Gujarat High Court
Usha Kulkarni And Ors. vs Union Of India And Ors. on 8 September, 1995
Equivalent citations: [1996]219ITR190(GUJ)
JUDGMENT Rajesh Balia, J.
1. These three petitions have arisen in the same set of facts and circumstances and raise common issues, hence are being disposed of by this common judgment.
2. The facts giving rise to these petitions may be noticed. By a written agreement dt. 18th Dec., 1994, Sahebrao Sitaram Bindal, in Special Civil Application No. 4397 of 1995, agreed to sell parcels of land situated in survey Nos. 3012, 31/1/4 and 32A to situated at Wadachi Wadi village, Haveli Taluka, Pune District to Mrs. Usha P. Kulkarni, Mr. Rajiv P. Kulkarni and Mrs. Neha R. Kulkarni. The consideration for the total land was stated to be Rs. 1,20,000 per acre. As the value of the land in question was exceeding the prescribed limit, application under Form 37-I as required under Chapter XX-C of the IT Act was filed before Appropriate Authority on 22nd Dec., 1994. The Appropriate Authority issued show-cause notice under s. 269UD(1A) of the Act to the vendor as well as three buyers on 13th March, 1995 fixing the date of their appearance on 21st March, 1995. According to the petitioners, the notices were received by them on 16th March. 1995. Except that different agreements have been executed by different vendors in favour of the same purchasers for different parcels of land at the same rate of consideration, the factual matrix of the three petitions are same. The three aforesaid buyers have filed these three separate petitions alleging that under the common agreement, the buyers have agreed to purchase one-third of the entire land independently and in fact the agreement constitutes three separate transactions between three different vendors and three purchases. The three separate petitions are in respect of three different sale agreements referred therein.
3. In response to the notice dt. 13th March, 1995, a reply was filed. Apart from many other points like insufficient period of notice, etc., it was pointed out by the petitioners in their separate replies that the PUC is situated at village Wadachi Wadi, Dist. Pune while the SIP is situated at village Undree, Pune District far away from each other; the PUC is 10.9 kms. away and not about 5 kms. away from Golibar Maidan Chowk; the SIP is situated 3 kms. away from NIBM and the PUC is situated 7 kms. away from NIBM by road. Apart from pointing out the discrepancies in the details of parity between PUC and SIP relied on by the Appropriate Authority, the petitioners also pointed out that the Government valuation of the property for stamp duty purposes and registration charges is Rs. 70,000 per hectare, i.e., Rs. 28,000 per acre with ten per cent increase per year. The petitioners also pointed out the sale instance of the land situated in Wadachi Wadi village which had taken place on 21st Nov., 1994 at Rs. 50,000 per acre, and dt. 12th Jan., 1995 at Rs. 40,000 per acre. Along with a copy of the index of the sale instance maintained by the registration department, xerox copies of the agreements of relied on transactions have also been produced. Thereafter by the impugned orders dt. 30th March, 1995, in Special Civil Application No. 4397 of 1995 and 4398 of 1995 and the order dt. 31st March, 1995 in Special Civil Application No. 4399 of 1995 the objections were overruled and the order under s. 269UD(1) was passed for purchasing the lands in question. These orders respectively are Ann. N in Special Civil Application No. 4397 of 1995, Ann. O in Special Civil Application No. 4398 of 1995 and Ann. M in Special Civil Application No. 4399 of 1995 are under challenge in these petitions.
4. Having heard the learned counsel for the parties, we are of the opinion that the impugned orders suffer from error on the face of the record and cannot be sustained.
5. From the perusal of the orders in question which are identical in terms, we find that the sale instance of the immovable properties situated in Wadachi Wadi village where the property under consideration is situated, which were pointed out by the petitioners have not been taken into consideration.
6. It is apparent from the show-cause notice that SIP relied on by the Appropriate Authority is not situated in the same locality but is situated at quite a distance from the property under consideration in a different village and it is in a superior location than the PUC. It is not the case that the transaction in village Wadachi Wadi relied on by the petitioners have not taken place on 12th Jan., 1995 or 21st Jan., 1994. It is also not the finding or case of the Appropriate Authority that the transactions, relied on by the petitioners are not genuine. It has simply refused to consider those transactions as having any relevant bearing by considering the fair market value for the purpose of enquiring in connection with the property in question merely on the ground that the declared sale consideration of the sale instance property relied on by the petitioner being less than Rs. 10 lakh, no Form No. 37-I in respect thereof was required to be filed and the Appropriate Authority cannot exercise the power in respect of those properties.
6A. The fact whether those sale instances could have been subject to the proceedings under Chapter XX-C or not, has no bearing on the question whether the sale instance provide comparable material for arriving at any conclusion about the fair market price of the property in question to find out whether consideration stated in the agreement is below fifteen per cent of its market value which provides basis to proceed under s. 269UD.
6B. It is apparent from the facts of this case that a comparable sale instance of the property of like nature, in the same locality in very near proximity of date of agreement under consideration was available before Appropriate Authority to decide upon the question before purchase under Chapter XX-C of the property in question. On the face of availability of such comparable instance it was not open for the Appropriate Authority to bring in the sale instance of the land situated at distance in different village as a comparable instance for the purpose of determining fair market value of the property in question without discarding the probative value of the material available with him and looking to the question whether any other sale instance in the near proximity of the same locality is not available. It is permissible in a given set of circumstances to travel away from the site of property in question to find a comparable instance because it may not be possible to find in all cases, sale transaction of comparable to the property to have taken place in the same locality or near vicinity for the purpose of arriving at a fair market value of the property in question. But where such instances are available, in our opinion, it is not permissible to treat property situated at far distance in different locality as comparable property in determining fair market value of the property in question without discarding the available material in respect of fair market value in respect of properties situated in the very same locality and in the near vicinity and in close proximity of time with which the enquiry is concerned.
