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Challenge to order under section 269UD(1) of the Income-tax Act, 1961 and prayer for a no objection certificate under section 269UL. Analysis: The petition challenged the order passed by the appropriate authority under section 269UD(1) of the Income-tax Act, 1961, regarding the purchase of a property. The petitioner sought a direction for issuing a no objection certificate under section 269UL. The agreement for the property in question was entered into by the petitioner and other respondents, leading to a notice under section 269UD(1A) due to alleged undervaluation. The appropriate authority exercised pre-emptive purchase power under section 269UD(1) and directed delivery of possession under section 269UE(2), which were contested in the petition. The petitioner contended that the authority failed to determine the fair market value of the property accurately and that the order was flawed for not establishing understatement of consideration to evade taxes. The argument highlighted discrepancies in the comparison of the property under consideration with a sale instance property, emphasizing the residential nature of the former and the commercial aspects of the latter. The petitioner also raised concerns about the motive to evade tax not being addressed in the order. The court, after considering the arguments, found in favor of the petitioner. It noted that the impugned order lacked a specific finding regarding understatement of consideration with the intention to evade tax, as required by legal precedents. Referring to the Supreme Court decision in C. B. Gautam v. Union of India, the court emphasized that the power under section 269UD should only be exercised in cases of significant undervaluation aimed at tax evasion. The court cited previous judgments reiterating the need for a clear nexus between understatement of consideration and tax evasion. Consequently, the court quashed the orders dated July 31, 1995, directing the issuance of a no objection certificate under section 269UL. It emphasized the importance of establishing the intent to evade tax before exercising pre-emptive purchase powers under the Income-tax Act, 1961. The court's decision was based on the legal requirement for a specific finding of understatement with the motive of tax evasion, as outlined in relevant legal precedents.
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