2001 (7) TMI 97 - HC - Income Tax

Summary

Issues Involved:
1. Legality of the respondents' action in not granting a "no objection certificate" (NOC).
2. Validity of the proceedings dated February 7, 2000.
3. Entitlement of the petitioners to the relief sought in the writ petition.

Summary:

Issue 1: Legality of the Respondents' Action in Not Granting NOC:
The petitioners filed a writ of mandamus challenging the respondents' refusal to grant a "no objection certificate" (NOC) pursuant to the joint statement filed in Form No. 37-I u/s 269UC of the Income-tax Act, 1961. The respondents had inspected the property and based on the Departmental Valuer's assessment, concluded that the apparent consideration was less than the fair market value by more than 15%. Consequently, they issued notices initiating proceedings for pre-emptive purchase. However, the respondents did not exercise the pre-emptive purchase within the statutory three-month period and instead lodged the application, which the court deemed illegal and arbitrary.

Issue 2: Validity of the Proceedings Dated February 7, 2000:
The court examined the relevant provisions of Chapter XX-C of the Income-tax Act, particularly sections 269UA, 269UC, 269UD, and 269UL. The petitioners had complied with the procedural requirements by filing Form No. 37-I on October 11, 1999. The respondents failed to pass an order of pre-emptive purchase within the stipulated three months, which expired on January 31, 2000. The court found that the permissive possession given to the second petitioner for alterations did not amount to a transfer u/s 53A of the Transfer of Property Act. Therefore, the respondents' action of lodging the application after the statutory period was in violation of the Act.

Issue 3: Entitlement of the Petitioners to the Relief Sought:
The court held that the respondents were obligated to issue the NOC since they did not exercise the pre-emptive purchase within the prescribed period. The references to the judgments in Digvijay Cement Co. Ltd. v. Appropriate Authority and Rajasthan Patrika Ltd. v. Union of India were found inapplicable to the present case. The court quashed the impugned proceedings dated February 7, 2000, and directed the respondents to issue the NOC forthwith to the petitioners.

Conclusion:
The writ petition was allowed, and the respondents were directed to issue the no-objection certificate to the petitioners without any costs. The rule nisi was made absolute.