2006 (10) TMI 87 - HC - Income Tax

Order passes on account undervaluation in pursuance of evidence given by petitioner respect of transfer of two other flats above 2 instances weren t made available to petitioners to enable them to defend so order passed u/c XX-C are liable to be set aside

Summary

Issues:
1. Challenge to order of compulsory acquisition of a flat due to alleged undervaluation.
2. Denial of natural justice by not providing instances relied upon by the Revenue to the Petitioners.
3. Comparison of instances cited by the Revenue with instances cited by the Petitioners.
4. Application of yardstick of 15% undervaluation as per Supreme Court judgment.
5. Decision on quashing the order and refund of deposited amount.

Issue 1: Challenge to order of compulsory acquisition
The Petitioners, owners of a flat, challenged an order of compulsory acquisition due to alleged undervaluation. The Appropriate Authority had directed the acquisition of the flat based on the perceived undervaluation, which the Petitioners contested. The Petitioners highlighted that the flat in question was sold at a rate comparable to another flat in the same building, indicating no significant undervaluation.

Issue 2: Denial of natural justice
The Petitioners argued that they were denied natural justice as the instances relied upon by the Revenue were not provided to them in advance. This lack of information hindered their ability to defend themselves adequately. The court acknowledged this violation of natural justice, citing previous judgments emphasizing the importance of providing such information to the parties involved.

Issue 3: Comparison of instances
The court noted that the Revenue relied on instances from different buildings, while the Petitioners cited instances from the same building for comparison. The court found the instance from the same building, involving a flat identical to the one in question, to be more relevant for assessing undervaluation. The comparison revealed no significant undervaluation as per the calculations presented.

Issue 4: Application of yardstick of 15% undervaluation
The Petitioners invoked a Supreme Court judgment establishing a yardstick of 15% undervaluation. They argued that even by the calculations of the Appropriate Authority, the alleged undervaluation did not meet this threshold. The court considered this argument and found no substantial undervaluation warranting compulsory acquisition.

Issue 5: Decision on quashing the order and refund
Considering the arguments presented, the court quashed and set aside the order of compulsory acquisition. The court made the Rule absolute, directing the decision and order of the Appropriate Authority to be nullified. Additionally, the court instructed the refund of the amount deposited by the Respondents, with accrued interest, signaling the resolution of the legal dispute in favor of the Petitioners.