2009 (6) TMI 135 - HC - Income Tax

Petitioner has challenged the order passed under section 269UD(1A) of the Income-tax Act, 1961, passed by the Appropriate Authority for the purchase of the flat of the petitioner for the Government of India. - In our opinion, in the present case, the three sale instances relied on by the Appropriate Authority cannot be compared with the agreement for sale of subject flat taking into consideration the location of the properties, prices commanded by property in those areas as well as the basic amenities. None of these aspects were considered by the Appropriate Authority. In view of these reasons, we find that the impugned order of compulsory is liable to be set aside.

Summary

Issues:
Challenge to order under section 269UD(1A) of the Income-tax Act, 1961 for purchase of flat by Government of India based on apparent consideration and market value discrepancy.

Analysis:
1. The petitioner contested an order under section 269UD(1A) of the Income-tax Act, 1961, regarding the sale of a flat to the Government of India. The petitioner agreed to sell a flat for Rs. 17,50,000, but due to cancellation of the agreement, the earnest money was returned. The Appropriate Authority still proceeded with the order despite the cancellation.

2. The Appropriate Authority based its decision on three transactions, indicating a market value of around Rs. 5,000 per sq. ft., while the apparent consideration was lower. The petitioner argued that the properties used for comparison were not similar in location or amenities to the subject property, presenting a transaction involving a nearby flat for contrast.

3. The petitioner highlighted that flats without lift facilities on higher floors typically have lower values, contrasting the subject flat on the fourth floor with another flat on the second floor in the same building. The petitioner emphasized the difference in built-up areas and rates per sq. ft., supporting a higher value for the subject flat.

4. The petitioner further argued about the location differences between the subject property and the properties used for comparison by the Appropriate Authority. The petitioner referenced the ready reckoner to show variations in property prices based on zones, emphasizing the lack of lift and parking facilities in the subject property.

5. The Court considered the use of the ready reckoner for price disparity analysis and cited relevant cases where property values in different areas were compared. It concluded that the properties used for comparison were not comparable due to location, amenities, and pricing differences, leading to the order's invalidation.

6. The Appropriate Authority's objection to revoking the agreement before issuance of the show-cause notice was noted, but the Court set aside the impugned order based on the lack of comparability in the properties considered and the flawed analysis by the Authority.

7. Ultimately, the Court allowed the writ petition, setting aside the impugned order under section 269UD(1A) of the Income-tax Act, 1961, due to the discrepancies in valuation and lack of proper consideration of relevant factors by the Appropriate Authority.