1998 (11) TMI 57 - HC - Income Tax

Summary

Issues:
Compulsory purchase of property belonging to co-owners, jurisdiction under Chapter XX-C, validity of acquisition of shares, payment discrepancies, jurisdictional errors in acquisition process, refund of received amounts with interest.

Compulsory Purchase of Property:
The petitioners were aggrieved by the compulsory purchase of their property as co-owners. The shares possessed by each petitioner were declared in a decree, specifying the value of each share. The shares were declared in a partition suit, making the agreement to sell their respective shares an individual agreement with the proposed transferee. The jurisdiction under Chapter XX-C could only be invoked for shares valued over Rs. 10,00,000. The authority erred by treating all shares as one undivided whole during acquisition, leading to jurisdictional errors.

Validity of Acquisition of Shares:
The authority illegally attempted to acquire the shares of certain petitioners whose share values were less than Rs. 10,00,000. The court held that the authority had no jurisdiction over such shares and set aside the order concerning those petitioners. However, for shares valued over Rs. 10,00,000, the court examined the payment process and discrepancies, ultimately finding that the acquisition process was not in accordance with the Income-tax Act.

Payment Discrepancies and Jurisdictional Errors:
The court noted discrepancies in the payment process, where cheques issued were less than the required amounts for certain shares. Despite refusals by some petitioners to accept the cheques, the authority proceeded to issue a new cheque after the deadline, leading to further irregularities. The court found that the payment and acceptance of money by the petitioners did not confer jurisdiction on the authority for compulsory acquisition if the shares were undervalued.

Refund of Received Amounts with Interest:
The court ordered the petitioners to refund the entire amount received from the Revenue with 15 percent interest. Upon repayment, the authority was directed to hand over possession of the property, subject to reasonable wear and tear. The petitioners were granted three months to make the repayment. The court allowed the petition, emphasizing that the compulsory purchase power should not lead to unnecessary litigation.

This comprehensive analysis covers the issues of compulsory purchase, jurisdiction under Chapter XX-C, validity of acquisition, payment discrepancies, jurisdictional errors, and the refund process with interest, as addressed in the detailed judgment by the High Court of Madras.