2012 (4) TMI 333 - HC - Income Tax

Writ petition - The petitioner had entered into an agreement of purchase of the property dated 19th November, 1995 - The Appropriate Authority came to the conclusion that the land rate had to be computed on the basis of the FAR and adjustment of 35.71% was made on account of the said additional FAR - In the present case, after the order of acquisition dated 29th February, 1996 was passed, the Central Government paid an amount of Rs.42 lacs to the petitioner on 17th March, 1996 and Rs.2.37 crores to the respondent Nos. 3 and 4 on 22nd March, 1996 - It is well settled that a prerogative remedy is not a matter of course. In exercising extraordinary power, therefore, a writ court will indeed bear in mind the conduct of the party who is invoking such jurisdiction - The present writ petition was filed by the purchaser in end of May, 1996, more than two months after the cheques were received and encashed - The agreement to sell records that the conversion charges will be paid by the vendee, i.e., the petitioner. The petitioner had not incurred any such expenses after the agreement to sell dated 19th November, 1995. Form No. 37-I was filed on very next day, i.e., 20th November, 199 - Petition is dismissed

Issues Involved:

1. Validity of the impugned order dated 29th February 1996.
2. Concealment of material facts by the petitioner.
3. Equitable jurisdiction and conduct of the petitioner.
4. Application of estoppel and approbate and reprobate principles.
5. Alleged violation of Sections 269 UG and UH of the Income Tax Act, 1961.

Issue-wise Detailed Analysis:

1. Validity of the Impugned Order Dated 29th February 1996:

The petitioner challenged the order dated 29th February 1996, passed by the Appropriate Authority under Section 269 UD(1) of the Income Tax Act, 1961, which involved the acquisition/compulsory purchase by the Central Government of the immovable property bearing No. S-380, Panchsheel Park, New Delhi. The petitioner contended that the impugned order was vitiated and contrary to law for several reasons, including the absence of allegations of tax evasion or understatement of sale consideration in the show cause notice and the impugned order. Additionally, the petitioner argued that the fair market value of the property was not calculated as per law, and appropriate deductions were not given for various factors such as ownership by three persons, lack of mutation in the names of the respondents, and expenses involved in converting the property to freehold.

2. Concealment of Material Facts by the Petitioner:

The court noted that the petitioner had concealed material facts, specifically the receipt of payments from the Central Government. After the order of acquisition, the Central Government paid Rs. 42 lakhs to the petitioner on 17th March 1996 and Rs. 2.37 crores to the respondents on 22nd March 1996. The petitioner did not disclose these payments in the writ petition, which was filed nearly 2.5 months after receiving the payments. The court emphasized that the concealment of these payments was significant and relevant, as it affected the restraint order obtained by the petitioner on 4th July 1996, which prevented the respondents from auctioning the property.

3. Equitable Jurisdiction and Conduct of the Petitioner:

The court highlighted that writ jurisdiction is discretionary and equitable, meant to do justice to the parties. The petitioner must come to the court with clean hands and disclose all material facts. The court observed that the petitioner had failed to state the material fact that they, along with the respondents, had received the full apparent sale consideration from the Central Government. The petitioner's conduct of accepting the payment and then challenging the acquisition order was criticized. The court referred to various judgments emphasizing that suppression of material facts can disentitle a petitioner from seeking relief under a discretionary remedy.

4. Application of Estoppel and Approbate and Reprobate Principles:

The court discussed the principles of estoppel and approbate and reprobate, stating that a party cannot accept the benefits of a contract and then challenge its validity. The petitioner, having accepted and utilized the payment from the Central Government, could not now contest the acquisition order. The court cited several judgments supporting this principle, emphasizing that a party cannot blow hot and cold or take inconsistent positions.

5. Alleged Violation of Sections 269 UG and UH of the Income Tax Act, 1961:

The petitioner contended that the full value of the apparent consideration was not paid to them and the respondents, alleging a violation of Sections 269 UG and UH. However, the court rejected this contention, noting that the petitioner had not pleaded or relied upon Section 269 UH. The apparent consideration mentioned in the application filed in form No. 37-I was Rs. 2.79 crores, which had been paid. The court also observed that the petitioner had not incurred any expenses for conversion charges as per the agreement to sell, and the Central Government had made the mandatory payment.

Conclusion:

The court dismissed the writ petition, emphasizing the petitioner's concealment of material facts and conduct, which disentitled them from claiming any relief. The court reiterated the importance of coming to the court with clean hands and the application of estoppel and approbate and reprobate principles in the case.

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