Income Tax Act, 1961 – ss.269UC, 269UD (1A), 269UE (1), 269UG (4) and Chapter XX-C – Rajasthan Urban Areas (Sub Division) Rules, 1975 – r.11 – Vesting of Property in Central Government – Appellants (Prospective buyers) entered into an agreement for purchase of the suit land for a total consideration of Rs.99,84,500/- – Appellants furnished information about the purchase of the suit land u/s 269UC of the Act to the appropriate authority – Appropriate authority issued a show cause notice u/s.269UD (IA) of the Act stating that sale consideration disclosed by the appellants was very low – After making inquiries and hearing the parties, the appropriate authority passed an order dated 30.03.1994, directing that in terms of s.269UE(1) of the Act, the suit land stood vested in the Central Government – Writ petition – Single Judge of the High Court upheld the order dated 30.03.1994 – The appellants and vendor (respondent No.3) filed separate intra court appeals before the Division Bench of High Court – Division Bench of the High Court dismissed the appellants’ appeal, however, partly allowed the vendor’s appeal with the direction that upon department taking over possession of the suit land, prospective buyers were entitled to claim refund of the amount paid to the vendor together with interest @ 6% p.a., out of the maturity amount of the FDR (created by department) and the remaining amount to be paid to the vendor – Review Petition was also dismissed – On appeal, held: Appropriate authority examined the location of the suit land, its area and its proximity with main roads, industries and residential colonies situated in the nearby areas and determined the market value of the suit land at Rs.1,46,58,548/- as against the apparent consideration of Rs.99,84,500/- fixed in the agreement – It was after recording the factual findings, the appropriate authority came to a conclusion that the case for pre-emptive purchase of suit land as contemplated u/s. 269UD(1) was made out against the appellants – Findings recorded by the writ Court, appellate Court and review Court were consistently against the appellants – These findings were based on appreciation of evidence and in conformity with requirements of s.269UD – Hence, the same are upheld – Insofar the entitlement of the prospective buyers to the refund amount is concerned, the Division Bench of the High Court did not take into consideration s.269UG(4) of the Act – Thus, decision to be taken by the appropriate authority for disbursement of the amount of consideration, as required u/s. 269UG(4) of the Act in accordance with law.
Dismissing the C.A.No.9800-9801/2010 and partly allowing the C.A.No.9901/2010, the Court
CIVIL APPEAL Nos.9800-9801/2010
HELD: 1. Appropriate authority after setting out the facts in detail, the appropriate authority examined the location of the suit land, its area, and its proximity with the main roads, industries and residential colonies situated in the nearby areas etc. The appropriate authority then found that having regard to the topography of the suit land, it has a potential market value. [Para 26] [343-B]
2. Thereafter, the appropriate authority examined the condition of the two existing godowns bearing Nos. 13 and 14 and other structures standing on the suit land and found as a fact that the condition of the two existing godowns was very good and these godowns were actually being used by the appellants for commercial purposes. [Para 27] [343-C]
3. Considering the rates applicable as in the case of CPWD structures by cost index and keeping in view the relevant factors such as size, location, condition and the commercial use of the godowns, the appropriate authority fixed Rs.42 lakhs as being the market value of the two godowns. [Para 28] [343-D]
4. The appropriate authority then worked out the rate of the suit land at Rs.1727.5 per sq. meter and accordingly determined the market value of the suit land at Rs.1,79,21,532/-as against its declared value of Rs.99,84,500/- in the agreement. [Para 29] [343-E]
5. The appropriate authority then considered the appellants’ objections to the effect that while determining the market value of suit land, deduction of 30% to 40% should have been given and, if it had been given, there would have been no difference of 15% in the value of the suit land as was required to be made out for invoking powers under Chapter XX-C by the appropriate authority for pre-emptive purchase of the suit land. [Para 31] [344-G-H]
