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TMI Blog2004 (5) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... passed under section 269UD(1) of the Income-tax Act, 1961, without giving an opportunity of hearing to the petitioner is bad in law. Secondly, it is contended that the order passed under section 269UJ of the Income-tax Act on February 22,1990, declining to rectify the wrongful deduction of Rs. 5,06,200 from the total consideration is bad in law. Thirdly, it is contended that in view of the failure on the part of the Central Government to pay the said consideration amount of Rs. 5,06,200 within the time stipulated under the Act, the order passed under section 269UD(1) of the Act stands abrogated and the immovable property purchased under section 269UD(1) stands revested in the petitioner as per section 269UH(1) of the Act. Accordingly, it is submitted that the orders passed under Chapter XX-C of the Act which are impugned in the petition are liable to be quashed and set aside. The petitioner is a company incorporated under the Companies Act, 1956. The petitioner inter alia, owned a plot of land admeasuring 1446 square metres together with a structure consisting of ground, first and second floor situated at Andheri-Kurla Road, Sakinaka, Bombay-400 072. By an agreement dated June 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... owards refund of earnest money). By its letter dated September 4, 1989, the petitioner did not challenge the exercise of power under section 269UD(1). However, it submitted that the deduction of the amount of Rs. 5,06,200 on account of discounting and stamp duty and registration charges from the total consideration was unauthorised and called upon the authorities to pay back the said amount forthwith. Another letter was also issued to that effect on January 13, 1990. By an order dated February 22, 1990, passed under section 269UJ of the Income-tax Act, it was held by the appropriate authority that the deduction of the aforesaid amount of Rs. 5,06,200 from the total consideration was in accordance with law and there is no mistake apparent from the record which could be rectified under section 269UJ of the Income-tax Act. Challenging the aforesaid orders passed by the appropriate authority under section 269UD(1) dated August 29, 1989, as well as the order dated February 22, 1990, passed under section 269UJ of the Income-tax Act, the present petition has been filed. To complete the narration of facts, it may be noted that on March 23, 1990, the above purchased property was auction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1) without giving an opportunity of hearing would not be covered under the exception carved out by the apex court in C.B. Gautam's case [1993] 199 ITR 530 and, therefore, the orders impugned in the petition are liable to be quashed and set aside. In support of the above contention, Mr. Mistry relied upon an unreported decision of this court in the case of Home Builders v. O.D. Mahindra (O.S. Writ Petition No. 2779 of 1990 decided on December 22,1995). In that case, the order under section 269UD(1) was passed on June 29, 1990, and possession of the property was taken by the appropriate authority on July 23,1990. The writ petition challenging the order passed under section 269UD(1) was filed on September 11, 1990, and pursuant to the interim order passed in the above writ petition, the said property was sold in auction held on January 6,1994. At the final hearing of the said writ petition, on behalf of the Central Government it was contended that the transaction being a concluded transaction, the case was covered by the excluded category carved out by the apex court in C.B. Gautam's case [1993] 199 ITR 530 and that the main decision given by the apex court was not applicable. Rejec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... failure on the part of the Central Government to tender the whole or any part of the amount of consideration within the stipulated time, then as per section 269UH(1), the order passed under section 269UD(1) stands abrogated and the immovable property stands revested in the transferor. In the present case, the petitioner had agreed to sell the property to the purchaser for a sum of Rs. 74,00,000. The Central Government had purchased the said property by passing an order under section 269UD(1) of the Act on August 29, 1989. Therefore, as per section 269UF(1), it was obligatory on the part of the Central Government to tender the entire consideration to the petitioner on or before September 30, 1989. However, in the present case, a sum of Rs. 5,06,200 was deducted from the total consideration of Rs. 74,00,000 and only a sum of Rs. 68,93,800 (Rs. 64,93,800 to the petitioner and Rs. 4,00,000 to the purchaser) was paid on September 27, 1989. Since, the whole of the amount of consideration has not been paid to the petitioner on or before September 30, 1989, as per section 269UH(1), the order passed under section 269UD(1) stood abrogated and the purchased property stood revested in the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In support of the above submission Mr. Mistry strongly relied upon an unreported judgment of the apex court in the case of Shrichand Raheja v. Union of India (arising out of S.L.P. (C) No. 18415-16 of 1994, dated February 17, 1995). In that case the Central Government had withheld a sum of Rs. 50,00,000 from the apparent consideration and the said amount of Rs. 50,00,000 was tendered by the Central Government much after the due date prescribed under the Act. The issue before the apex court was, whether failure on the part of the Central Government to pay part of the total consideration amounting to Rs. 50,00,000, within the stipulated time would abrogate the order passed under section 269UD(1) of the Act so as to revest the H property in favour of the transferor. In the facts of that case, the apex court held as follows: "The plain language of section 269UG(1) leaves no doubt that in the facts and circumstances of the case, as a result of non-payment of the balance amount of Rs. 50 lakhs in terms of the express requirement of section 269UG(1), the failure of the Central Government has resulted in attracting section 269UH of the Act. Accordingly, the order dated January 27, 1994 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nment from the petitioner stands revested in the petitioner. Reliance was also placed on the decision of the apex court in the case of Union of India v. Dr. A.K. Garg [2002] 256 ITR 660. In that case the apex court has held that failure on the part of the Central Government to tender the amount of apparent consideration within the time fixed by the statute attracts the wrath of section 269UH of the Act resulting in abrogation of the purchase order. Accordingly, Mr. Mistry submitted that in any view of the matter, the orders passed by the Appropriate Authority under the Act