2000 (10) TMI 25 - HC - Income Tax

Summary

Issues Involved:
1. Validity of the impugned order u/s 269UD(1) of the Income-tax Act, 1961.
2. Jurisdiction of the appropriate authority in dealing with the undervaluation of properties in an exchange transaction.
3. Consideration of sale instances and valuation methodology by the appropriate authority.
4. Scope of judicial review under Article 226 of the Constitution of India.

Summary:

1. Validity of the impugned order u/s 269UD(1) of the Income-tax Act, 1961:
The petitioner challenged the order dated August 21, 1997, passed by the appropriate authority u/s 269UD(1) of the Income-tax Act, 1961, directing the purchase of the property at Harrington Road, Chennai, for Rs. 1,87,00,000. The petitioner contended that the order was arbitrary and did not consider the various sale instances and valuation reports submitted.

2. Jurisdiction of the appropriate authority in dealing with the undervaluation of properties in an exchange transaction:
The petitioner argued that the transaction was one of exchange and any action u/s Chapter XX-C should cover all properties involved. The court rejected this argument, stating that the transaction of exchange is covered by Chapter XX-C, and the appropriate authority has jurisdiction to deal with the undervaluation of properties involved in the exchange.

3. Consideration of sale instances and valuation methodology by the appropriate authority:
The appropriate authority relied on two sale instances in the vicinity of the property at Harrington Road to conclude a significant undervaluation. The petitioner contended that the properties in Second Avenue, Harrington Road, were more valuable than those in First Avenue. The court upheld the authority's valuation, noting that guideline values for stamp duty purposes are not applicable for determining market value under Chapter XX-C. The court agreed with the authority's reliance on documented sale instances and the rejection of the petitioner's valuation reports.

4. Scope of judicial review under Article 226 of the Constitution of India:
The court emphasized that judicial review under Article 226 is limited to examining whether the findings are perverse, there is non-application of mind, or the order is contrary to established principles of law. The court concluded that the appropriate authority had considered all relevant factors and provided adequate opportunities to the parties. Therefore, the court dismissed the writ petitions, stating that it does not sit in appeal over the decisions of the appropriate authority.

Conclusion:
The writ petitions were dismissed, and the court upheld the order of the appropriate authority u/s 269UD(1) of the Income-tax Act, 1961, directing the purchase of the property at Harrington Road, Chennai, for Rs. 1,87,00,000. The court found no reason to interfere with the authority's decision, as it was based on relevant sale instances and proper valuation methodology.