1990 (4) TMI 13 - HC - Income Tax

Summary

Issues Involved:
1. Whether the second respondent's order u/s 269UD(1) of the Income-tax Act, 1961, was valid.
2. Whether the principles of natural justice were violated in passing the order.
3. Whether the reasons for the order were adequately recorded and communicated.

Summary:

Issue 1: Validity of the Order u/s 269UD(1)
The petitioner challenged the order of the second respondent deciding to purchase the immovable property situated at Santhome High Road, Madras. The petitioner had agreed to transfer 90.505% of his right, title, and interest in the property for Rs. 32,76,733.50 while retaining 9.495%. The impugned order, however, indicated the purchase of the entire property for the same amount. The court found that the order was passed hastily and without proper application of mind, as it erroneously stated the purchase of 100% of the property. The order was quashed on this ground.

Issue 2: Violation of Natural Justice
The court examined whether the principles of natural justice were violated. The second respondent did not provide any opportunity of hearing to the petitioner before passing the order. The court held that even if the statute does not explicitly provide for a hearing, the principles of natural justice must be read into the statute. The denial of a hearing, either pre-decisional or post-decisional, violated the principles of fair play and natural justice, rendering the order void.

Issue 3: Recording and Communication of Reasons
The impugned order did not contain any reasons for the decision, and the reasons recorded separately were not communicated to the petitioner. The court emphasized that recording and communicating reasons are essential for a quasi-judicial order to ensure transparency and fairness. The failure to communicate the reasons deprived the petitioner of the opportunity to challenge the order effectively, thus violating the statutory requirements of section 269UD(1) and (2) and the principles of natural justice.

Conclusion:
The court upheld the judgment of the learned single judge, quashing the order of the second respondent dated March 28, 1988. The writ appeal was dismissed, and the impugned order was found to be invalid due to the violation of natural justice and statutory requirements. The court also dismissed the related civil miscellaneous petitions seeking interim orders.