Document Fragment View
Fragment Information
Showing contexts for: undervalued in Laboni Developers vs Appropriate Authority And Ors. on 19 October, 1995Matching Fragments
3. The learned counsel for the petitioner contended that -
(1) the Appropriate Authority had failed to determine the fair market value of the property in question. The learned counsel further contended that the finding of the Appropriate Authority that the Property Under Consideration (PUC) was comparable to the Sale Instance Properties (SIPs) was perverse;
(2) the order was also otherwise bad, because the Appropriate Authority had not given any finding that the alleged undervaluation was done with a view to evade tax.
5. The learned counsel also relied on the judgment of the Bombay High Court reported in the case of Vimal Agarwal vs. Appropriate Authority (1994) 210 ITR 16 (Bom) : TC 3PS. 179 laying down that in order to draw inference of undervaluation, it is necessary to determine first the fair market value of the property in question in light of all the attending circumstances. Without doing so, it is not only difficult but impossible to say that the apparent consideration is lower than fair market value by 15% or more. It has also been laid down in the said judgment that the instances relied upon by the aggrieved parties, more so, in cases where applications in form No. 37-I have been filed and no objection certificates issued, should be meticulously scrutinised as the burden of proving that the said instances are not comparable with the property under consideration is on the Appropriate Authority.
9. In the case of C. B. Gautam vs. Union of India & Ors. (supra), their Lordships of the Hon'ble Supreme Court held that the very historical setting in which the provisions of this Chapter XX-C were enacted, suggests 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. It was further held that if the Appropriate Authority concerned is satisfied that, in an agreement to sell immovable property in such areas as set out earlier, the apparent consideration shown in the agreement for sale is less than the fair market value by 15% or more, it may draw a presumption that this undervaluation has been done with a view to evade tax. Of course, such a presumption is rebuttable and the intending seller or purchaser can lead evidence to rebut such a presumption. Moreover, an order for compulsory purchase of immovable property under the provisions of s. 269UD requires to be supported by reasons in writing and such reasons must be germane to the object for which Chapter XX-C was introduced in the IT Act, namely, to counter attempts to evade tax.
10. The aforesaid decision was followed by this Court in the case of Anagram Finance Ltd. vs. Appropriate Authority and also in the decisions of this Court rendered in Special Civil Appln. No. 3853 of 1995 decided on 19th Sept., 1995 [since reported as Krishnakumar Agarwal & Anr. vs. Appropriate Authority & Anr. and in Special Appln. No. 5328 of 1995 decided on 19th Sept., 1995. This Court held in Special Civil Appln. No. 3853 of 1995 as under :
"Thus necessary concomitants of exercise of powers under s. 269UD(1) are that firstly the Appropriate Authority must arrive at a decision that there is significant undervaluation of the property by 15% or more and secondly, such undervaluation is an attempt at tax evasion. It is only on the existence of second indicia and not merely in the case of undervaluation that the Authority has been empowered to have resort to the power of pre-emptive purchase, undervaluation having been done with a view to evading tax, a presumption which is rebuttable. However, such presumption is not an obligation under statutory provision. It is for the Appropriate Authority to raise presumption or not on the basis of the estimated valuation. Whether such presumption has in fact been resorted to and has not been rebutted must in our opinion be reflected in the order which is finally passed by the Appropriate Authority disclosing application of mind to all available material on record. As this exercise of power depends upon the satisfaction of the Appropriate Authority and Appropriate Authority is under an obligation to pass a speaking order by specifying the reasons for purchasing the property, its satisfaction about the facts must be reflected in the order and cannot be left to the guess work or for raising the presumption by the Court in favour of the Appropriate Authority, if the order is challenged. The order must speak for itself. The impugned order in our opinion, does not even whisper about the satisfaction of Appropriate Authority about the undervaluation being with an intention to evade tax. It must be noticed that the presumption is rebuttable one and what evidence is required to rebut depends upon facts and circumstances of each case. The presumption may even be rebutted, without leading evidence, on the basis of material already available on record."