cannot be sustained and therefore, the impugned orders are liable to be quashed and set aside. Mr. Asokan, the learned advocate appearing on behalf of the respondents submitted that in the present case, before filing the petition, not only the possession of the property was taken by the appropriate authority, but even the auction sale has been completed and the auction purchaser has been put in possession of the property purchased under section 269UD(1) of the Act. He submitted that in the light of the decision of the apex court in the case of C.B. Gautam [1993] 199 ITR 530 the case of the petitioner being a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se transactions. Moreover, the apex court in the case of Union of India v. Shatabadi Trading and Investment P. Ltd. [2001] 251 ITR 93 has held as follows: "There is other factor which is very significant, namely, that this court having allowed the auction of the property in question ending confirmation of the same and that order having become final, now to allow the order made by the Appropriate Authority to be set aside and to permit the parties to work out in appropriate proceedings for restitution of the property would lead to a serious anomalous position. When the transferor without demur allowed the property to be sold pursuant to the orders of this court and that sale having taken place and this court having affirmed the same and the proceedings by way of special leave petition filed under article 136 of the Constitution coming to an end as having become infructuous, the High Court could not have brushed aside that sale in the manner it has been done. The impact of such decision ought to have been taken note of by the High Court. Indeed in K. Basavarajappa v. Tax Recovery Commissioner [1997] 223 ITR 297 this court has held that an agreement to sell creates no interest in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f C.B. Gautam's case [1993] 199 ITR 530. In these circumstances, we are firmly of the view that the case of the petitioner clearly falls within the category of concluded transaction and hence the validity of the order passed under section 269UD(1) on the ground of violation of the principles of natural justice is unassailable. Strong reliance was placed by the counsel for the petitioner on the un-reported decision of this court in the case of Home Builders. However, in our opinion, in view of the subsequent decision of the apex court in the case of Shatabadi Trading and Investment (P.) Ltd. [2001] 251 ITR 93, it is well settled that where the transferor without demur allowed the property to be sold and the sale has been confirmed whether during the pendency of the writ petition or not, then such transactions should not be disturbed by the courts. In the present case much before the decision of the apex court in the case of C.B. Gautam's case [1993] 199 ITR 530, possession of the property was taken, the apparent consideration determined has been paid and accepted by the petitioner and the said property has been auctioned and the auction purchaser has been put in possession of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out in the definition. The period of such discount shall be the period between the date of the agreement and the date or dates on which the consideration or part thereof is payable. To put it differently, because, under the agreement, the transferor gives the transferee time to pay the consideration, the consideration is assumed to comprehend some element of interest for such delayed payment, and this is ascertained and deducted to arrive at the real consideration for the agreement, or the apparent consideration. The period of the delay necessarily starts on the date of the agreement." In view of the aforesaid dictum laid down by the apex court it is futile on the part of the petitioner to contend that there is no provision under the Income-tax Act for discounting the price mentioned in the agreement of transfer. In the present case, under the sale agreement the purchase was to be effected within one month from the date of receiving no objection certificate from the appropriate authority. Under section 269UD(1) an order for purchase by the Central Government cannot be made after the expiration of a period of two months from the end of the month in which the requisite statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d subsequent to the decision of the apex court in the case of C.B. Gautam [1993] 199 ITR 530. Secondly, in that case, the amount deducted by way of discounting was not even disputed. In that case even though the total consideration under the agreement was Rs. 19.25 crores, the apparent consideration was determined at Rs. 18,68,54,154 after discounting and the same was accepted by the parties. What was disputed was the deduction of Rs. 50,00,000 from the apparent consideration determined at Rs. 18,68,54,154. Therefore, reliance placed on the decision of the apex court in the case of Shrichand Raheja is totally misplaced and the said decision does not support the contention of the petitioner. Similarly, the decision of the apex court in the case of Dr. A.K. Garg [2002] 256 ITR 660 is also distinguishable on facts. In the said case it is held that where the amount of consideration is tendered beyond the stipulated period, then section 269UG is attracted thus resulting in abrogation of the purchase order. In the said decision the issue pertaining to deduction on account of discounting was neither raised nor considered by the apex court. Therefore, the said decision does not support the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the auction purchaser on June 8,1990. Thereafter, the writ petition was filed belatedly in July, 1990. Thus, the dispute as to abrogation of the order passed under section 269UD(1) and revesting of the property was raised by the petitioner for the first time after the conclusion of the purchase transaction between the petitioner and the Central Government and after the subject property was auctioned and third party rights have been created in respect thereof. (d) Even in the belated writ filed by the petitioner there is no specific ground taken in the petition regarding the abrogation of the order passed under section 269UD(1). Although in the prayer clause of the petition, the petitioner has vaguely sought an order for revesting of the property, in the entire writ petition there is no pleading regarding abrogation of the order passed under section 269UD of the Act and the entire emphasis in the petition is on claiming the amount of Rs. 5,06,200 with interest. (e) The dictum laid down by the apex court in the case of C.B. Gautam [1993] 199 ITR 530 regarding concluded transactions as well as the decision of the apex court in the case of Shatabadi Trading and Investment (P.) Lt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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