9911796707
TMI Blog2002 (6) TMI 4X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 269UD(1) of the Income-tax Act, 1961 (which is hereinafter referred to as "the Act") for the purposes of brevity. The facts which are necessary to be narrated for the purposes of this decision, in short, are as under: The matter relates to disposal of the disputed property by the petitioners in a manner so as to develop the property in pursuance of an agreement arrived at between the petitioners and a contractor, the details of which can be narrated as under: The property concerned is a Nazul plot No. 34, admeasuring 17,807 sq. ft. together with the existing residential premises bearing house No. 38 (new), situated at Cement Road, Dharampeth Extension, Shivaji Nagar, Nagpur, within the municipal limits in Ward No. 73. The petitioners claim to be the owners of the property which was originally belonging to Mr. Manohar K. Deshpande, who had acquired the same on leasehold rights and subsequently constructed a residential house thereon. The present petitioners Nos. 1 to 5 are the sons and daughters of the late Mr. Manohar K. Deshpande. Mr. M.K. Deshpande, the father of petitioners Nos. 1 to 5, expired on January 3, 1982, and their mother expired on October 31, 1991. Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds rights of Neelam Kalikar was concerned, the point to that effect was left open. In short, suffice it is to observe that so far as regards the litigation between the petitioners inter se, it is yet burning and not concluded. Regarding the property in question, there are various litigations pending between the landlords and tenants. There are two tenants in the property in question, i.e., one Arun Gosewade and another Shri Krishna Bhagade. This litigation, no doubt, is between Baliram and those two tenants it is the contention of the petitioners that there are about eight such civil suits pending between the parties to which detailed reference is made by the petitioners in paragraph 11 of the petition. For the purpose of the present decision, suffice it is to observe that the property is not free from any encumbrances in all respects and that the property is not further free from various types of litigations. These are the aspects which no doubt would carry importance in the present type of matter, wherein the respondents are taking action under section 269UD of the Act. Admittedly, the petitioners including Mr. Shivankar entered into an agreement of development and sale of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his date is not disputed by the respondents in any manner. In view of this and as is clear from the record, no doubt there were six days available for the petitioners to get themselves prepared in that respect so as to defend their claim. It is also necessary to make a passing reference to one aspect in the matter that, out of the abovesaid six days, there were F two days which were holidays, i.e., Saturday and Sunday. Thus, factually, working days at the disposal of the petitioners could be only four days. Since the petitioners were called at Ahmedabad, naturally, they were supposed to travel from Nagpur to Ahmedabad by some mode available and which was not to take time, less than two days for the petitioners to reach at Ahmedabad i.e., at least a day in advance. Thus, factually, there remained two days at the disposal of the petitioners to prepare all these things, to collect the documents and other evidence and papers including that of instructing legal advisor, getting things drafted, etc. On February 21, 1995, however, 'the petitioners presented themselves' before respondent No.1 through their power of attorney holder one Mr. Ramesh Nagorao Pise. On the same day, reply to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... position as to the circumstances in which the value of the property was fixed at the apparent price shown in Form No. 37-I of the rules. It was further specifically mentioned in the application that some of the parties since resided at rune and Delhi, it was necessary for rest of the petitioners to establish contact with these vendors so as to tender their evidence at appropriate time. The petitioners, therefore, sought for necessary opportunity and expected it to be granted by respondent No. 1. However, to the surprise of the petitioners, no order on this application was passed by respondent No. 1 and it appeared to have been left unconsidered. Since the representative of the petitioners Mr. Bhise was present, he was heard and the authority concerned passed an order which is dated February 24, 1995, whereby respondent No. 1 reached the conclusion that the apparent consideration/discounted consideration was below the market value, and considered the value of the property at the relevant time. As was indicated in the show cause notice, the apparent price is understated by more than 17 per cent. and, therefore, the authority considered it to be a fit case wherein an order of pre- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lculation thereof when the Department arrived at the conclusion that the discounted consideration or understated consideration was 15 per cent. or more. Unexpected rise or appreciation in the price in the preceding 12 to 13 months appears to have been taken into consideration by the authority concerned without there being any proof on the record. The appropriate authority concerned also observed that so far as regards it related to the liabilities of tenants to which reference was made in the reply, the authorities no doubt observed that there were certain litigations going on. However, according to the