7. Here is a case where the petitioners have relied on and submitted Government record of sale transactions which have taken place in November, 1994 and December, 1995 within a period of one month before or after the date of agreement in question, in respect of agricultural property situated in Wadach Wadi village where the property in question is situate. Copies of agreements of said transaction were also produced. The Appropriate Authority has refused to take into consideration that material and examine its veracity simply on the ground that since the referred transactions were not subject to provisions of purchase under the Act, they cannot be looked into.
8. We see no reason how Appropriate Authority could fall on a sale instance of property situated about 10 kms. away from PUC in a different village by assuming that the price of the property in question will be the same as that of sale instance property situated in village Undree which is undisputedly a superior location.
9. This Court is not sitting as a Court of appeal to appreciate the evidence and the conclusions arrived at by Appropriate Authorities in that regard, but if it is apparent from record that the conclusions arrived at by the Appropriate Authority are by ignoring relevant material on wholly irrelevant grounds, the case will be one of error apparent on the face of record to be corrected by issue of writ of certiorari. Present is clearly such a case which required to be corrected by issuing a writ of certiorari.
10. Apart from the aforesaid, we also find that the orders in question do not conform to the requirement of statute. Sub-s. (1B) of s. 269UD which enjoins a duty on the Appropriate Authority makes on order for purchase of any immovable property, to specify the grounds on which it is made. It involves some thing more than mere rejection of objections made. It requires that the Appropriate Authority must come to a positive finding on the basis of which the immovable property is sought to be purchased by the Central Government. That in terms cast obligation on the Authority to specify the grounds to come to a definite conclusion about the fair market value of property with reference to which apparent consideration has been significantly understated with intention to evade tax. In the absence of any finding about fair market value of PUC it cannot reach a conclusion that the consideration of the agreement to sell is understated by more than 15%, which according to both the learned counsel is sine qua non and the foundation for taking action under s. 269UD. In this connection, it will be appropriate to notice the decision of apex Court in the case of C. B. Gautam vs. Union of India & Ors. reported in (1993) 199 ITR 530 (SC) wherein the Court said :
"Chapter XX-C of the IT Act, 1961, providing for pre-emptive purchase at apparent consideration by the Government of immovable property proposed to be transferred does not confer arbitrary or unfettered discretion on the Appropriate Authority to compulsorily purchase immovable properties and does not violate Art. 14 of the Constitution of India. The very historical setting in which the provisions of this Chapter were enacted indicates that it was intended to be resorted to only in cases where there is an attempt at tax evasion by significant undervaluation of immovable property agreed to be sold. This is strengthened by Instruction No. 1A 88 issued by the CBDT. 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 to 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 presumption that this undervaluation has been done with a view to evading tax. Such a presumption, however, is rebuttable and the intending seller or purchaser can lead evidence to rebut it. Moreover, the reasons for such acquisition which are required by s. 269UD to be in writing must be germane to the object for which the Chapter was introduced, namely, to counter attempts to evade tax. ...
Although a presumption of an attempt to evade tax may be raised by the Appropriate Authority concerned in a case where the aforesaid circumstances are established, such a presumption is rebuttable and this would necessarily imply that the concerned parties must have an opportunity to show cause as to why such a presumption should not be drawn. Moreover, in a given transaction of an agreement to sell, there might be several bona fide considerations which might induce a seller to sell his immovable property at less than what might be considered to be fair market value."
10A. This Court in Special Civil Application No. 869 of 1995 decided on 30th Jan., 1995 [reported as Anagram Finance Ltd. vs. Appropriate Authority & Anr.] observed :
"This combined reading of s. 269UD(1A) and (1B) of the Act leaves no room of doubt that it is a question of objectively decision-making process by taking into consideration all relevant materials which have come before hearing authority and considering the rival aspects of the matter. Moreover, requirement of law is to specify the grounds on which the order of pre-emptive purchase is made. That obligation does not stop by merely rejecting the submissions made before it. Rejection of submissions made by the vendors or transferee or person interested in the property, does not lead to consequence that grounds for making pre-emptive purchase exists. Sine quanon is that the reasons must exist on the material placed before it for supporting the action taken for pre-emptive purchase under s. 269UD of the Act. The order clearly falls short of this requirement".
11. From the order we find that the Appropriate Authority has also not specified any such grounds for purchase of the property except rejecting the objections raised by the petitioners. The orders also do not disclose that the Appropriate Authority has called its attention to reasons germane to connect the transaction with an attempt to evade tax and action is to counter such attempt.
12. In view of the above discussion, we do not consider it necessary to embark upon various grounds of challenge raised by the petitioners.
13. The petitions accordingly succeed. The impugned orders dt. 31st March, 1995 (Ann. N) in Special Civil Application No. 4397 of 1995; 30th March, 1995 (Ann. O) in Special Civil Application No. 4398 of 1995 and 31st March, 1995 (Ann. M) in Special Civil Application No. 4399 of 1995 are quashed. Rule is made absolute as aforesaid with no order as to costs.
14. As a consequence of this order the petitioners shall make the requisite payment in respect of all the three petitions to the Appropriate Authority on or before 25th Oct., 1995. On making such payment, the Appropriate Authority shall deliver the possession of the land in question to the petitioners with appropriate certificate including the certificate in question under s. 269UL(3) in accordance with law.