6. The appropriate authority, however, rejected this submission finding no merit therein. The appropriate authority then examined the issue in the light of Rule 11 of the Rajasthan Urban Areas (sub division) Rules, 1975 and other relevant facts and came to a conclusion that, if several other aspects such as the location of the suit land and its commercial value is taken into consideration, the market value of the suit land would be substantially enhanced and would come to Rs.1,46,58,548/- as against the apparent consideration of Rs.99,84,500/- fixed in the agreement. The appropriate authority, therefore, held that in any case, value of the suit land was 15% higher than the amount of the apparent consideration fixed in the agreement. [Para 32] [345-A-C]
7. It is after recording the aforementioned factual findings, the appropriate authority came to a conclusion that the case for pre-emptive purchase of the suit land as contemplated under Section 269UD(1) of the Income Tax Act, 1961 is made out against the appellants. [Para 36] [347-D]
8. Now coming to the order of the writ Court(Single Judge) dated 14.09.1994, this Court finds on its perusal that the writ Court rightly observed that it could not act as an appellate Court to examine the legality and correctness of the pre-emptive order dated 30.03.1994 passed by the appropriate authority under Section 269UD(1) of the Act but its jurisdiction was confined only to examine as to whether any relevant material is ignored or any erroneous material is considered or whether the order of the appropriate authority has violated the principle of natural justice or any case is made out for infraction of any statutory provision or whether the decision taken by the appropriate authority for pre-emptive purchase is such that no reasonable person could ever take such decision. [Para 37] [347-E-F]
9. It is in the light of the findings recorded by the appropriate authority, writ Court, appellate Court and lastly, review Court consistently against the appellants, the question, which arises for consideration in this appeal is whether any case is made out to interfere in the impugned order. [Para 42] [349-C-D]
10. It is not in dispute that the appropriate authority laid a factual foundation in the show cause notice to prove the value of suit land, which, according to the authority, was 15% higher than the apparent consideration. It is also not in dispute that a categorical finding was recorded by the appropriate authority that the fair market value of the suit land was 15% more than the apparent consideration mentioned in the agreement of sale by the parties. As mentioned above, these findings were examined by the writ Court, intra appellate Court and lastly the review Court in their respective jurisdiction. They were upheld. [Para 44] [349-E]
11. The findings are based on appreciation of evidence. The Court does not find these findings to be either arbitrary or illegal or against any statutory provisions and nor they can be regarded as being perverse to the extent that no reasonable man could ever reach to such conclusion. This Court also find that these findings are in conformity with the requirements of Section 269 UD of the Act and the law laid down by the Constitution Bench in the case of C.B. Gautam v. Union of India & Others. [Para 45] [349-G-H; 350-A]
CIVIL APPEAL NO 9901/2010
12. Division Bench of High Court dismissed the appeal filed by the prospective buyers and partly allowed the appeal filed by the vendor. This Court finds that while passing the aforesaid order, the provisions contained in Section 269UG (4) of the Act were not taken into consideration by the Division Bench, which inter alia provide as to how the issue in relation to amount of consideration is finally required to be dealt with by the appropriate authority in a case of this nature. [Para 3, 4] [351-F; 352-A-B]
13. Therefore, this Court is of the view that instead of issuing the aforementioned impugned directions in relation to the disbursement of the amount of FDR, the High Court should have left the matter to be decided by the appropriate authority as required under Section 269UG (4) of the Act. [Para 6] [352-E]
C.B Gautam v. Union of India and Others (1993) 1 SCC
78 : [1992] 3 Suppl. SCR 12 – relied on.
Sahib Singh Kalha & Ors. v. Amritsar Improvement Trust & Ors. (1982) 1 SCC 419 ; Lal Chand v. Union of India & Anr. (2009) 15 SCC 769 : [2009] 13 SCR
622 ; Executive Engineer, Karnataka Housing Board v. Land Acquisition Officer, Gadag & Ors. (2011) 2 SCC
246 : [2011] 1 SCR 600 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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