authority concerned, it was the responsibility of the authorities themselves to settle the matter with the tenants and so far as regards the nature of the litigation was concerned, the authorities concerned observed that the same was only as regards recovery of rent and, therefore, both these points, according to the authorities concerned, did not adversely affect the price of the property in question. So far as regards the point raised by the petitioners before the authority concerned as regards the financial position of the petitioners is concerned and the need of the petitioners, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n is situated, is totally and absolutely a residential locality. A stray office of any commercial institution may be there, but factually, it is a residential locality A only and that too mostly of the middle class and higher middle class people, Therefore, according to Mr. Deshpande, it was incorrect on the part of the appropriate authority to have compared these two sale instances for the purposes of invoking powers under section 269UD(1) of the Act. Mr. Deshpande further pointed out that, while dealing with this point, the B authority concerned did take into consideration the very many offices established and situated in civil lines area. However, we wish not to dilate on this point for the very simple reason that these two areas, by no stretch of imagination, can be compared in any manner, so far as regards valuation of the property is concerned. Civil lines area is a vast locality very widely spread having High Court, District Court, Offices of All India Radio, Air Lines and Sales Tax and majority of Central Government offices. Such is not the position so far as regards the area in question, i.e., Shivaji Nagar. It appears that the appropriate authority was much impressed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale proceeds of the property under consideration and definitely not more than 15 per cent. as alleged. It was the contention of the petitioners before the authority concerned that there was no considerable appreciation in the value of the real estate in the preceding 12 to 13 months. This contention of the petitioners was totally rejected by the authority concerned simply observing that: "It is a common knowledge and no evidence is required to be lead to prove that there has been a considerable appreciation in the value of immovable property in the last 12 to 13 months in all the important cities and Nagpur is no exception." We are really surprised to note such type of observation in the order, the cognizance of which, much less judicial cognizance cannot be taken unless documents and evidence to that effect is produced on the record. Even assuming for the sake of argument that there may be some escalation, but, unless and Until it is brought on record as to what was the rate of escalation, what was the percentage thereof and if at all there was any escalation, what was the reason for a sudden shoot up in the prices, decision based on gathered knowledge by the authority conce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . and more, in the ordinary course, it was open for the authority concerned to presume that this understating has been made with a view to evade tax. However, at the same time, Mr. Deshpande contended that this presumption is rebuttable and opportunity to that effect has been given to the party concerned. Mr. Deshpande further contended that pre-emptive acquisition of the property under section 269UD of the Act would definitely prove to be punitive for the vendor or vendee and therefore, before taking any such harsh action, it was very much necessary for the authority concerned to consider all the points germane to the object for which Chapter XX-C of the Act has been introduced. After having considered all the arguments and the points raised on behalf of both the parties, we see that the notice issued by respondent No. 1 under section 269UD does not disclose all the material on the basis of which it could be said to have been issued, much less the details thereof and, therefore, the interest of the petitioners could be said to have been totally prejudiced. If the authority concerned reached the conclusion that there was concealment or understating on the part of the petitioners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Principles of natural justice are not embodied in law. However, that by itself would not mean that the authorities were justified at their own whims to refuse said opportunity to the petitioner. We are, on this point, totally fortified by the decision of the Supreme Court reported in A.K. Kraipak v. Union of India, AIR 1970 SC 150 wherein the Supreme Court specifically observed that: "Rules of natural justice are not embodied rules nor can they be elevated to the position of fundamental rights. It is an established principle that the aim of rules of natural justice is to secure justice or to put it negatively to prevent miscarriage of justice. It is also well known that these rules of natural justice can operate only in the areas not covered by any law validly made. In short, these rules can be said to be supplement to law and not supplant the law." In the instant matter, we have already observed that, though it is the decision of the authority concerned which prompted the authority to initiate the action under section 269UD, however, this satisfaction of the authority concerned for initiating action for pre-emptive acquisition has to be a subjective satisfaction of objecti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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