1991 (4) TMI 116 - HC - Income Tax

Summary

Issues Involved:
1. Declaration of abrogation of the order under section 269UH(2) of the Income-tax Act, 1961.
2. Revesting of property in the petitioners.
3. Validity of the deposit made under section 269UG(3).
4. Validity of the reasons provided by the second respondent for the deposit.
5. Entitlement of the petitioners to receive the consideration.
6. Impact of the pending writ petition on the entitlement to receive the consideration.

Issue-wise Detailed Analysis:

1. Declaration of Abrogation of the Order under Section 269UH(2):
The petitioners sought a writ of mandamus to declare that the order passed by the first respondent on February 16, 1990, stands abrogated with effect from April 1, 1990, under section 269UH(2) of the Income-tax Act, 1961. They argued that the second respondent neither tendered the money nor deposited it validly as required by section 269UG, leading to the revesting of the property in the petitioners.

2. Revesting of Property in the Petitioners:
The petitioners contended that the property should revest in them under section 269UH due to the alleged invalid deposit by the second respondent. The court examined whether the deposit made by the second respondent on March 30, 1990, before the first respondent complied with section 269UG(3).

3. Validity of the Deposit Made under Section 269UG(3):
The second respondent made a deposit under section 269UG(3), considering the case to fit within its provisions. The court analyzed whether the conditions for making a deposit under section 269UG(3) were met, specifically if there was any dispute as to the title to receive the amount of consideration.

4. Validity of the Reasons Provided by the Second Respondent for the Deposit:
The court scrutinized the four reasons given by the second respondent for the deposit:
- Non-production of the original will.
- Lack of probate for the will.
- Filing of Writ Petition No. 2978 of 1990 by the petitioners.
- Resolution authorizing procedural matters being on unstamped paper.
The court found the first, second, and fourth reasons to be erroneous in law. The non-production of the will was explained by the will being deposited under section 42 of the Indian Registration Act, 1908. The lack of probate was not required under section 213 of the Indian Succession Act, 1925, for the executors to establish their rights. The resolution on unstamped paper was valid as it was pursuant to the directions in the registered will.

5. Entitlement of the Petitioners to Receive the Consideration:
The court considered whether the filing of the writ petition by the petitioners challenging the provisions of the Act and the order of vesting constituted a dispute as to their entitlement to receive the consideration. It was held that challenging the vires of the provisions or the order of vesting raised a dispute as to the entitlement, justifying the deposit under section 269UG(3).

6. Impact of the Pending Writ Petition on the Entitlement to Receive the Consideration:
The court held that as long as the writ petition challenging the provisions of the Act and the order of vesting was pending, there was a dispute as to the entitlement of the petitioners to receive the consideration. Therefore, the authorities were justified in making the deposit before the appropriate authority under section 269UG(3).

Conclusion:
The writ petition was dismissed. However, the court provided the petitioners with options to either withdraw the earlier writ petition or furnish a bank guarantee to receive the consideration. The court also directed the first respondent to invest the amount in appropriate units under the Unit Trust of India if the petitioners applied for such an investment. The petitioners agreed to sign the necessary papers for this purpose. The dismissal of the writ petition was subject to these directions, with no order as to costs.