1990 (11) TMI 128 - HC - Income Tax

Summary

Issues Involved:
1. Jurisdiction of the appropriate authority u/s 269UD of the Income-tax Act, 1961.
2. Legality of the proposed sale transaction.
3. Issuance of a "no-objection certificate" u/s 269UL(3) of the Income-tax Act, 1961.

Summary:

1. Jurisdiction of the appropriate authority u/s 269UD of the Income-tax Act, 1961:
The challenge in this writ petition is to the orders dated July 20, 1989, and January 22, 1990, passed by the appropriate authority purportedly under Chapter XX-C of the Income-tax Act, 1961. The appropriate authority observed that the agreement to sell was not certain and was void as per section 29 of the Indian Contract Act. The authority concluded that the statement in Form No. 37-I was premature and invalid. The court held that the only right conferred on the appropriate authority u/s 269UD is to make an order for the purchase of the immovable property at an amount equal to the apparent consideration. The provision does not give jurisdiction to adjudicate upon the legality of the transaction.

2. Legality of the proposed sale transaction:
The appropriate authority contended that it could determine the legality of the proposed sale transaction. However, the court clarified that Chapter XX-C was incorporated to curb sales of immovable properties for apparent consideration less than the actual consideration. The appropriate authority cannot refuse to grant the certificate sought by the seller on grounds of alleged infringement of law. The authority can only decide whether to purchase the property or not.

3. Issuance of a "no-objection certificate" u/s 269UL(3) of the Income-tax Act, 1961:
Section 269UL(3) mandates that if no order for purchase is passed, the appropriate authority shall issue a "no-objection certificate." The court found that the appropriate authority had not exercised its pre-emptive right of purchase within the stipulated period and its decision not to issue a certificate u/s 269UL(3) was without jurisdiction. The court issued a writ of certiorari quashing the impugned orders and a writ of mandamus directing the issuance of a "no-objection certificate" within four weeks.

Conclusion:
The court quashed the impugned orders and directed the appropriate authority to issue a "no-objection certificate" to the petitioners within four weeks, emphasizing that the authority's role is limited to deciding on the purchase of the property and not on the legality of the transaction.