2016 (3) TMI 874 - HC - Income Tax

Acquisition proceedings under Chapter XX-A of the Act of 1961 were initiated against the petitioner society in the year 1985. The petitioner society participated in the proceedings, raised the objections and a necessary order as per Section 269-F(6) of the Act of 1961 was passed on 16.10.2002. The petitioner never questioned validity of the provision in which proceedings were initiated and were to be dealt with. The petitioner, if had any genuine grievance with the provisions of Constitutional correctness of the provisions of Section 269-J(1) of the Act of 1961 - Held that - Section 269-J(1) of the Act of 1961, then validity of the same should have been challenged immediately on initiation of the proceedings under Chapter XX-A of the Act of 1961. The petitioner never agitated this cause before any legal forum, though the order passed by the competent authority was also subject matter of an appeal before the Income Tax Appellate Tribunal and then before the High Court. A Special Leave Petition was also filed before the Apex Court, but while availing these remedies also the petitioner never agitated the cause which is subject matter of present writ petition. We are of considered opinion that after getting the entire issue threshed as per Chapter XX-A of the Act of 1961, it is not open for the petitioner now to challenge the validity of the provision concerned. In view of it, we are not inclined to examine merits of the issue agitated in this writ petition. The writ petition is dismissed accordingly.

Summary

Issues:
Challenge to acquisition proceedings under Chapter XX-A of the Income Tax Act, 1961 and constitutional validity of Section 269-J(1) of the Act.

Analysis:
The case involved the transfer of a chunk of land by a company to a cooperative society, which was later subjected to acquisition proceedings under Chapter XX-A of the Income Tax Act, 1961. The Departmental Valuation Officer determined the market value of the property to be significantly higher than the consideration mentioned in the sale deed. The competent authority ordered the acquisition of the property after considering the discrepancies in the valuation and the stated consideration. The petitioner society challenged this order through various legal avenues, including appeals before the Income Tax Appellate Tribunal, the High Court, and the Supreme Court, all of which were dismissed. Subsequently, the society was asked to hand over possession of the property and receive compensation under Section 269-J of the Act, but it raised objections regarding the division of the land into plots allotted to its members. Despite being asked to draw compensation, the society did not take any action.

The petitioner then filed a writ petition seeking reassessment of compensation and interest. However, the petition was dismissed with liberty to avail appropriate remedy. Subsequently, the society claimed that the penalty imposed by the Income Tax Department was unjust considering the value of the property. The petitioner further challenged the constitutional validity of Section 269-J(1) of the Act, arguing that it conflicted with Section 269-J(4) and imposed penalties beyond legal limits, leading to unjust enrichment.

The High Court, in its judgment, noted that the petitioner had participated in the proceedings under Chapter XX-A of the Act since 1985, raising objections and receiving the final order in 2002 without challenging the validity of the provisions at that time. The court emphasized that the petitioner had multiple opportunities to challenge the provisions but failed to do so. Therefore, the court held that it was not open for the petitioner to question the validity of the provision at this stage, especially after exhausting other legal remedies without raising this specific issue. Consequently, the court dismissed the writ petition without delving into the merits of the constitutional challenge raised by the petitioner regarding Section 269-J(1) of the Act.

In conclusion, the judgment upheld the acquisition proceedings under Chapter XX-A of the Income Tax Act, 1961 and rejected the challenge to the constitutional validity of Section 269-J(1) raised by the petitioner society, citing the petitioner's failure to raise the issue at the appropriate stages of the legal process.