1994 (4) TMI 21 - HC - Income Tax

Appropriate Authority, Income Tax, Movable Property, Natural Justice, Purchase Of Immovable Property By Central Government, Transfer Of Property

Issues Involved:
1. Constitutional validity of Chapter XX-C of the Income-tax Act.
2. Legality of the order contained in the letter dated May 30, 1991.
3. Issuance of a no-objection certificate under Section 269UL(3) of the Income-tax Act.
4. Prosecution under Section 276AB of the Income-tax Act.
5. Validity of the agreement for sale and whether it constituted a transfer under Section 269UA(f).

Issue-wise Detailed Analysis:

1. Constitutional Validity of Chapter XX-C of the Income-tax Act:
The petitioner did not address the constitutional validity of Chapter XX-C during arguments, acknowledging that the Supreme Court had already upheld its validity. The court noted that the challenge to the constitutional validity was not pressed by the petitioner.

2. Legality of the Order Contained in the Letter Dated May 30, 1991:
The petitioner challenged the validity of the letter dated May 30, 1991 (Annexure "D"), which declared the statement in Form No. 37-I void vis-a-vis Section 269UL(2). The court found that the Deputy Commissioner of Income-tax, acting as the appropriate authority, issued the letter within his competence. The court rejected the argument that the letter was not signed by the appropriate authority, affirming its legality.

3. Issuance of a No-Objection Certificate Under Section 269UL(3):
The petitioner argued that the appropriate authority was obligated to issue a no-objection certificate if it did not opt to purchase the property. The court held that the appropriate authority was not obliged to issue a no-objection certificate because the petitioner and respondent No. 4 had already effected a transfer before submitting Form No. 37-I, violating Section 269UC. The court emphasized that no party can take advantage of its own wrong.

4. Prosecution Under Section 276AB of the Income-tax Act:
The court upheld the show-cause notice under Section 276AB (Annexure "E"), finding that the petitioner had violated the provisions of Section 269UC by effecting a transfer before submitting Form No. 37-I. The court held that the appropriate authority acted within its rights to prosecute the petitioner for this violation.

5. Validity of the Agreement for Sale and Whether it Constituted a Transfer Under Section 269UA(f):
The court examined whether the agreement for sale constituted a transfer under Section 269UA(f). The court found that the petitioner had taken possession of part of the property in part performance of the contract, which constituted a transfer under the Income-tax Act. The court rejected the petitioner's argument that the possession was merely permissive and not a transfer.

Conclusion:
The court dismissed the writ petition, finding no merit in the petitioner's contentions. The court upheld the legality of the letter dated May 30, 1991, and the show-cause notice under Section 276AB. The court also ruled that the appropriate authority was not obligated to issue a no-objection certificate due to the petitioner's violation of Section 269UC. The court ordered the petitioner to pay costs of Rs. 5,000 to the respondents. The interim orders dated June 19, 1991, and July 17, 1991, were vacated.

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