1994 (9) TMI 40 - HC - Income Tax

Summary

Issues Involved:
1. Jurisdiction of the Appropriate Authority under Chapter XX-C of the Income-tax Act, 1961.
2. Validity of the findings made by the Appropriate Authority regarding the title of the property.
3. Interpretation of Section 269UD and its provisos concerning the limitation period for passing an order for purchase by the Central Government.
4. Whether the Appropriate Authority can reconsider the statement in Form No. 37-I after the set-aside of its order.

Detailed Analysis:

Jurisdiction of the Appropriate Authority under Chapter XX-C of the Income-tax Act, 1961:
The core issue was whether the Appropriate Authority had the jurisdiction to consider matters beyond the adequacy of the consideration in the transfer agreement. The court held that Section 269UD of the Act does not confer any authority, power, or jurisdiction to the Appropriate Authority to go into the question of the title of the writ petitioners in respect of the property in question. The purpose of Chapter XX-C is to counteract tax evasion by allowing the Central Government to purchase properties at the apparent consideration to ensure the full consideration is declared. Thus, the Appropriate Authority's role is limited to assessing whether the property is being sold at its apparent consideration to prevent tax evasion.

Validity of the Findings Made by the Appropriate Authority Regarding the Title of the Property:
The court found that the Appropriate Authority exceeded its jurisdiction by making findings on the title of the writ petitioners. The findings included doubts about the power of attorney, the execution of wills, and the passage of right and title. The court emphasized that the Appropriate Authority's mandate under Section 269UD is restricted to assessing the adequacy of the consideration and does not extend to verifying the title or other extraneous matters. Therefore, the findings related to the title were beyond the scope of the Appropriate Authority's jurisdiction and invalid.

Interpretation of Section 269UD and Its Provisos Concerning the Limitation Period for Passing an Order for Purchase by the Central Government:
The court interpreted Section 269UD and its provisos, emphasizing that the power to purchase an immovable property is discretionary, as indicated by the use of the word "may." However, the provisos to Section 269UD are mandatory, as indicated by the use of the word "shall," creating a strict limitation period for passing an order for purchase. The first and second provisos mandate that no order for purchase can be made after the expiration of three months from the end of the month in which the statement under Section 269UC is received. The court held that after this period, the Appropriate Authority loses its jurisdiction to pass an order for purchase. The fourth proviso, which allows the extension of the limitation period in case of a stay order, was not applicable as no stay was granted in this case.

Whether the Appropriate Authority Can Reconsider the Statement in Form No. 37-I After the Set-Aside of Its Order:
The court rejected the argument that the Appropriate Authority should be given an opportunity to reconsider the statement in Form No. 37-I after setting aside its order. It was held that once the limitation period expired, the Appropriate Authority could not pass a fresh order for purchase. The court relied on precedents from the Delhi High Court and the Madras High Court, which held that the statutory time frame for the Appropriate Authority to make its decision is strict and cannot be extended by the court. Consequently, the court directed the respondents to issue a "no objection" certificate under Section 269UL for the registration of the sale deed.

Conclusion:
The writ petition was allowed, and the impugned order dated May 31, 1994, was set aside. The court directed the respondents to issue a "no objection" certificate within three months from the date of communication of the order, ensuring compliance with the statutory provisions under Chapter XX-C of the Income-tax Act, 1961. The court emphasized the mandatory nature of the limitation period under Section 269UD and reinforced the limited jurisdiction of the Appropriate Authority to matters concerning the adequacy of the consideration in the transfer agreement.