Main, Sarakki, II Phase; (iii) No. 1190, 26th Main, Sarakki Extension, I Phase; (iv) No. 233, 32nd Cross, 7th Block, Jayanagar; and (v) No. 120, 4th Cross, 10th Main, 1st Block, Jayanagar. On this aspect of the matter, the consideratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erent facilities. If this aspect is borne in mind though it may be very close to that property still the value may not be exactly the same or it cannot be said that they would provide a guide to arrive at the market value of the property in question. In that view of the matter, we do not think the Department has any relevant material to arrive at the correct market value at all. The Department has eschewed from consideration the sale statistics provided by the appellant and the third respondent for one reason or the other. However, Sri Seshachala, learned counsel for the Department, contended that this property being situate on a very wide and main road consisting of a vast area definitely fetches more price than any other property situated in the interior on an area or an extension situate abutting a narrower road. It is no doubt true that could be the position. But could it be said that the two properties are comparable in order to arrive at a correct market value, particularly when we adopt the principle of comparable market value in respect of properties in question unless one can say safely that the properties at least to an extent are comparable and transaction entered are al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... known to law. He adverted to the decision of the Supreme Court in Rajalakshmi Narayanan v. Margaret Kathleen Gandhi [1993] 201 ITR 681, inasmuch as the transaction could not be completed not on account of the default of the second respondent or that of the appellant but on account of the intervention of the Department by initiating proceedings under section 269UD of the Act. Therefore, he submitted that we must give appropriate relief to him. Unfortunately, for us, though we do sympathise with the situation in which the second respondent is placed, this court will not be in a position to give any such direction. It is certainly possible for the parties concerned to arrive at a proper settlement in this regard. We do hope that the appellant being a prudent person aware of the trend in the market would adequately compensate the second respondent in this regard. The appeal shall stand allowed accordingly. In the circumstances, the parties shall bear their own costs. K. N. Rawal, Additional Solicitor-General (Rajiv) Nanda, Ranbir Chandra, Advocate, for B. K. Prasad, Advocate, with him), for the appellants. G. Sarangan, Senior Advocate (Ms. Janaki Ramachandran Advocate, with him), for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conclusion about the valuation of the land by taking into consideration the sale instances which are not comparable with the property in question and thereby the conclusion is vitiated. The Division Bench also came to the conclusion that the concerned authority had no relevant material to arrive at the correct valuation of the property and further the method adopted by the Department was defective and consequently the order made by the authorities concerned is vitiated. With these conclusions the order passed by the appropriate authority having been quashed and the writ appeal having been allowed the said appropriate authority is in appeal in this court. Mr. Rawal, learned Additional Solicitor-General appearing for the appellant, contended that the Division Bench of the High Court committed a gross error of law and exceeded its jurisdiction in interfering with the finding of the appropriate authority with regard to the market value of the land in question, in the absence of any procedural irregularity and in the absence of a finding by the High Court that the appropriate authority had considered irrelevant materials or have excluded relevant materials from consideration. A findin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against orders of any other inferior Tribunal and the High Court is duty bound to take note of all submissions made by an aggrieved person. Judged from this standpoint, the Division Bench having recorded a finding that the sale instances relied upon by the appropriate authority cannot be held to be comparable, the ultimate conclusion of the appropriate authority that the valuation of the property shown in the transaction is grossly low becomes a conclusion without any evidence and such conclusion has rightly been interfered with by the High Court. In support of such contention, learned counsel places reliance on a decision of the Delhi High Court in the case of Mahesh Chandra Agarwal v. Union of India [1998] 231 ITR 318. According to learned counsel for the respondents, a reading of the order of the appropriate authority would indicate that the said authority has acted more or less in an arbitrary manner in arriving at the fair market value of the property in question and, therefore, in the interest of justice the Division Bench rightly quashed the said order of the appropriate authority. In view of the rival contentions of the parties, two questions really arise for our consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the ground that the provisions of the said Chapter could be resorted to only when there is an attempt at tax evasion by significant undervaluation of immovable property agreed to be sold and further reasons are required to be recorded and disclosed to the affected parties and opportunity to be heard is required to be given before making an order for purchase. This court ultimately came to the conclusion that the power of the appropriate authority is not arbitrary and the pre-conditions engrafted in the provisions must be satisfied for invoking the power to make an order for compulsory acquisition. This being the position, we fail to understand how the supervisory power of the High Court while examining the correctness of the conclusion arrived at by such appropriate authority could get enlarged merely because there is no appeal or revision against the order of the appropriate authority. In the case of Kailash Suneja (Mrs.) v. Appropriate Authority [1998] 231 ITR 318, the decision of the Delhi High Court on which the learned senior counsel for the respondent strongly relied, the learned judges themselves have indicated that the satisfaction of the competent authority for initiati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ality and situated in the same locality, the appropriate authority came to the conclusion that the fair market land rate could not be less than Rs. 850 per square foot. Further, in the absence of any irrebuttable materials adduced on behalf of the transferor or the transferee as to why in the impugned transaction the property has been agreed to be sold at Rs. 650 per square foot, the natural presumption arises that it was with a view to attempt to evade tax. In fact in Gautam's case, referred to supra [1993] 199 ITR 530, this court had held that the provisions of Chapter XX-C can be resorted to only where there is a significant undervaluation of the property to the extent of 15 per cent. or more in the agreement of sale, as evidenced by the apparent consideration being lower than the fair market value by 15 per cent. or more and a presumption of an attempt to evade tax may be raised by the appropriate authority concerned where the aforesaid circumstances are established but such a presumption is undoubtedly a rebuttable one. In the case in hand, the plea of the transferor that he agreed to sell the land at a lower price as he was in urgent need of money to defray the medical expens ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amount of consideration money indicated in the agreement dated September 25, 1995, particularly when the intended transferee under the deed has deposited a sizeable amount of the said consideration amounting to Rs. 43 lakhs. The learned Additional Solicitor-General appearing for the appropriate authority resisted the prayer of the transferee for grant of interest on the ground that the transferee having attempted to delay and defeat the compulsory purchase of the property and the amount in question having been deposited after the transferor refused to take the money, it would not be in the interest of justice to award interest in the case in hand. In support of his contention reliance has been placed on Rajalakshmi Narayanan v. Margaret Kathleen Gandhi [1993] 201 ITR 681 (SC). In the aforesaid case this court held that whether interest should be paid to the owner of an immovable property who has entered into an agreement of sale but the sale could not be completed by reason of an order of purchase under section 269UD of the Income-tax Act, and if so, at what rate will have to be decided in the facts and circumstances of each case. As a general rule the court had observed that wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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