2023 (8) TMI 94 - HC - Income Tax

Acquisition proceedings - recovery of the income tax dues from the compensation amount payable to the petitioner company - Lands belonging to petitioner company as acquired for the purpose of constructing a residential school - communication from the Deputy Collector (Revenue)/Land Acquisition Officer, Puducherry stating that the property has been attached and steps have been taken to recover the income tax dues from the compensation amount payable to the petitioner company in respect of the acquired land - HELD THAT - Once lands are acquired, there is no second opinion with regard to vesting of the same with the State, free of all encumbrances. The original land owner cannot impose his views or dictate terms to the State, as to how the lands should be utilised. It is the discretion of the State to use the lands for any other purpose also. The only entitlement of the land owner is to get compensation and there is no inherent right for the land owner to seek to quash the land acquisition proceedings and consequently reclaim his property. In the present case, we notice that Sec.4(1) notification was dated 17.11.2009 subsequently Sec.6 declaration was also made on 14.12.2009 and the award also came to be passed within one year viz., on 16.06.2010. It is also the specific case of respondents that possession was also taken on 25.02.2010. Writ Petition came to be filed only in April 2011, contending that petitioner company had no notice of the acquisition proceedings. It is also contended by the counsel for the appellant that the name of the petitioner company is reflected in the encumbrance certificate and they are the rightful owners of the subject lands even before the acquisition proceedings commenced and therefore they are entitled to notice as a matter of right. Though this argument may sound attractive, unfortunately in the light of the fact that the revenue records were only in the name of erstwhile owner on the date of acquisition proceedings, such a contention that the petitioner's company name is reflected in the encumbrance certificate cannot be countenanced. It is the duty of the petitioner company to have the revenue records transferred/mutated in its name subsequent to purchase of the property in question. The respondents cannot be blamed for the lethargy and inaction of the appellant and equally it is not for the Court or the land acquisition authorities to make roving enquiries to find out as to who is the present owner on the relevant date for consideration. It is well settled law that the authorities are entitled to go with the revenue records for the purpose of issuing notices in land acquisition proceedings. As seen that 80% of the total compensation has been paid to the income tax department towards tax arrears of the petitioner company, pursuant to the notice issued by the income tax department. In so far as the allegation of post notification delay, it would not be a ground to quash the acquisition proceedings per se. Once the award has been passed pursuant to Sec.6 declaration, the property vests with the State and the State has discretion to put the said lands to use for any public purpose that it may deem fit and proper. Therefore, the contentions raised in the Writ Appeal do not merit any consideration. The single Judge has addressed all issues that arose in the Writ Petition including the invocation of the urgency clause as well as the issue regarding non issuance of notice to the petitioner company by the land acquisition authority. We do not deem it fit to interfere with the well reasoned order of the learned single Judge. Considering the fact that there have been subsequent developments with regard to the income tax proceedings and this Court allowing tax appeals filed by the petitioner company and remitting the matter to the AO for re-computation, the liability towards the income tax arrears may undergo modification, subject to final orders being passed by the AO. We also noticed that pending the Writ Petition, the Income Tax authorities have been impleaded as respondents and they are also parties before us. In the event of the assessment proceedings concluding in favour of the appellant, wholly or partly, then the compensation amount or whichever sum is in excess shall be refunded by the respondents 4 and 5, together with interest at 9% per annum.

Summary

Issues involved:
The issues involved in the judgment are the quashing of land acquisition proceedings, invocation of urgency clause, non-issuance of notice to the petitioner company, and subsequent developments regarding income tax proceedings.

Quashing of Land Acquisition Proceedings:
The Writ Petitioner, a company owning lands in a village, challenged the land acquisition proceedings initiated for constructing a residential school. The petitioner alleged irregularities and lack of notice in the acquisition process. The Deputy Collector defended the acquisition, stating proper notifications were issued, possession was taken, and notices were served as per revenue records. The learned single Judge dismissed the Writ Petition, finding the petitioner's claims of no notice incorrect and justifying the urgency clause invoked. The possession of the land was taken promptly, and there was no pre-notification delay as claimed by the petitioner.

Invocation of Urgency Clause and Non-issuance of Notice:
The Writ Appeal challenged the single Judge's order, arguing that despite the award being passed, no further steps were taken to utilize the land. The appellant contended that the single Judge did not properly consider relevant Supreme Court dictum. The Court noted that once lands are acquired, they vest with the State, and the landowner's only entitlement is compensation. The Court found that the acquisition process was conducted within legal timelines, and the petitioner's claim of not receiving notice was dismissed. The Court emphasized that the authorities rely on revenue records for issuing notices in land acquisition proceedings.

Subsequent Developments Regarding Income Tax Proceedings:
The Court, while upholding the single Judge's order, acknowledged subsequent developments in income tax proceedings. The Court allowed tax appeals by the petitioner company and remitted the matter for re-computation. Depending on the final outcome of the income tax assessment, any excess compensation paid towards tax arrears would be refunded with interest. The balance compensation payable to the appellant would also be subject to the income tax assessment outcome, with the respondents liable to pay any due amounts along with applicable interest and benefits.

The Writ Appeal was ultimately dismissed, with no costs imposed, as the Court found no grounds to interfere with the single Judge's well-reasoned order.