2002 (11) TMI 61 - HC - Income Tax

Order passed by the appropriate authority under section 269UD(1) of the Income-tax Act, 1961 directing pre-emptive purchase of a residential house validity - Therefore the order of purchase was valid. - The show cause notice clearly indicates the basis for arriving at the fair market value of the subject property and the petitioner had filed objections thereto, without asking for the valuation report prepared by the registered valuer, and the same mainly pertained to the adjustments made therein on account of advantages and disadvantages of the sale instance property and the subject property. Accordingly, there is no hesitation in rejecting the argument that a proper opportunity to rebut the material used against the petitioner has not been granted - we do not find any merit in the petition. The same is accordingly dismissed.

Issues Involved:
1. Challenge to the pre-emptive purchase order under Section 269UD(1) of the Income-tax Act, 1961.
2. Comparison of property valuation with an alleged non-comparable sale instance.
3. Alleged violation of principles of natural justice due to non-supply of the valuation report.
4. Judicial review of the decision-making process by the appropriate authority.

Detailed Analysis:

1. Challenge to the Pre-emptive Purchase Order:
The petitioner challenged an order dated November 30, 1996, by the appropriate authority under Section 269UD(1) of the Income-tax Act, 1961, which directed the pre-emptive purchase of a residential house in Punjabi Bagh, New Delhi, for Rs. 2.76 crores. The petitioner had entered into an agreement with respondents for the purchase of the property, and a statement in Form No. 37-1 was filed seeking a no objection certificate.

2. Comparison of Property Valuation with an Alleged Non-comparable Sale Instance:
The appropriate authority issued a notice stating that the apparent consideration of Rs. 2.76 crores was low compared to a nearby property sold for Rs. 2.51 crores, resulting in a unit land rate of Rs. 25,048 per sq. mtr. Adjustments were made for time gap, FAR, plot size, and location, leading to an adjusted unit land rate of Rs. 20,038 per sq. mtr. The total fair market value (FMV) was determined to be Rs. 3,86,11,000, showing a 40% difference from the declared consideration. The petitioner objected, arguing that the construction cost and other disadvantages were not properly accounted for, and that a comparable sale instance from August 1995 was ignored.

3. Alleged Violation of Principles of Natural Justice Due to Non-supply of the Valuation Report:
The petitioner claimed that the valuation report was not supplied, violating principles of natural justice. The court noted that no such request was made during the proceedings, and the petitioner had filed objections without asking for the valuation report. The court found this claim to be an afterthought and rejected it.

4. Judicial Review of the Decision-making Process by the Appropriate Authority:
The court emphasized that judicial review under Article 226 is limited to examining the decision-making process, not the correctness of the decision itself. The court found that the appropriate authority had considered all relevant factors, including adjustments for location, plot size, and other factors. The court held that the decision was not perverse or manifestly unreasonable and did not warrant interference.

Conclusion:
The court dismissed the petition, finding no merit in the arguments presented by the petitioner. The rule was discharged, and all interim orders were vacated, allowing the appropriate authority to confirm the auction. No order as to costs was made.

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