1990 (4) TMI 6 - HC - Income Tax

Summary

Issues Involved:
1. Constitutionality of the provisions under Chapter XXC of the Income-tax Act, 1961.
2. Legality of the impugned order dated January 9, 1989, under section 269UD(1) of the Income-tax Act, 1961.
3. Dispute over the payment and breach of the agreement for the sale of property.
4. Validity of the interim stay granted and whether it should be made absolute or vacated.

Issue-wise Detailed Analysis:

1. Constitutionality of the Provisions under Chapter XXC of the Income-tax Act, 1961:
The writ petitioner contended that the provisions under Chapter XXC of the Income-tax Act, 1961, are unconstitutional. However, the third respondent argued that the legislation is valid and intended to curb dealings related to black money, concealment of income, and other anti-social activities. The court noted that the constitutionality of Chapter XXC is pending consideration before various High Courts and the Supreme Court. Therefore, the court did not provide a definitive ruling on this issue but acknowledged its significance.

2. Legality of the Impugned Order Dated January 9, 1989, under Section 269UD(1) of the Income-tax Act, 1961:
The writ petitioner challenged the impugned order dated January 9, 1989, issued by the Appropriate Authority, Income-tax Department, ordering the purchase of the property by the Central Government. The petitioner claimed to have entered into an agreement for the purchase of the property and had advanced Rs. 3,75,000 along with incurring substantial expenditure for developmental matters. The court observed that the impugned order resulted in the property vesting in the Central Government free from all encumbrances from the date of the order. The first respondent directed the transferor or any person in possession to surrender or deliver possession of the property within 15 days.

3. Dispute Over the Payment and Breach of the Agreement for the Sale of Property:
The third respondent argued that the writ petitioner breached the agreement by not paying the required instalments on time, thereby losing the right to purchase the property and the right to challenge the action of the Appropriate Authority. The writ petitioner countered these allegations, stating that payments were made as demanded and that the third respondent had assured steps to set aside the impugned order. The petitioner also claimed to have made additional payments, which the third respondent allegedly suppressed. The court noted that the dispute over payments and breach of the agreement is a matter to be resolved in further proceedings, as it involves conflicting versions from both parties.

4. Validity of the Interim Stay Granted and Whether It Should Be Made Absolute or Vacated:
The court referred to previous decisions, including Padma (R.) v. Appropriate Authority, Income-tax Department, where it was held that public funds should not be parted with before the transfer of title in immovable property, especially when the Central Government is prevented from implementing the provisions of the Act due to pending litigation. The court also observed that the third respondent's remedy lies in taking legal proceedings against the writ petitioner for any loss incurred due to litigation. Applying the ratio laid down in Padma's case, the court concluded that the interim stay granted should be made absolute, and the petition to vacate the stay should be dismissed.

Conclusion:
The court allowed W. M. P. No. 1920 of 1989, making the interim stay absolute, and dismissed W. M. P. No. 5041 of 1989, thereby rejecting the request to vacate the stay. No order as to costs was made.