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2. It is the contention of the petitioners that on their own showing in the notice as well as in the order, the consideration under the agreement has not been shown to be significantly undervalued by more than 15% of its fair market value to take proceedings under s. 269UD and to raise any presumption of intention to evade tax. It is also contended that in the order dt. 30th May, 1995, the Appropriate Authority has hiked the estimated fair market price by adding the alleged difference between the cost of built up area to be provided by the purchaser by estimating the actual cost to less than the one agreed between the parties under the agreement to make the consideration for transfer. This estimated difference between the cost envisaged under the agreement and estimated by the Appropriate Authority while passing the order was never the subject matter of enquiry from the petitioner, neither it was disclosed in the notice to show cause nor from the order it is reflected how the Appropriate Authority has fixed the cost of construction to be supplied by the purchaser at 350 sq. ft. instead of 434 sq. ft. agreed between the parties in the agreement for the purpose of fulfilling the consideration. It is by taking into consideration irrelevant material and the grounds which were not disclosed to the petitioner that the difference between the rate per square metre estimated by the Appropriate Authority as fair market value and rate per square metre on the basis of agreement has been hiked to be more than 15% for laying the foundation for purchasing the property in question.

5. We have carefully considered the contentions raised before us and gone through the material made available to us. It has to be noticed that Chapter XX-C under which the provisions of pre-emotive purchase have been enacted are not laws enacted as such for acquiring the property but are provisions relating to implementation of the IT Act. It is also true that any provision under such statute may not only contain the provisions related to levy, but may contain all incidental and necessary provisions to make the levy effective. That provision must necessarily either relate to the levy of the tax or provide for necessary machinery provisions for its due collection. It may also provide for preventing evasion and avoidance of tax. It is only in the light of this scope that the provisions of Chapter XX-C are to be viewed. In our opinion, the provisions contained in Chapter XX-C are directly referable to providing for meeting the challenge of evasion of tax liability which may arise as a result of transfers of immovable property. Therefore, for invoking such provision the nexus between the estimated undervaluation and attempt to tax evasion has to be established. The Supreme Court in the case of C. B. Gautam vs. Union of India & Ors. (1993) 199 ITR 530 (SC) has stated :

"This is strengthened by Instruction No. 1A-BB 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%, or more. If the Appropriate Authority is satisfied that the apparent consideration shown in the agreement for sale is less than market value by 15%, 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 intending seller or purchaser can lead evidence to rebut it. 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."

From the aforesaid, it can be fairly concluded that before any action under s. 269UD can validly be taken, the Appropriate Authority must on material before it should prima facie be satisfied that there is a significant undervaluation of property by 15% or more and secondly that such undervaluation is an attempt of tax evasion. On coming to this satisfaction, the Appropriate Authority is further required to offer reasonable opportunity permissible in the limited time frame prescribed for making order of purchase under s. 269UD, to the concerned parties, namely, the intending purchaser, intending seller and the persons in occupation of immovable property if the transferor is not himself in occupation of the property and to other persons whom the Appropriate Authority knows to be interested in the property. The Appropriate Authority is further ordained to specify grounds on which order of purchase is made.