2002 (9) TMI 57 - HC - Income Tax

Order passed by respondent No. 1 under section 269UD(1) for pre-emptive purchase of the property - Determination of Fair Market Value - We set aside the order passed by the appropriate authority dated December 27, 2001, and direct respondent No. 1 for reconsideration of the matter afresh. The show cause notice shall remain valid and the appropriate authority shall take a decision within six weeks after affording opportunity of hearing, as indicated hereinbefore. In view of the fact that Chapter XX-C of the Income-tax Act has already been repealed with effect from July 1, 2002, the appropriate authority shall take a sympathetic attitude in the matter.

Summary

Issues:
Challenge to order under section 269UD(1) of the Income Tax Act, 1961 for pre-emptive purchase of property. Allegations of improper valuation and procedural irregularities.

Analysis:
The petitioner contested the order passed under section 269UD(1) of the Income Tax Act, 1961, regarding the pre-emptive purchase of a property. The petitioner had entered into an agreement with the property owner for purchase, exceeding the specified value, necessitating a no objection certificate. The valuation of the property was disputed, with the petitioner citing comparable sale instances for fair market value assessment. The petitioner argued that procedural rules were not followed, and the valuation report was provided last minute, impeding a fair response. Legal counsel for the petitioner relied on a previous judgment to support their case.

The respondent's counsel defended the authority's actions, stating that the omitted sale instances were not applicable under the Act and District Magistrate's valuation was not mandatory. The authority justified its valuation methodology based on a single comparable property. The court heard arguments from both sides and concluded that further sale instances should be considered, granting a fresh hearing opportunity to the petitioner and respondent. The court found fault with the authority's exclusion of certain sale instances and deemed the impugned order unsustainable.

The court set aside the order and directed a reconsideration of the matter, emphasizing a fair hearing and consideration of additional sale instances. Given the repeal of Chapter XX-C of the Income Tax Act, a sympathetic approach was advised. The court also addressed possession issues, maintaining status quo and instructing the return of money to the Union of India. Keys to the property were to be handled based on the final decision, ensuring proper payment arrangements between the parties involved.

In conclusion, the writ petition challenging the order under section 269UD(1) was disposed of, with directions for a fresh consideration of the matter, adherence to procedural fairness, and resolution of possession and payment issues in accordance with the court's directives.