2011 (11) TMI 471 - HC - Income Tax

Pre-emptive purchase u/s 269UD(1) under-statement of consideration - sale of agreement dated 18.12.94 for 24.19 lacs for sale of flat in Madhuban building in Nehru Place, Delhi order of acquisition on 22.03.1995 Held that - In the order dated 22.3.1995, the Appropriate Authority has referred to another sale instance in Chiranjeev Tower, which was not mentioned in the SCN dated 10th March, 1995 and thus was relied upon by the Appropriate Authority for the first time only at the time of hearing. The petitioner was not given any time to rebut or offer any explanation or distinguishing factors in respect of Chiranjeev Tower, Nehru Place. This was a serious lapse and failure on the part of the Appropriate Authority and reliance placed on the said sale instance in the impugned order makes it vulnerable and bad in law. As petitioner had highlighted the difference between the Madhuban Tower and Ansal Tower on ground of age of building, location, floor of flat, amenities, area of flat, date of sale. Appropriate Authority gave marginal adjustment for all the factors. Formula and rational of such adjustment is not stated and cannot be fathomed from the impugned order. In these circumstances, we allow the present writ petition and quash the order dated 22.3.1995 and set aside the said order. See Kailash Suneja Vs. Appropriate Authority (2001 (8) TMI 10 - SUPREME COURT) Decided in favor of petitioner.

Summary

Issues Involved:
1. Violation of principles of natural justice by the Appropriate Authority.
2. Consideration of material not confronted or mentioned in the notice.
3. Failure to consider relevant factors and consideration of irrelevant factors in determining the under-statement of consideration.

Issue-wise Detailed Analysis:

1. Violation of Principles of Natural Justice:
The petitioner argued that the Appropriate Authority failed to grant adequate time and a fair hearing, which violated the principles of natural justice. The court noted that the Appropriate Authority issued a notice on 10th March 1995, scheduling a hearing for 21st March 1995. The petitioner filed a response on 18th March 1995, pointing out significant differences between the property in question and the comparative property cited by the Appropriate Authority. Despite this, the Appropriate Authority passed the acquisition order on 22nd March 1995, just one day after the hearing, without adequately considering the petitioner's submissions. The court found that the Appropriate Authority's failure to provide sufficient time to the petitioner to respond to new material introduced during the hearing constituted a serious lapse and violation of natural justice.

2. Consideration of Material Not Confronted or Mentioned in the Notice:
The Appropriate Authority introduced a new sale instance from Chiranjeev Tower during the hearing on 21st March 1995, which was not mentioned in the initial show-cause notice dated 10th March 1995. The court emphasized that the petitioner was not given any opportunity to rebut or offer an explanation regarding this new sale instance. The reliance on this new material without giving the petitioner a chance to respond rendered the acquisition order legally vulnerable and bad in law.

3. Failure to Consider Relevant Factors and Consideration of Irrelevant Factors:
The court examined the differences between the properties in question and the comparative properties cited by the Appropriate Authority. The petitioner highlighted substantial differences, such as the age of the buildings, location, amenities, and size of the flats. The Appropriate Authority made only a 10% adjustment for these differences without providing a clear rationale. Additionally, the court noted that the Appropriate Authority added a 13% increase for the time gap between the sale instances on a hypothetical basis, which was not legally justified. The court referenced the case of Kailash Suneja Vs. Appropriate Authority, where similar adjustments were criticized. The court concluded that the determination of the fair market value was not done on a correct basis, and the differences pointed out by the petitioner were substantial and should have been given more weight.

Conclusion:
The court allowed the writ petition, quashing the acquisition order dated 22nd March 1995. The court found that there was a violation of natural justice and that the determination of the fair market value was erroneous. The substantial time gap between the impugned order and the present decision, along with the petitioner's continued occupation of the property, led the court to decide the case on the material record rather than remanding it for a fresh decision. No order as to costs was made.